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Convenience Translation of Publicly Announced Unconsolidated Financial
Statements Originally Issued in Turkish, See Note I of Section Three
Arap Türk Bankası A.Ş.
Notes to Unconsolidated Financial
Statements at 31 December 2014
( Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated. )
General Information
Corporate Management
Financial Information
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 Bank 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 Bank 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.
Receivables collected which is provisioned in the same year, the impairment loss is deducted from loans and other receivables.
IX. INFORMATION ON OFFSETTING FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously.
X. INFORMATION ON SALE AND REPURCHASE AGREEMENTS AND LENDING OF FINANCIAL ASSETS
Repurchase (“repo”) and resale (“reverse repo”) agreements of financial assets are followed at the balance sheet accounts. Financial
assets which are sold to customers under repurchase agreements are categorized according to initial classification and are measured
in accordance with the accounting policy of the related portfolio.
Funds obtained under repurchase agreements are accounted under funds provided under repurchase agreements in liability
accounts. The interest expense accruals are calculated by means of internal rate of return method over the difference resulting from
repurchase and sale prices for the relevant period.
Securities subject to repurchase (“reverse repo”) agreements are reflected under receivables from reverse repurchase agreements.
The difference between the purchase and resell price which is related with the period is computed with the effective interest rate
method for accrued interest income.