RNS Number:7184R
Turk Ekonomi Bankasi A.S.
05 November 2003
Turk Ekonomi Bankasi
Anonim Sirketi
Unconsolidated Financial Statements
As of September 30, 2003
Together With Review Report
(CONVENIENCE TRANSLATION OF A REPORT AND FINANCIAL STATEMENTS
ORIGINALLY ISSUED IN TURKISH- SEE SECTION III, NOTE XXV)
(Convenience Translation of A Report And Financial Statements
Originally Issued In Turkish - See Section III, Note XXV)
TURK EKONOMI BANKASI ANONIM SIRKETI
REVIEW REPORT AS OF SEPTEMBER 30, 2003
We have reviewed the balance sheet of Turk Ekonomi Bankasi Anonim Sirketi as of
September 30, 2003 and the related statements of income for the interim period
then ended. These financial statements are expressed in the equivalent
purchasing power of Turkish lira as of September 30, 2003. These financial
statements are the responsibility of the Bank's management. Our responsibility
as independent auditors is to issue a review report on these financial
statements based on our review.
We conducted our review in accordance with the auditing standards which were
determined under the provisions of Banking Law Number 4389. These standards
require that the review should be planned and performed to obtain limited
assurance as to whether the financial statements are free of material
misstatement. A review is limited primarily to inquires of bank personnel and
analytical procedures applied to financial data and thus provides less assurance
than an audit. We have not performed an audit and, accordingly we do not
express an opinion.
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial statements of Turk Ekonomi Bankasi
Anonim Sirketi at September 30, 2003 are not presented fairly, in all material
respects, in accordance with the accounting principles and standards that are
based on the Article 13 of the Banking Law number 4389.
Additional paragraph for convenience translation to English:
The above mentioned accounting principles differ from International Financial
Reporting Standards (IFRS) issued by International Accounting Standards Board
and so far as such differences apply to the financial statements of the Bank
they mainly relate to the format of financial statements and disclosure
requirements, accounting for deferred taxes and accounting for retirement pay
liabilities. The effects of the differences between these accounting principles
and accounting principles generally accepted in the countries in which the
accompanying financial statements are to be used and IFRS have not been
quantified in the accompanying financial statements. Accordingly, the
accompanying financial statements are not intended to present the financial
position and results of operations in accordance with the accounting principles
generally accepted in the countries of users of the financial statements and
IFRS. The Bank's consolidated financial statements prepared in accordance with
the accounting principles and standards that are based on the Article 13 of the
Banking Law number 4389 will be issued separately.
Guney Serbest Muhasebeci Mali Musavirlik Anonim Sirketi
An Affiliated Firm of Ernst & Young International
Esra Peri, SMMM
November 5, 2003
Istanbul, Turkey
INDEX
SECTION ONE Page no.
General Information
I. Footnotes and Explanations on the Bank's Service
Activities and Operating Areas 1
II. The Explanations and Footnotes Regarding the Including
Group of the Bank 1
III. The Explanations Regarding the Interim Financial
Statements of the Bank 1
SECTION TWO
Unconsolidated Interim Financial Statements
I. Balance Sheets - Assets 3
II. Balance Sheets - Liabilities 4
III. Statements of Income 5
IV. Statements of Off Balance Sheet Commitments 6
SECTION THREE
Accounting Principles
I. Basis of Presentation 7
II. Explanations on Forward, Option Contracts and
Derivative Instruments 8
III. Netting of Financial Assets and Liabilities 8
IV. Interest Income and Expense 8
V. Fees and Commission Income and Expense 8
VI. Securities Held for Trading 9
VII. Sales and Repurchase Agreements and Lending of
Securities 9
VIII. Securities Held to Maturity, Securities Available for
Sale and Bank Originated Loans and Receivables 9
IX. Participations 10
X. Subsidiaries 10
XI. Originated Loans and Receivables and Provisions for
Loan Impairment 10
XII. Goodwill and Other Intangible Fixed Assets 11
XIII. Tangible Fixed Assets 11
XIV. Leasing Transactions 12
XV. Provisions and Contingent Liabilities 12
XVI. Liabilities Regarding Employee Benefits 13
XVII. Taxation 13
XVIII.Additional Explanations on Borrowings 14
XIX. Paid-in Capital and Share Certificates 14
XX. Acceptances 14
XXI. Government Incentives 14
XXII. Securities at Custody 14
XXIII.Impairment of Assets 14
XXIV. Segment Reporting 14
XXV. Other Matters 15
SECTION FOUR
Information on Financial Structure
I. Capital Adequacy Standard Ratio 16
II. Market Risk 19
III. Foreign Currency Risk 19
IV. Interest Rate Risk 21
V. Liquidity Risk 23
SECTION FIVE
Footnotes and Explanations on Unconsolidated Financial Statements
I. Footnotes and Explanations Related to the Assets 25
II. Footnotes and Explanations Related to the Liabilities 33
III. Footnotes and Explanations Related to the Income Statement 37
IV. Footnotes and Explanations Related to the Off-balance
Sheet Commitments 39
V. Footnotes and Explanations on the Risk Group of the Bank 41
VI. Footnotes and Explanations on Inflation Accounting 43
VII. Explanations Related to Subsequent Events 45
SECTION SIX
Independent Limited Review Report
I. The Explanations on the Independent Limited Review Report 45
SECTION ONE
GENERAL INFORMATION
I- Footnotes and Explanations on the Bank's Service Activities and
Operating Areas
a) Commercial name of the Bank : Turk Ekonomi Bankasi Anonim
Sirketi (the Bank)
Reporting period : 1 January - 30 September 2003
Address of the head office : Meclis-i Mebusan Caddesi No: 35
Findikli 34427 - ISTANBUL
Telephone number : (0212) 251 21 21
Facsimile number : (0212) 249 65 68
Web page : www.teb.com.tr
E-mail address : investor.relations@teb.com.tr
b) The Bank's service activities and operating areas: The Bank's
operating areas include, commercial financing and corporate
banking, fund management operations, retail banking and credit
card operations.
c) Financial statements and relevant explanations together with the
footnotes are stated in Billions of Turkish Lira.
II. The Explanations and Footnotes Regarding the Group of the Bank
The Group of the Bank: Turk Ekonomi Bankasi Anonim Sirketi ("the Bank") is
included in the Colakoglu Group. 70.08% of the shares of the Bank belongs to TEB
Mali Yatirimlar Anonim Sirketi (TEB Mali Yatirimlar) and 8.60% of the shares
belongs to Colakoglu Metalurji Anonim Sirketi.
III. Explanations on The Interim Financial Statements
a) Accounting principles and basis of valuation used in the preparation
of year-end financial statements are also used for the preparation of
interim financial statements without any changes or exceptions, and
are summarized in Section Three below.
b) There are no transactions realized in the interim period that display
a seasonal or a periodical nature.
c) There are no non-recurring transactions or basic accounting
misstatements.
d) There are no extraordinary items in terms of nature or amount that
effect the assets, liabilities, equity, net income or the cash flow of
the Bank.
e) Prior period interim financial statements, do not contain any changes
with respect to the estimated values related with the current period.
There are no items in the prior period financial statements that are
recorded with their estimated value.
f) There are no convertible bonds or any other debt securities issued
during the current period.
g) In accordance with the decision related with the distribution of
profit, declared at the Annual General Meeting of the Bank dated
March 27, 2003, the Bank distributed dividends to its shareholders
in the current period starting at April 4, 2003.
h) There are no subsequent events that occurred after the preparation
date of the interim financial statements which have a material impact
on the interim financial statements.
i) There are no transactions that may cause a structural change for the
Bank such as restructuring, mergers and acquisitions, or discontinue
of any operations.
j) There are no changes in the subsequent commitments and contingencies
of the Bank that have arisen after the year-end balance sheet date.
SECTION TWO
UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS
I. Balance Sheets - Assets
II. Balance Sheets - Liabilities
III. Statements of Income
IV. Statements of Off Balance Sheet Commitments
I- BALANCE SHEETS - ASSETS
Reviewed Audited
Current Period Prior Period
Note Ref. 30.09.2003 31.12.2002
ASSETS (Section five) TL FC Total TL FC Total
I. CASH AND 19,204 409,656 428,860 23,094 452,423 475,517
BALANCES WITH
THE CENTRAL
BANK OF
TURKEY
1.1 Cash 9,793 - 9,793 6,709 - 6,709
1.2 Foreign - 63,531 63,531 - 89,266 89,266
currency
1.3 Balances with I-1 9,411 346,125 355,536 16,385 363,157 379,542
the Central
Bank of
Turkey
II. TRADING 14,078 6,479 20,557 27,673 3,255 30,928
SECURITIES
(Net)
2.1 Public sector I-2 14,078 6,116 20,194 27,673 2,954 30,627
debt
securities
2.1.1 Government I-2 12,615 1,030 13,645 21,316 2,954 24,270
bonds
2.1.2 Treasury I-2 1,462 - 1,462 6,356 - 6,356
bills
2.1.3 Other I-2 1 5,086 5,087 1 - 1
2.2 Share - - - - - -
certificates
2.3 Other - 363 363 - 301 301
marketable
securities
III. BANKS AND 40,016 175,813 215,829 25,476 336,829 362,305
OTHER
FINANCIAL
INSTITUTIONS
3.1 Due from 40,016 175,813 215,829 25,476 336,829 362,305
banks
3.1.1 Domestic 40,016 39,270 79,286 25,476 117,122 142,598
banks
3.1.2 Foreign - 136,543 136,543 - 219,707 219,707
banks
3.2 Other - - - - - -
financial
institutions
IV. MONEY MARKET 300,000 83,063 383,063 251,610 197,892 449,502
PLACEMENTS
4.1 Interbank 300,000 83,063 383,063 251,610 197,892 449,502
money market
placements
4.2 Istanbul Stock - - - - - -
Exchange money
market
placements
4.3 Receivables - - - - - -
from reverse
repurchase
agreements
V. SECURITIES 9 59,018 59,027 10 18,663 18,673
AVAILABLE FOR
SALE (Net)
5.1 Share I-3 9 - 9 10 - 10
certificates
5.2 Other I-3 - 59,018 59,018 - 18,663 18,663
marketable
securities
VI. LOANS 489,721 585,927 1,075,648 394,220 493,609 887,829
6.1 Short term I-4 439,736 551,101 990,837 365,629 475,408 841,037
6.2 Medium and I-4 42,114 34,826 76,940 23,097 18,201 41,298
long term
6.3 Loans under I-4 23,563 - 23,563 22,379 - 22,379
follow-up
6.4 Specific I-4 (15,692) - (15,692) (16,885) - (16,885)
provisions (-)
VII. FACTORING - - - - - -
RECEIVABLES
VIII. SECURITIES 41,895 - 41,895 40,476 - 40,476
HELD TO
MATURITY (Net)
8.1 Public sector I-5 41,895 - 41,895 40,476 - 40,476
debt
securities
8.1.1 Government I-5 41,895 - 41,895 40,476 - 40,476
bonds
8.1.2 Treasury I-5 - - - - - -
bills
8.1.3 Other I-5 - - - - - -
8.2 Other I-5 - - - - - -
marketable
securities
IX. INVESTMENTS 6,137 - 6,137 6,248 - 6,248
AND ASSOCIATES
(Net)
9.1 Financial I-6 6,137 - 6,137 6,248 - 6,248
investments
and
associates
9.2 Non-Financial - - - - - -
investments
and
associates
X. SUBSIDIARIES 65,746 49,181 114,927 63,581 48,437 112,018
(Net)
10.1 Financial I-7 65,746 49,181 114,927 63,581 48,437 112,018
subsidiaries
10.2 Non-Financial - - - - - -
subsidiaries
XI. OTHER - - - - - -
INVESTMENTS
(Net)
XII. FINANCE LEASE - - - - - -
RECEIVABLES
(Net)
12.1 Gross finance I-8 - - - - - -
lease
receivables
12.2 Unearned I-8 - - - - - -
income ( - )
XIII. RESERVE - 13,791 123,469 137,260 10,232 135,812 146,044
DEPOSITS
XIV. MISCELLANEOUS 451 1,086 1,537 289 43 332
RECEIVABLES
XV. ACCRUED 27,777 7,209 34,986 26,640 3,730 30,370
INTEREST AND
INCOME
RECEIVABLES
15.1 Loans I-9 10,318 3,308 13,626 10,333 2,904 13,237
15.2 Marketable I-9 5,983 293 6,276 4,436 413 4,849
securities
15.3 Other I-9 11,476 3,608 15,084 11,871 413 12,284
XVI. PROPERTY AND 38,832 - 38,832 41,226 - 41,226
EQUIPMENT
(Net)
16.1 Book value 94,356 - 94,356 92,725 - 92,725
16.2 Accumulated (55,524) - (55,524) (51,499) - (51,499)
depreciation (
- )
XVII. INTANGIBLE 3,335 - 3,335 3,280 - 3,280
ASSETS (Net)
17.1 Goodwill - - - - - -
17.2 Other 8,210 - 8,210 7,297 - 7,297
17.3 Accumulated (4,875) - (4,875) (4,017) - (4,017)
amortization (
- )
XVIII. OTHER ASSETS I-10 27,165 693 27,858 20,849 1,977 22,826
TOTAL ASSETS 1,088,157 1,501,594 2,589,751 934,904 1,692,670 2,627,574
The accompanying notes are an integral part of these balance sheets.
II- BALANCE SHEETS - LIABILITIES
Reviewed Audited
Current Period Prior Period
Note Ref. 30.09.2003 31.12.2002
LIABILITIES (Section five) TL FC Total TL FC Total
I. DEPOSITS 487,627 1,226,144 1,713,771 395,073 1,477,734 1,872,807
1.1 Bank II-1 42,614 53,012 95,626 20,272 46,098 66,370
deposits
1.2 Saving II-1 179,431 - 179,431 181,096 - 181,096
deposits
1.3 Public sector II-1 12,518 - 12,518 39 - 39
deposits
1.4 Commercial II-1 196,627 - 196,627 156,896 - 156,896
deposits
1.5 Other II-1 56,437 - 56,437 36,770 - 36,770
institutions
deposits
1.6 Foreign II-1 - 1,158,870 1,158,870 - 1,406,774 1,406,774
currency
deposits
1.7 Precious II-1 - 14,262 14,262 - 24,862 24,862
metals deposit
accounts
II. MONEY MARKET 8,432 - 8,432 25,244 - 25,244
BALANCES
2.1 Interbank - - - - - -
money market
takings
2.2 Istanbul Stock - - - - - -
Exchange money
market
takings
2.3 Funds provided II-2 8,432 - 8,432 25,244 - 25,244
under
repurchase
agreements
III. FUNDS 40,412 326,541 366,953 17,655 273,580 291,235
BORROWED
3.1 Funds borrowed - - - - - -
from the
Central Bank
of Turkey
3.2 Other funds II-3 40,412 326,541 366,953 17,655 273,580 291,235
borrowed
3.2.1 Domestic banks II-3 27,372 28,948 56,320 17,655 13,446 31,101
and
institutions
3.2.2 Foreign banks, II-3 13,040 297,593 310,633 - 260,134 260,134
institutions
and funds
IV. MARKETABLE - - - - - -
SECURITIES
ISSUED (Net)
4.1 Bills II-4 - - - - - -
4.2 Asset backed II-4 - - - - - -
securities
4.3 Bonds II-4 - - - - - -
V. FUNDS II-5 - - - - - -
VI. MISCELLANEOUS II-6 14,916 21,550 36,466 12,016 27,277 39,293
PAYABLES
VII. OTHER EXTERNAL II-7 39,438 12,512 51,950 20,644 7,313 27,957
RESOURCES
VIII. TAXES AND 7,968 - 7,968 6,585 - 6,585
OTHER DUTIES
PAYABLE
IX. FACTORING - - - - - -
PAYABLES
X. FINANCE LEASE - 5,347 5,347 - 7,469 7,469
PAYABLES (Net)
10.1 Finance Lease II-8 - 6,509 6,509 - 9,051 9,051
Payables
10.2 Deferred II-8 - (1,162) (1,162) - (1,582) (1,582)
finance lease
expenses ( - )
XI. ACCRUED 29,977 7,608 37,585 13,790 2,697 16,487
INTEREST AND
EXPENSES
PAYABLE
11.1 Deposits II-9 9,919 1,466 11,385 5,805 1,120 6,925
11.2 Borrowings II-9 1,698 3,018 4,716 1,796 1,577 3,373
11.3 Repurchase II-9 7 - 7 31 - 31
agreements
11.4 Other II-9 18,353 3,124 21,477 6,158 - 6,158
XII. PROVISIONS 34,822 - 34,822 30,062 - 30,062
12.1 General II-10 7,571 - 7,571 6,746 - 6,746
provisions
12.2 Reserve for II-10 1,106 - 1,106 1,025 - 1,025
employee
termination
benefits
12.3 Provisions for II-10 25,869 - 25,869 21,692 - 21,692
income taxes
12.4 Insurance - - - - - - -
technical
reserves (Net)
12.5 Other II-10 276 - 276 599 - 599
provisions
XIII. SUBORDINATED II-10 - 20,766 20,766 - 27,232 27,232
LOANS
XIV. SHAREHOLDERS' 305,732 (41) 305,691 283,203 - 283,203
EQUITY
14.1 Paid-in II-11 55,125 - 55,125 55,125 - 55,125
capital
14.2 Supplementary 207,361 (41) 207,320 207,580 - 207,580
capital
14.2.1 Share II-12 - - - - - -
premium
14.2.2 Share - - - - - -
cancellation
profits
14.2.3 Marketable 3 (41) (38) 222 - 222
securities
value increase
fund
14.2.4 Revaluation - - - - - -
fund
14.2.5 Value increase - - - - - -
in revaluation
fund
14.2.6 Other capital - - - - - -
reserves
14.2.7. Effect on 207,358 - 207,358 207,358 - 207,358
inflation
accounting on
share
capital
14.3 Profit 2,373 - 2,373 - - -
reserves
14.3.1 Legal 2,373 2,373 - - -
reserves
14.3.2 Status - - - -
reserves
14.3.3 Extraordinary - - - -
reserves
14.3.4 Other profit - - - -
reserves
14.4 Profit or 40,873 - 40,873 20,498 - 20,498
loss
14.4.1 Prior year 2,259 - 2,259 - - -
income/loss
14.4.2 Current year 38,614 - 38,614 20,498 - 20,498
income/loss
TOTAL 969,324 1,620,427 2,589,751 804,272 1,823,302 2,627,574
LIABILITIES
The accompanying notes are an integral part of these balance sheets.
Reviewed Reviewed Reviewed Reviewed
Current Period Prior Period 01.07.2003 01.07.2002
Note Ref. 30.09.2003 30.09.2002 - 30.09.2003 - 30.09.2002
INCOME AND EXPENSES (Section five) Total Total Total Total
I. INTEREST INCOME III-1 238,818 286,060 80,135 89,778
1.1 Interest on loans 127,126 132,325 45,433 45,464
1.1.1 Interest on TL loans 107,567 109,095 38,717 37,329
1.1.1.1 Short term loans 101,718 102,539 36,361 35,151
1.1.1.2 Medium and long term 5,849 6,556 2,356 2,178
loans
1.1.2 Interest on foreign 19,315 22,720 6,631 7,889
currency loans
1.1.2.1 Short term loans 18,143 21,967 6,097 7,698
1.1.2.2 Medium and long term 1,172 753 534 191
loans
1.1.3 Interest on loans 244 510 85 246
under follow-up
1.1.4 Premiums received from - - - -
Resource Utilisation
Support Fund
1.2 Interest received from 4,481 3,365 1,685 1,454
reserve deposits
1.3 Interest received from 21,684 11,291 8,047 5,358
banks
1.3.1 The Central Bank of - - - -
Turkey
1.3.2 Domestic banks 16,929 7,305 6,584 3,642
1.3.3 Foreign banks 4,755 3,986 1,463 1,716
1.4 Interest received from 66,238 76,542 18,368 20,457
money market
transactions
1.5 Interest received from 19,026 62,139 6,550 16,918
marketable securities
portfolio
1.5.1 Trading securities 3,094 62,139 892 16,918
1.5.2 Available-for-sale 2,374 - 1,588 -
securities
1.5.3 Held to maturity 13,558 - 4,070 -
securities
1.6 Other interest 263 398 52 127
income
II. INTEREST EXPENSE III-2 138,883 146,896 46,655 44,144
2.1 Interest on deposits 98,253 91,589 35,800 29,107
2.1.1 Bank deposits 8,668 7,209 3,558 2,271
2.1.2 Saving deposits 49,972 42,689 16,466 12,395
2.1.3 Public sector - 6 - 2
deposits
2.1.4 Commercial deposits 22,203 25,645 9,886 8,341
2.1.5 Other institutions 422 149 228 108
deposits
2.1.6 Foreign currency 16,872 15,773 5,626 5,945
deposits
2.1.7 Precious metals vault 116 118 36 45
accounts
2.2 Interest on money - 36 - -
market transactions
2.3 Interest on funds 14,302 27,628 5,458 7,257
borrowed
2.3.1 The Central Bank of - - - -
Turkey
2.3.2 Domestic banks 6,707 5,960 2,469 2,204
2.3.3 Foreign banks 5,040 17,784 2,989 3,778
2.3.4 Other financial 2,555 3,884 - 1,275
institutions
2.4 Interest on securities - - - -
issued
2.5 Other interest 26,328 27,643 5,397 7,780
expense
III. NET INTEREST INCOME (I 99,935 139,164 33,480 45,634
- II)
IV. NET FEES AND 13,852 14,670 4,683 4,076
COMMISSIONS INCOME
4.1 Fees and commissions 25,048 23,217 8,503 7,533
received
4.1.1 Cash loans 2,567 1,930 708 578
4.1.2 Non-cash loans 7,026 6,276 2,554 2,293
4.1.3 Other 15,455 15,011 5,241 4,662
4.2 Fees and commissions 11,196 8,547 3,820 3,457
paid
4.2.1 Cash loans 1,885 1,426 567 688
4.2.2 Non-cash loans 27 25 10 2
4.2.3 Other 9,284 7,096 3,243 2,767
V. DIVIDEND INCOME - - - -
5.1 Trading securities - - - -
5.2 Available-for-sale - - - -
securities
VI. NET TRADING INCOME 36,209 3,176 15,494 4,341
6.1 Profit/losses on 25,514 5,760 12,895 2,843
trading account
securities (Net)
6.2 Foreign exchange gains 10,695 (2,584) 2,599 1,498
/losses (Net)
VII PROFIT/LOSS FROM HELD
TO MATURITY MARKETABLE
SECURITIES
III-3 - - - -
VIII. OTHER OPERATING III-4 12,132 10,572 3,805 3,839
INCOME
IX. TOTAL OPERATING INCOME 162,128 167,582 57,462 57,890
(III+IV+V+VI+VII+VIII)
X. PROVISION FOR LOAN III-5 5,134 16,725 2,789 7,235
LOSSES OR OTHER
RECEIVABLES (-)
XI. OTHER OPERATING III-6 87,641 93,034 29,288 34,881
EXPENSES (-)
XII. NET OPERATING INCOME 69,353 57,823 25,385 15,774
(IX-X-XI)
XIII. PROFIT/LOSSES FROM III-7 11,589 7,286 - 3,487
ASSOCIATES AND
SUBSIDIARIES
XIV. NET POSITION INCOME/ (18,883) (33,889) 1,141 (13,484)
EXPENSE
XV. INCOME BEFORE TAXES 62,059 31,220 26,526 5,777
(XII+XIII+ XIV)
XVI. PROVISION FOR TAXES ON 23,445 16,086 7,894 4,787
INCOME (-)
XVII. NET OPERATING INCOME/ 38,614 15,134 18,632 990
EXPENSE AFTER TAXES
(XV-XVI)
XVIII. EXTRAORDINARY INCOME/ - - - 1,250
EXPENSE AFTER TAXES
18.1 Extraordinary net - - - 1,250
income/expense before
taxes
18.1.1 Extraordinary income - - - -
18.1. 2 Extraordinary expense - - - 1,250
(-)
18.2 Provision for taxes on - - - -
extraordinary income
XIX. NET PROFIT/LOSSES III-8 38,614 15,134 18,632 2,240
(XVII+XVIII)
XX. Earnings/Losses per 350.23 137.27 169.00 20.32
share
The accompanying notes are an integral part of these statements.
IV- STATEMENTS OF OFF-BALANCE SHEET COMMITMENTS
Reviewed Audited
Current Period Prior Period
Note Ref. 30.09.2003 31.12.2002
OFF BALANCE SHEET (Section five) TL FC TOTAL TL FC TOTAL
COMMITMENTS
---
A. OFF BALANCE SHEET 762,314 1,720,337 2,482,651 582,038 1,534,787 2,116,825
COMMITMENTS
(I+II+III)
I. GUARANTEES IV-2,3 347,511 678,077 1,025,588 289,990 604,523 894,513
1.1. Letters of 347,439 283,768 631,207 289,911 281,357 571,268
guarantee
1.1.1. Guarantees subject 33,640 1,635 35,275 31,563 280 31,843
to State Tender
Law
1.1.2. Guarantees given 75,034 16,470 91,504 77,224 10,515 87,739
for foreign trade
operations
1.1.3. Other letters of 238,765 265,663 504,428 181,124 270,562 451,686
guarantee
1.2. Banks loans - 45,114 45,114 - 44,687 44,687
1.2.1. Import letter of - 45,114 45,114 - 44,687 44,687
acceptance
1.2.2. Other bank - - - - - -
acceptances
1.3. Letters of credit 72 342,865 342,937 79 270,033 270,112
1.3.1. Documentary letters 72 308,427 308,499 79 227,720 227,799
of credit
1.3.2. Other letters of - 34,438 34,438 - 42,313 42,313
credit
1.4. Prefinancing given - - - - - -
as guarantee
1.5. Endorsements - - - - - -
1.5.1. Endorsements to the - - - - - -
Central Bank of
Turkey
1.5.2. Other - - - - - -
endorsements
1.6. Securities issue - - - - - -
purchase
guarantees
1.7. Other guarantees - - - - - -
1.8. Other collaterals - 6,330 6,330 - 8,446 8,446
II. COMMITMENTS 305,996 346,095 652,091 200,666 364,525 565,191
2.1. Irrevocable 305,996 346,095 652,091 200,666 364,525 565,191
commitments
2.1.1. Asset purchase - - - 1,107 - 1,107
commitments
2.1.2. Deposit purchase 7,000 346,095 353,095 - 364,525 364,525
and sales
commitments
2.1.3. Share capital - - - - - -
commitment to
associates and
subsidiaries
2.1.4. Loan granting 109,001 - 109,001 125,005 - 125,005
commitments
2.1.5. Securities issue - - - - - -
brokerage
commitments
2.1.6. Commitments for 400 - 400 - - -
reserve deposit
requirements
2.1.7. Commitments for IV-2 98,981 - 98,981 74,554 - 74,554
credit card
limits
2.1.8. Other irrevocable 90,614 - 90,614 - - -
commitments
2.2. Revocable - - - - - -
commitments
2.2.1. Revocable loan - - - - - -
granting
commitments
2.2.2. Other revocable - - - - - -
commitments
III. DERIVATIVE 108,807 696,165 804,972 91,382 565,739 657,121
FINANCIAL
INSTRUMENTS
3.1. Forward foreign 108,807 525,840 634,647 91,382 235,547 326,929
currency buy/sell
transactions
3.1.1. Forward foreign 31,985 281,039 313,024 23,255 138,878 162,133
currency
transactions-buy
3.1.2. Forward foreign 76,822 244,801 321,623 68,127 96,669 164,796
currency
transactions-sell
3.2. Swap transactions - 165,955 165,955 - 330,192 330,192
related to f.c. and
interest rates
3.2.1. Foreign currency - 81,963 81,963 - - -
swap-buy
3.2.2. Foreign currency - 83,070 83,070 - 164,312 164,312
swap-sell
3.2.3. Interest rate - 461 461 - - -
swaps-buy
3.2.4. Interest rate - 461 461 - 165,880 165,880
swaps-sell
3.3. Foreign currency - - - - - -
and interest rate
options
3.3.1. Foreign currency - - - - - -
options-buy
3.3.2. Foreign currency - - - - - -
options-sell
3.3.3. Interest rate - - - - - -
options-buy
3.3.4. Interest rate - - - - - -
options-sell
3.4. Foreign currency - 4,370 4,370 - - -
futures
3.4.1. Foreign currency - 2,185 2,185 - - -
futures-buy
3.4.2. Foreign currency - 2,185 2,185 - - -
futures-sell
3.5. Interest rate - - - - - -
futures
3.5.1. Interest rate - - - - - -
futures-buy
3.5.2. Interest rate - - - - - -
futures-sell
3.6. Other - - - - - -
B. CUSTODY AND PLEDGED 1,657,431 550,390 2,207,821 1,279,504 425,427 1,704,931
ITEMS (IV+V)
IV. ITEMS HELD IN 1,212,583 289,336 1,501,919 895,294 284,486 1,179,780
CUSTODY
4.1. Assets under - - - - - -
management
4.2. Investment 506,228 156,711 662,939 311,863 160,376 472,239
securities held in
custody
4.3. Checks received for 678,609 65,593 744,202 569,497 48,933 618,430
collection
4.4. Commercial notes 27,746 19,943 47,689 13,934 23,215 37,149
received for
collection
4.5. Other assets - 47,089 47,089 - 51,962 51,962
received for
collection
4.6. Assets received for - - - - - -
public offering
4.7. Other items under - - - - - -
custody
4.8. Custodians - - - - - -
V. PLEDGED ITEMS 444,848 261,054 705,902 384,210 140,941 525,151
5.1. Marketable 13,758 10,858 24,616 10,225 9,266 19,491
securities
5.2. Guarantee notes 6,128 1,190 7,318 6,873 1,460 8,333
5.3. Commodity 217,142 - 217,142 208,812 - 208,812
5.4. Warranty - - - - - -
5.5. Immovables 126,552 164,128 290,680 123,725 41,020 164,745
5.6. Other pledged 81,268 84,878 166,146 34,575 89,195 123,770
items
5.7. Pledged - - - - - -
items-depository
TOTAL COMMITMENTS 2,419,745 2,270,727 4,690,472 1,861,542 1,960,214 3,821,756
(A+B)
The accompanying notes are an integral part of these statements.
SECTION THREE
ACCOUNTING PRINCIPLES
I- Basis of Presentation
The Bank prepares its financial statements in accordance with the "Accounting
Application Regulations" (AAR) based on Article 13 named as "Accounting and
Recording System" of the Banking Law 4389 and related communiques and related
explanations and further communiques that add or cause a change on the content
of the relevant communiques.
Restatement of Financial Statements in Accordance with The Current Period
Purchasing Power
The "Accounting Standard on Financial Statements at Hyperinflation Periods",
Communique No:14 of "Accounting Application Regulations" (AAR) became effective
from July 1, 2002.
In accordance with the communique No:14, the Bank's financial statements should
be restated, taking the current period equivalent purchasing power of Turkish
lira into account. In other words, Communique No:14 states that, financial
statements prepared in terms of the domestic currency of a country with high
inflation rate should be restated in accordance with the equivalent purchasing
power of the domestic currency at the balance sheet date. Prior period financial
statements should also be restated in their entirety to the measuring unit
current at the balance sheet date. One characteristic that necessitates the
application of inflation accounting under the provisions of Communique No : 14
is a cumulative three-year inflation rate approaching or exceeding 100%.
Restatement of financial statements is based on both the principles described in
Communique No.14 and the wholesale price indices published in its appendix and
the wholesale price indices announced by the State Institute of Statistics.
Detailed information on the application of inflation accounting is given in the
section V, footnote VII, "Footnotes and Explanations on Inflation Accounting" of
the following footnotes.
Other Basis of Valuation
Other basis of valuation used for assets and liabilities in the preparation of
financial statements are explained among the accounting principles for the
related assets and liabilities.
Changes in Accounting Policies and Valuation Methods in the Current Period
Changes in Accounting Policies
Until September 30, 2002, the Bank's financial statements were being prepared in
accordance with the Uniform Chart of Accounts, standard balance sheet, income
statement, supplementary financial statements and footnotes to these financial
statements and the explanations related to the applications of such financial
statements and the accounting and valuation principles thereto that are based on
the article 13 of the Banking Law 4389 as revised by Law Number 4672 and 4491
and the "Accounting Standard on Financial Statements at Hyperinflation Periods",
Communique No:14, published at Official Gazette dated June 22, 2002 and numbered
24793 and which is related to the "Regulation of Accounting Applications" and
became effective from July 1, 2002. After October 1, 2002, the Bank's financial
statements are prepared in accordance with the accounting policies explained
below and included in both Communique No:14 and the other communiques related to
the Regulation of Accounting Applications effective from October 1, 2002.
Accordingly, assets and liabilities were classified as of October 1, 2002 in
accordance with the provisions of the related communiques and the required
changes for the other accounts were made and the effects of such changes were
reflected in the income statement for 2002.
II- Explanations on Forward, Option Contracts and Derivative Instruments
The Bank makes forward currency agreements and swap transactions to reduce the
foreign currency risk. In accordance with Communique No:1, "Accounting Standards
of Financial Instruments" of AAR, derivative financial instruments that are not
designated as hedging instruments are classified as held-for-trading and carried
at fair value.
Foreign currency forward and swap transactions are evaluated by comparing the
period end Bank foreign exchange rates with the forward rate amortized to the
balance sheet date since the book values approximate their fair values. The
resulting gain or loss is reflected to the income statement.
There are no embedded derivatives separated from the host contract or that are
designated as hedging instruments.
Before the effective date of AAR, above-mentioned transactions had been recorded
by means of arbitrage accounting, the changes at the foreign currencies had been
recorded through evaluation under accounts and the liabilities at the maturity
had been followed under off balance sheet commitments. In order to avoid the
effects of the changes at the rates on the income statement, the amounts
followed under off balance sheet commitments had been evaluated and the
generated differences had been recorded under the income and expense accrual
accounts.
Foreign Currency Assets and Liabilities
Gains or losses arising from foreign currency transactions are reflected in the
statement of income as they are realized during the year. Foreign currency
assets and liabilities at each year-end are translated into Turkish lira at the
year-end foreign exchange buying rates announced by the Bank and the resulting
foreign exchange gains or losses are recorded in the statement of income as
foreign exchange loss, net. The net investment in foreign entities as of the
related year-ends were translated into Turkish lira by applying the exchange
rates prevailing at respective dates. The resulting foreign exchange gains or
losses are recorded in the statement of income.
The differences resulting from the translation of the securities issued and
monetary financial assets into Turkish lira are reflected to the statement of
income.
III- Netting of Financial Assets and Liabilities
Financial assets and liabilities are netted off when the Parent Bank has a legal
right and sanction regarding netting off, and when the Bank has the intention of
collecting or paying the net amount of related assets and liabilities or when
the Bank has the right to off set the assets and liabilities simultaneously.
There is no netting of financial assets and liabilities at the accompanying
financial statements as of September 30, 2003.
IV- Interest Income and Expense
Interest income and expense are recognized in the income statement for all
interest bearing instruments on an accrual basis using the effective interest
method. In accordance with the related regulation, the due and not due interest
accruals of the non-performing loans are cancelled and interest income related
to these loans are recorded as interest income only when collected.
V- Fees and Commission Income and Expense
Commission income and fees for various banking services in the period of
collection.
Fees and commissions for funds borrowed paid to other financial institutions,
which is a part of the transaction costs, are recorded as prepaid expenses and
considered as a part of interest of the related funds borrowed and accordingly,
recorded as expense monthly.
The dividend income is reflected to the financial statements on cash basis when
the profit distribution is realized by the participations and the subsidiaries.
VI- Securities Held for Trading
Trading securities are securities which were either acquired for generating a
profit from short-term fluctuations in price or dealer's margin, or are
securities included in a portfolio in which a pattern of short-term profit
taking exists. Trading securities are initially recognized at cost. Transaction
costs of the related securities are included in the initial cost. The positive
difference occurred between the cost and fair value of the marketable security
is accounted as interest and income accrual. The negative difference occurred is
accounted under marketable security diminution in value account.
Since the foreign currency financial assets held at the same portfolio
(Eurobond) do not hold a price formed in an active market and since the fair
values of these securities could not be determined reliably, they are valued at
amortized cost by using relevant interest rates as stated in the articles 8 and
9 of the AAR's Communique No:1, "Accounting Standards of Financial Instruments."
VII- Sales and Repurchase Agreements and Lending of Securities
The Bank has been following the repurchase agreements made with the clients as a
balance sheet item since February 1, 2002 in accordance with the Uniform Chart
of Accounts. Accordingly, the government bonds and treasury bills sold to
clients under repurchase agreements are recorded under the related securities
account in the financial statements and are valued according to the valuation
principles of the related account. Funds obtained by repurchase agreements are
classified as a separate sub account under money markets account in the
liabilities. The interest expense accruals calculated by means of effective
interest method for the funds obtained by means of repurchase agreements are
reflected to the interest and other expense accruals account in the balance
sheet.
The above-mentioned transactions are short term and consists of domestic public
sector debt securities.
The income and expenses generated from above mentioned operations are reflected
to the "Interest Income on Marketable Securities" and "Interest Expense on
Marketable Securities subject to Repurchase Agreement" accounts in the statement
of income.
As of September 30, 2003, the Bank does not have any reverse repo transactions
(December 31, 2002 - None).
As of September 30, 2003, the Bank does not have any lent marketable securities
(December 31, 2002 - None).
VIII-Securities Held to Maturity, Securities Available for Sale and Bank
Originated Loans and Receivables
Securities held to maturity are obtained with the intention of holding till the
maturity of the security, and accordingly, including the funding abilities, the
relevant conditions for this exist. This portfolio includes securities with
fixed or determinable payments and with a fixed maturity, excluding bank
originated loans and receivables.
Securities available for sale include all securities other than bank originated
loans and receivables, securities held to maturity and securities held for
trading.
The marketable securities are initially recognized at cost including the
transaction costs.
Foreign currency denominated financial assets included in the available for sale
securities portfolio (Eurobonds) is stated by translating the cost value to
Turkish lira at The Bank's exchange rates. The differences generated from the
translation is reflected to foreign currency gains and losses account at the
relevant period. Since these securities do not hold a price formed in an active
market and since the fair values of these securities could not be determined
reliably, they are valued at amortized cost by using relevant interest rates as
stated in the articles 8 and 9 of the AAR's Communique No:1, "Accounting
Standards of Financial Instruments." The differences between the cost and the
valued amounts are reflected to the income accrual accounts.
Loans and receivables originated by the Bank are those generated by lending
money and exclude those that are held with the intention of trading or selling
in near future.
Held to maturity securities are remeasured at amortized cost by using original
effective interest rate and reserve for impairment in value is provided, if any.
The interests received from securities held to maturity are recorded as interest
income. There are no dividends related with any marketable securities that are
held to maturity.
There are no financial assets that were previously classified as securities held
to maturity but cannot be currently classified as held to maturity for the next
two years due to the breaching of "tainting" rules by the Bank.
The Bank classifies securities according to above-mentioned portfolios at the
acquisition date of the related security.
The sale and purchase transactions of the securities held to maturity are
recorded at the delivery dates.
Prior to the effective date of AAR, the Bank had initially recorded marketable
securities held with the intention of not selling till maturity (investment
portfolio), which were given as collateral at cost, and the income accruals of
these securities were calculated by straight line method and reflected to the
financial statements.
IX- Participations
Turkish lira participations which are quoted at the stock exchange are valued at
fair value and any positive difference between fair value price and cost is
included under shareholders' equity at "Marketable Securities Value Increase
Fund" account in the financial statements. The others are valued by means of
restating their costs and the capital increases after deducting the ones
generated by means of adding the values accumulated at the revaluation like
funds to the capital of the participations, with the rates applicable for the
relevant dates. A provision is provided when there is a permanent diminution in
value.
X- Subsidiaries
Turkish lira subsidiaries are valued by means of restating their costs and the
capital increases after deducting the ones generated by means of adding the
values accumulated at the revaluation like funds to the capital of the
subsidiaries, with the rates applicable for the relevant dates. Foreign currency
denominated subsidiaries are valued with year-end foreign exchange rates. A
provision is provided when there is a permanent diminution in value of the
subsidiaries.
XI- Originated Loans and Receivables and Provisions for Loan Impairment
The Bank initially records originated loans and receivables at cost, and at the
following periods, in accordance with the AAR, Communique No:1, these loans are
remeasured at amortized cost by means of effective interest rate method. The
taxes, transaction expenses and other expenses paid for the guarantees taken for
the originated loans are taken into consideration while calculating the banks
financing cost and these are reflected to the interest rates of the loans.
Cash loans are recorded in accordance with the regulations stated at the
Communique on the Uniform Chart of Accounts and Its Explanations.
Provision is set for the loans that may be doubtful and the amount is expensed
at the current period. The provisioning criteria for the non-performing loans
are determined by the Bank's management for compensating the probable losses of
the current loan portfolio, by means of evaluating the portfolio for its quality
and risk factors and by means of considering the economical conditions, other
facts and related regulations.
Allowances are computed and reflected in accordance with the Banking Law No.4389
as revised by Law Number 4672 and 4491, Article 3, Sub Article 11 and Article
11, Sub Article 12 published on the Official Gazette No. 24448 dated June 30,
2001on "Methods and Principles for the Determination of Loans and Other
Receivables to be Reserved for and Allocation of Reserves" amended by
Communiques dated 31.01.02 in the current period financial statements.
Furthermore, a general reserve of 0.5% is being provided for the cash loans and
other receivables and 0.1 % is provided for non-cash loans. These provisions are
reflected to the statement of income under "Provision and Diminishing in Value
Expenses - Special Provision Expense". The collection made regarding these loans
are first deducted from the principal amount of the loan and the remaining
collections are deducted from interest receivables.
The collections made regarding the current year provision of the above mentioned
loans are deducted from the "Provision for Loans and Other Receivables" account
in the income statement. The collections made related to the previous years'
written-off loans or allowances are recorded under "Other Operating Income"
account and interest incomes are recorded under the "Interest Received from
Non-performing Loans" account.
Release of provision are removed by means of reversing the amount to the "
Provision and Diminishing in Value Expense - Provision Expense" account.
Allowances recorded in the previous periods and lost its necessity in the
current period are credited to "Collections Regarding Previous Year's Expenses"
account.
XII- Goodwill and Other Intangible Fixed Assets
There is no goodwill regarding the participations and subsidiaries.
The intangible fixed assets are reflected with their restated costs in
accordance with inflation accounting and depreciated with straight-line method.
The depreciation rate is 20%. The cost of assets subject to depreciation is
restated after deducting the exchange differences, capitalized financial
expenses and revaluation increases, if any, from the cost of the assets.
Major group classified as other intangible fixed assets by the Bank is
softwares. While determining the depreciation periods of these, the essentials
of General Tax Regulations are taken in to consideration and no special criteria
are used. The useful lives of these assets are determined as 5 years. Softwares
mainly used are developed within the Bank by the Bank's personnel, and the
expenses regarding these are not capitalized. Software is purchased only in
emergency cases and for special projects.
There are no expected changes in the accounting estimates about the depreciation
rate and method and residual values for the current and future periods.
XIII-Tangible Fixed Assets
Buildings are reflected to the financial statements at their restated costs and
reserve for impairment is provided, if any. In accordance with the Communique
No:14, buildings are valued by real estate expertise companies and the expertise
value is close to the restated costs at September 30, 2003. The straight-line
method for depreciation is used and economical life is accepted to be 50 years.
Other tangible fixed assets are reflected with their restated cost in accordance
with inflation accounting, and depreciated by straight-line depreciation method.
The depreciation rate is 20%. A prorate basis is used for depreciating assets
held less than one year as of the balance sheet date. The leasehold improvements
are depreciated in accordance with the lease period by means of straight-line
method. The annual rates used, which approximate rates based on the estimated
economic lives of the related assets, are as follow:
%
Buildings 2
Motor vehicles 20
Furniture, fixtures and office equipment 20
Leasehold improvements Lease period-not less than 5 years
Gain profit or loss resulting from disposals of the tangible fixed assets are
reflected to the statement of income as the difference between the net proceeds
and net book value.
The repairment costs of the tangible fixed assets are capitalized if the
operation lengthens the economic life of the asset. Otherwise the repairment
costs are expensed. There are no pledge, mortgage or other restrictions on the
tangible fixed assets.
There are no purchase commitments related to the tangible fixed assets.
There are no expected changes in the accounting estimates, which could have a
significant impact on the current and future periods.
XIV- Leasing Transactions
Leasing of fixed assets are recorded in accordance with AAR, Article 7 of the
Communique No:4, "Accounting Standard for Leasing Transactions." In accordance
with the above-mentioned article, the leasing transactions, which consist only
foreign currency liabilities, are translated to Turkish lira with the exchange
rates effective at the transaction dates and they are recorded both as an asset
and a liability. The foreign currency liabilities are translated to Turkish lira
with the Bank's period end exchange rate. The increases resulting from the
differences in the foreign exchange rates are recorded as expense in the
relevant period. Rent payments consist of financing costs generated due to
leasing, and the amount of the leased asset corresponding to the relevant
period. The financing cost resulting from leasing is distributed through the
agreement period to form a fixed interest rate.
In addition to interest expense, the Bank records depreciation expense in each
period for the leased assets. The depreciation rate is determined in accordance
with "Accounting Standard of Tangible Fixed Assets" and the depreciation rate is
20%.
Operating lease expenses are recognized as expense in the income statements in
the periods in which they are incurred.
The Bank has no leasing transactions as lessor.
XV- Provisions and Contingent Liabilities
The provisions and contingent liabilities are determined in accordance with the
Communique No:8 of AAR, except for the general and specific provisions set for
the loans and other receivables. Liabilities generated from previous events are
recorded by the Bank immediately at the estimated amounts.
XVI- Liabilities Regarding Employee Benefits
In accordance with the existing social legislation, the Bank is required to make
lump-sum termination indemnities including retirement and notice payments to
each employee whose employment is terminated due to resignment or for reasons
other than misconduct. The retirement pay is calculated for every working year
within the Bank over the wage for 30 days and the notice pay is determined by
the relevant notice period time calculated over the years worked within the
Bank. In accordance with AAR, Communique No:10, the Bank sets provision for
retirement and notice pay liabilities by taking the actual payment rates for the
previous 5 years into consideration.
The Bank has no employees contracted for determined periods.
As of September 30, 2003 and December 31, 2002, the arithmetical averages of the
actual payments realized for the previous five years are 8.35% and 8.44%
respectively and this forms the base of the provision amount that will be set
for the retirement and notice pay liabilities.
The Bank employees are members of Tebliler foundation. The Bank does not have
any liability to this foundation.
There are no liabilities that require additional provisions related to other
employee rights.
XVII-Taxation
Corporate tax
In accordance with the incumbent tax Law, Corporate Tax is computed over
statutory net income that is subject to tax, without taking into account the
effects of inflation accounting.
In line with the new tax Law number 4842, published in the Official Gazette
dated April 24, 2003, starting with the current year income, the corporate tax
rate to be applied is 30 % (December 31, 2002 - 33%, including fund share).
Corporate tax is to be paid in a lump sum payment within the specified period
allowed by the law for the declaration of tax.
As long as the Bank does not distribute the yearly income for 2003, there will
not be any withholding taxes with regards to this income.
The addition of current year profit to the share capital will not be regarded as
a profit distribution and thus, will be exempt from any withholding taxes.
The Bank's distribution of profit to "Fully-liable" institutions will also be
exempt from any withholding taxes. The Bank's distribution of profit to real
persons, "semi-liable" institutions, and those institutions that are not liable
and or exempt from both corporation tax and income tax, will be subject to
withholding taxes.
In accordance with the Tax Procedural Code explained above, in every three-month
period the Bank's tax assessment is made and the temporary corporate tax is
calculated over the income generated in the three-month period at a rate of 30%
and paid in cash up to the fifth day of the second month following the period.
The corporate tax provision is recorded under "Provisions and Diminishing in
Value Expenses-Tax Provision" account and expensed at every three month period
end. At the corporate tax payment periods, the cash payments made are deducted
from the tax liability calculated over the yearly income and the remaining
liability is paid in cash.
In accordance with the Tax Procedural Code, the losses presented in the tax
declarations can be deducted from the tax assessments at the current period
within five years.
In Turkey, tax returns are filed during the fourth month following the year-end.
According to existing tax regulations, the tax authorities may examine such
returns and the underlying accounting records within five years.
Deferred tax
Certain income and expense items are taxable in periods different from those in
which they are recognized in the financial statements. Deferred taxes on such
timing differences are calculated and reflected in full in the accompanying
financial statements. The Bank does not compute deferred tax on the effects of
inflation accounting.
As of September 30, 2003 and December 31, 2002, the deferred tax asset is
included in other assets in the accompanying balance sheet and the deferred tax
provision is stated under the tax provision in the accompanying income
statement.
XVIII- Additional Explanations on Borrowings
The Bank has not issued any debt securities.
The Bank has not issued convertible bonds. There are no debt securities issued
by the Bank.
XIX- Paid-in Capital and Share Certificates
The Bank does not have any costs related to share issue as of September 30,
2003. In the General Assembly meeting of the Bank, dated March 27, 2002, it was
decided that the profit for the year 2002 will be distributed to the
shareholders after providing the legal reserves, which will amount to 276
(Nominal full TL) of dividend for every 1,000 TL nominal shares owned by each
shareholder. The payment of dividends to the shareholders were started at April
4, 2003 and completed as of September 30, 2003.
XX- Acceptances
Acceptances are realized simultaneously with the payment dates of the clients
and they are presented as commitments in off-balance sheet accounts.
There are no acceptances presented as liabilities against any assets.
XXI- Government Incentives
There are no government incentives utilized by the Bank.
XXII-Securities at Custody
Securities at custody held by the Bank on behalf of clients are not reflected to
the financial statements since they are not Bank's assets.
XXIII-Impairment of Assets
At every balance sheet date, the evidence on impairment in value of assets is
evaluated objectively for existence. When an evidence regarding impairment in
value exists, the market value of the asset is determined. The difference
between book and net realizable values of the asset is recorded as provision for
impairment in the balance sheet and as an expense in the income statement.
XXIV-Segment Reporting
Segment reporting will be made effective January 1, 2004.
XXV- Other Matters
Explanation for convenience translation to English
The accounting principles used in the preparation of the accompanying financial
statements differ from International Financial Reporting Standards (IFRS) and so
far as such differences apply to the financial statements of the Bank they
relate mainly, but not limited, to the format of financial statements and
disclosure requirements, accounting for deferred taxes and reserve for
retirement pay liabilities. The effects of the differences between these
accounting principles and the accounting principles generally accepted in the
countries in which the accompanying financial statements are to be used and IFRS
have not been quantified in the accompanying financial statements. Accordingly,
the accompanying financial statements are not intended to present the financial
position and results of operations in accordance with accounting principles
generally accepted in the countries of users of the financial statements and
IFRS. The Bank's consolidated financial statements prepared in accordance with
the accounting principles and standards that are based on the Article 13 of the
Banking Law number 4389 will be issued separately.
There are no other matters required to be disclosed.
SECTION FOUR
INFORMATION ON FINANCIAL STRUCTURE
I- Capital Adequacy Standard Ratio
The method used for risk measurement for capital adequacy standard ratio is
performed in accordance with the Communique on "Measurement and Assessment of
Banks Capital Adequacies ", which was published on January 31, 2002 in the
Official Gazette numbered 24657. As of September 30, 2003, the Bank's capital
adequacy ratio is % 14.57 (December 31, 2002 - %15.40).
In the computation of capital adequacy standard ratio, information prepared in
accordance with statutory accounting requirements are used. Additionally, the
market risk amount is calculated in accordance with the communique on the
"Internal Control and Risk Management Systems of the Banks" and is taken in to
consideration in the capital adequacy standard ratio calculation
The values deducted from the capital in the shareholders' equity computation are
not considered while calculating risk-weighted assets, non-cash loans and
contingent liabilities. Assets subject to depreciation and depletion among
risk-weighted assets are included in the calculations over their net book values
after the relative depreciations and provisions are deducted.
When calculating the basic amounts subject to credit risk regarding the
transactions on the non-cash loans, the net receivable amount from the counter
parties found by means of deducting the provision amount set in accordance with
the "Communique on Methods and Principles for the Determination of Loans and
Other Receivables to be Reserved for and Allocation of Reserves" is multiplied
by the rates presented at the Clause 1, Article 21 of the "Communique on
Regulations on the Establishment and Operations of Banks", and included in the
related risk group and weighted by the related group's risk.
Receivables from counter parties generated from foreign currency and interest
rate transactions are included in the related risk group at the loan conversion
rates stated in Clause 2, Article 21 of the "Communique on Regulations on the
Establishment and Operations of Banks" and weighted for a second time by the
weight of the related risk group.
Information related to the capital adequacy ratio:
Risk Weight
0% 20% 50% 100%
Risk Weighted Assets, Liabilities and Non-Cash Loans
Balance Sheet items (Net) 1,009,349 215,146 75,559 1,004,431
Cash 73,324 - - -
Due from banks 355,536 215,142 - 687
Interbank money market placements 383,063 - - -
Receivables from reverse repo transactions - - - -
Reserve deposits 137,260 - - -
Special finance houses - - - -
Loans 42,634 - 63,587 961,556
Loans under follow-up (Net) - - - 7,871
Subsidiaries, associates and investments held to maturity - - - -
Miscellaneous receivables - - - 1,537
Marketable securities held to maturity (Net) - - - -
Advances for assets acquired by financial leasing - - - -
Financial lease receivables - - - -
Leased assets (Net) - - 11,972 -
Fixed assets (Net) - - - 20,705
Other assets 17,532 4 - 12,075
Off balance sheet items 363,925 446,661 311,785 43,600
Guarantees and pledges 15,494 439,476 73,750 25,722
Commitments 346,095 - 238,035 -
Other off balance sheet items - - - -
Transactions related with derivative financial - - - 4,175
instruments
Interest and income accruals 2,336 7,185 - 13,703
Non risk weighted accounts - - - -
1,373,274 661,807 387,344 1,048,031
Total Risk Weighted Assets - 132,361 193,672 1,048,031
Summary information related to the capital adequacy ratio:
Current Prior
Period Period
Total Risk Weighted Assets (*) 1,408,650 1,221,004
Shareholders' Equity 205,223 188,018
Shareholders' Equity / Total risk weighted assets (CAR (%)) 14.57 15.40
(*) As of September 30, 2003, the amount includes TL 34,586 (2002 - TL
21,784) of market risk amount.
Information related to the shareholders' equity components :
Current Period Prior Period
MAIN CAPITAL
Paid-in Capital 55,125 55,125
Nominal capital 55,125 55,125
Capital commitments (-) - -
Effect on Inflation Accounting on Share 207,358 207,358
Capital
Share Premium - -
Legal Reserves 2,373 -
First legal reserve (Turkish Commercial Code 2,373 -
466/1)
Second legal reserve (Turkish Commercial Code - -
466/2)
Other legal reserve per special legislation - -
Statute Reserves - -
Extraordinary reserves - -
Reserves allocated by the General Assembly - -
Retained earnings - -
Accumulated loss - -
Foreign currency share capital exchange - -
difference
Profit 40,873 20,498
Current period profit 38,614 20,498
Prior period profit 2,259 -
Loss (-) - -
Current period loss - -
Prior period loss - -
Total Main Capital 305,729 282,981
SUPPLEMENTARY CAPITAL
Revaluation Fund - -
Furniture, fixture and vehicles - -
Buildings - -
Profit on sale of associates, subsidiaries and - -
buildings to be transferred to share capital
Revaluation fund of leasehold improvement - -
Increase in the Value of Revaluation Fund - -
Foreign Exchange Differences - -
General Reserves 7,571 6,746
Provisions for Possible Losses - -
Subordinated Loans 20,766 27,232
Marketable Securities and Investment Securities (38) 222
Value Increase Fund
Associates and subsidiaries (38) 222
Available for sale securities - -
Structured positions - -
Total Supplementary Capital 28,299 34,200
TIER III CAPITAL - -
CAPITAL 334,028 317,181
DEDUCTIONS FROM THE CAPITAL 128,805 129,163
Investments in unconsolidated financial
companies whose main activities are money and
capital markets, insurance and that operate
with licenses provided in accordance with
special laws
121,064 118,266
Leasehold improvements 6,155 7,065
Start-up costs - -
Prepaid expenses 1,586 3,832
The negative difference between the market
values and the carrying amounts for
unconsolidated investments, subsidiaries, other
investments and fixed assets
- -
Subordinated loans given to other banks which - -
operate in Turkey
Goodwill (Net) - -
Capitalized expenses - -
- -
Total Shareholder's Equity 205,223 188,018
II- Market Risk
The Bank has determined market risk management operations and has taken the
necessary precautions in order to hedge market risk within its financial risk
management purposes, in accordance with the Communique on "Internal Control and
Risk Management Systems of Banks" announced in the Official Gazette dated
February 8, 2001.
The interest rate and exchange rate risks of the financial positions taken by
the Bank related to balance sheet and off-balance sheet accounts are measured
and while calculating the capital adequacy, the amount subject to VAR is taken
into consideration by the standard method. Scenario analysis and stress tests
are used additionally in market risk computations.
In order to measure the market risk of the Bank, the Board of Directors has
determined risk management strategies in accordance with the proposals of the
Top Management Risk Committee and these strategies are forced to be followed up
periodically. The Board of Directors evaluates the basic risks faced and
determines limitations accordingly. The limits are revised periodically.
Additionally the Board of Directors has urged the risk management group and the
top management to take necessary precautions to consider, evaluate, control and
to control the variety of risks the Bank faces.
Amount
Capital to be employed for interest rate risk - standard method 2,165
Capital to be employed for general market risk 2,165
Capital to be employed for specific risk -
Capital to be employed for options subject to interest rate risk -
Capital to be employed for common stock position risk - Standard method -
Capital to be employed for general market risk -
Capital to be employed for specific risk -
Capital to be employed for options subject to common stock position risk -
Capital to be employed for currency risk - Standard method 602
Capital liability 602
Capital to be employed for options subject to currency risk -
Total Value-at-risk (VAR)-Internal Model -
Total capital to be employed for market risk 2,767
Amount subject to market risk 34,586
III- Foreign Currency Risk
Foreign currency risk indicates the possibilities of the potential losses that
banks are subject to due to the exchange rate movements in the market. While
calculating the share capital requirement, all foreign currency assets,
liabilities and forward transactions of the Bank are taken into account. Net
short and long position of Turkish Lira equivalent of each foreign currency is
calculated. The value, which will be a base for calculating the share capital
requirement, is computed by taking the higher absolute value of the position by
adding to absolute net gold position. Share capital requirement is computed over
of this amount. The Board of Directors sets limits for the positions, which are
followed up daily. Additionally, possible value changes in the existing or
possible foreign currency positions are observed together with the follow-up of
the foreign currency risk in accordance with the provisions of the "Communique
on Internal Control and Risk Management Systems of Banks".
As an element of the Bank's risk management strategies, foreign currency
liabilities are hedged against exchange rate risk by derivative instruments.
The Board of Directors of the Bank determines the short position limits that the
Bank can hold in accordance with the present legal limitations. The Treasury
Department of the Bank is responsible for the management of Turkish Lira or
foreign currency price, liquidity and affordability risks that could occur in
the domestic and international markets. The Risk Control Department continuously
controls risk and risk related transactions occurring in the money markets and
prepares weekly reports for the Bank's Asset-Liability Committee. The related
principles and limitations of the counterparties are determined by the Loan
Committee. The limits concerning the maturity structure of the foreign currency
transactions and interest rates are examined by the Asset-Liability Committee.
As of September 30, 2003, the Bank's net long position is TL 3,834 (December 31,
2002 - TL 722 net short) resulting from short position amounting to TL 31,297
(December 31, 2002 - TL 41,365) on the balance sheet and long position amounting
to TL 35,131 (December 31, 2002 - TL 40,643) on the off-balance sheet.
The announced current foreign exchange buying rates of the Bank at the balance
sheet date and the previous five working days are as follows:
23/9/03 24/9/03 25/9/03 26/9/03 29/9/03 30/9/03
USD 1,348,023 1,349,013 1,366,040 1,365,178 1,376,707 1,384,378
CHF 995,456 994,568 1,010,555 1,013,747 1,017,541 1,048,196
GBP 2,227,117 2,231,179 2,262,756 2,264,465 2,268,864 2,313,057
JPY 12,088 12,062 12,191 12,163 12,318 12,509
EUR 1,548,070 1,547,183 1,569,171 1,567,497 1,571,236 1,615,154
The simple arithmetical average of the major current foreign exchange buying
rates of the Bank for the thirty days before the balance sheet date is as
follows:
Monthly Average
Foreign Exchange
Rate
USD 1,371,963
CHF 993,589
GBP 2,208,843
JPY 11,913
EUR 1,539,809
Information on the foreign currency risk of the Bank:
Current Period EUR USD YEN OTHER FC TOTAL
Assets
Cash (cash in vault, foreign currency cash, money in 28,060 379,740 20 1,840 409,660
transit, cheques purchased) and balances with the
Central Bank of Turkey
Due from other banks and financial institutions 18,383 206,451 687 33,355 258,876
Trading securities (***) 508 5,614 - 357 6,479
Investment securities available-for-sale - 59,018 - - 59,018
Loans (**) 232,956 423,346 - 16,105 672,407
Investments in subsidiaries and participations 49,181 - - - 49,181
Investment securities held-to-maturity - - - - -
Property and equipment - - - - -
Goodwill - - - - -
Other assets 20,709 110,817 - 925 132,451
Total Assets 349,797 1,184,986 707 52,582 1,588,072
Liabilities
Bank deposits 3,215 10,165 6 39,626 53,012
Foreign currency deposits (*) 242,203 896,463 867 33,599 1,173,132
Funds provided from other financial institutions 26,566 320,278 - 463 347,307
Marketable securities issued - - - - -
Miscellaneous payables 14,912 6,509 - 129 21,550
Other liabilities 5,777 17,846 - 745 24,368
Total liabilities 292,673 1,251,261 873 74,562 1,619,369
Net Balance Sheet Position 57,124 (66,275) (166) (21,980) (31,297)
Net Off-Balance Sheet Position (63,163) 76,303 - 21,991 35,131
Financial derivative assets 130,919 202,361 - 32,369 365,649
Financial derivative liabilities 194,082 126,058 - 10,378 330,518
Non-cash loans (****) 188,826 452,763 9,301 27,187 678,077
Prior Period
Total Assets 393,749 1,273,288 20,523 94,377 1,781,937
Total Liabilities 294,356 1,444,323 225 84,398 1,823,302
Net Balance Sheet Position 99,393 (171,035) 20,298 9,979 (41,365)
Net Off-Balance Sheet Position (98,326) 167,549 (20,022) (8,558) 40,643
Non-cash loans 183,148 389,224 7,406 24,745 604,523
(*) Gold account deposits amounting to TL 14,262 (December 31, 2002 - TL
24,862) are included in the foreign currency deposits.
(**) Foreign currency indexed loans amounting to TL 86,480 (December 31,
2002 - TL 89,025) are included in the loan portfolio.
(***) In the prior period, foreign currency indexed government bonds and
treasury bills amounting to TL 242 are included in the trading portfolio.
(****) There are no effects on the net off-balance sheet position.
IV- Interest Rate Risk
Interest rate risk shows the loss probability related to the changes in the
interest rates depending on the Bank's position, and it is managed by the
Treasury Department. The interest rate sensitivity of assets, liabilities and
off-balance sheet items related to this risk are measured by using the standard
method. The first step at calculation of interest rate risk, is to place the
instruments subject to interest rate risk in the appropriate one of the 13
maturity sections according to the remaining time to maturity or to the
repricing. At the second step, the instruments with variety of maturities are
weighted according to their risks for reflecting the interest rate risk
volatilities that match their maturities.
The first priority of the Bank's risk management is to protect from interest
rate volatility. All types of sensitivity analysis performed within the context
is calculated by the risk management and reported to the Asset-Liability
Committee.
Work is performed regarding interest income according to the macro economical
indicators in the Bank's budget estimations and the effects of the market
interest fluctuations on the financial position and cash flow are purified at
the maximum level possible by means of target revisions.
The Bank management follows the market interest rates and expectations daily and
revises the interest rates of the Bank when necessary.
Since the Bank does not permit or imposes limits, on maturity mismatches it is
not expected that the Bank will face a significant interest rate risk.
Information related to the interest rate sensitivity of assets, liabilities and
off-balance sheet items based on repricing dates):
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Current Period
Assets
Cash (cash in vault, 492,800 - - - - 73,324 566,124
foreign currency
cash, money in
transit, cheques
purchased) and
balances with the
Central Bank of
Turkey
Due from banks and 572,393 3,499 16,000 7,000 - - 598,892
other financial
institutions
Trading securities 996 1,983 6,134 5,425 5,656 363 20,557
Securities - - 6,462 - 52,556 9 59,027
available-for-sale
Loans 447,247 237,298 203,354 104,361 75,517 - 1,067,777
Securities 1,743 36,624 - 3,528 - - 41,895
held-to-maturity
Other assets 44,501 9,378 9,137 2,825 4,227 165,411 235,479
Total Assets 1,559,680 288,782 241,087 123,139 137,956 239,107 2,589,751
Liabilities
Bank deposits 80,820 11,206 3,600 - - - 95,626
Other deposits 1,453,064 136,470 25,388 2,415 808 - 1,618,145
Miscellaneous - - - - - 36,466 36,466
payables
Marketable - - - - - - -
securities issued
Funds provided from 244,742 47,073 46,864 47,102 1,938 387,719
other financial
institutions
Other liabilities 25,093 15,427 3,163 1,829 5,828 400,455 451,795
Total Liabilities 1,803,719 210,176 79,015 51,346 8,574 436,921 2,589,751
Balance Sheet (244,039) 78,606 162,072 71,793 129,382 (197,814) -
Interest Sensitivity
Gap
Off Balance Sheet - - - - - - -
Interest Sensitivity
Gap
Total Interest (244,039) 78,606 162,072 71,793 129,382 (197,814) -
Sensitivity Gap
The other assets line at the without interest column consists of tangible fixed
assets amounting to TL 38,832 intangible fixed assets amounting to TL 3,335,
participations amounting to TL 6,137 and subsidiaries amounting to TL 114,927
and the other liabilities line consists of shareholders' equity with a total
amount of TL 305,391.
Up to 1 1-3 3-6 6-12 1 Year
Month Month Months Months and Over Demand Total
Prior Period
Assets
Cash (cash in vault, 525,588 - - - - 96,232 621,820
foreign currency
cash, money in
transit, cheques
purchased) and
balances with the
Central Bank of
Turkey
Due from banks and 716,808 12,180 8,857 2,837 - 71,125 811,807
other financial
institutions
Trading securities 2,799 14,012 6,875 6,516 425 301 30,928
Investment - 18,663 - - - 10 18,673
securities
available-for-sale
Loans 362,210 178,134 236,718 59,665 45,608 - 882,335
Investment 229 40,247 - - - - 40,476
securities
held-to-maturity
Other assets - - - - - 221,535 221,535
Total Assets 1,607,634 263,236 252,450 69,018 46,033 389,203 2,627,574
Liabilities
Banks deposits 65,082 181 1,107 - - - 66,370
Other deposits 1,647,171 132,080 11,411 15,338 437 - 1,806,437
Miscellaneous - - - - - 39,293 39,293
payables
Marketable - - - - - - -
securities issued
Funds provided from 4,517 203,298 19,636 91,016 - - 318,467
other financial
institutions
Other liabilities 121 385 623 1,044 5,298 389,536 397,007
Total Liabilities 1,716,891 335,944 32,777 107,398 5,735 428,829 2,627,574
On Balance Sheet (109,257) (72,708) 219,673 (38,380) 40,298 (39,626) -
Interest Sensitivity
Gap
Off Balance Sheet - - - - - - -
Interest Sensitivity
Gap
Total Interest (109,257) (72,708) 219,673 (38,380) 40,298 (39,626) -
Sensitivity Gap
The other assets line at the without interest column consists of tangible fixed
assets amounting to TL 41,226, intangible fixed assets amounting to TL 3,280,
participations amounting to TL 6,248 and subsidiaries amounting to TL 112,018
and the other liabilities line consists of shareholders' equity with a total
amount of TL 283,203.
Average interest rates applied to monetary financial instruments:
EURO USD Yen TL
% % % %
Current Period
Assets
Cash (cash in vault, foreign currency cash, money in 0.98 0.40 - 21.00
transit, cheques purchased) and balances with the Central
Bank of Turkey
Due from banks and other financial institutions - 1.09 - 30.98
Trading securities 10.11 11.44 - 51.27
Securities available-for-sale - 8.59 - -
Loans 5.89 5.70 7.07 41.81
Securities held-to-maturity - - - 40.72
Liabilities
Bank deposits 3.25 2.99 4 31.96
Other deposits 3.26 3.09 3.03 27.65
Miscellaneous payables - - - -
Marketable securities issued - - - -
Funds provided from other financial institutions 4.13 2.98 5.93 30.42
V- Liquidity Risk
Liquidity risk occurs when there is not sufficient amount of cash or cash flows
to fulfill the cash outflows completely and on time, resulting from the unstable
cash inflows.
Liquidity risk may occur when the market penetration is not enough, when the
open positions cannot be closed urgently with a suitable price and sufficient
amount due to barriers and break-ups at the markets.
The Bank's policy is to establish a liquid asset structure that can afford all
kinds of liabilities by liquid sources. In this scope liquidity problem does not
happen at any period. The Board of Directors of the Bank continuously determines
the liquidity ratios and related standards, and controls them, in order to keep
this structure.
There is a system worked on to apply international measurement methods. However,
according to the general policies of the Bank, the adaptation of the assets,
liabilities, the interest rates to the payments are always established within
the asset liability management strategies. A positive difference is tried to be
established between the yields of TL and foreign currency assets and liabilities
at the balance sheet and their costs. According to this strategy, the Bank pays
special attention not to take maturity risk, and no banking service is marketed
when the price is lower than the financing cost.
When the funding and liquidity sources are considered, the Bank covers majority
of its liquidity need by deposits, and in addition to this source, it makes use
of prefinancing and syndication products to generate additional sources.
Generally, the Bank does not prefer to utilize liquidity from interbank money
markets and is in a net lender position in interbank money markets.
Presentation of assets and liabilities according to their remaining maturities :
1-3
Months 3-6 6-12 1 Year and
Current Period Demand (**) (*) Months Months Over Total
Assets
Cash (cash in vault, foreign currency 566,124 - - - - 566,124
cash, money in transit, cheques
purchased) and Balances with the Central
Bank of Turkey
Due from banks and other financial 572,393 3,499 16,000 7,000 - 598,892
institutions
Trading securities 690 976 6,659 6,028 6,204 20,557
Securities available-for-sale 9 - 6,462 52,556 59,027
Loans 447,247 237,298 203,354 104,361 75,517 1,067,777
Securities held-to-maturity - 275 38,092 3,528 - 41,895
Other assets 44,311 8,807 9,830 2,839 4,281 235,479
Total Assets 1,630,774 250,855 280,397 123,756 138,558 2,589,751
Liabilities
Bank deposits 80,820 11,206 3,600 - - 95,626
Other deposits 1,453,064 136,470 25,388 2,415 808 1,618,145
Funds provided from other financial 187,060 47,073 46,864 47,102 59,620 387,719
institutions
Marketable securities issued - - - - - -
Miscellaneous payables 36,466 - - - - 36,466
Other liabilities 118,494 15,427 3,163 1,829 312,882 451,795
Total Liabilities 1,875,904 210,176 79,015 51,346 373,310 2,589,751
Net Liquidity Gap (245,130) 40,679 201,382 72,410 (234,752) -
Prior Period
Total Assets 1,785,433 217,231 269,217 77,640 105,348 2,627,574
Total Liabilities 1,854,556 159,663 56,805 198,913 357,637 2,627,574
Net Liquidity Gap (69,123) 57,568 212,412 (121,273) (252,289) -
(*) The maturity of up to 1 month of Interbank funds sold amounting to TL
383,063, loans amounting to TL 447,247, and domestic and foreign banks
placements amounting to TL 189,329 are shown in the demand column. Furthermore,
demand deposits amounting to TL 962,172 are included in the other deposits and
shown at the demand column.
(**) Total column includes other assets amounting to TL 165,411 consists of
TL 121,064 of subsidiaries and participations, TL 38,832 of tangible assets, TL
3,335 of intangible fixed assets, TL 1,586 of prepaid expenses and TL 594 of
office supply inventory that are not taken in to consideration at the maturity
distribution. Other liabilities which matures up to 1 year and over includes
shareholders' equity amounting to TL 305,691.
SECTION FIVE
FOOTNOTES AND EXPLANATIONS ON
UNCONSOLIDATED FINANCIAL STATEMENTS
I- Footnotes And Explanations Related to the Assets
1. Information related to the account of the Central Bank of Turkey:
Current Period Prior Period
Demand unrestricted amount 9,411 16,386
Time unrestricted amount 346,125 363,156
Total 355,536 379,542
2. Information about trading portfolio:
a) Trading securities given as collateral or blocked: None.
b) Trading securities subject to repurchase agreements:
Current Period Prior Period
TL FC TL FC
Government bonds 6,633 - 18,519 -
Treasury bills 321 - 6,278 -
Other debt securities - - - -
Bank bonds and bank guaranteed bonds - - - -
Asset backed securities - - - -
Other - - - -
Total 6,954 - 24,797 -
3. Information on available for sale portfolio:
a) Main types of available for sale securities: public sector debt
securities, and other marketable securities and share certificates.
b) Information on available for sale portfolio:
Current Period Prior Period
Debt securities 59,018 18,663
Quoted in a stock exchange 6,462 -
Not quoted 53,356 18,663
Share certificates 9 10
Quoted in a stock exchange - -
Not quoted 9 10
Provision for impairment (-) (800) -
Total 59,027 18,673
c) Available for sale securities given as collateral or blocked: None.
d) Information on investment securities available-for-sale given as
collateral or blocked: None
e) Information on investment securities available-for-sale subject to
repurchase agreements: None.
4. Information on loans :
a) Information on all types of loans and advances given to shareholders
and employees of the Bank:
Current Period Prior Period
Cash Loans Non-Cash Loans Cash Loans Non-Cash Loans
Direct loans granted to shareholders 1,000 1,200 659 7,451
Corporate shareholders 1,000 1,200 659 7,451
Real person shareholders - - - -
Indirect loans granted to - - - -
shareholders
Loans granted to employees 846 - 833 -
Total 1,846 1,200 1,492 7,451
b) Information about the first and second group loans and other receivables
including loans that have been restructured or rescheduled:
Loans and Other Receivables Under
Standard Loans and Other Receivables Close Monitoring
Loans and Other Restructured or Loans and Other Restructured or
Receivables Rescheduled Receivables Rescheduled
Cash Loans
Non-specialized loans 1,059,542 - 4,233 4,002
Discount notes 27,734 - - -
Export loans 517,983 - 1,626 -
Import loans - - -
Loans given to financial sector 35,714 - - -
International loans 27,340 - - -
Consumer loans 29,967 - - -
Credit cards 17,987 - - -
Precious metals loans 12,681 - 550 -
Other 390,136 - 2,057 4,002
Specialized loans - - - -
Other receivables - - - -
Total 1,059,542 - 4,233 4,002
c) Information on consumer loans :
Medium and Interest Income
Short Term Long Term Total Accrual
Consumer loans-TL 11,263 6,298 17,561 742
Real estate loans 438 1,096 1,534 32
Automotive loans 1,836 4,831 6,667 153
Consumer loans - - - -
Personnel loans 748 98 846 25
Other consumer loans 8,241 273 8,514 532
Consumer loans- Indexed to FC 1,614 10,792 12,406 63
Real estate loans 143 2,348 2,491 11
Automotive loans 884 8,245 9,129 41
Consumer loans 587 199 786 11
Personnel loan - - - -
Other consumer loans - - - -
Credit cards 17,987 - 17,987 -
Total Consumer Loans 30,864 17,090 47,954 805
d) Domestic and foreign loans:
Current Period Prior Period
Domestic loans 1,040,437 868,069
Foreign loans 27,340 14,266
Total 1,067,777 882,335
e) Loans granted to subsidiaries and investments:
Current Period Prior Period
Direct loans granted to subsidiaries and investments 69 204
Indirect loans granted to subsidiaries and investments - -
Total 69 204
f) Specific provisions provided against loans:
Current Period Prior Period
Specific provisions
Loans and receivables with limited collectibility 535 70
Loans and receivables with doubtful collectibility 289 199
Uncollectible loans and receivables 14,868 16,616
Total 15,692 16,885
g) Information on loans under follow-up account (Net) :
g.1) Information on loans and other receivables included in loans under
follow-up account which are restructured or rescheduled: None.
g.2) The movement of loans under follow-up:
III. Group IV. Group V. Group
Loans and
receivables with
Loans and doubtful
receivables with colectibility Uncollectible
limited loans and
collectibility receivables
Prior period end balance 1,010 399 20,970
Additions (+) 3,769 22 3,155
Transfers from other categories of loans under - 1,416 1,160
follow-up (+)
Transfers to other categories of loans under 1,416 1,160 -
follow-up (-)
Collections (-) 179 103 3,307
Write-offs (-) - - 30
Index difference (-) 97 38 2,008
Current period end balance 3,087 536 19,940
Specific provision (-) 535 289 14,868
Net Balances on Balance Sheet 2,552 247 5,072
g.3) Information on foreign currency loans and other receivables under
follow-up: None.
h) Liquidation policies for the uncollectible loans and other receivables :
The loans and other receivables decided to be uncollectible are written off from
the assets according to the Tax Law by the decision of the top management in
accordance with the "Communique on Methods and Principles for the Determination
of Loans and Other Receivables to be Reserved for and Allocation of Reserves"
related to the clause 12 of article 11 and clause 11 of the article 3 of the
Bank Law 4389 changed by the laws 4672 and 4491 and announced at the Official
Gazette numbered 24448 and dated September 30, 2001.
5. Information on held to maturity portfolio (Net) :
a) Information on held to maturity portfolio:
Current Period Prior Period
Debt securities 41,895 40,476
Quoted in a stock exchange 41,895 40,476
Not quoted - -
Provision for impairment (-) - -
Total 41,895 40,476
b) Movement of held to maturity portfolio :
Current Period Prior Period
Beginning balance 40,476 95,963
Effect of inflation (-) (3,890) (22,616)
Foreign currency differences on monetary assets - 5,850
Purchases during year 5,526 40,476
Disposals through sales and redemptions (217) (79,197)
Impairment provision - -
Closing Balances 41,895 40,476
c.1) Information on accounts in which investment securities held-to-maturity
recorded:
Current Period Prior Period
Historical Cost Valuation Historical Cost Valuation
TL FC TL FC TL FC TL FC
Held to Maturity Portfolio
Given as collateral or blocked 41,895 - 42,024 - 40,476 - 41,205 -
Subject to repo transactions - - - - - - - -
Held for structural position - - - - - - - -
Receivables from securities lending - - - - - - - -
Collaterals on securities lending - - - - - - - -
Closing Balances 41,895 - 42,024 - 40,476 - 41,205 -
Other than the above items, there are no held to maturity securities which are
not given as collateral.
c.2) Marketable securities held to maturity given as collateral consist
of public sector debt securities of TL 41,895, given as collateral for
statutory requirements.
Securities held-to-maturity given as collateral or blocked:
Current Period Prior Period
TL FC TL FC
Share certificates - - - -
Bonds and similar investment securities 41,895 - 40,476 -
Other - - - -
Total 41,895 - 40,476 -
c.3) Securities held-to-maturity subject to repurchase agreements : None.
c.4) Securities held-to-maturity held for structural position: None.
6. Information on participations (Net):
a.1) Information on participations :
Current Period Prior Period
Balance at the beginning of the period 6,248 5,115
Movements during the period (111) 1,133
Purchases - 745
Free shares obtained profit from current year's share 120 431
Dividends from current year income - -
Sales - -
Revaluation increase (231) (43)
Provision for impairment - -
Balance at the end of the period 6,137 6,248
Capital commitments - -
Share percentage at the end of the period (%) - -
a.2) Valuation of participations:
Current Period Prior Period
Valuation with cost 5,891 5,891
Valuation with fair value 246 357
Valuation with equity method - -
Total 6,137 6,248
a.3) Participations which are quoted to a stock exchange:
Current Period Prior Period
Other financial participation / Varlik Yatirim Ortakligi A.S. 246 357
Total 246 357
a.4) Information related to participations:
Bank's share percentage-If Bank's risk group
different voting share percentage (%)
Description Address (City / percentage(%)
Country))
TEB Sigorta A.S. Istanbul /Turkey 50.00 50.00
Varlik Yatirim Ortakligi A.S. Istanbul /Turkey 24.40 31.58
Information on participations as presented in table a.4:
Income from
Marketable
Securities Prior Period
Portfolio (*) Profit / Loss
Shareholders'Equity(*) Total Fixed Interest Current (*) Fair
Assets(*) Income (*) Period Profit Value (*)
Total / Loss (*)
Assets
25,938 4,879 494 357 - (2,856) 582 -
1,637 1,610 7 21 - 239 55 1,008
(*) Financial statements of Varlik Yatirim Ortakligi A.S. have been prepared in
accordance with the incumbent Capital Market Board legislation. Financial
statements of TEB Sigorta have been prepared in accordance with principles
stated in the Insurance Control Law. Current period information is expressed in
the equivalent purchasing power at September 30, 2003, while prior period
information are historical and are expressed with nominal figures at December
31, 2002.
a.5) Information on investments which are sold in current period : None.
a.6) Investments purchased in the current period: None.
7. Information on subsidiaries (Net):
a) Information on subsidiaries:
a.1) Information on subsidiaries:
Current Period Prior Period
Balance at the beginning of the period 112,018 99,753
Movements during the period 2,909 12,265
Purchases - 7,613
Free shares obtained profit from current year's share 10,249 3,643
Dividends from current year income - -
Sales - -
Revaluation increase (*) (7,340) 1,009
Provision for impairment - -
Balance at the end of the period 114,927 112,018
Capital commitments - -
Share percentage at the end of the period (%) - -
(*) The exchange (expense)/income generated from the difference between
the devaluation and inflation of the foreign subsidiaries.
a.2) Valuation of subsidiaries:
Subsidiaries denominated in Turkish Lira are reflected by restating their costs
with the conversion factors applicable for the relevant dates after deducting
the capital increases generated by funds like the revaluation fund. When there
is a permanent diminution in value of the subsidiaries then a provision is set.
Subsidiaries denominated in foreign currency are translated into Turkish Lira by
applying the exchange rates prevailing at balance sheet dates.
Current Prior
Period Period
Valuation with cost 114,927 112,018
Valuation with fair value - -
Valuation with equity method - -
a.3) Subsidiaries which are quoted to a stock exchange: None.
a.4) Information on subsidiaries:
Bank's share Bank's risk group
percentage-If different share percentage
voting percentage(%) (%)
Description Address(City/ Country)
The Economy Bank N.V. Netherlands 100.00 100.00
Petek International Holdings B.V. Netherlands 100.00 100.00
TEB Yatirim Menkul Degerler A.S. Istanbul/Turkey 74.80 91.81
TEB Finansal Kiralama A.S. Istanbul/Turkey 68.76 72.53
TEB Kiymetli Madenler A.S. Istanbul/Turkey 66.00 71.81
TEB Factoring A.S. Istanbul/Turkey 65.80 70.77
TEB Portfoy Yonetimi A.S. Istanbul/Turkey 55.89 88.61
Information on subsidiaries as presented in table a.4 (*) :
Income from
Marketable
Total Securities
Fixed Portfolio
Shareholders' Assets Interest Current Period Prior Period Fair
Equity Income Profit / Loss Profit / Loss Value
Total Assets
1,111,387 74,129 5,189 39,912 (434) 3,836 8,112 -
1,628 1,628 - - - (37) 3,262 -
17,583 14,565 418 377 2,039 739 2,983 -
220,844 81,095 174,114 1,044 65 26,454 4,141 -
222 215 - - - (56) 40 -
69,543 7,914 1,514 9,999 - 1,238 500 -
5,473 4,787 526 598 76 1,022 876 -
(*) Information is disclosed in statutory amounts.
a.5) Information on the subsidiaries that were disposed in current period: None.
a.6) Information on the subsidiaries purchased in current period: None.
8. Information on financial lease receivables (Net): None.
9. Explanations related to interest and income accruals :
a) Information about accrued interest and income receivables:
Current Period Prior Period
Accrued interest and income receivables TL FC TL FC
Interest accruals - due 978 1 252 -
Interest accruals - not due 9,329 3,304 10,068 2,903
Loan commissions and other income accruals - due - - - -
Loan commissions and other income accruals - not 11 3 13 1
due
Total 10,318 3,308 10,333 2,904
b) Information on other interest and income accruals :
Current Period Prior Period
Other interest and income accruals TL FC TL FC
Trading securities 5,138 30 3,707 18
Securities available for sale - 263 - 395
Securities held to maturity 845 - 729 -
Interest accruals of reverse repo transactions - - - -
Interest accruals of reserve deposits 1,537 152 1,019 274
Income accruals of financial derivative instruments 2,434 3,051 4,866 -
Interest and income accruals - - - -
Income accrual of foreign exchange gains 2,434 3,051 4,866 -
Income accruals of financial lease income - - - -
Others 7,505 405 5,986 139
Total 17,459 3,901 16,307 826
10. Information on other assets:
a) Information on prepaid expenses, taxes and similar items :
Current Period Prior Period
Deferred tax 4,297 2,252
Assets held for sale - -
Advances given 36 205
Prepaid rent expenses 453 417
Transaction cost related to financial liabilities - 2,275
Prepaid taxes 16,982 10,097
Others 6,090 7,580
Total 27,858 22,826
b) Other assets and liabilities which exceed 10 % of the balance sheet total
(excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None
II- Footnotes And Explanations Related to the Liabilities
1. a)Information on maturity structure of deposits:
a.1) Current period :
7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Demand Accounts month Year over
Saving deposits 14,533 - 79,159 33,418 32,439 7,621 12,260
Foreign currency 345,268 - 475,772 311,695 18,488 6,462 1,185
deposits
Residents in Turkey 327,805 - 464,458 303,876 18,109 5,579 1,185
Residents abroad 17,463 - 11,314 7,819 379 883 -
Public sector 12,518 - - - - - -
deposits
Commercial deposits 61,692 - 60,921 15,261 55,481 3,259 13
Other institutions 41,207 - 11,091 4,126 11 1 -
deposits
Precious metals 4,296 - 1,375 8,591 - - -
deposits
Interbank deposits 11,377 - 28,232 49,672 3,745 2,600 -
Central Bank of - - - - - - -
Turkey
Domestic Banks 89 - - - - - -
Foreign Banks 4,845 - 28,232 49,672 3,745 2,600 -
Special finance 6,443 - - - - - -
houses
Other - - - - - - -
Total 490,892 - 656,550 422,763 110,164 19,943 13,458
a.2) Prior period :
7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Demand Accounts month Year over
Saving deposits 19,445 - 86,631 42,613 13,876 3,621 14,912
Foreign currency 452,531 - 563,439 345,701 35,427 9,283 392
deposits
Residents in Turkey 434,602 - 546,076 339,475 32,720 7,827 373
Residents abroad 17,929 - 17,363 6,226 2,707 1,456 19
Public sector 39 - - - - - -
deposits
Commercial deposits 59,280 - 83,440 4,734 9,421 6 15
Other institutions 36,269 - 475 15 9 1 -
deposits
Precious metals 10,755 - - 12,542 - 1,565 -
deposits
Interbank deposits 21,862 - 29,278 14,123 - 1,107 -
Central Bank of - - - - - - -
Turkey
Domestic Banks 12,208 - - - - 1,107 -
Foreign Banks 9,654 - 29,278 14,123 - - -
Special finance - - - - - - -
houses
Other - - - - - - -
Total 600,181 - 763,263 419,728 58,733 15,583 15,319
b.1) Information on saving deposits under the guarantee of saving deposit
insurance and exceeding the limit of saving deposit insurance:
Under the guarantee of Exceeding the limit of
saving deposit insurance saving deposit
Saving Deposits
Current Period Prior Period Current Period Prior Period
Saving deposits 178,826 26,980 - 154,116
Foreign currency saving deposits 761,412 213,539 - 699,084
Other deposits in the form of saving 1,083 753 - 7,313
deposits
Foreign branches' deposits under foreign - - -
authorities' insurance -
Off-shore banking regions' deposits under -
foreign authorities' insurance - - -
Total 941,321 241,272 - 860,513
In accordance with the BRSA legislation published in the Official Gazette No.
25157 at July 3, 2003, all saving deposits are taken under the guarantee of
Saving Deposits Insurance Fund until July 5, 2004.
b.2) The bank which has settled abroad should disclose, the total amount
of savings deposit in Turkey branch, and insured in the country of head office :
TL 1,500 (December 31, 2002: None)
2. Information on funds provided from repurchase agreement
transactions:
Current Period Prior Period
TL FC TL FC
From domestic transactions 8,429 - 24,250 -
Financial institutions and organizations 3,000 - 14,395 -
Other institutions and organizations 1,279 - 4,478 -
Real persons 4,150 - 5,377 -
From foreign transactions 3 - 994 -
Financial institutions and organizations - - - -
Other institutions and organizations - - 993 -
Real persons 3 - 1 -
- -
Total 8,432 - 25,244 -
3. a)Information on funds borrowed:
Current Period Prior Period
TL FC TL FC
Short-term 40,412 287,687 17,665 209,797
Medium and long-term - 38,854 - 63,783
Total 40,412 326,541 17,665 273,580
4. a)Information on debt securities issued: None.
b) The explanation on the maturity structure, interest rate, type of currency
of the issued marketable securities : None.
5. Explanation on funds: None
6. Explanation on miscellaneous payables:
Current Period Prior Period
Total amount of cash collateral obtained 110 133
The table consists of blocked accounts regarding cash collateral, loans, import
and export transactions
7. Other assets and liabilities which exceed 10 % of the balance sheet
total (excluding off-balance sheet commitments) and breakdown of these
which constitute at least 20% of grand total: None
8. Explanation on leasing operations:
Current Period Prior Period
Gross Net Gross Net
Less than a year 2,083 1,467 2,351 2,170
1-4 years 4,426 3,880 6,700 5,299
More than 4 years - - - -
Total 6,509 5,347 9,051 7,469
9. Information on interest and expense accruals:
Current Period Prior Period
TL FC TL FC
Accrued interest on deposits 9,919 1,466 5,805 1,120
Accrued interest on funds borrowed 1,698 3,018 1,796 1,577
Accrued interest on bonds - - - -
Accrued interest on repurchase
agreement transactions
7 - 31 -
Accrued interest on derivative
financial instruments
9,820 3,124 5,057 -
Accrued interest and expense - - - -
Foreign exchange losses accrued 9,820 3,124 5,057 -
Other interest and expense accruals 8,533 - 1,101 -
Total 29,977 7,608 13,790 2,697
10. Provisions and subordinated loans :
a) Information on general provisions::
Current Period Prior Period
General provisions 7,571 6,746
Provisions for First Group Loans and Receivables 6,356 5,723
Provisions for Second Group Loans and Receivables 39 35
Provisions for Non Cash Loans 1,176 988
Others - -
Total 7,571 6,746
b) Information on employee termination benefits and notice indemnity:
5 PP 4 PP 3 PP 2 PP Prior Current
Period Period
Actual Payments of Employee Termination 56 107 947 662 435 528
Benefits (*)
Reserve for Employee Termination Benefits 1,580 3,140 4,456 6,912 10,972 14,425
and Notice Indemnity (*)
Actual Payment Ratio %3.57 %3.40 %21.24 %9.59 %3.96 %8.35
Ratio of reserve for Employee Termination - - - - - %8.35
Benefits and Notice Indemnity (**)
Possible reserve for Employee Termination - - - - - 1,106
Benefits and Notice Indemnity
(*) Reflected with statutory figures
(**) 5-year actual payment ratio
As of September 30, 2003, TL 1,106 of reserve for employee termination benefits
and notice indemnity was reflected to the financial statements corresponding to
8.35% of total liability of TL 14,425.
c) Information on free reserves for possible losses : None.
d) Information on subordinated loans:
Current Period Prior Period
TL FC TL FC
From Domestic Banks - - - -
From Other Domestic Institutions - - - -
From Foreign Banks - - - -
From Other Foreign Institutions - 20,766 - 27,232
Total - 20,766 - 27,232
11. Information of Shareholders' Equity:
a) Presentation of paid-in capital:
Current Period Prior Period
Common stock 55,125 55,125
Preferred stock - -
b) Paid-in capital amount, explanation as to whether the registered share
capital system is applicable to the Bank if so, amount of registered
share capital ceiling :
Capital System Paid-in capital Ceiling
Registered capital system 55,125 100,000
c) Information on share capital increases and their sources; other information
on increased capital shares in current period: None
d) Information on share capital increases from revaluation funds: None.
e) Capital commitments in the last fiscal year and at the end of the following
interim period, the general purpose of these commitments and projected
resources required to meet these commitments : None.
f) Indicators of the Bank's income, profit and liquidity for the previous
periods and within these indicators possible affects on capital fore
sighting uncertainty : Not applicable.
g) Information on privileged shares :
7 % of the Bank's remaining net income and tax after deducting legal
reserves and first dividends, corresponding to the Bank's 60,000 shares of
TL 30,000,000 (in full TL) is distributed to the founder shares.
12. a) Common stock issue premiums, shares and equity instruments: None
13. Information on shareholders having more than 10 % share:
Name/Commercial title Amounts Share Percentage Paid-in capital Unpaid portion
Teb Mali Yatirimlar 38,631 70.08% 38,631 -
III- Footnotes And Explanations Related To the Income Statement
There is no fundamental error for any groups or items related to the prior
period. There is no change in accounting estimates for the fiscal year.
The breakdown of other interest and non-interest income and expense accounts
that exceed 10% of the related totals are shown below.
Other interest expense amounting to TL 26,328 includes foreign exchange losses
amounting to TL 13,657 of foreign currency indexed loans occurred from the
devaluation of foreign currencies against TL and interest expenses on marketable
securities subject to repurchase agreements amounting to TL 12,406.
Other fees and commission income amounting to TL 15,455 includes fees and
commissions on credit cards amounting to TL 5,059, and other fee and commission
expense amounting to TL 9,284 includes fees and commissions on credit card and
interbank money marked transactions amounting to TL 5,011 and TL 1,278,
respectively.
1. a)Information on interest income received from investments and
subsidiaries:
Current Period Prior Period
Interest received from investments and subsidiaries 14 12
b) Information on financial lease income: None.
c) Interest received from reverse repurchase agreement transactions:
2. a)Information on interest expense to investments and subsidiaries: None
Current Period Prior Period
Interest expense to investments and subsidiaries 186 413
b)Information on financial lease expenses :
Current Period Prior Period
Financial lease expense 167 300
c) Distribution of interest expense on deposits based on maturity of
deposits :
Time Deposits
Demand Up to 1 Up to 3 Up to 6 Up to 1 More than 1
Deposits Month Months Months Year Year Total
Account name
TL
Bank deposits 3 7,675 - - - - 7,678
Saving deposits 189 19,828 15,207 8,606 1,801 4,341 49,972
Public sector deposits - - - - - - -
Commercial deposits 322 14,855 3,757 3,097 167 5 22,203
Other deposits 19 293 107 3 - - 422
7 days call accounts - - - - - - -
Total 533 42,651 19,071 11,706 1,968 4,346 80,275
Foreign Currency
Foreign currency 1,051 9,413 6,644 569 169 16 17,862
deposits (*)
7 days call accounts - - - - - - -
Precious metal - 9 100 - 7 - 116
deposits
Total 1,051 9,422 6,744 569 176 16 17,978
Total 1,584 52,073 25,815 12,275 2,144 4,362 98,253
(*) Interest expense on foreign currency demand deposits includes TL 990 of
foreign bank deposits interest expense.
d) Interest expense on repurchase agreements :
Current Period Prior Period
TL FC TL FC
Interest expense on repurchase agreements 13,657 - 26,594 -
3. Net income/losses from marketable securities for investment purposes: None
4. Information on other operating income :
The information on the factors affecting the Bank's income including
extraordinary items and new developments, and the explanation on nature and
amount of income earned from extraordinary items : None.
5. Provision expenses of banks for loans and other receivables:
Current Period Prior Period
Specific provisions for loans and other receivables 1,601 13,238
Unsecured - 10,894
Other groups 1,601 2,344
General provision expenses 1,978 2,724
Marketable securities impairment expense 836 90
Provision for impairment* - -
Others 719 673
Total 5,134 16,725
(*) Provision for impairment related to participations, subsidiaries and
securities held to maturity.
6.a) Income and expenses relating to investments and subsidiaries : None
b) Income / loss from investments, which are accounted for under the equity
method : None.
c) The information on income and expense from related party transactions:
The Bank has certain banking transactions with group companies. These are
commercial transactions, which are realized in line with market rates. These are
reflected in income statement. The related amounts are presented in Part V,
section V.
7. The explanations on net income / loss for the period:
a) The nature and amount of certain income and expense items from ordinary
operations is disclosed if the disclosure for nature, amount and repetition
rate of such items is required for a complete understanding of the Bank's
performance for the period : None
b) Effect of changes in accounting estimates on income statement for the
current and, if any for subsequent periods : None.
8. Nature and amount of changes in accounting estimates, which have a
material effects on current period or expected to have a material effect on
subsequent periods : None.
IV. Footnotes And Explanations Related To the Off-Balance Sheet Commitments
1.a) Disclosure to be made separately from other contingent liabilities :
a.1) The Bank's share in contingent liabilities of joint ventures together
with other ventures : None.
a.2) Share of joint ventures in their own contingent liabilities: None.
a.3) The Bank's contingent liabilities resulting obligations of other
ventures in joint ventures : None.
b) Accounting and presentation of contingent assets and liabilities in the
financial statements :
b.1) For contingent assets, if realization probability is close to certain,
then it is accounted. If realization probability is low, then it is
explained in the footnotes. As of September 30, 2003 there are no
contingent assets needed to be explained.
b.2) For contingent liabilities, if realization probability is close to
certain, then provision is set. If there is low or no realization
probability, then it is explained in the footnotes : None.
2. Information on off-balance sheet liabilities :
a) Nature and amount of irrevocable loan commitments : Credit card
expenditure limit commitments are TL 98,981 and TL 74,554 as of September
30, 2003 and December 31, 2002 respectively.
b) Nature and amount of contingent loss and commitments from off-balance
sheet items including below statements:
The Bank, within the context of banking activities, undertakes certain
commitments, consisting of loan commitments, letters of guarantee, acceptance
credits and letters of credit.
b.1) Non-cash loans including guarantees, acceptances, financial collaterals
and other letters of credits:
As of September 30, 2003 total guarantees and commitments consist of
letter of guarantees amounting to TL 631,207, acceptances amounting to
TL 45,114 and letters of credit amounting to TL 342,937.
b.2) Guarantees, surety ships and similar transactions : None other than the
ones explained in article b.1).
3.a) Non-cash loans:
Current Period Prior Period
Guarantees given against cash loans 77,957 66,376
With maturity of 1 year or less than 1 year 19,145 24,870
With maturity of more than 1 year 58,812 41,506
Other non-cash loans 947,631 828,137
Total 1,025,588 894,513
b) Collateral, mortgage and other restrictions on tangible fixed assets, the
amount of capital expenditures related to expenses construction of tangible
fixed assets, intangible fixed asset purchase commitments: None.
4. The information on the Bank's rating by in the international rating
introductions :
The results of the trading performed by Moody's Investor Services and Fitch
Ratings are shown below:
Moody's Investor Services: March 2003
Bank Financial Strength D+
Long Term FX Deposits B3
Fitch Ratings: July 2003
Foreign Currency Commitments
Long Term B
View Positive
Turkish Lira Commitments
Long Term B
View Positive
National
Long Term A (tur)
View Stable
Individual Rating C/D
Support Points 5
Additionally, Fitch Ratings have made an announcement at October 2, 2003 and
stated that TL and foreign currency rating and of the Bank has been increased
to B from B(-).
V- Footnotes And Explanations on the Risk Group of the Bank
1. Volume of related party transactions, income and expense amounts
involved and outstanding loan and deposit balances :
a) Current Period :
Related Parties (*) Investments and Direct and indirect Other entities included in
subsidiaries shareholders of the Bank related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other receivables
Balance at beginning of period 204 16,257 659 7,451 11,242 2,750
Balance at end of period 69 10,561 1,000 1,200 6,334 6,277
Interest and commission income 499 37 416 4 1,740 14
b) Prior Period :
Related Parties (*) Investments and Direct and indirect Other entities included in
subsidiaries shareholders of the Bank related parties
Cash Non-cash Cash Cash Non-cash
Loans and other receivables
Balance at beginning of period 89 40,174 828 1,326 5,417 6,124
Balance at end of period 204 16,257 659 7,451 11,242 2,750
Interest and commission income
received
1,794 108 39 507 2,300 508
c.1) Information on related party deposits balances:
Related parties (*) Investments and Direct and indirect Other entities included
subsidiaries shareholders of the Bank in related parties
Deposits Current Prior Current Prior Current Prior
period period period period period period
Balance at beginning of period 6,606 10,337 201,556 65,758 15,421 13,592
Balance at end of period 10,976 6,606 167,405 201,556 1,597 15,421
Interest on deposits 187 532 3,014 2,713 156 12,333
c.2) Information on forward and option agreements and other similar agreements
made with related parties :
Related Parties (*) Investments and Direct and indirect Other entities included
subsidiaries shareholders of the in related parties
Bank
Current Prior Current Prior Current Prior
period period period period period period
Trading transactions
Beginning of period 58,077 59,722 47,954 25,651 27,110 17,357
End of period 77,960 58,077 54,148 47,954 17,905 27,110
Total income/loss 1,607 893 (1,547) (381) (296) 684
Hedging transactions purposes - - - - - -
Beginning of period - - - - - -
End of period - - - - - -
Total income/loss 1,607 893 (1,547) (381) (296) 684
(*) The scope of the related parties are defined in the Article 20-2 of
the "Regulation on the Establishment and Operations of Banks".
2. Disclosures for related parties
a) The relations of the Bank with the entities controlled by the Bank and
its related parties, regardless of whether there are any transactions or
not:
The Bank enters into baking transactions with related parties. These are
commercial transactions and realized on an arms-length basis.
a) Besides the structure of relationship, nature of the transaction,
amount and ratio to the total volume of transactions, amount of major
items and ratio to all items, pricing policies and other factors:
% According to the Amounts at
the Financial Statements
Amount
Forward transactions and option agreements 150,013 18.64
Deposits 179,978 10.50
Non-cash loans 18,038 1.76
Cash loans 7,403 0.69
These transactions are priced in accordance with the general pricing policies of
the Bank and are in line with market rates.
b) In the case that disclosing items separately, total of similar items
is disclosed in order to present the total impact on financial statements :
Explained in the article b.
c) Investments accounted for under the equity method : None.
e) Disclosures related to purchase and sale of real estate and other
assets, trading of services, agency contracts, leasing contracts,
transferring information as a result of research and development, license
contracts, financing (loans and cash or real capital supports included),
guarantees, and management contracts :
The Bank has financial lease agreements with TEB Finansal Kiralama A.S.. As of
September 30, 2003 the total leasing obligations related to these agreements
amounted to TL 5,347. Additionally, the Bank provides agency services for TEB
Sigorta A.S. and TEB Yatirim Menkul Degerler A.S.
Within the limits of the Banking Law, the Bank renders cash and non-cash
loans to its related parties and the ratio of these to the Bank's total cash and
non-cash loan portfolio is 1.21 %. Amounts of these loans are explained in the
note V- 1a.
As of September 30, 2003 the Bank has no purchases and sale of real
estate and other assets, transfer of information as a result of research and
development, license and management contracts with the related parties.
VI- Footnotes And Explanations on Inflation Accounting
Inflation Accounting
The accompanying financial statements are prepared by applying inflation
accounting to the financial statements, which are prepared on a historical cost
basis, except for the revaluation of fixed assets in line with Turkish Tax
Legislation, in accordance with the provisions of Communique No : 14 "Accounting
Standard Related to the Preparation of Financial Statements in Hyperinflationary
Periods" related to ARR. Communique No:14 requires banks to restate their
financials in the equivalent purchasing power of Turkish Lira at the balance
sheet date. One characteristic that necessitates the application of inflation
accounting under the provisions of Communique No : 14 is a cumulative three-year
inflation rate approaching or exceeding 100%. As of September 30, 2003 based on
the wholesale price indices announced by the State Institute of Statistics, the
cumulative three-year inflation rate in Turkey is 193%.
Communique No:14 requires that the financial statements should be restated in
the equivalent purchasing power at the balance sheet date and the financial
statements of prior year should be restated in their entirety to the measuring
unit current at the balance sheet date.
The main guidelines for inflation accounting are as follows:
Cash and monetary assets and liabilities, which maintain their nominal balances
but experience a decline in purchasing power are not restated because they are
already expressed in terms of the monetary unit current at that balance sheet
date.
Non-monetary assets and liabilities which are not carried at amounts current at
the balance sheet date and other components of shareholders' equity (except for
the revaluation surplus which is eliminated) are restated by applying the
relevant conversion factors; being the change in the general price index from
the date of acquisition to the closing date. The inflation adjusted share
capital amount has been derived by indexing each capital increase other than
bonus shares from statutory revaluation fund from the date they were
contributed. Transfers to share capital from general reserves, gain on sale of
property and investments and inappropriate profits are considered as cash
contributions and are restated from the date of contribution.
Fixed assets subject to depreciation are restated from their historical
acquisition costs after eliminating the statutory revaluation increments.
Depreciation is not separately restated in the income statement since it is
computed over restated amounts.
Non-monetary items reflected at current values are not restated since they are
already stated in the current purchasing power.
Investments and subsidiaries denominated in Turkish Lira are reflected at
restated costs by converting historical acquisition costs, excluding free shares
from revaluation fund, with the relevant conversion factors. Transfers to share
capital from general reserves, gain on sale of property and investments and
inappropriate profits are considered as cash contributions and are restated from
the date of contribution. Investments and subsidiaries denominated in foreign
currency are converted to Turkish Lira with the exchange rates prevailing and
year-end.
All items in the statements of income are restated by applying the appropriate
conversion factors.
The effect of inflation on the Bank's net monetary position is included in the
statements of income and separately disclosed as a net monetary gain or loss.
The effect of inflation accounting on prior year financial statements in
included in retained earnings and the effect of restatement is disclosed
separately under shareholders' equity.
Indices and conversion factors that are used to restate the accompanying the
financial statements as of December 31, 2002, reflecting the restatement for the
changes in the general purchasing power of the Turkish is as follows;
Dates Index Conversion Factors
December 31, 2002 6,478.8 1.107
December 31, 2001 4,951.7 1.449
December 31, 2000 2,626.0 2.732
September 30, 2003 7,173.3 1.000
September 30, 2002 6,024.6 1.191
Restatement of balance sheet and income statement items through the use of a
general price index and relevant conversion factors does not necessarily mean
that the Bank could realize or settle the same values of assets and liabilities
as indicated in the balance sheets. Similarly, it does not necessarily mean that
the Bank could return or settle the same values of equity to its shareholders.
In accordance with Communique No :14, the Bank obtains expertise reports for its
buildings.
As of September 30, 2003 the total amount of legal reserves and general reserves
are TL 7,555 and TL 28,769, respectively, in the Bank's statutory books of
account.
Balance sheet and income statement for the period ended September 30, 2003 and
2002 are reviewed. Balance sheet as of December 31, 2002, is audited.
Income statement items do not have seasonality. However, restatement of income
statement items were made with monthly indices.
VII- Explanations Related To Subsequent Events
Disclosure related to subsequent events and their impact on the financial
statements as required by the related standard:
a) The syndication loan which is included in the accompanying financial
statements amounting to USD100,000,000 has been repaid at October 20, 2003
and with respect to the decision of the Board of the Bank dated October 17,
2003, an agreement for a one- year syndication loan amounting to USD
125,000,000 has been signed at October 27, 2003.
b) In the Extraordinary General Meeting held at October 23, 2003, it was
decided to increase the share capital of TEB Finansal Kiralama A.S. from
TL10,000 to TL29,500 by revaluation fund.
c) In the Extraordinary General Meeting held at October 30, 2003, it was
decided to increase the share capital of TEB Sigorta A.S. from TL3,325 to
TL10,000 by cash resources and the Bank to participate by paying TL3,338
for the share capital increase.
d) The impact of significant changes in foreign exchange rates subsequent to
the balance sheet date on the foreign currency transactions, items and on
the financial statements of the Bank : There are no significant changes.
SECTION SIX
INDEPENDENT LIMITED REVIEW REPORT
I- Explanations on The Independent Limited Review Report
The unconsolidated interim financial statements of the Bank were reviewed by
Guney Serbest Muhasebeci Mali Musavirlik A.S. (An Affiliated Firm of Ernst &
Young International) and the review report dated November 5, 2003 is presented
preceding the interim financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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