RNS Number:3372S
Turk Ekonomi Bankasi A.S.
21 November 2003
PART 2
SECTION FIVE
FOOTNOTES AND EXPLANATIONS ON CONSOLIDATED FINANCIAL STATEMENTS
I. Footnotes and Explanations Related to the Consolidated
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 346,125 363,157
Total 355,536 379,543
2. Additional information of trading portfolio ( stated at net values )
:
a) Trading securities given as collateral or blocked: None.
b) Trading securities subject to repurchase agreements:
Current Prior Period
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 Cash Loans Non-Cash
Loans Loans
Direct loans granted to shareholders 48,791 1,200 111,802 7,451
Corporate shareholders 48,791 1,200 111,802 7,451
Real person shareholders - - - -
Indirect loans granted to - - - -
shareholders
Loans granted to employees 862 13 833 -
Total 49,653 1,213 112,635 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
Close Monitoring
Standard Loans and Other Receivables
Loans and Other Restructured or Loans and Other Restructured or
Receivables Rescheduled Receivables Rescheduled
Cash Loans
Non-specialized loans 1,505,428 - 4,233 4,002
Discount notes 59,906 - - -
Export loans 527,348 - 1,626 -
Import loans - - - -
Loans given to financial sector 121,945 - - -
International loans 98,518 - - -
Consumer loans 32,554 - - -
Credit cards 17,987 - - -
Precious metals loans 12,681 - 550 -
Other 634,489 - 2,057 4,002
Specialized loans - - - -
Other receivables - - - -
Total 1,505,428 - 4,233 4,002
c) Information on consumer loans:
Short Term Medium and Long Term Total Interest Income
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 4,201 10,792 14,993 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 16 - 16 -
Other consumer loans 2,571 - 2,571 -
Credit cards 17,987 - 17,987 -
Total Consumer Loans 33,451 17,090 50,541 805
d) Domestic and foreign loans:
Current Period Prior Period
Domestic loans 1,143,532 1,345,313
Foreign loans 370,131 103,465
Total 1,513,663 1,448,778
e) Loans granted to subsidiaries and investments: None.
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 14,902 16,661
Total 15,726 16,930
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
Loans and with doubtful
receivables with colectibility
limited Uncollectible
collectibility loans and
receivables
Prior period end balance 1,010 399 21,015
Additions (+) 3,769 22 3,155
Transfers from other categories of loans - 1,416 1,160
under follow-up (+)
Transfers to other categories of loans 1,416 1,160 -
under follow- up (-)
Collections (-) 179 103 3,307
Write-offs (-) - - 30
Index differences (-) 97 38 2,019
Current period end balance 3,087 536 19,974
Specific provisions (-) 535 289 14,902
Net Balances on Balance Sheet 2,552 247 5,072
g.3) Information on foreign currency loans and other receivables under
follow-up:
III. Group: IV. Group: V. Group
Loans and Loans and
receivables with receivables with
limited doubtful Uncollectible loans
collectibility colectibility and receivables
Period end balance - - 34
Specific provisions (-) - - 34
Net Balances on Balance Sheet - - -
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 4491and announced at the Official
Gazette numbered 24448 and dated June 30, 2001.
5. Information on held to maturity portfolio (Net) :
a) Information on held to maturity portfolio:
Current Period Prior Period
Debt securities 44,663 43,869
Quoted in a stock exchange 43,519 43,869
Not quoted 1,144 -
Provision for impairment (-) - -
Total 44,663 43,869
b) Movement of held to maturity portfolio:
Current Period Prior Period
Beginning balance 43,869 98,145
Effect of inflation (-) (3,923) (23,215)
Foreign currency differences on monetary assets (604) 5,850
Purchases during year 7,352 43,869
Disposals through sales and redemptions (1,829) (80,780)
Impairment provision (202) -
Closing Balances 44,663 43,869
c.1) Information on accounts in which investment securities
held-to-maturity are 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 42,177 1,342 42,422 1,341 40,724 - 41,534 -
Subject to repo transactions - - - - - - - -
Held for structural position - - - - - - - -
Receivables from securities lending - - - - - - - -
Other (*) - 1,144 - 1,255 - 3,145 - 3,218
Collaterals on securities lending - - - - - - - -
Closing Balances 42,177 2,486 42,422 2,596 40,724 3,145 41,534 3,218
(*) The free marketable securities held by the Group is stated at the Other
line.
c.2) Marketable securities held to maturity given as collateral consist of
public sector debt securities of TL 43,519, 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 42,177 1,342 40,724 -
Other - - - -
Total 42,177 1,342 40,724 -
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 investments (Net):
a.1) Information on unconsolidated participations :
Group's share
percentage-If
Address different voting Group's risk group
percentage(%) share percentage
Description (City/ Country) (%)
Varlik Yatirim Ortakligi A.S. Istanbul /Turkey 24.40 31.58
a.2) Information on investments as presented in table a.1:(*):
Marketable Current
Securities Period
Total Total Total Interest Income Income/Loss Prior Period
Assets Income Income/Loss
Equity Fixed Assets Fair Value
1,637 1,610 7 21 - 239 55 1,008
(*) The financial statements of Varlik Yatirim Ortakligi A.S. are prepared
in accordance with the Capital Market Board Regulations. The current period data
is presented as of September 30, 2003 and the prior period income / loss amounts
are presented with their nominal values as of December 31, 2002.
a.3) Out of Group members / shareholders who has the control power with the
parent company and/or other members of the financial group are explained: 66%
shares of the unconsolidated participation Varlik Yatirim Ortakligi A.S. is
publicly traded.
a.4) The reason for not consolidating the unconsolidated participations and
the method of recording the unconsolidated participations at the Parent Bank's
financials: The participation is not consolidated due to materiality principle,
is quoted at the stock exchange and is valued by fair value.
b) Information on the consolidated participations:
b.1) Information on the consolidated participations:
Current Prior Period
Period
Balance at the beginning of the period 5,891 4,717
Movements during the period - 1,174
Purchases - 744
Free shares obtained profit from current year's share - 430
Dividends from current year income - -
Sales - -
Revaluation increase - -
Provision for impairment - -
Balance at the end of the period 5,891 5,891
Capital commitments
Share percentage at the end of the period (%) %50.00 %50.00
b.2) Valuation of investments made to the consolidated participations:
Current Prior Period
Period
Valuation with cost 5,891 5,891
Valuation with fair value - -
Valuation with equity method - -
Total 5,891 5,891
The above mentioned participation is stated at cost at the unconsolidated
financial statement of the Parent Company Bank.
b.3) Sectoral information and the related carrying amounts on consolidated
investments:
Participations Current Prior Period
Period
Insurance companies/TEB Sigorta A.S. 5,891 5,891
Total 5,891 5,891
b.4) Investments which are quoted to a stock exchange: None.
b.5) Information related to investments that are included in consolidation:
Group's share
percentage-If
Address (City / different voting Group's risk group Method of
Country)) percentage(%) share percentage Consolidation
Description (%)
TEB Sigorta Istanbul / Turkey 50.00 50.00 Full
Since the management of the company is controlled by the Parent Bank, line by
line consolidation method is used.
Participation as presented above (*):
Income from Current
Marketable Period
Total Fixed Securities Profit /
Assets Portfolio Loss
Shareholders' Interest Prior Period Fair
Income Profit / Value
Total Assets Equity Loss
25,938 4,879 494 357 - (2,856) 582 -
(*) The financial statements of TEB Sigorta is prepared in accordance with the
principles of Insurance Law and the current year data is stated as of September
30, 2003 and the previous period data is the nomianal values of December 31,
2002.
b.6) Information on consolidated investments which are sold in current
period : None.
b.7) Consolidated investments purchased in the current period: None.
7. Information on Subsidiaries (Net):
a) Information on unconsolidated subsidiaries:
TEB Kiymetli Madenler is not included in the consolidation in accordance with
AAR's materiality principle.
a.1) Information on unconsolidated subsidiaries:
Group's share Group's risk group
percentage-If different share percentage
voting percentage(%) (%)
Description Address(City/ Country)
TEB Kiymetli Madenler Istanbul/Turkey 66.00 71.81
a.2) Information on subsidiaries as presented in table a.1 (*):
Income from
Marketable
Securities
Portfolio
Total Shareholders'Equity Total Fixed Interest Current Prior Period
Assets Assets Income Period Profit /
Profit / Loss Fair
Loss Value
222 215 - - - (56) 40 -
(*) The amounts at the financial statements are presented with their nominal
values as of September 30, 2003.
b) Information on the consolidated subsidiaries.
b.1) Information on the consolidated subsidiaries:
Current Period Prior Period
Balance at the beginning of the period 123,480 109,854
Movements during the period 3,640 13,626
Purchases - 7,613
Free shares obtained profit from current year's share 10,980 5,004
Dividends from current year income - -
Sales - -
Revaluation increase (*) (7,340) 1,009
Provision for impairment - -
Balance at the end of the period 127,120 123,480
Capital commitments - -
Share percentage at the end of the period (%)
(*) The foreign exchange (expense)/income generated from the difference
between the devaluation and inflation of the foreign subsidiaries.
b.2) Valuation of investments made to the consolidated 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 127,120 123,480
Valuation with fair value - -
Valuation with equity method - -
b.3) Sectoral information on consolidated subsidiaries and the related
carrying amounts:
Current Prior Period
Period
Banks / Economy Bank 48,454 47,579
Other Financial Sub. / Petek International 726 857
TEB Yatirim 29,650 26,754
TEB Portfoy Yonetimi 3,202 3,202
Leasing Companies / TEB Leasing 27,762 27,762
Factoring Companies / TEB Factoring 17,326 17,326
127,120 123,480
Total
b.4) Consolidated subsidiaries which are quoted to a stock exchange: None.
b.5) Information related to subsidiaries that are included in consolidation:
Group's share Group's risk
percentage-If group share
Address (City / different voting percentage Method of
Country)) percentage(%) (%) Consolidation
Description
Economy Bank Netherlands 100.00 - Full
Petek International Netherlands 100.00 - Full
TEB Yatirim Istanbul/Turkey 74.80 25.20 Full
TEB Portfoy Yonetimi Istanbul/Turkey 55.89 44.11 Full
TEB Leasing Istanbul/Turkey 68.76 31.24 Full
TEB Factoring Istanbul/Turkey 65.80 34.20 Full
Information on subsidiaries as presented in table 10. b.5:
Income from Current
Marketable
Total Period
Securities
Total Shareholders' Fixed Interest Profit / Prior Period Fair
Portfolio (*) Loss (*) Profit / Loss
Assets (*) Equity (*) Assets (*) Income (*) (*) Value
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 -
5,473 4,787 526 598 76 1,022 876 -
220,844 81,095 174,114 1,044 65 26,454 4,141 -
69,543 7,914 1,514 9,999 - 1,238 500 -
(*) Information is disclosed in statutory amounts.
b.6) Information on the consolidated subsidiaries that were disposed in
current period: None.
b.7) Information on the consolidated subsidiaries purchased in current
period: None.
8. Information on financial lease receivables (Net):
a) Aging of leasing receivables:
Current Period Prior Period
Gross Net Gross Net
Less than 1 year 86,095 75,231 70,410 61,540
Between 1-4 years 53,777 49,264 32,674 30,711
Over 4 years 333 298 4,240 1,912
Total 140,205 124,793 107,324 94,163
9. Information on receivables arising from term sales of assets included
in miscellaneous receivables: None.
10. Explanations related to interest and income accruals:
a) Information about accrued interest and income receivables of loans:
Current Period Prior Period
Accrued interest and income receivables TL FC TL FC
Interest accruals - due 978 1 252 -
Interest accruals - not due 10,052 7,131 10,096 10,869
Loan commissions and other income accruals - due - - - -
Loan commissions and other income accruals - not 11 3 12 1
due
Total 11,041 7,135 10,360 10,870
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 66 3,848 125
Securities available for sale - 261 - 396
Securities held to maturity 963 168 809 74
Interest accruals of reverse repo transactions - - - -
Interest accruals of reserve deposits 1,537 152 1,019 274
Income accruals of financial derivative instruments 2,444 2,158 4,136 349
Interest and income accruals 10 - - -
Income accrual of foreign exchange gains 2,434 2,158 4,136 349
Income accruals of financial lease income 52 1,008 146 664
Other 8,055 629 6,335 590
Total 18,189 4,442 16,293 2,472
11. Information on other assets:
a) Information on prepaid expenses, taxes and similar items:
Current Period Prior Period
Deferred tax 7,175 2,262
Advances given 44 205
Prepaid rent expenses 456 456
Transaction cost related to financial liabilities 203 2,275
Prepaid taxes 33,755 11,950
Financial lease agreements in progress 5,669 1,547
Leasing premium receivable 16,716 14,690
Other 13,490 10,330
Total 77,508 43,715
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 Consolidated Liabilities
1. a) Information on maturity structure of deposits:
a.1) Current period :
Demand 7 day Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Call month Year over
Accounts
Saving deposits 47,576 2,202 109,228 52,257 48,414 36,008 24,789
Foreign currency 336,941 - 475,772 311,695 18,488 6,462 1,185
deposits
Residents in Turkey 319,478 - 464,458 303,876 18,109 5,579 1,185
Residents abroad 17,463 - 11,314 7,819 379 883
-
Public sector deposits 12,518 -
- - - - -
Commercial deposits 152,683 732 684,570 39,609 81,481 78,564 19,896
Other institutions 41,209 - 11,090 4,126 11
deposits 1 -
Precious metals deposits 4,296 - 1,375 8,591
- - -
Interbank deposits 20,613 - 31,734 49,671 3,745 2,600
-
Central Bank of Turkey -
- - - - - -
Domestic Banks 131 -
- - - - -
Foreign Banks 14,039 - 31,734 49,671 3,745 2,600 -
Special finance houses 6,443 - - - - - -
Other - - - - - - -
Total 615,836 2,934 1,313,769 465,949 152,139 123,635 45,870
a.2) Prior period:
Demand 7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Accounts month Year over
Saving deposits 19,444 - 86,631 42,611 3,621 14,912
13,876
Foreign currency 506,626 - 1,317,631 393,258 84,783 181,572
deposits 82,691
Residents in Turkey 434,604 - 546,075 339,475 7,827 373
32,720
Residents abroad 72,022 - 771,556 53,783 76,956 181,199
49,971
Public sector deposits 39 -
- - - - -
Commercial deposits 59,981 - 106,302 4,734 5 15
9,420
Other institutions 36,269 - 475 16 8 1 -
deposits
Precious metals deposits 10,755 - - 12,542 - 1,565 -
Interbank deposits 22,061 - 76,724 16,852 1,107
- -
Central Bank of Turkey - -
- - - - -
Domestic Banks 12,210 - 1,107
- - - -
Foreign Banks 9,851 - 76,724
- - - -
Special finance houses - 16,852
- - - - -
Other -
- - - - - -
Total 655,175 - 1,587,763 470,013 105,995 91,082 196,499
b.1) Information on saving deposits under the guarantee of saving deposit
insurance and exceeding the limit of saving deposit insurance:
Under the Under the Exceeding
guarantee of guarantee of the limit of
saving saving Exceeding the
deposit deposit saving limit of
Saving Deposits insurance insurance deposit
saving
deposit
Current Prior Period Current Prior Period
Period 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 deposits 1,083 753 - 7,313
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 Group which has settled abroad should disclose, the total amount of
savings deposit in Turkey branch, and insured in the country of head office :
None
b.3) Saving deposits which are not under the guarantee of deposit insurance
fund : 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 63,450 409,662 39,119 298,651
Medium and long-term - 71,723 - 97,225
Total 63,450 481,845 39,119 395,876
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. Explanations on liabilities generated from financial lease payables:
None
9. Information on interest and expense accruals:
Current Period Prior Period
TL FC TL FC
Accrued interest on deposits 10,252 5,245 5,868 9,775
Accrued interest on funds borrowed 2,259 4,751 2,281 2,420
Accrued interest on bonds - - - -
Accrued interest on repurchase agreement 7 - 31 -
transactions
Accrued interest on derivative financial 9,821 3,978 5,171 -
instruments
Accrued interest and expense - - - -
Foreign exchange losses accrued 9,821 3,978 5,171 -
Other interest and expense accruals 8,654 170 1,111 911
Total 30,993 14,144 14,462 13,106
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 PR 4 PR 3 PR 2 PR Prior PR Current PR
Actual Payments of Employee 56 107 947 662 435 -
Termination Benefits (**)
Reserve for Employee Termination 1,580 3,140 4,456 6,912 10,972 14,425
Benefits and Notice Indemnity (**)
Actual Payment Ratio 3.57% 3.40% 21.24% 9.59% 3.96% -
Ratio of reserve for Employee 8.35%
Termination Benefits and Notice
Indemnity (*)
Possible reserve for Employee 2,178
Termination Benefits and Notice
Indemnity
(*) 5-year actual payment rate.
(**) The liability and payment amounts regarding the prior periods are stated at
historical cost.,
As of September 30, 2003, TL 1,106 of reserve for employee termination benefits
and notice indemnity was reflected to the financial statements of Parent Bank
corresponding to annually 8.35% of total liability of TL 14,425.
The consolidated subsidiaries have calculated reserve for employee termination
benefits and notice indemnity in accordance with the regulations they apply, and
reflected an amount of TL 1,052 into their financial statements as of September
30, 2003.
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 Group 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 Group's income, profit and liquidity for the previous
periods and within these indicators possible affects on capital fore sighting
uncertainty : None.
g) Information on privileged shares:
7 % of the Parent Bank's remaining net income and tax after deducting legal
reserves and first dividends, corresponding to the Group'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 Consolidated 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
total to 20% of the items that exceed 10% of the related totals are shown below.
Other interest income amounting to TL 31,027 includes financial lease interest
income amounting to TL 20,055 and factoring interest income amounting to TL
9,775.
The total other interest expense amounting to TL 26,386 consists of foreign
exchange losses amounting to TL 12,406 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 13,619.
The total other fees and commissions received amounting to TL 26,410 majorly
consists of credit card fees and commissions amounting to TL 5,059 and brokerage
commissons amounting to TL 6,255. Other fees and commission expense totaling to
TL 10,955 majorly consists of fees and commissons given to credit card
transactions totaling to TL 5,011, and fees and commissons paid for the
transactions generated from the interbank money market totalling to TL 1,278.
1. a) Information on interest income received from investments and
subsidiaries: None.
b) Information on financial lease income : None.
c) Interest received from reverse repurchase agreement transactions:
None
Current Period Prior Period
TL FC TL FC
Interest received from reverse repurchase 1,593 - 3,695 -
agreement transactions
2. a) Information on interest expense to investments and subsidiaries:
None.
b) Information on financial lease expenses : None.
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
Deposits Month Months Months Year 1 Year
Account name Total
TL
Bank deposits 3 9,460 - - - - 9,463
Saving deposits 743 20,535 16,733 8,606 1,801 4,341 52,759
Public sector deposits - - - - - - -
Commercial deposits 1,960 18,047 7,982 3,097 167 5 31,258
Other deposits 19 293 107 3 - - 422
7 days call accounts - - - - - - -
Total 2,725 48,335 24,822 11,706 1,968 4,346 93,902
FC
Foreign currency deposits(* ) 1,326 12,309 9,798 1,889 720 11,303 37,345
7 days call accounts - - - - - - -
Precious metal deposits - 9 100 - 7 - 116
Total 1,326 12,318 9,898 1,889 727 11,303 37,461
Total 4,051 60,653 34,720 13,595 2,695 15,649 131,363
(*) Interest expense on foreign currency deposits includes TL 1,137 of foreign
currency bank deposits, TL 4,442 foreign currency saving deposits and TL 14,930
commercial deposits.
d) Interest expense on repurchase agreements:
Current Period Prior Period
TL FC TL FC
Interest expense on repurchase agreements 13,619 - 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 Group'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 Groups for loans and other receivables:
Current Period Prior Period
Specific provisions for loans and other receivables 1,601 13,628
Unsecured -
Other groups 1,601 13,628
General provision expenses 2,582 2,524
Marketable securities impairment expense 1,038 90
Provision for impairment* - -
Other 850 1,148
Total 6,071 17,390
(*) Provision for impairment related to participations, subsidiaries and
securities held to maturity
6.a) Income and expenses relating to investments and subsidiaries: None
b) The income or expense share resulting from the investments at the
participations at The information on income and expense from related party
transactions: None.
c) The information on income and expense from related party transactions:
The Group 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.
7. The explanations on net income / loss for the period:
a) Income/loss related to minority shares:
Current Period Prior Period
Income and loss related to minority shares (389) 937
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 Consolidated Off-balance Sheet
Commitments
1.a) Disclosure to be made separately from other contingent liabilities:
a.1) The Group'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 Group'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 commitments:
a) Nature and amount of irrevocable loan commitments: As of September 30,
2003 and December 31, 2002, credit card spending limit commitments are TL 98,981
and TL 74,554, respectively.
b) Nature and amount of contingent loss and commitments from off-balance
sheet items including below statements:
The Group, 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 656,261 (December 31, 2002 - TL 642,876),
acceptances amounting to TL 46,085 (December 31, 2002 - TL 44,687), and letters
of credit amounting to TL 434,735 (December 31, 2002 - TL 356,502).
b.2) Guarantees, surety ships and similar transactions : The Group has other
commitments and contingencies amounting TL 14,464 (December 31, 2002 - TL
10,038) other than the ones explained in article b.1).
3.a) Non-cash loans:
Current Period Prior Period
Guarantees given against cash loans 79,145 66,376
With maturity of 1 year or less than 1 year 19,145 24,870
With maturity of more than 1 year 60,000 41,506
Other non-cash loans 1,072,400 987,727
Total 1,151,545 1,054,103
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 Group'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 Related to the Risk Group of the Parent Bank
1. Volume of The Banks's risk group transactions, income and expense
amounts involved and outstanding loan and deposit balances:
a) Current Period:
Investments and Direct and indirect Other entities included
in
Bank's Risk Group (*) subsidiaries shareholders of the Group
related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other receivables
Balance at beginning of period - - 111,802 7,451 11,242 4,842
Balance at end of period - - 48,791 1,200 8,417 6,624
Interest and commission income - - 4,660 15 1,777 47
b) Prior Period:
Investments and Direct and indirect Other entities included
in
Bank's Risk Group (*) subsidiaries shareholders of the
Group related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other receivables
Balance at beginning of period - - 23,810 1,326 119,440 6,354
Balance at end of period - - 111,802 7,451 11,242 4,842
Interest and commission income - - 4,809 507 11,588 606
c.1) Information on Bank's Risk Group deposits balances:
Investments and Direct and indirect Other entities included
in
Bank's Risk Group (*) subsidiaries shareholders of the
Group related parties
Deposits Current Prior Current Prior Current Prior
period period
period period period period
Balance at beginning of - - 207,185 65,758 855,785 360,444
period
Balance at end of period - - 167,405 207,185 672,930 855,785
Interest on deposits - - 3,069 3,385 9,518 49,438
c.2) Information on forward and option agreements and other similar
agreements made with related parties:
Bank's Risk Group (*) Investments and Direct and indirect Other entities included
subsidiaries shareholders of the in related parties
Group
Current Prior Current Prior Current Prior
period
period period period period period
Trading transactions
Beginning of period - - 47,954 25,651 27,110 17,357
End of period - - 54,147 47,954 17,907 27,110
Total income/loss - - (1,547) (381) (296) 684
Hedging transactions purposes
Beginning of period - - - - - -
End of period - - - - - -
Total income/loss - - (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 Group with the entities controlled by the Group and
its related parties, regardless of whether there are any transactions or not:
The Parent Bank enters into banking transactions with group companies in
accordance with the Banking Law. These are commercial transactions and realized
on an arms-length basis.
b) 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
Cash loans 840,335 30.89
Noncash loans 72,054 9.09
Deposits 57,208 3.78
Forward transactions and option agreements 7,824 0.68
These transactions are priced in accordance with the general pricing policies of
the Bank and are in line with market rates.
c) 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.
d) 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 Group has financial lease agreements with TEB Leasing. The total leasing
obligations related to these agreements amounted to TL 5,364. Additionally, the
Group provides agency services for TEB Sigorta and TEB Yatirim.
Within the limits of the Banking Law, the Group renders cash and
non-cash loans to its related parties and the ratio of these to the Group's
total cash and non-cash loan portfolio is 2.43 %. Amounts of these loans are
explained in the note 1a.
As of September 30, 2003 the Group 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 Related to 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 Groups 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 Group'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 September 30, 2003, reflecting the restatement for
the changes in the general purchasing power of the Turkish is as follows:
Conversion Factors
Index
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 Group 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 Group could return or settle the same values of equity to its shareholders.
Explanations regarding the economical life of assets subject to depreciation,
depreciation calculation made in accordance with the regulations and indexed
amounts, and whether expertise values are used to determine the fair values of
these assets:
In accordance with Communique No :14, the Group 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 interim 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.
VIII- 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 Leasing 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 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 Group : There are no significant changes.
SECTION SIX
REPORT OF INDEPENDENT AUDITORS
I. Explanations on the Report of Independent Auditors:
The consolidated interim financial statements of the Group were reviewed by
Guney Serbest Muhasebeci Mali Musavirlik A.S. (An Affiliated Firm of Ernst &
Young International) and the review report of independent auditors, dated
November 20, 2003, is presented preceding the consolidated interim financial
statements.
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