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ARAP TÜRK BANKASI A.Ş.
NOTES TO UNCONSOLIDATED FINANCIAL
STATEMENTS AT 31 DECEMBER 2013
( Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated. )
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL
STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I OF SECTION THREE
4
GENERAL INFORMATION
50
CORPORATE MANAGEMENT
67
FINANCIAL INFORMATION
A&T BANK 2013 ANNUAL REPORT
IV. 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.
V. 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.
VI. 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.
VII. 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.
a. 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.
Financial derivative instruments are classified as financial assets held for trading unless they are stated as for hedging purposes.
Accounting of derivative financial assets is explained in IV of Section Three.
The financial assets held for trading are initially recognized at cost which includes transaction costs. Subsequent to the initial
recognition financial assets held for trading are re-measured at their fair value. The gains and losses arising from the change in fair
value are recognized in the income statement. The interest income earned from financial assets held for trading is recorded in the
interest income and share profit is recorded in the dividends account.