Page 79 - A&T BANK ANNUAL REPORT 2012

77 76 A&T BANK 2012 ANNUAL REPORT •
ARAP TÜRK BANKASI ANONİM ŞİRKETİ
UNCONSOLIDATED FINANCIAL REPORT
AS OF 31 DECEMBER 2012
(Currency: Thousands of Turkish Lira (“TL”) unless otherwise stated)
Convenience Translation of Consolidated Financial
Report Originally Issued in Turkish
See Note on I. in Section Three
III. Information on forward transactions, options and derivative instruments
The Bank’s financial derivatives are classified as “Held for Trading” in accordance with TAS – 39 Financial Instruments:
Recognition and Measurement.
Derivatives are initially recorded at their purchase costs including the transaction costs. The notional amounts of derivative
transactions are recorded in off-balance sheet accounts based on their contractual amounts.
The derivative transactions are measured at fair value subsequent to initial recognition and if the fair value of a derivative
financial instrument is positive, it is disclosed under the main account fair values of financial assets through profit or loss”
in trading derivative financial instruments and if the fair value difference is negative, it is disclosed under trading derivative
financial liabilities. Gains and losses arising from a change in fair value of trading derivatives after the re measurement are
accounted in the income statement. The fair value of the derivative financial instruments is calculated using quoted market
prices by using discounted cash flows model.
IV. Information on interest income and expense
Interest income and expense are recognized according to the effective interest method based on accrual basis. Effective
interest rate is the rate that discounts the expected cash flows of financial assets or liabilities during their lifetimes to their
carrying values. Effective interest rate is calculated when a financial asset or a liability is initially recorded and is not modified
thereafter.
The computation of effective interest rate comprises discounts and premiums, fees and commissions paid or received and
transaction costs. Transaction costs are additional costs that are directly related to the acquisition, issuance or disposal of
financial assets or liabilities.
In accordance with the related regulation, the accrued interest income on non-performing loans are reversed and subsequently
recognized as interest income only when collected.
V. Information on fees and commission
Fees and commission received and paid are recognized according to either accrual basis of accounting or effective interest
method depending on nature of fees and commission; incomes derived from agreements and asset purchases for third parties
are recognized as income when realized.
VI. Information on financial assets
The Bank categorizes and records its financial assets as financial assets at fair value through profit or loss, financial assets
available-for-sale, loans and receivables or financial assets held to maturity.
Financial assets except for measured at fair value through profit or loss are recognized initially with their transaction costs
that are directly attributable to the acquisition or issue of the financial asset. Purchase and sale transactions of securities are
accounted at settlement dates.
Financial Assets at Fair Value through Profit or Loss
This category has two sub categories: financial assets for trading purposes and those recorded as financial assets designated
at fair value through profit or loss at their initial recognition.
Financial assets held for trading are part of a portfolio aiming to generate a profit from short term fluctuations in prices or
dealer’s margin or in which a pattern of short term profit making exists.