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Convenience Translation of Publicly Announced Consolidated Fınancial
Statements Originally Issued in Turkish, See Note I of Section Three
Arap Türk Bankası A.Ş.
Notes to Consolidated Financial
Statements at 31 December 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
General Information
Corporate Management
Financial Information
b. Financial Assets Available-for-Sale
Financial assets available for sale are financial assets other than those classified as loans and receivables, financial assets held to
maturity and financial assets at fair value through profit or loss.
Debt securities classified as financial assets available-for-sale are subsequently re-measured at their fair values. Unrealized gains
and losses arising from changes in the fair value of securities classified as financial assets available for sale is reflected in the equity
marketable securities value increase fund. When these financial assets available for sale are disposed of or collected the fair value
differences accumulated under equity are transferred to the income statement.
Financial assets available for sale that have a quoted market price in an active market and whose fair values can be reliably measured
are carried at fair value. Financial assets available for sale that do not have a quoted market price and whose fair values cannot be
reliably measured are carried at cost, less provision for impairment.
c. Loans and Receivables
Loans and receivables are the financial assets raised by the Bank providing money, commodity and services to debtors. Loans are
financial assets with fixed or determinable payments and not quoted in an active market.
Loans and receivables are recorded at cost and measured at amortized cost by using effective interest method. The duties paid,
transaction expenditures and other similar expenses on assets received against such risks are considered as a part of transaction cost
and charged to customers.
d. Financial Assets Held to Maturity
Held-to-maturity securities are financial assets that are not classified as loans and receivables with fixed maturities and
pre-determinable payments that the Bank has the intent and ability to hold until maturity. The financial assets held to maturity are
initially recognized at cost and subsequently carried at amortized cost using effective interest method with internal rate of return after
deducting impairments, if any. Interest earned on financial assets held-to-maturity is recognized as interest income in the statement of
income.
There are no financial assets that were previously classified as held to maturity but cannot be subject to this classification for two years
due to the violation of the tainting rule.
VIII. INFORMATION ON IMPAIRMENT OF FINANCIAL ASSETS
Financial assets or group of financial assets are reviewed at each balance sheet date to determine whether there is objective evidence
of impairment. If any such indication exists, the Group estimates the amount of impairment.
Impairment loss incurs if, and only if, there is objective evidence that the expected future cash flows of financial asset or group of
financial assets are adversely affected by an event(s) (“loss event(s)”) incurred subsequent to recognition. The losses expected to
incur due to future events are not recognized even if the probability of loss is high.
If there is an objective evidence that certain loans will not be collected, for such loans; the Group provides specific and general
allowances for loan and other receivables classified in accordance with the Regulation on Identification of and Provision against
Non-Performing Loans and Other Receivables published on the Official Gazette no. 26333 dated 1 November 2006 and the
amendments to this regulation. The allowances are recorded in the statement of income of the related period.
Provision in prior periods has been collected which is provisioned accounts are recorded under other operating income is deducted. Is
collected which is provisioned in the same year, the impairment loss is deducted from loans and other receivables.
If there is objective evidence that certain leasing receivables will not be collected; the Group assess that receivables in accordance with
the Regulation on Identification of and Provision against Non-Performing Receivables of Financial Leasing, Factoring and Financing
Companies published on the Official Gazette no.26588 dated 20 July 2007.