ATB_FRAE_2015

186 A&T BANK ANNUAL REPORT 2015

ARAP TÜRK BANKASI ANONİM ŞİRKETİ

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AT 31 DECEMBER 2015

(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

Operational leases

Transactions regarding operational lease agreements are accounted on an accrual basis in accordance with the terms of

the related contracts.

Lease payments made under operational leases are recognized in the income statement over the lease term in equal

installments.

XV. INFORMATION ON PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions and contingent liabilities are provided for in accordance with the “TAS 37 - Provisions, Contingent Liabilities

and Contingent Assets”, except for the general and specific provisions set aside for the loans and other receivables.

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of past events, it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a

reliable estimate of the amount of obligation can be made.

A provision for contingent liabilities arising from past events should be recognized in the same period of occurrence if

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a

reliable estimate the amount of the obligation can be made.

XVI. INFORMATION ON LIABILITIES REGARDING EMPLOYEE BENEFITS

Reserve for employee termination benefits

In accordance with existing Turkish Labor Law, the Group is required to make lump-sum termination indemnities to each

employee who has completed one year of service with the Bank and whose employment is terminated due to retirement

or for reasons other than resignation or as mentioned in related legislation. The computation of the liability is based

upon the retirement pay ceiling announced. The applicable ceiling amount as at 31 December 2015 is TL 3,828 (full TL)

(31 December 2014: TL 3,438 (full TL)).

The Group reserved for employee severance indemnities in the accompanying consolidated financial statements using

actuarial method in compliance with the updated TAS 19 - Employee Benefits. Accumulated all actuarial gains and losses

in equity are recognized in retained earnings.

As at 31 December 2015 and 31 December 2014, the major actuarial assumptions used in the calculation of the total

liability are as follows:

The Parent Bank

Current Period

Prior Period

Discount Rate

3.12%

2.84%

Expected Rate of Salary/Limit Increase

7.56%

5.00%

Estimated Employee Turnover Rate

5.30%

5.44%

Subsidiary