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78 A&T BANK ANNUAL REPORT 2015
ARAP TÜRK BANKASI ANONİM ŞİRKETİ
NOTES TO UNCONSOLIDATED 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
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.
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 Bank estimates the amount of impairment.