RNS Number:7626L
Turk Ekonomi Bankasi A.S.
30 May 2003
Turk Ekonomi Bankasi
Anonim Sirketi
Consolidated Financial Statements
As of March 31, 2003
Together With Review Report
(CONVENIENCE TRANSLATION OF A REVIEW REPORT AND FINANCIAL STATEMENTS)
ORIGINALLY ISSUED IN TURKISH- SEE SECTION III, NOTE XXV)
(Convenience Translation of A Review Report And Financial Statements
Originally Issued In Turkish - See Section III, Note XXV)
TURK EKONOMI BANKASI ANONIM SIRKETI
REVIEW REPORT AS OF MARCH 31, 2003
We have reviewed the consolidated balance sheet of Turk Ekonomi Bankasi Anonim
Sirketi as of March 31, 2003 and the related consolidated statement of income
for the interim period then ended. These financial statements are expressed in
the equivalent purchasing power of Turkish lira as of March 31, 2003. These
financial statements are the responsibility of the Bank's management. Our
responsibility as independent auditors is to issue a review report on these
financial statements based on our review.
We conducted our review in accordance with the auditing standards which were
determined under the provisions of Banking Law Number 4389. These standards
require that the review should be planned and performed to obtain limited
assurance as to whether the financial statements are free of material
misstatement. A review is limited primarily to inquires of bank personnel and
analytical procedures applied to financial data and thus provides less assurance
than an audit. We have not performed an audit and, accordingly we do not
express an opinion.
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying consolidated interim financial statements of Turk Ekonomi
Bankasi Anonim Sirketi at March 31, 2003 are not presented fairly, in all
material respects, in accordance with the accounting principles and standards
that are based on the Article 13 of the Banking Law number 4389.
Additional paragraph for convenience translation to English:
The above mentioned accounting principles differ from International Financial
Reporting Standards (IFRS) issued by International Accounting Standards Board
and so far as such differences apply to the financial statements of the Bank
they mainly relate to the format of financial statements and disclosure
requirements, accounting for deferred taxes and accounting for retirement pay
liabilities. The effects of the differences between these accounting principles
and accounting principles generally accepted in the countries in which the
accompanying financial statements are to be used and IFRS have not been
quantified in the accompanying financial statements. Accordingly, the
accompanying financial statements are not intended to present the financial
position and results of operations in accordance with the accounting principles
generally accepted in the countries of users of the financial statements and
IFRS.
Guney Serbest Muhasebeci Mali Musavirlik Anonim Sirketi
An Affiliated Firm of Ernst & Young International
Esra Peri, SMMM
May 28, 2003
Istanbul, Turkiye
INDEX
SECTION ONE Page no.
General Information
I. Footnotes and Explanations on the Parent Company Bank's Service
Activities and Operating Areas 1
II. Explanations and Footnotes Regarding the Including Group of the
Parent Company Bank 1
III. Explanations on the consolidated financial statements 1
SECTION TWO
Consolidated Financial Statements
I. Consolidated Balance Sheets - Assets 3
II. Consolidated Balance Sheets - Liabilities 4
III. Consolidated Income Statements 5
IV. Consolidated Off Balance Sheet Liabilities Tables 6
SECTION THREE
Accounting Principles
I. Basis of Presentation 7
II. Presentation of the Information Regarding the Parent Comapany
Bank and the Group Companies Included in the Consolisdation 8
III. Explanations on Forward, Option Contracts and Derivative
Instruments 9
IV. Netting of Financial Assets and Liabilities 9
V. Interest Income and Expense 10
VI. Fees and Commission Income and Expense 10
VII. Securities Held for Trading 10
VIII. Sales and Repurchase Agreements and Lending of Securities 10
IX. Securities Held to Maturity, Securities Available for Sale and
Bank Originated Loans and Receivables 11
X. Unconsolidated Participations and Subsidiaries 12
XI. Originated Loans and Receivables and Provisions for Loan
Impairment 12
XII. Goodwill and Other Intangible Fixed Assets 13
XIII. Tangible Fixed Assets 13
XIV. Leasing Transactions 14
XV. Provisions and Contingent Liabilities 14
XVI. Liabilities Regarding Employee Benefits 14
XVII. Taxation 15
XVIII. Additional Explanations on Borrowings 16
XIX. Paid-in Capital and Share Certificates 16
XX. Acceptances 16
XXI. Government Incentives 16
XXII. Securities at Custody 16
XXIII. Impairement of Assets 16
XXIV. Reporting Regarding Operational Sections 17
XXV. Other Issues 17
SECTION FOUR
Information on Fianancial Structure
I. Capital Adequacy Standard Ratio 18
II. Consolidated Market Risk 21
III. Consolidated Foreign Currency Risk 21
IV. Consolidated Interest Rate Risk 23
V. Consolidated Liquidity Risk 25
SECTION FIVE
Footnotes and Explanations on Consolidated Financial Statements
I. Explanations on Consolidated Assets 27
II. Footnotes and Explanations Related to Consolidated Liabilities 37
III. Footnotes and Explanations Related to Consolidated Income Statement 41
IV. Explanations Related to Consolidated Off-balance Sheet Items 43
V. Footnotes and Explanations Related to The Risk Group of the
Parent Bank 45
VI. Footnotes and Explanations Related to Inflation Accounting 47
VII. Explanations Related to Subsequent Events 49
SECTION SIX
Independent Auditor's Report
I. Explanations on independent review report 49
SECTION ONE
GENERAL INFORMATION
I- Footnotes and Explanations on the Parent Company Bank's Service
Activities and Operating Areas
a) Commercial name of the Bank : Turk Ekonomi Bankasi Anonim
Sirketi (the Bank)
Reporting period : 1 January - 31 March 2003
Address of the head office : Meclis-i Mebusan Cad. 35, Findikli
34427 / ISTANBUL
Telephone number : (0212) 251 21 21
Facsimile number : (0212) 249 65 68
Web page : www.teb.com.tr
E-mail address : @teb.com.tr
b) The Parent Company Bank's service activities and operating areas: The
Parent Company Bank operates in corporate, commercial, retail and private
banking areas.
c) Financial statements and relevant explanations together with the
footnotes are stated in Billions of Turkish Lira.
II- Explanations and Footnotes Regarding the Including Group of the Parent
Company Bank
The Including Group of the Parent Company Bank: Turk Ekonomi Bankasi Anonim
Sirketi ("the Bank") is included in the Colakoglu Group. The 70.08% of shares of
the Bank belong to TEB Mali Yatirimlar Anonim Sirketi (TEB Mali Yatirimlar) and
8.60% of the shares belong to Colakoglu Metalurji Anonim Sirketi.
III- Explanations on Consolidated Interim Financial Statements
a) Accounting principles and basis of valuation used in the preparation of
year-end financial statements are also used for the preparation of interim
financial statements without any changes or exceptions, and are summarized in
Section Three below.
b) There are no transactions realized in the interim period that are of a
seasonal or periodical nature.
c) There are no non-recurring transactions or basic accounting
misstatements.
d) There are no extraordinary items in terms of nature or amount that
effect the assets, liabilities, equity, net income or the cash flow of the Bank.
e) Prior period interim financial statements, do not contain any changes
with respect to the estimated values related with the current period. There
are no items in the prior period financial statements that are recorded with
their estimated value.
f) There are no convertible bonds or any other debt securities issued
during the current period.
g) There are no dividends paid during the current period.
h) There are no subsequent events that occurred after the preparation date
of the interim financial statements which have a material impact on the interim
financial statements, and not reflected in the interim financial statements.
i) There are no transactions that may cause a structural change for the
Bank such as restructuring, mergers and acquisitions, or discontinue of any
operations.
j) There are no changes in the commitments and contingencies of the Bank
that have arisen subsequent to the year-end balance sheet date.
SECTION TWO
CONSOLIDATED FINANCIAL STATEMENTS
I. Consolidated Balance Sheets - Assets
II. Consolidated Balance Sheets - Liabilities
III. Consolidated Statements of Income
IV. Consolidated Statements of Off Balance Sheet Commitments
I- CONSOLIDATED BALANCE SHEET - ASSETS
Current Period Prior Period
31.03.2003 31.12.2002
Note Ref.
ASSETS (Section TL FC Total TL FC Total
Five)
I. CASH AND BALANCES WITH THE CENTRAL 13,795 316,770 330,565 23,537 459,278 482,815
BANK OF TURKEY
1.1 Cash 7,837 - 7,837 6,903 - 6,903
1.2 Foreign currency - 76,734 76,734 - 90,628 90,628
1.3 Balances with the Central Bank of I-1 5,958 240,036 245,994 16,634 368,650 385,284
Turkey
II. TRADING SECURITIES (Net) 12,310 35,994 48,303 45,552 10,715 56,267
2.1 Public sector debt securities I-2 12,308 30,286 42,594 45,552 10,409 55,961
2.1.1 Government bonds I-2 11,749 24,154 35,903 39,099 7,410 46,509
2.1.2 Treasury bills I-2 558 3,714 4,272 6,453 - 6,453
2.1.3 Other I-2 1 2,418 2,419 1 2,999 3,000
2.2 Share certificates 2 - 2 - - -
2.3 Other marketable securities - 5,708 5,708 - 306 306
III. BANKS AND OTHER FINANCIAL 67,189 816,932 884,121 43,912 1,119,867 1,163,779
INSTITUTIONS
3.1 Due from banks 67,189 816,932 884,121 43,912 1,119,867 1,163,779
3.1.1 Domestic banks 29,910 103,170 133,080 31,080 200,828 231,908
3.1.2 Foreign banks 37,279 713,762 751,041 12,832 919,039 931,871
3.2 Other financial institutions - - - - - -
IV. MONEY MARKET PLACEMENTS 256,029 103,704 359,733 263,341 200,885 464,226
4.1 Interbank money market placements 243,850 103,704 347,554 255,416 200,885 456,301
4.2 Istanbul Stock Exchange money market 62 - 62 - - -
placements
4.3 Receivables from reverse repurchase 12,117 - 12,117 7,925 - 7,925
agreements
V. SECURITIES AVAILABLE FOR SALE (Net) 9 43,950 43,959 10 18,945 18,955
5.1 Share certificates I-3 9 - 9 10 - 10
5.2 Other marketable securities I-3 - 43,950 43,950 - 18,945 18,945
VI. LOANS 374,268 1,079,386 1,453,654 405,096 1,071,172 1,476,268
6.1 Short term I-4 345,546 959,462 1,305,008 376,072 877,022 1,253,094
6.2 Medium and long term I-4 23,607 119,924 143,531 23,447 194,150 217,597
6.3 Loans under follow-up I-4 19,995 43 20,038 22,717 45 22,762
6.4 Specific provisions (-) I-4 (14,880) (43) (14,923) (17,140) (45) (17,185)
VII. FACTORING RECEIVABLES 50,828 23,701 74,529 47,093 27,710 74,803
VIII. SECURITIES HELD TO MATURITY (Net) 40,477 2,935 43,412 41,340 3,192 44,532
8.1 Public sector debt securities I-5 40,477 2,935 43,412 41,340 3,192 44,532
8.1.1 Government bonds I-5 40,195 2,935 43,130 41,088 3,192 44,280
8.1.2 Treasury bills I-5 282 - 282 252 - 252
8.1.3 Other I-5 - - - - - -
8.2 Other marketable securities I-5 - - - - - -
IX. INVESTMENTS AND ASSOCIATES (Net) 405 - 405 498 - 498
9.1 Financial investments and associates I-6 405 - 405 498 - 498
9.2 Non-Financial investments and - - - - - -
associates
X. SUBSIDIARIES (Net) 376 - 376 380 - 380
10.1 Financial subsidiaries I-7 376 - 376 380 - 380
10.2 Non-Financial subsidiaries - - - - - -
XI. OTHER INVESTMENTS (Net) - - - - - -
XII. FINANCE LEASE RECEIVABLES (Net) 7,911 94,242 102,153 5,263 90,324 95,587
12.1 Gross finance lease receivables I-8 9,695 106,045 115,740 7,372 101,575 108,947
12.2 Unearned income ( - ) I-8 (1,784) (11,803) (13,587) (2,109) (11,251) (13,360)
XIII. RESERVE DEPOSITS 9,033 126,480 135,513 10,388 137,866 148,254
XIV. MISCELLANEOUS RECEIVABLES I-9 1,013 1,833 2,846 350 46 396
XV. ACCRUED INTEREST AND INCOME 26,737 12,978 39,715 27,057 13,544 40,601
RECEIVABLES
15.1 Loans I-10 11,219 9,976 21,195 10,517 11,034 21,551
15.2 Marketable securities I-10 5,363 1,033 6,396 4,728 604 5,332
15.3 Other I-10 10,155 1,969 12,124 11,812 1,906 13,718
XVI. PROPERTY AND EQUIPMENT (Net) 44,527 646 45,173 47,136 462 47,598
16.1 Book value 104,262 1,458 105,720 107,389 1,260 108,649
16.2 Accumulated depreciation ( - ) (59,735) (812) (60,547) (60,253) (798) (61,051)
XVII. INTANGIBLE ASSETS (Net) 4,925 113 5,038 4,232 140 4,372
17.1 Goodwill 416 - 416 416 - 416
17.2 Other 11,395 992 12,387 9,539 1,024 10,563
17.3 Accumulated amortization ( - ) (6,886) (879) (7,765) (5,723) (884) (6,607)
XVIII. OTHER ASSETS I-11 50,679 14,837 65,516 41,557 2,818 44,375
TOTAL ASSETS 960,511 2,674,501 3,635,012 1,006,742 3,156,964 4,163,706
The accompanying notes are an integral part of these balance sheets.
II- CONSOLIDATED BALANCE SHEET - LIABILITIES
Current Period Prior Period
31.03.2003 31.12.2002
Note Ref.
LIABILITIES (Section TL FC Total TL FC Total
Five)
I. DEPOSITS 375,737 2,275,768 2,651,505 438,474 2,715,042 3,153,516
1.1 Bank deposits II-1 23,977 32,510 56,487 34,088 84,422 118,510
1.2 Saving deposits II-1 182,832 - 182,832 183,835 - 183,835
1.3 Public sector deposits II-1 11,283 - 11,283 39 - 39
1.4 Commercial deposits II-1 124,860 - 124,860 183,186 - 183,186
1.5 Other institutions deposits II-1 32,785 - 32,785 37,326 - 37,326
1.6 Foreign currency deposits II-1 - 2,227,331 2,227,331 - 2,605,382 2,605,382
1.7 Precious metals deposit accounts II-1 - 15,927 15,927 - 25,238 25,238
II. MONEY MARKET BALANCES 11,647 - 11,647 25,626 - 25,626
2.1 Interbank money market takings - - - - - -
2.2 Istanbul Stock Exchange money - - - - - -
market takings
2.3 Funds provided under repurchase II-2 11,647 - 11,647 25,626 - 25,626
agreements
III. FUNDS BORROWED 32,076 391,669 423,745 39,710 401,864 441,574
3.1 Funds borrowed from the Central - - - - - -
Bank of Turkey
3.2 Other funds borrowed II-3 32,076 391,669 423,745 39,710 401,864 441,574
3.2.1 Domestic banks and institutions II-3 19,271 14,662 33,933 18,937 13,649 32,586
3.2.2 Foreign banks, institutions and II-3 12,805 377,007 389,812 20,773 388,215 408,988
funds
IV. MARKETABLE SECURITIES ISSUED (Net) - - - - - -
4.1 Bills II-4 - - - - - -
4.2 Asset backed securities II-4 - - - - - -
4.3 Bonds II-4 - - - - - -
V. FUNDS II-5 - - - - - -
VI. MISCELLANEOUS PAYABLES II-6 34,098 21,562 55,660 24,947 42,280 67,227
VII. OTHER EXTERNAL RESOURCES II-7 46,347 14,481 60,828 20,957 7,424 28,381
VIII. TAXES AND OTHER DUTIES PAYABLE 29,702 5,029 34,731 7,596 - 7,596
IX. FACTORING PAYABLES 13,338 16,906 30,244 14,728 16,722 31,450
X. FINANCE LEASE PAYABLES (Net) - - - - - -
10.1 Finance Lease Payables II-8 - - - - - -
10.2 Deferred finance lease expenses ( - II-8 - - - - - -
)
XI. ACCRUED INTEREST AND EXPENSES 20,208 11,898 32,106 14,681 13,304 27,985
PAYABLE
11.1 Deposits II-9 6,293 7,127 13,420 5,957 9,923 15,880
11.2 Borrowings II-9 2,523 3,389 5,912 2,316 2,456 4,772
11.3 Repurchase agreements II-9 17 - 17 31 - 31
11.4 Other II-9 11,375 1,382 12,757 6,377 925 7,302
XII. PROVISIONS 27,462 1,044 28,506 41,191 1,894 43,085
12.1 General provisions II-10 6,470 - 6,470 6,848 - 6,848
12.2 Reserve for employee termination II-10 1,711 - 1,711 1,968 - 1,968
benefits
12.3 Provisions for income taxes II-10 7,937 67 8,004 23,878 1,894 25,772
12.4 Insurance technical reserves (Net) 9,588 - 9,588 7,887 - 7,887
12.5 Other provisions II-10 1,756 977 2,733 610 - 610
XIII. SUBORDINATED LOANS II-10 - 25,501 25,501 - 27,644 27,644
XIV. MINORITY INTEREST 21,673 - 21,673 21,631 - 21,631
XV. SHAREHOLDERS' EQUITY 220,349 38,517 258,866 242,724 45,267 287,991
15.1 Paid-in capital II-11 55,125 - 55,125 55,125 - 55,125
15.2 Supplementary capital II-11 211,507 35 211,542 211,555 - 211,555
15.2.1 Share premium II-12 - - - - - -
15.2.2 Share cancellation profits - - - - - -
15.2.3 Marketable securities value 178 35 213 226 - 226
increase fund
15.2.4 Revaluation fund - - - - - -
15.2.5 Value increase in revaluation fund - - - - - -
15.2.6 Other capital reserves - - - - - -
15.2.7. Effect on inflation accounting on 211,329 - 211,329 211,329 - 211,329
share capital
15.3 Profit reserves 7,466 4,925 12,391 4,957 6,576 11,533
15.3.1 Legal reserves 7,466 - 7,466 4,957 - 4,957
15.3.2 Status reserves - - - - - -
15.3.3 Extraordinary reserves - - - - - -
15.3.4 Other profit reserves - 4,925 4,925 - 6,576 6,576
15.4 Profit or loss (53,749) 33,557 (20,192) (28,913) 38,691 9,778
15.4.1 Prior year income/loss (41,376) 32,500 (8,876) (45,347) 25,907 (19,440)
15.4.1.1 Group's share (30,710) 32,500 1,790 (33,815) 25,907 (7,908)
15.4.1.2 Minority shares (10,666) - (10,666) (11,532) - (11,532)
15.4.2 Current year income/loss (12,373) 1,057 (11,316) 16,434 12,784 29,218
15.4.2.1 Group's share (10,735) 1,057 (9,678) 15,290 12,784 28,074
15.4.2.2 Minority shares (1,638) - (1,638) 1,144 - 1,144
TOTAL LIABILITIES 832,637 2,802,375 3,635,012 892,265 3,271,441 4,163,706
The accompanying notes are an integral part of these balance sheets.
III- CONSOLIDATED STATEMENTS OF INCOME
Current Prior
Period Period
31.03.2003 31.03.2002
Note Ref.
INCOME AND EXPENSES (Section Total Total
Five)
I. INTEREST INCOME III-1 113,620 111,244
1.1 Interest on loans 52,563 46,648
1.1.1 Interest on TL loans 37,217 29,030
1.1.1.1 Short term loans 34,827 27,554
1.1.1.2 Medium and long term loans 2,390 1,476
1.1.2 Interest on foreign currency loans 15,237 17,560
1.1.2.1 Short term loans 8,248 15,772
1.1.2.2 Medium and long term loans 6,989 1,788
1.1.3 Interest on loans under follow-up 109 58
1.1.4 Premiums received from Resource Utilization Support Fund - -
1.2 Interest received from reserve deposits 1,520 835
1.3 Interest received from banks 12,976 12,656
1.3.1 The Central Bank of Turkey - -
1.3.2 Domestic banks 6,271 3,008
1.3.3 Foreign banks 6,705 9,648
1.4 Interest received from money market transactions 28,490 28,616
1.5 Interest received from marketable securities portfolio 6,574 15,498
1.5.1 Trading securities 1,081 15,498
1.5.2 Available-for-sale securities 748 -
1.5.3 Held to maturity securities 4,745 -
1.6 Other interest income 11,497 6,991
II. INTEREST EXPENSE III-2 56,450 67,699
2.1 Interest on deposits 44,638 48,340
2.1.1 Bank deposits 3,395 1,504
2.1.2 Saving deposits 16,810 15,587
2.1.3 Public sector deposits - 1
2.1.4 Commercial deposits 15,570 9,373
2.1.5 Other institutions deposits 97 62
2.1.6 Foreign currency deposits 8,702 21,783
2.1.7 Precious metals vault accounts 64 30
2.2 Interest on money market transactions - 30
2.3 Interest on funds borrowed 7,680 13,354
2.3.1 The Central Bank of Turkey - -
2.3.2 Domestic banks 2,212 2,042
2.3.3 Foreign banks 5,468 10,237
2.3.4 Other financial institutions - 1,075
2.4 Interest on securities issued - -
2.5 Other interest expense 4,130 5,975
III. NET INTEREST INCOME (I - II) 57,170 43,545
IV. NET FEES AND COMMISSIONS INCOME 9,613 9,932
4.1 Fees and commissions received 13,740 14,237
4.1.1 Cash loans 1,312 694
4.1.2 Non-cash loans 3,211 1,537
4.1.3 Other 9,217 12,006
4.2 Fees and commissions paid 4,127 4,305
4.2.1 Cash loans 661 1,001
4.2.2 Non-cash loans 126 128
4.2.3 Other 3,340 3,176
V. DIVIDEND INCOME - -
5.1 Trading securities - -
5.2 Available-for-sale securities - -
VI. NET TRADING INCOME (8,514) 4,103
6.1 Profit/losses on trading account securities (Net) 1,573 2,966
6.2 Foreign exchange gains/losses (Net) (10,087) 1,137
VII PROFIT/LOSS FROM HELD TO MATURITY MARKETABLE SECURITIES III-3 - -
VIII. OTHER OPERATING INCOME III-4 4,608 3,679
IX. TOTAL OPERATING INCOME (III+IV+V+VI+VII+VIII) 63,163 61,259
X. PROVISION FOR LOAN LOSSES OR OTHER RECEIVABLES (-) III-5 1,433 5,452
XI. OTHER OPERATING EXPENSES (-) III-6 39,451 29,447
XII. NET OPERATING INCOME (IX-X-XI) 21,993 26,360
XIII. PROFIT/LOSSES FROM ASSOCIATES AND SUBSIDIARIES III-7 - -
XIV. GAIN / (LOSS) ON NET MONETARY POSITION (25,972) (14,610)
XV. INCOME BEFORE TAXES (XII+XIII) (3,979) 11,750
XVI. PROVISION FOR TAXES ON INCOME (-) (7,342) 6,053
XVII. NET OPERATING INCOME/EXPENSE AFTER TAXES (XIV-XV) (11,321) 5,697
XVIII. EXTRAORDINARY INCOME/EXPENSE AFTER TAXES 5 (22)
18.1 Extraordinary net income/expense before taxes 5 (22)
18.1.1 Extraordinary income 40 -
18.1. 2 Extraordinary expense (-) 35 22
18.2 Provision for taxes on extraordinary income - -
XIX. PROFIT/LOSSES ON UNCONSOLIDATED INVESTMENTS (-) III-8 - -
XX. NET PROFIT/LOSSES (XVI+XVII+XVIII-XIX) (11,316) 5,675
20.1 Group's profit/loss III-9 (9,678) 4,548
20.2 Minority shares (1,638) 1,127
XXI. Earnings/Losses per share (102.64) 51.47
The accompanying notes are an integral part of these statements
IV- CONSOLIDATED STATEMENTS OF OFF-BALANCE SHEET COMMITMENTS
Current Period Prior Period
31.03.2003 31.12.2002
Note Ref.
OFF- BALANCE SHEET COMMITMENTS (Section TL FC Total TL FC Total
Five)
A. OFF - BALANCE SHEET COMMITMENTS
(I+II+III)
I. GUARANTEES 669,320 1,843,416 2,512,736 594,229 1,683,508 2,277,737
1.1. Letters of guarantee IV-1 309,455 694,257 1,003,712 297,764 772,282 1,070,046
1.1.1. Guarantees subject to State Tender 308,735 273,593 582,328 297,636 354,962 652,598
Law
1.1.2. Guarantees given for foreign trade 29,364 292 29,656 32,040 284 32,324
operations
1.1.3. Other letters of guarantee 73,396 7,570 80,966 78,392 52,789 131,181
1.2. Banks loans 205,975 265,731 471,706 187,204 301,889 489,093
1.2.1. Import letter of acceptance 648 51,547 52,195 - 45,363 45,363
1.2.2. Other bank acceptances - 51,547 51,547 - 45,363 45,363
1.3. Letters of credit 648 - 648 - - -
1.3.1. Documentary letters of credit 72 348,531 348,603 81 361,814 361,895
1.3.2. Other letters of credit 72 314,946 315,018 81 318,861 318,942
1.4. Refinancing given as guarantee - 33,585 33,585 - 42,953 42,953
1.5. Endorsements - - - - - -
1.5.1. Endorsements to the Central Bank - - - - - -
of Turkey
1.5.2. Other endorsements - - - - - -
1.6. Securities issue purchase - - - - - -
guarantees
1.7. Other guarantees - - - - - -
1.8. Other collaterals - 12,676 12,676 47 1,568 1,615
II. COMMITMENTS - 7,910 7,910 - 8,575 8,575
2.1. Irrevocable commitments 188,047 239,710 427,757 203,700 370,039 573,739
2.1.1. Asset purchase commitments 186,477 239,710 426,187 203,700 370,039 573,739
2.1.2. Deposit purchase and sales - - - 1,124 - 1,124
commitments
2.1.3. Share capital commitment to - 239,710 239,710 - 370,039 370,039
associates and subsidiaries
2.1.4. Loan granting commitments - - - - - -
2.1.5. Securities issue brokerage 100,940 - 100,940 126,895 - 126,895
commitments
2.1.6. Commitments for reserve deposit - - - - - -
requirements
2.1.7. Commitments for credit card limits - - - - - -
2.1.8. Other irrevocable commitments 72,817 - 72,817 75,681 - 75,681
2.2. Revocable commitments 12,720 - 12,720 - - -
2.2.1. Revocable loan granting 1,570 - 1,570 - - -
commitments
2.2.2. Other revocable commitments - - - - - -
III. DERIVATIVE FINANCIAL INSTRUMENTS 1,570 - 1,570 - - -
3.1. Forward foreign currency buy/sell IV-2 171,818 909,449 1,081,267 92,765 541,187 633,952
transactions
3.1.1. Forward foreign currency 131,648 430,010 561,658 92,765 198,349 291,114
transactions-buy
3.1.2. Forward foreign currency 29,221 245,244 274,465 23,608 120,211 143,819
transactions-sell
3.2. Swap transactions related to f.c. 102,427 184,766 287,193 69,157 78,138 147,295
and interest rates
3.2.1. Foreign currency swap-buy 40,170 460,457 500,627 - 342,838 342,838
3.2.2. Foreign currency swap-sell 37,210 221,852 259,062 - 170,664 170,664
3.2.3. Interest rate swaps-buy 2,960 238,605 241,565 - 172,174 172,174
3.2.4. Interest rate swaps-sell - - - - - -
3.3. Foreign currency and interest rate - - - - - -
options
3.3.1. Foreign currency options-buy - - - - - -
3.3.2. Foreign currency options-sell - - - - - -
3.3.3. Interest rate options-buy - - - - - -
3.3.4. Interest rate options-sell - - - - - -
3.4. Foreign currency futures - - - - - -
3.4.1. Foreign currency futures-buy - 18,982 18,982 - - -
3.4.2. Foreign currency futures-sell - 9,490 9,490 - - -
3.5. Interest rate futures - 9,492 9,492 - - -
3.5.1. Interest rate futures-buy - - - - - -
3.5.2. Interest rate futures-sell - - - - - -
3.6. Other - - - - - -
B. CUSTODY AND PLEDGED ITEMS (IV+V) - - - - - -
IV. ITEMS HELD IN CUSTODY 1,200,141 497,702 1,697,843 1,303,993 431,863 1,735,856
4.1. Assets under management 969,512 331,596 1,301,108 911,142 288,790 1,199,932
4.2. Investment securities held in - - - - - -
custody
4.3. Checks received for collection 369,140 217,527 586,667 316,580 162,802 479,382
4.4. Commercial notes received for 581,278 49,430 630,708 579,042 49,674 628,716
collection
4.5. Other assets received for 16,412 20,994 37,406 14,158 23,566 37,724
collection
4.6. Assets received for public 1,086 43,645 44,731 489 52,748 53,237
offering
4.7. Other items under custody - - - - - -
4.8. Custodians 1,596 - 1,596 873 - 873
V. PLEDGED ITEMS - - - - - -
5.1. Marketable securities 230,629 166,106 396,735 392,851 143,073 535,924
5.2. Guarantee notes 14,393 10,966 25,359 13,210 9,406 22,616
5.3. Commodity 6,843 1,143 7,986 6,977 1,482 8,459
5.4. Warranty 62,961 15,392 78,353 211,970 - 211,970
5.5. Immovable - - - - - -
5.6. Other pledged items 114,911 55,182 170,093 125,596 41,641 167,237
5.7. Pledged items-depository 31,521 83,423 114,944 35,098 90,544 125,642
TOTAL COMMITMENTS (A+B) 1,869,461 2,341,118 4,210,579 1,898,222 2,115,371 4,013,593
The accompanying notes are an integral part of these statements.
SECTION THREE
ACCOUNTING PRINCIPLES
I. Basis of Presentation
The Parent Bank prepares its financial statements in accordance with the "
Accounting Application Regulations" (AAR) based on Article 13 named as "
Accounting and Recording System" of the Banking Law 4389 and related communiques
and related explanations and further communiques that add or cause a change on
the content of the relevant communiques.
Presentation of the financial statements in accordance with the current
purchasing power of money
The "Accounting Standard on Financial Statements at Hyperinflation Periods",
Communique No:14, of "Accounting Application Regulations" (AAR) became effective
from July 1, 2002.
In accordance with the communique No:14, the parent company Bank's financial
statements should be restated, taking the current period equivalent purchasing
power of Turkish lira into account. In other words, Communique No:14 states
that, financial statements prepared in terms of the domestic currency of a
country with high inflation rate should be restated in accordance with the
equivalent purchasing power of the domestic currency at the balance sheet date.
Prior period financial statements should also be restated in their entirety to
the measuring unit current at the balance sheet date. One characteristic that
necessitates the application of inflation accounting under the provisions of
Communique No : 14 is a cumulative three-year inflation rate approaching or
exceeding 100%. Restatement of financial statements is based on both the
principles described in Communique No.14 and the wholesale price indices
published in its appendix and the wholesale price indices announced by the State
Institute of Statistics. Detailed information on the application of inflation
accounting is given in the section V, footnote VI, "Footnotes and Explanations
on Inflation Accounting" of the following footnotes.
Other valuation methods
Other basis of valuation used for assets and liabilities in the preparation of
financial statements are explained among the accounting principles for the
related assets and liabilities.
Changes in Accounting Policies and Valuation Methods in the Current Period
Changes in Accounting Policies
Until September 30, 2002, the parent company Bank's financial statements were
being prepared in accordance with the Uniform Chart of Accounts, standard
balance sheet, income statement, supplementary financial statements and
footnotes to these financial statements and the explanations related to the
applications of such financial statements and the accounting and valuation
principles thereto that are based on the article 13 of the Banking Law 4389 as
revised by Law Number 4672 and 4491 and the "Accounting Standard on Financial
Statements at Hyperinflation Periods", Communique No:14, published at Official
Gazette dated June 22, 2002 and numbered 24793 and which is related to the "
Regulation of Accounting Applications" and became effective from July 1, 2002.
After October 1, 2002, the Bank's financial statements are prepared in
accordance with the accounting policies explained below and included in both
Communique No:14 and the other communiques related to the Regulation of
Accounting Applications effective from October 1, 2002. Accordingly, assets and
liabilities were classified as of October 1, 2002 in accordance with the
provisions of the related communiques and the required changes for the other
accounts were made and the effects of such changes were reflected in the income
statement for 2002.
II- Presentation of the Information Regarding the Parent Bank and the
Group Companies Included in the Consolidation:
Turk Ekonomi Bankasi Anonim Sirketi and its financial institutions, The Economy
Bank N.V. (Economy Bank), Petek International Holdings B.V. (Petek
International), TEB Yatirim Menkul Degerler A.S. (TEB Yatirim), TEB Portfoy
Yonetimi A.S. (TEB Portfoy), TEB Finansal Kiralama A.S. (TEB Leasing), TEB
Factoring A.S. (TEB Factoring) and TEB Sigorta A.S. (TEB Sigorta) are included
in the accompanying consolidated financial statements by full consolidation
method. The provisions of the Communique 15 "The Standard of Preparation of
Consolidated Financial Statements and Accounting for the Subsidiaries,
Participations and the Entities and Participations Jointly Controlled" of the
AAR were considered while determining the institutions to be consolidated. The
Parent Bank and the institutions included in the consolidation will be named as
"the Group".
Certain changes were made on the financial statements of the subsidiaries, which
were prepared in accordance with the principles and rules regarding financial
statement and report presentation stated in the Turkish Commercial Code and/or
Financial Leasing Law and/or XI/1 and XI/11 numbered communiques of the Capital
Board Market and any other communiques which adds and changes statements at the
formal communiques, in order to present their financial statements in accordance
with to AAR.
Explanations on Consolidation Method and Scope
The commercial names of the institutions included in consolidation and the
locations of the head offices of these institutions:
Commercial Name: Head Office
---------------------- ---------------
Economy Bank The Netherlands
Petek International The Netherlands
TEB Yatirim Istanbul
TEB Portfoy Istanbul
TEB Leasing Istanbul
TEB Factoring Istanbul
TEB Sigorta Istanbul
Full consolidation method is used for all the financial institutions included in
the consolidation.
The unconsolidated subsidiary TEB Kiymetli Madenler Anonim Sirketi is valued at
cost. The financial statements of TEB Kiymetli Madenler Anonim Sirketi is not
included in the consolidation as of March 31, 2003 in accordance with the AAR's
materiality principle.
When there are differences between the accounting policies of the subsidiaries
and the Parent Bank, the financial statements are adjusted in accordance with
the ARR principles considering the materiality. The financial statements of the
subsidiaries are prepared as of March 31, 2003 and December 31, 2002 and
restated in accordance with the inflation accounting principles.
The transactions and balances between the Parent Bank and the subsidiaries are
netted off.
No subsidiaries were acquired during the current period. The Group does not have
any goodwill related to the subsidiaries. No difference occured while applying
the fair values at the foreign entities' assets and liabilities. There are no
subsidiaries disposed in at the current or previous periods.
Explanations on Foreign Currency Transactions
Gains or losses arising from foreign currency transactions are reflected in the
statement of income as they are realized during the year. Foreign currency
assets and liabilities at each year-end are translated into Turkish lira at the
year-end foreign exchange buying rates announced by the Parent Bank and the
resulting foreign exchange gains or losses are recorded in the statement of
income as foreign exchange gain or loss. The USD exchange rate used for
translating foreign currency transactions into Turkish Lira and reflecting these
to consolidated financial statements as of March 31, 2003 is TL 1,700,073
(December 31, 2002 - TL 1,639,745 (in full TL)).
The Group's total net foreign exchange loss included in the net income of the
period is TL (10,087) (December 31, 2002 - TL 4,722). The amount results from
recording of the foreign exchange gain amounting to TL 4,325 related to the
foreign currency indexed loans under the "Interest Income" in accordance with
the Uniform Chart of Accounts.
There are no capitalized foreign exchange losses.
The information regarding the principles of foreign currency risk management are
stated in Section Four, Note III.
The net investment in foreign entities of the Group as of the related year-ends
were translated into Turkish lira by applying the Parent Bank's exchange rates
prevailing at respective dates. The resulting foreign exchange gains or losses
are recorded in the statement of income.
There are no debt securities issued. Foreign exchange gains and losses arising
from translating monetary financial assets are reflected to foreign exchange
gains / (losses) in the statement of income.
III- Explanations on Forward, Option Contracts and Derivative Instruments
The Parent Company Bank makes forward currency agreements and swap transactions
to reduce the foreign currency risk. In accordance with Communique No:1, "
Accounting Standards of Financial Instruments" of AAR, derivative financial
instruments that are not designated as hedging instruments are classified as
held-for-trading and carried at fair value.
As of March 31, 2003, foreign currency forward and swap transactions were
evaluated by comparing year- end foreign exchange rates of the Parent Bank with
the forward rate amortized to the balance sheet date, since the book values
approximate their fair values. The resulting gain or loss is reflected to the
income statement.
There are no embedded derivatives separated from the host contract or that are
designated as hedging instruments.
Before the effective date of AAR, above-mentioned transactions had been recorded
by means of arbitrage accounting, the changes at the foreign currencies had been
recorded through evaluation under accounts and the liabilities at the maturity
had been followed under off balance sheet commitments. In order to avoid the
effects of the changes at the rates on the income statement, the amounts
followed under off balance sheet commitments had been evaluated and the
generated differences had been recorded under the income and expense accrual
accounts.
IV- Netting of Financial Assets and Liabilities
Financial assets and liabilities are netted off when the Parent Bank has a legal
right and sanction regarding netting off, and when the Bank has the intention of
collecting or paying the net amount of related assets and liabilities or when
the Bank has the right to off set the assets and liabilities simultaneously.
There is no netting of financial assets and liabilities at the accompanying
financial statements as of March 31, 2003.
V- Interest Income and Expense
Interest income and expense are recognized in the income statement for all
interest bearing instruments on an accrual basis using the effective interest
method. In accordance with the related regulation, the due and not due interest
accruals of the non-performing loans are cancelled and interest income related
to these loans are recorded as interest income only when collected.
VI- Fees and Commission Income and Expense
Commission income and fees for various banking services in the period of
collection.
Fees and commissions for funds borrowed paid to other financial institutions,
which is a part of the transaction costs, are recorded as prepaid expenses and
considered as a part of interest of the related funds borrowed and accordingly,
recorded as expense monthly.
The dividend income is reflected to the financial statements on cash basis when
the profit distribution is realized by the participations and the subsidiaries.
VII- Securities Held for Trading
Trading securities are securities which were either acquired for generating a
profit from short-term fluctuations in price or dealer's margin, or are
securities included in a portfolio in which a pattern of short-term profit
taking exists. Trading securities are initially recognized at cost. Transaction
costs of the related securities are included in the initial cost. The positive
difference occurred between the cost and fair value of the marketable security
is accounted as interest and income accrual. The negative difference occurred is
accounted under marketable security diminution in value account.
Since the foreign currency financial assets held in the same portfolio
(Eurobond) do not hold a price formed in an active market and since the fair
values of these securities could not be determined reliably, they are valued at
amortized cost by using relevant interest rates as stated in the articles 8 and
9 of the AAR's Communique No:1, "Accounting Standards of Financial Instruments."
VIII- Sales and Repurchase Agreements and Lending of Securities
The Parent Bank has been following the repurchase agreements made with the
clients as a balance sheet item since February 1, 2002 in accordance with the
Uniform Chart of Accounts. Accordingly, the government bonds and treasury bills
sold to clients under repurchase agreements are recorded under the related
securities account in the financial statements and are valued according to the
valuation principles of the related account. Funds obtained by repurchase
agreements are classified as a separate sub account under money markets account
in the liabilities. The interest expense accruals calculated by means of
effective interest method for the funds obtained by means of repurchase
agreements are reflected to the interest and other expense accruals account in
the balance sheet.
The above-mentioned transactions are short term and consists of domestic public
sector debt securities.
The income and expenses generated from above mentioned operations are reflected
to the "Interest Income on Marketable Securities" and "Interest Expense on
Marketable Securities subject to Repurchase Agreement" accounts in the statement
of income.
As of March 31, 2003, the Parent Bank does not have any reverse repo
transactions (December 31, 2002 - None).
As of March 31, 2003, the Parent Bank does not have any lent marketable
securities (December 31, 2002 - None).
IX- Securities Held to Maturity, Securities Available for Sale and Bank
Originated Loans and Receivables
Securities held to maturity are obtained with the intention of holding till the
maturity of the security, and accordingly, including the funding abilities, the
relevant conditions for this exist. This portfolio includes securities with
fixed or determinable payments and with a fixed maturity, excluding bank
originated loans and receivables.
Securities available for sale include all securities other than bank originated
loans and receivables, securities held to maturity and securities held for
trading.
The marketable securities are initially recognized at cost including the
transaction costs.
Foreign currency denominated financial assets included in the available for sale
securities portfolio (Eurobonds) are stated by translating the cost value to
Turkish lira at The Bank's exchange rates. The differences generated from the
translation is reflected to foreign currency gains and losses account at the
relevant period. Since these securities do not hold a price formed in an active
market and since the fair values of these securities could not be determined
reliably, they are valued at amortized cost by using relevant interest rates as
stated in the articles 8 and 9 of the AAR's Communique No:1, "Accounting
Standards of Financial Instruments." The differences between the cost and the
valued amounts are reflected to the income accrual accounts.
Loans and receivables originated by the Bank are those generated by lending
money and exclude those that are held with the intention of trading or selling
in near future.
Held to maturity securities are remeasured at amortized cost by using original
effective interest rate and reserve for impairment in value is provided, if any.
The interests received from securities held to maturity are recorded as interest
income. There are no profit shares.
There are no financial assets that cannot be classified as securities held to
maturity for two years because of tainting rules.
The Bank classifies securities according to above-mentioned portfolios at the
acquisition date of the related security.
The sale and purchase transactions of the securities held to maturity are
recorded at the delivery dates.
Prior to the effective date of AAR, the Bank had initially recorded marketable
securities held with the intention of not selling till maturity (investment
portfolio), which were given as collateral at cost, and the income accruals of
these securities were calculated by straight line method and reflected to the
financial statements.
X- Unconsolidated Participations and Subsidiaries
Turkish lira participations which are quoted at the stock exchange are valued at
fair value and any positive difference between fair value price and cost is in
included under shareholders' equity in the financial statements. The others are
valued by means of restating their costs and the capital increases after
deducting the ones generated by means of adding the values accumulated at the
revaluation like funds to the capital of the participations, with the rates
applicable for the relevant dates. A provision is provided when there is a
permanent diminution in value. The difference between the fair value and cost
value of the participations valued at fair value is recorded to " Marketable
Security Increase in Value Fund " under the Shareholders' Equity.
Turkish lira subsidiaries are valued by means of restating their costs and the
capital increases after deducting the ones generated by means of adding the
values accumulated at the revaluation like funds to the capital of the
subsidiaries, with the rates applicable for the relevant dates.
There are no foreign currency unconsolidated participations or subsidiaries.
XI- Originated Loans and Receivables and Provisions for Loan Impairment
The Parent Bank initially records originated loans and receivables at cost, and
at the following periods, in accordance with the AAR, Communique No:1, these
loans are remeasured at amortized cost by means of effective interest rate
method. The taxes, transaction expenses and other expenses paid for the
guarantees taken for the originated loans are taken into consideration while
calculating the banks financing cost and these are reflected to the interest
rates of the loans.
Cash loans are recorded in accordance with the regulations stated at the
Communique on the Uniform Chart of Accounts and Its Explanations.
Provision is set for the loans that may be doubtful and the amount is expensed
at the current period. The provisioning criteria for the non-performing loans
are determined by the Bank's management for compensating the probable losses of
the current loan portfolio, by means of evaluating the portfolio for its quality
and risk factors and by means of considering the economical conditions, other
facts and related regulations.
Allowances are computed for group III, group IV, group V loans and reflected in
accordance with the Banking Law No.4389 as revised by Law Number 4672 and 4491,
Article 3, Sub Article 11 and Article 11, Sub Article 12 published on the
Official Gazette No. 24448 dated 30.06.2001 on "Methods and Principles for the
Determination of Loans and Other Receivables to be Reserved for and Allocation
of Reserves" amended by Communiques dated 31.01.02 in the current period
financial statements These provisions are reflected to the statement of income
under "Provision and Diminishing in Value Expenses - Special Provision Expense".
The collection made regarding these loans are first deducted from the principal
amount of the loan and the remaining collections are deducted from interest
receivables.
The collections made regarding the current year provision of the above mentioned
loans are deducted from the "Provision for Loans and Other Receivables" account
in the income statement. The collections made related to the previous years'
written-off loans or allowances are recorded under "Other Operating Income"
account and interest incomes are recorded under the "Interest Received from
Non-performing Loans" account.
Release of provision are removed by means of reversing the amount to the "
Provision and Diminishing in Value Expense - Provision Expense" account.
Allowances recorded in the previous periods and lost its necessity in the
current period are credited to "Collections Regarding Previous Year's Expenses"
account.
Foreign currency denominated loans are recorded at the Turkish Lira equivalent
values at the recording dates and the foreign currency exchange gains generated
from these loans are recorded under the interest income accounts.
XII- Goodwill and Other Intangible Fixed Assets
The negative difference amounting to TL 639 ( 2002 - TL 639 ), between the cost
of TEB Leasing and the Parent Bank's share in its equity as of March 31, 2003,
generating from the changes at the Parent Bank's participation structure in the
year 2000 has been reflected in that related period's income statement for which
AAR, that has been effective since October 1, 2002, was applied for the first
time. The positive difference amounting to TL 416 ( 2002 - TL 416 ), between the
cost of TEB Factoring and the Parent Bank's share in its equity is reflected
under the intangible fixed assets as goodwill in the accompanying consolidated
financial statements after deducting the accumulated amortization amounting to
TL 270 ( 2002 - TL 249 ).
The intangible fixed assets are reflected with their restated costs in
accordance with inflation accounting and depreciated with straight-line method.
The depreciation rate is 20%. The cost of assets subject to depreciation is
restated after deducting the exchange differences, capitalized financial
expenses and revaluation increases, if any, from the cost of the assets.
Major group classified as other intangible fixed assets by the Parent Bank is
soft wares. While determining the depreciation periods of these, the essentials
of General Tax Regulations are taken in to consideration and no special criteria
are used. The useful lives of these assets are determined as 5 years. Soft wares
mainly used are developed within the Parent Bank by the Bank's personnel, and
the expenses regarding these are not capitalized. Software is purchased only in
emergency cases and for special projects.
There are no expected changes in the accounting estimates about the depreciation
rate and method and residual values for the current and future periods.
XIII- Tangible Fixed Assets
Buildings are reflected to the financial statements at their restated costs and
reserve for impairment is provided, if any. In accordance with the Communique
No:14, buildings are valued by real estate expertise companies and the expertise
value is higher than the restated costs at December 31, 2002. The straight-line
method for depreciation is used and economical life is accepted to be 50 years.
Other tangible fixed assets are reflected with their restated cost in accordance
with inflation accounting, and depreciated by straight-line depreciation method.
The depreciation rate is 20%. A prorata basis is used for depreciating assets
held less than one year as of the balance sheet date. The leasehold improvements
are depreciated in accordance with the lease period by means of straight-line
method. The annual rates used, which approximate rates based on the estimated
economic lives of the related assets, are as follow:
%
Buildings 2
Motor vehicles 20
Furniture, fixtures and office equipment 20
Leasehold improvements Lease period-not less than 5 years
Gain profit or loss resulting from disposals of the tangible fixed assets are
reflected to the statement of income as the difference between the net proceeds
and net book value.
The repairment costs of the tangible fixed assets are capitalized if the
operation lengthens the economic life of the asset. Otherwise the repairment
costs are expensed. There are no pledge, mortgage or other restrictions on the
tangible fixed assets.
There are no purchase commitments related to the tangible fixed assets.
There are no expected changes in the accounting estimates, which could have a
significant impact on the current and future periods.
XIV- Leasing Transactions
Leasing of fixed assets are recorded in accordance with AAR, Article 7 of the
Communique No:4, "Accounting Standard for Leasing Transactions." In accordance
with the above-mentioned article, the leasing transactions, which consist only
foreign currency liabilities, are translated to Turkish lira with the exchange
rates effective at the transaction dates and they are recorded both as an asset
and a liability. The foreign currency liabilities are translated to Turkish lira
with the Bank's period end exchange rate. The increases resulting from the
differences in the foreign exchange rates are recorded as expense in the
relevant period. Rent payments consist of financing costs generated due to
leasing, and the amount of the leased asset corresponding to the relevant
period. The financing cost resulting from leasing is distributed through the
agreement period to form a fixed interest rate.
In addition to interest expense, the Parent Bank records depreciation expense in
each period for the leased assets. The depreciation rate is determined in
accordance with the Communique No:2 "Accounting Standard of Tangible Fixed
Assets" and the depreciation rate is 20%.
The gross lease receivables including interest and principal amounts regarding
the Group's financial leasing activities conducted by TEB Leasing as "Lessor"
are stated under the receivables from the financial leasing activities. The
difference between the total of rent payments and the cost of the related fixed
assets are reflected to the" unearned income" account. The interest income is
calculated and recorded as prevailing a stable periodic income ratio over the
lessor's investment on the leased item.
The Group expenses the rent payments made regarding the rent agreements made
under operational activities throughout the rent period in equal amounts.
XV- Provisions and Contingent Liabilities
The provisions and contingent liabilities are determined in accordance with the
Communique No:8 of AAR, except for the general and specific provisions set for
the loans and other receivables. Liabilities generated from previous events are
recorded by the Group immediately at the estimated amounts. The Parent Bank did
not provide an additional provision for contingent liabilities as of March 31,
2003 apart from the doubtful receivable provision and general provision set in
accordance with the released regulations.
XVI- Liabilities Regarding Employee Benefits
In accordance with the existing social legislation, the Group is required to
make lump-sum termination indemnities including retirement and notice payments
to each employee whose employment is terminated due to resignment or for reasons
other than misconduct. The retirement pay is calculated for every working year
within the Group over the wage for 30 days and the notice pay is determined by
the relevant notice period time calculated over the years worked within the
Group. In accordance with AAR, Communique No:10, the Group sets provision for
retirement and notice pay liabilities by taking the actual payment rates for the
previous 5 years into consideration. The Group has no employees contracted for
determined periods.
As of March 31, 2003 the arithmetical average of the actual payments realized
for the previous five years is 8.35% (December 31, 2003 - %8.44 ). The Parent
Bank's consolidated participations and subsidiaries provided full reserve for
retirement pay for the eligible personnel as of March 31, 2003 and 2002.
The Group employees are members of TEB'LILER Foundation. The Parent Bank does
not have any liability to this foundation.
There are no liabilities that require additional provisions related to other
employee rights.
XVII- Taxation
Corporate Tax
In line with the new tax Law number 4842, published in the Official Gazette
dated April 246, 2003, starting with the current year income, the corporate tax
rate to be applied is 30 % (December 31, 2002 - 33%, including fund share).
Corporate tax is to be paid in a lump sum payment within the specified period
allowed by the law for the declaration of tax.
As long as the Group does not distribute the yearly income for 2003, there will
not be any withholding taxes with regards to this income.
The addition of current year profit to the share capital will not be regarded as
a profit distribution and thus, will be exempt from any withholding taxes.
The Parent Bank's distribution of profit to "Fully-liable" institutions will
also be exempt from any withholding taxes. The Parent Bank's distribution of
profit to real persons, "semi-liable" institutions, and those institutions that
are not liable and or exempt from both corporation tax and income tax, will be
subject to withholding taxes.
In accordance with the Tax Procedural Code explained above, in every three-month
period the parent Bank's tax assessment is made and the temporary corporate tax
is calculated over the income generated in the three-month period at a rate of
30% and paid in cash up to the fifth day of the second month following the
period. The corporate tax provision is recorded under "Provisions and
Diminishing in Value Expenses-Tax Provision" account and expensed at every three
month period end. At the corporate tax payment periods, the cash payments made
are deducted from the tax liability calculated over the yearly income and the
remaining liability is paid in cash.
In accordance with the Tax Procedural Code, the losses presented in the tax
declarations can be deducted from the tax assessments at the current period
within five years.
In Turkey, tax returns are filed during the fourth month following the year-end.
According to existing tax regulations, the tax authorities may examine such
returns and the underlying accounting records within five years.
Deferred tax
Certain income and expense items are taxable in periods different from those in
which they are recognized in the financial statements. Deferred taxes on such
timing differences are calculated and reflected in full in the accompanying
financial statements. The Group does not compute deferred tax on the effects of
inflation accounting.
As of March 31, 2003 and December 31, 2002, the deferred tax asset is included
in other assets in the accompanying balance sheet and the deferred tax provision
is stated under the tax provision in the accompanying income statement.
XVIII- Additional Explanations on Borrowings
The Group has not issued any debt securities.
The Group has not issued convertible bonds during the current period or the
previous period.
XIX- Paid-in Capital and Share Certificates
The Parent Bank does not have any costs related to share issue as of March 31,
2003. In the General Assembly meeting of the Parent Bank, dated March 27, 2003,
it was decided that the profit for the year 2002, amounting TL 18,514 (in
equivalent purchasing power as of December 31, 2002 ) will be distributed to the
shareholders after providing the legal reserves, which will amount to 276
(Nominal full TL) of dividend for every 1,000 TL nominal shares owned by each
shareholder.
XX- Acceptances
Acceptances are realized simultaneously with the payment dates of the clients
and they are presented as commitments in off-balance sheet accounts.
There are no acceptances presented as liabilities against any assets.
XXI- Government Incentives
There are no government incentives utilized by the Group.
XXII- Securities at Custody
Securities at custody held by the Parent Bank on behalf of clients are not
reflected to the financial statements since they are not the Bank's assets.
XXIII- Impairment of Assets
At every balance sheet date, the evidence on impairment in value of assets is
evaluated objectively for existence. When an evidence regarding impairment in
value exists, the market value of the asset is determined. The difference
between book and net realizable values of the asset is recorded as provision for
impairment in the balance sheet and as an expense in the income statement.
XXIV- Segment Reporting
Segment reporting will be made effective January 1, 2004.
XXV- Other Matters
Explanation for convenience translation to English:
The accounting principles used in the preparation of the accompanying
consolidated financial statements differ from International Financial Reporting
Standards (IFRS) and so far as such differences apply to the consolidated
financial statements of the Bank they relate mainly, but not limited, to the
format of consolidated financial statements and disclosure requirements,
accounting for deferred taxes and reserve for retirement pay liabilities. The
effects of the differences between these accounting principles and the
accounting principles generally accepted in the countries in which the
accompanying financial statements are to be used and IFRS have not been
quantified in the accompanying financial statements. Accordingly, the
accompanying consolidated financial statements are not intended to present the
consolidated financial position and results of its consolidated operations in
accordance with accounting principles generally accepted in the countries of
users of the financial statements and IFRS.
There are other matters that are required to be disclosed.
SECTION FOUR
INFORMATION ON FINANCIAL STRUCTURE OF THE GROUP
I- Consolidaded Capital Adequacy Standard Ratio
The method used for risk measurement for capital adequacy standard ratio is
performed in accordance with the Communique on "Measurement and Assessment of
Banks Capital Adequacies ", which was published on January 31, 2002 in the
Official Gazette numbered 24657. The consolidated capital adequacy ratio of the
Parent Company Bank, calculated in accordance with the Communique on
"Measurement and Assessment of Banks Capital Adequacies " is %15.18 ( December
31, 2002 - 16.75% ).
In the computation of capital adequacy standard ratio, information prepared in
accordance with statutory accounting requirements are used. Additionally, the
market risk amount is calculated in accordance with the communique on the
"Internal Control and Risk Management Systems of the Bank" and is taken in to
consideration in the capital adequacy standard ratio calculation.
The values deducted from the capital in the shareholders' equity computation are
not considered while calculating risk-weighted assets, non-cash loans and
contingent liabilities. Assets subject to depreciation and depletion among
risk-weighted assets are included in the calculations over their net book values
after the relative depreciations and provisions are deducted.
When calculating the basic amounts subject to credit risk regarding the
transactions on the non-cash loans, the net receivable amount from the counter
parties found by means of deducting the provision amount set in accordance with
the "Communique on Methods and Principles for the Determination of Loans and
Other Receivables to be Reserved for and Allocation of Reserves" is multiplied
by the rates presented at the Clause 1, Article 21 of the "Communique on
Regulations on the Establishment and Operations of Groups", and included in the
related risk group and weighted by the related group's risk.
Receivables from counter parties generated from foreign currency and interest
rate transactions are included in the related risk group at the loan conversion
rates stated in Clause 2, Article 21 of the "Communique on Regulations on the
Establishment and Operations of Banks" and weighted for a second time by the
weight of the related risk group.
Information related to the capital adequacy ratio:
Consolidated Parent Bank
Risk Weight Risk Weight
0% 20% 50% 100% 0% 20% 50% 100%
Risk Weighted Assets, Liabilities
and Non Cash Loans
Balance Sheet items (Net) 1,191,063 883,585 123,985 1,246,228 868,564 239,135 21,832 854,524
Cash 84,571 - - - 84,554 - - -
Due from Groups 245,994 883,585 - 10,993 245,994 239,135 - 711
InterGroup money market 347,554 - - - 347,554 - - -
placements
Receivables from reverse repo 12,179 - - - - - - -
transactions
Reserve deposits 135,513 - - - 135,513 - - -
Special finance houses - - - - - - - -
Loans 348,737 - 21,832 1,142,042 39,794 - 21,832 800,690
Loans under follow-up (Net) - - - 5,115 - - - 5,115
Subsidiaries, associates and - - - - - - - -
investments held
to maturity
Miscellaneous receivables - - - 2,846 - - - 2,108
Marketable securities held to - - - - - - - -
maturity (Net)
Advances for assets acquired by - - - - - - - -
financial
leasing
Financial lease receivables - - 102,153 - - - - -
Leased assets (Net) - - - - - - - -
Fixed assets (Net) - - - 41,416 - - - 34,057
Other assets 16,515 - - 43,816 15,155 - - 11,843
Off balance sheet items 268,315 433,298 245,118 64,986 261,360 384,105 232,398 52,177
Guarantees and pledges 24,473 427,191 58,641 36,391 19,088 379,600 58,641 29,729
Commitments 241,280 - 186,477 - 239,710 - 173,757 -
Other off balance sheet items - - - - - - - -
Transactions related with - - - 3,945 - - - 4,743
derivative financial
instruments
Interest and income accruals 2,562 6,107 - 24,650 2,562 4,505 - 17,705
Non risk weighted accounts - - - - - - - -
Total Assets Subject to Risk 1,459,378 1,316,883 369,103 1,311,214 1,129,924 623,240 254,230 906,701
Total Risk Weighted Assets - 263,377 184,552 1,311,214 - 124,648 127,115 906,701
Summary information related to the capital adequacy ratio:
Consolidated Parent Bank
Current Prior Current Prior
Period Period Period Period
Total Risk Weighted Assets (*) 1,819,068 1,840,016 1,196,439 1,239,473
Shareholders' Equity 276,076 308,261 167,998 190,865
Shareholders' Equity / Total risk weighted assets (CAR (%)) 15.18 16.75 14.04 15.40
(*) The above mentioned amounts consist of base amounts of the market risk
which are TL 59,925 and TL 37,975 as consolidated and as for the Parent Bank
basis, respectively, for the current period and TL 56,477 and TL 22,114 for the
previous period.
Information related to the shareholders' equity components :
Parent Bank
Consolidated
Current Prior Current Prior
Period Period Period Period
MAIN CAPITAL
Paid-in Capital 55,125 55,125 55,125 55,125
Nominal capital 55,125 55,125 55,125 55,125
Capital commitments (-) - - - -
Effect on Inflation Accounting on Share Capital 211,329 211,329 211,329 211,329
Share Premium - - - -
Legal Reserves 12,391 11,533 2,409 -
First legal reserve (Turkish Commercial Code 466/1) 7,466 4,957 2,409 -
Second legal reserve (Turkish Commercial Code 466/2) - - - -
Other legal reserve per special legislation 4,925 6,576 - -
Statute Reserves - - - -
Extraordinary reserves - - - -
Reserves allocated by the General Assembly - - - -
Retained earnings - - - -
Accumulated loss - - - -
Foreign currency share capital exchange difference - - - -
Profit - 29,218 6,679 20,809
Current period profit - 29,218 4,385 20,809
Prior period profit - - 2,294 -
Loss (-) (20,192) (19,440) - -
Current period loss (11316) - - -
Prior period loss (8,876) (19,440) - -
Total Main Capital 258,653 287,765 275,542 287,263
SUPPLEMENTARY CAPITAL
Revaluation Fund - - - -
Furniture, fixture and vehicles - - - -
Buildings - - - -
Profit on sale of associates, subsidiaries and buildings to be - - - -
transferred to share capital
Revaluation fund of leasehold improvement - - - -
Increase in the Value of Revaluation Fund - - - -
Foreign Exchange Differences - - - -
General Reserves 6,470 6,848 6,470 6,848
Provisions for Possible Losses - - - -
Subordinated Loans 25,501 27,644 25,501 27,644
Marketable Securities and Investment Securities Value Increase 213 226 213 226
Fund
Associates and subsidiaries 213 226 213 226
Available for sale securities - - - -
Structured positions - - - -
Total Supplementary Capital 32,184 34,718 32,184 34,718
TIER III CAPITAL - - - -
CAPITAL 290,837 322,483 307,726 321,981
DEDUCTIONS FROM THE CAPITAL 14,761 14,222 139,728 131,116
Investments in unconsolidated financial companies whose main 781 878 129,363 120,054
activities are money and
capital markets, insurance and that operate with licenses
provided in accordance with
special laws
Leasehold improvements 8,379 8,483 6,391 7,172
Start-up costs - -
Prepaid expenses 5,185 4,695 3,974 3,890
The negative difference between the market values and the - - - -
carrying amounts for
unconsolidated investments, subsidiaries, other investments and
fixed assets
Subordinated loans given to other Groups which operate in Turkey - - - -
Goodwill (Net) 416 166 - -
Capitalized expenses - - - -
Total Shareholder's Equity 276,076 308,261 167,998 190,865
II- Consolidated Market Risk
The Group has determined market risk management operations and has taken the
necessary precautions in order to hedge market risk within its financial risk
management purposes, in accordance with the Communique on "Internal Control and
Risk Management Systems of Groups" announced in the 24312 numbered and February
8, 2001 dated Official Gazette.
The interest rate and exchange rate risks of the financial positions taken by
the Group related to balance sheet and off-balance sheet accounts are measured
and while calculating the capital adequacy, the amount subject to VAR is taken
into consideration by the standard method. Scenario analysis and stress tests
are used additionally in market risk computations.
In order to measure the market risk of the Parent Bank, the Board of Directors
has determined risk management strategies in accordance with the proposals of
the Top Management Risk Committee and these strategies are forced to be followed
up periodically. The Board of Directors evaluates the basic risks faced and
determines limitations accordingly. The limits are revised periodically.
Additionally the Board of Directors has urged the risk management group and the
top management to take necessary precautions to consider, evaluate, control and
to control the variety of risks the Bank faces.
Consolidated Parent Bank
Capital to be employed for interest rate risk - standard method 2,687 2,386
Capital to be employed for general market risk 2,678 2,386
Capital to be employed for specific risk 9 -
Capital to be employed for options subject to interest rate risk - -
Capital to be employed for common stock position risk - Standard method - -
Capital to be employed for general market risk - -
Capital to be employed for specific risk - -
Capital to be employed for options subject to common stock position risk - -
Capital to be employed for currency risk - Standard method 2,106 652
Capital liability 2,106 652
Capital to be employed for options subject to currency risk - -
Total Value-at-risk (VAR)-Internal Model - -
Total capital to be employed for market risk 4,794 3,038
Amount subject to market risk 59,925 37,975
III- Consolidated Foreign Currency Risk
Foreign currency risk indicates the possibilities of the potential losses that
Banks are subject to due to the exchange rate movements in the market. While
calculating the share capital requirement, all foreign currency assets,
liabilities and forward transactions of the Parent Bank are taken into account.
Net short and long position of Turkish Lira equivalent of each foreign currency
is calculated. The value, which will be a base for calculating the share capital
requirement, is computed by taking the higher absolute value of the position by
adding to absolute net gold position. Share capital requirement is computed over
of this amount. The Board of Directors sets limits for the positions, which are
followed up daily. Additionally, possible value changes in the existing or
possible foreign currency positions are observed together with the follow-up of
the foreign currency risk in accordance with the provisions of the "Communique
on Internal Control and Risk Management Systems of Banks".
As an element of the Group's risk management strategies, foreign currency
liabilities are hedged against exchange rate risk by derivative instruments.
The Board of Directors of the Parent Bank determines the short position limits
that the Bank can hold in accordance with the present legal limitations. The
Treasury Department of the Bank is responsible for the management of Turkish
Lira or foreign currency price, liquidity and affordability risks that could
occur in the domestic and international markets. The Risk Control Department
continuously controls risk and risk related transactions occurring in the money
markets and prepares weekly reports for the Bank's Asset-Liability Committee.
The related principles and limitations of the counterparties are determined by
the Loan Committee. The limits concerning the maturity structure of the foreign
currency transactions and interest rates are examined by the Asset-Liability
Committee.
As of March 31, 2003, the Group's net long position is TL 9,473 (December 31,
2002 - TL 24,286, net short) resulting from short position amounting to TL
34,250 (December 31, 2002- TL 64,849) on the balance sheet and long position
amounting to TL 43,723 (December 31, 2002 - 40,563 ) from off-balance sheet
position.
The announced current foreign exchange buying rates of the Parent Bank at the
balance sheet date and the previous five working days are as follows:
24/3/03 25/3/03 26/3/03 27/3/03 28/3/03 31/3/03
USD 1,746,390 1,734,240 1,700,066 1,705,559 1,708,213 1,700,073
CHF 1,257,724 1,258,414 1,226,131 1,234,910 1,239,168 1,251,357
GBP 2,744,221 2,733,105 2,672,620 2,684,835 2,669,206 2,682,487
JPY 14,445 14,454 14,104 14,207 14,197 14,289
EUR 1,857,985 1,855,637 1,811,081 1,829,724 1,833,254 1,850,359
The simple arithmetical average of the major current foreign exchange buying
rates of the Bank for the thirty days before March 31, 2003 is as follows:
Monthly Average
FX rates
USD 1,657,506
CHF 1,215,892
GBP 2,621,405
JPY 13,936
EUR 1,789,663
Information on the foreign currency risk of the Group:
Current Period EUR USD YEN OTHER FC TOTAL
Assets
Cash (cash in vault, foreign currency cash, money 25,742 287,800 41 3,187 316,770
in transit, cheques purchased) and balances with
the Central Bank of Turkey
Due from other Banks and financial institutions 75,484 714,716 274 26,458 816,932
Trading securities (**) 11,063 20,509 - 4,422 35,994
Investment securities available-for-sale - 43,950 - - 43,950
Loans (**) 286,738 855,214 - 17,425 1,159,377
Investments in subsidiaries and participations - - - - -
Investment securities held-to-maturity - 1,606 - 1,329 2,935
Property and equipment 759 - - - 759
Goodwill - - - - -
Other assets 101,314 273,584 - 16,510 391,409
Total Assets 501,100 2,197,379 315 69,331 2,768,125
Liabilities
Bank deposits 4,658 11,075 3 16,774 32,510
Foreign currency deposits (*) 266,540 1,924,848 213 51,657 2,243,258
Funds provided from other financial institutions 33,397 367,937 7,319 6,809 415,462
Marketable securities issued - - - - -
Miscellaneous payables 25,987 18,825 - 6,328 51,140
Other liabilities 34,819 24,365 - 821 60,005
Total liabilities 365,401 2,347,050 7,535 82,389 2,802,375
Net Balance Sheet Position 135,699 (149,671) (7,220) (13,058) (34,250)
Net Off-Balance Sheet Position (123,805) 147,003 - 20,525 43,723
Financial derivative assets 129,331 305,992 - 41,263 476,586
Financial derivative liabilities 253,136 158,989 - 20,738 432,863
Non-cash loans (***) 280,962 377,928 5,754 29,613 694,257
Prior Period
Total Assets 526,177 2,585,706 21,487 114,206 3,247,576
Total Liabilities 464,194 2,734,074 3,312,425
907 113,250
Net Balance Sheet Position 61,983 (148,368) 20,580 956 (64,849)
Net Off-Balance Sheet Position (116,709) 190,066 (20,323) (12,471) 40,563
Non-cash loans (***) 199,026 539,925 4,766 28,565 772,282
(*) Gold account deposits amounting to TL 15,927 (December 31, 2002 - TL
25,238) are included in the foreign currency deposits.
(**) Foreign currency indexed factoring receivables amounting to TL 13,633
and loans amounting to TL 79,991 (December 31, 2002 - TL 90,372) are included in
the loan portfolio.
(***) The amount does not have any impact on the net off-balance sheet
position.
IV- Consolidated Interest Rate Risk
Interest rate risk shows the loss probability related to the changes in the
interest rates depending on the Parent Bank's position, and it is managed by the
Treasury Department. The interest rate sensitivity of assets, liabilities and
off-balance sheet items related to this risk are measured by using the standard
method. The first step at calculation of interest rate risk, is to place the
instruments subject to interest rate risk in the appropriate one of the 13
maturity sections according to the remaining time to maturity or to the
reprising. At the second step, the instruments with variety of maturities are
weighted according to their risks for reflecting the interest rate risk
volatilities that match their maturities.
The first priority of the Group's risk management is to protect from interest
rate volatility. All types of sensitivity analysis performed within the context
is calculated by the risk management and reported to the Asset-Liability
Committee.
Work is performed regarding interest income according to the macro economical
indicators in the Group's budget estimations and the effects of the market
interest fluctuations on the financial position and cash flow are purified at
the maximum level possible by means of target revisions.
The Bank management follows the market interest rates daily and determines the
interest rates of the Bank when necessary.
Since the Group does not permit or imposes limits on maturity mismatches, it is
not expected that the Group will face a significant interest rate risk.
Information related to the interest rate sensitivity of assets, liabilities and
off-balance sheet items based on reprising dates):
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Current Period
Assets
Cash (cash in vault, foreign 381,507 - - - - 84,571 466,078
currency cash, money in
transit, cheques purchased) and
balances with the Central Bank
of Turkey
Due from Banks and other 941,071 4,000 10,500 4,295 - 283,988 1,243,854
financial institutions
Trading securities 5,738 18,128 3,282 17,283 3,872 - 48,303
Securities available-for-sale - - 36,014 7,936 - 9 43,959
Loans 369,496 343,204 343,533 239,579 143,122 14,720 1,453,654
Securities held-to-maturity 54 39,861 - 3,497 - - 43,412
Other assets 50,229 66,242 33,158 38,374 51,524 96,225 335,752
Total Assets 1,748,095 471,435 426,487 310,964 198,518 479,513 3,635,012
Liabilities
Bank deposits 52,849 2,256 - - - 1,382 56,487
Other deposits 1,825,654 294,264 47,633 153,423 105,881 168,163 2,595,018
Miscellaneous payables 5,071 - 5,452 - - 45,137 55,660
Marketable securities issued - - - - - - -
Funds provided from other 132,983 236,129 43,073 11,775 25,286 - 449,246
financial institutions
Other liabilities 30,786 42,107 5,392 4,918 11,022 384,376 478,601
Total Liabilities 2,047,343 574,756 101,550 170,116 142,189 599,058 3,635,012
Balance Sheet Interest (299,248) (103,321) 324,937 140,848 56,329 (119,545) -
Sensitivity Gap
Off Balance Sheet Interest - - - - - - -
Sensitivity Gap
Total Interest Sensitivity Gap (299,248) (103,321) 324,937 140,848 56,329 (119,545) -
The other asset line at the without interest column consists of TL 45,173 amount
tangible fixed assets, TL 5,038 of intangible fixed assets, TL 376 of
participations and TL 405 of subsidiaries and the other liability line consists
of equity total amounting to TL 258,866 and TL 21,673 amount minority interest.
Up to 1 1-3 3-6 6-12 1 Year and
Months Months Months Months Over Demand Total
Prior Period
Assets
Cash (cash in vault, foreign 533,535 - - - - 97,792 631,327
currency cash, money in
transit, cheques purchased) and
balances with the Central Bank
of Turkey
Due from Banks and other 1,520,796 16,786 12,456 3,001 - 74,966 1,628,005
financial institutions
Trading securities 2,841 32,204 12,502 7,617 797 306 56,267
Securities available-for-sale - 18,945 - - - 10 18,955
Loans 450,999 284,100 337,955 173,830 223,807 5,577 1,476,268
Securities held-to-maturity 233 40,855 1,733 1,459 252 - 44,532
Other assets 6,131 91,023 16,634 25,758 35,370 133,436 308,352
Total Assets 2,514,535 483,913 381,280 211,665 260,226 312,087 4,163,706
Liabilities
Bank deposits 114,429 2,957 1,124 - - - 118,510
Other deposits 2,516,512 182,354 59,564 92,211 184,365 - 3,035,006
Miscellaneous payables - - - - - 67,227 67,227
Marketable securities issued - - - - - - -
Funds provided from other 37,716 222,731 84,025 113,652 11,094 - 469,218
financial institutions
Other liabilities 3,025 38,491 1,216 262 - 430,751 473,745
Total Liabilities 2,671,682 446,533 145,929 206,125 195,459 497,978 4,163,706
Balance Sheet Interest (157,147) 37,380 235,351 5,540 64,767 (185,891) -
Sensitivity Gap
Off Balance Sheet Interest - - - - - - -
Sensitivity Gap
Total Interest Sensitivity Gap (157,147) 37,380 235,351 5,540 64,767 (185,891) -
The other asset line at the without interest column consists of TL 47,598 amount
tangible fixed assets, TL 4,372 of intangible fixed assets, TL 380 of
participations and TL 498 of subsidiaries and the other liability line consists
of equity total amounting to TL 259,159 and TL 21,673 amount minority interest.
Average interest rates applied to monetary financial instruments:
EURO % USD % YEN % TL %
Current Period
Assets
Cash (cash in vault, foreign currency cash, money in -
transit, cheques purchased) and balances with the Central 1.23 0.60 25.00
Bank of Turkey
Due from Banks and other financial institutions 2.74 2.10 - 44.43
Trading securities 4.46 7.76 - 77.87
Securities available-for-sale - 7.53 - -
Loans 5.88 5.26 - 50.39
Securities held-to-maturity - - - 58.18
Liabilities
Bank deposits 4.28 2.11 - 41.04
Other deposits 3.88 2.83 - 37.21
Miscellaneous payables - - - -
Marketable securities issued - - - -
Funds provided from other financial institutions 5.35 3.00 - 43.31
V- Consolidated Liquidity Risk
Liquidity risk occurs when there is not sufficient amount of cash or cash flows
to fulfill the cash outflows completely and on time, resulting from the unstable
cash inflows.
Liquidity risk may occur when the market penetration is not enough, when the
open positions cannot be closed urgently with a suitable price and sufficient
amount due to barriers and break-ups at the markets.
The Group's policy is to establish a liquid asset structure that can afford all
kinds of liabilities by liquid sources. In this scope liquidity problem does not
happen at any period. The Boards of Directors of the Group continuously
determines the liquidity ratios and related standards, and controls them, in
order to keep this structure.
There is a system worked on to apply international measurement methods. However,
according to the general policies of the Group, the adaptation of the assets,
liabilities, the interest rates to the payments are always established within
the asset liability management strategies. A positive difference is tried to be
established between the yields of TL and foreign currency assets and liabilities
at the balance sheet and their costs. According to this strategy, the Group pays
special attention not to take maturity risk, and no banking service is marketed
when the price is lower than the financing cost.
When the funding and liquidity sources are considered, the Parent Bank covers
majority of its liquidity need by deposits, and in addition to this source, it
makes use of prefinancing and syndication products to generate additional
sources. Generally the Bank does not prefer to utilize liquidity from interbank
money markets and is in a net lender position in interbank money markets.
Presentation of assets and liabilities according to their remaining maturities :
3-6 6-12 1 Year
Demand (**) 1-3 Months Months Months and Over Total
Current Period (*)
Assets
Cash (cash in vault, foreign currency 466,078 - - - - 466,078
cash, money in transit, cheques
purchased) and Balances with the Central
Bank of Turkey
Due from Banks and other financial 1,225,059 4,000 10,500 4,295 - 1,243,854
institutions
Trading securities 4,527 8,318 2,608 25,517 7,333 48,303
Securities available-for-sale 9 - - 7,936 36,014 43,959
Loans 296,713 425,151 343,533 239,579 148,678 1,453,654
Securities held-to-maturity 336 1,769 - 41,307 - 43,412
Other assets 91,285 66,242 33,158 38,374 51,524 335,752
Total Assets 2,084,007 505,480 389,799 357,008 243,549 3,635,012
Liabilities
Bank deposits 54,231 2,256 - - - 56,487
Other deposits 1,993,817 294,264 47,633 153,423 105,881 2,595,018
Funds provided from other financial 47,509 51,358 27,238 234,378 88,763 449,246
institutions
Marketable securities issued - - - - - -
Miscellaneous payables 50,208 - 5,452 - - 55,660
Other liabilities 415,162 42,107 5,392 4,918 11,022 478,601
Total Liabilities 2,560,927 389,985 85,715 392,719 205,666 3,635,012
Net Liquidity Gap (476,920) 115,495 304,084 (35,711) 37,883 -
Prior Period
Total Assets 2,771,022 428,973 380,844 211,550 318,452 4,163,706
Total Liabilities 3,091,353 333,032 154,238 306,714 278,361 4,163,706
Net Liquidity Gap (320,331) 95,941 226,606 (95,164) 40,091 -
(*) The maturity of up to 1 month of interbank funds sold amounting to TL
359,733, loans amounting to TL 369,496, and domestic and foreign Banks
placements amounting to TL 581,338 are shown in the demand column. Furthermore,
deposits with maturities up to one month amounting to TL 1,825,654 is included
in the other deposits and shown at the demand columns. The demand column of the
other liabilities consist of shareholders' equity amounting to TL 258,866 and
minority interest amounting to TL 21,673.
(**) TL 55,169 amount of the total column consists of subsidiaries and
participations amounting to TL 781, prepaid taxes amounting to TL 4,177,
tangible fixed assets amounting to 45,173 and intangible fixed assets amounting
to 5,038 and these are not taken in to consideration at the maturity
distribution.
SECTION FIVE
FOOTNOTES AND EXPLANATIONS ON CONSOLIDATED FINANCIAL STATEMENTS
I. Footnotes and Explanations Related to the Consolidated Assets
1. Information related to the account of the Central Bank of Turkey:
Current Period Prior Period
Demand Unrestricted Amount 5,958 16,634
Time Unrestricted Amount 240,036 368,650
Total 245,994 385,284
2. Additional information of trading portfolio ( stated at net values ):
a) Trading securities given as collateral or blocked: None.
b) Trading securities subject to repurchase agreements:
Current Period Prior Period
TL FC TL FC
Government bonds 10,061 - 18,799 -
Treasury bills 524 - 6,373 -
Other debt securities - - - -
Group bonds and Group guaranteed bonds - - - -
Asset backed securities - - - -
Other - - - -
Total 10,585 - 25,172 -
5. Information on available for sale portfolio:
a) Main types of available for sale securities: public sector debt
securities, and other marketable securities and share certificates.
b) Information on available for sale portfolio:
Current Period Prior Period
Debt securities 43,950 18,945
Quoted in a stock exchange 7,936 -
Not quoted 36,014 18,945
Share certificates 9 10
Quoted in a stock exchange - -
Not quoted 9 10
Provision for impairment (-) - -
Total 43,959 18,955
These financial assets are classified according to their acquisition purposes as
of October 1, 2002 in accordance with the Communique No:1 of the AAR.
Accordingly information on prior period cannot be presented.
c) Available for sale securities given as collateral or blocked: None.
d) Information on investment securities available-for-sale given as
collateral or blocked : None
e) Information on investment securities available-for-sale subject to
repurchase agreements: None.
4. Information on loans :
a) Information on all types of loans and advances given to shareholders and
employees of the Bank:
Current Period Prior Period
Cash Loans Non-Cash Cash Loans Non-Cash
Loans Loans
Direct loans granted to shareholders 115,505 1,741 113,493 7,564
Corporate shareholders 115,505 1,741 113,493 7,564
Real person shareholders - - - -
Indirect loans granted to - - - -
shareholders
Loans granted to employees 809 15 847 -
Total 116,314 1,756 114,340 7,564
b) Information about the first and second group loans and other receivables
including loans that have been restructured or rescheduled:
Loans and Other Receivables Under
Close Monitoring
Standard Loans and Other Receivables
Loans and Other Restructured or Loans and Other Restructured or
Receivables Rescheduled Receivables Rescheduled
Cash Loans
Non-specialized loans 1,442,461 - 741 5,338
Discount notes 22,190 - - -
Export loans 512,781 - - -
Import loans - - - -
Loans given to financial sector 132,748 - - -
International loans 76,706 - 43 -
Consumer loans 28,446 - - -
Credit cards 13,940 - - -
Precious metals loans 14,624 - 698 -
Other 641,025 - - 5,338
Specialized loans - - - -
Other receivables - - - -
Total 1,442,460 - 741 5,338
c) Information on consumer loans:
Short Term Medium and Long Term Total Interest Income
Accrual
Consumer loans-TL 7,231 5,222 12,453 322
Real estate loans 187 1,062 1,249 29
Automotive loans 1,142 4,059 5,201 110
Consumer loans - - - -
Personnel loans 618 - 618 20
Other consumer loans 5,284 101 5,385 163
Consumer loans- Indexed to FC 4,280 11,713 15,993 89
Real estate loans - 2,052 2,052 13
Automotive loans 2,988 9,592 12,580 70
Consumer loans - - - -
Personnel loan - - - -
Other consumer loans 1,292 69 1,361 6
Credit cards 13,940 - 13,940 -
Total Consumer Loans 25,451 16,935 42,386 411
d) Domestic and foreign loans:
Current Period Prior Period
Domestic loans 1,329,208 1,365,661
Foreign loans 119,331 105,030
Total 1,448,539 1,470,691
e) Loans granted to subsidiaries and investments: None.
f) Specific provisions provided against loans:
Current Period Prior Period
Specific provisions
Loans and receivables with limited collectibility 49 71
Loans and receivables with doubtful collectibility 270 202
Uncollectible loans and receivables 14,604 16,912
Total 14,923 17,185
g) Information on loans under follow-up account (Net) :
g.1) Information on loans and other receivables included in loans under
follow-up account which are restructured or rescheduled: None.
g.2) The movement of loans under follow-up:
III. Group IV. Group V. Group
Loans and
receivables
Loans and with doubtful
receivables with colectibility
limited Uncollectible
collectibility loans and
receivables
Prior period end balance 1,025 403 21,332
Additions (+) 267 - 394
Transfers from other categories of loans - 875 97
under follow-up (+)
Transfers to other categories of loans 875 97 -
under follow-up (-)
Collections (-) 50 15 799
Write-offs (-) - - 14
Indexation difference (-) 113 44 2,348
Current period end balance 254 1,122 18,662
Specific provision (-) 49 270 14,604
Net Balances on Balance Sheet 205 852 4,058
g.3) Information on foreign currency loans and other receivables under
follow-up:
III. Group: IV. Group: V. Group
Loans and Loans and
receivables with receivables with
limited doubtful Uncollectible loans
collectibility colectibility and receivables
Period end balance - - 43
Specific provision (-) - - 43
Net Balances on Balance Sheet - - -
h) Liquidation policies for the uncollectible loans and other receivables:
The loans and other receivables decided to be uncollectible are written off from
the assets according to the Tax Law by the decision of the top management in
accordance with the "Communique on Methods and Principles for the Determination
of Loans and Other Receivables to be Reserved for and Allocation of Reserves"
related to the clause 12 of article 11 and clause 11 of the article 3 of the
Group Law 4389 changed by the laws 4672 and 4491and announced at the Official
Gazette numbered 24448 and dated June 30, 2001.
5. Information on held to maturity portfolio (Net) :
a) Information on held to maturity portfolio:
Current Period Prior Period
Debt securities 43,412 44,532
Quoted in a stock exchange 42,083 44,532
Not quoted 1,329 -
Provision for impairment (-) - -
Total 43,412 44,532
b) Movement of Held to Maturity Portfolio:
Current Period Prior Period
Beginning balance 44,532 99,629
Effect of inflation (-) 4,911 23,566
Foreign currency differences on monetary assets 3 5,939
Purchases during year 3,995 44,532
Disposals through sales and redemptions (207) (82,002)
Impairment provision - -
Closing Balances 43,412 44,532
c.1) Information on accounts in which investment securities
held-to-maturity are recorded:
Current Period Prior Period
Historical Cost Valuation Historical Cost Valuation
TL FC TL FC TL FC TL FC
Held to Maturity Portfolio
Given as collateral or blocked 40,477 - 41,365 - 41,340 - 42,162 -
Subject to repo transactions - - - - - - - -
Held for structural position - - - - - - - -
Receivables from securities lending - - - - - - - -
Other (*) - 2,935 - 3,068 - 3,192 - 3,267
Collaterals on securities lending - - - - - - - -
Closing Balances 40,477 2,935 41,365 3,068 41,340 3,192 42,162 3,267
(*) The free marketable securities held by the Group is stated at the Other
line.
c.2) Marketable securities held to maturity given as collateral consist of
public sector debt securities of TL 40,477, given as collateral for statutory
requirements.
Securities held-to-maturity given as collateral or blocked
Current Period Prior Period
TL FC TL FC
Share certificates - - - -
Bonds and similar investment securities 40,477 - 41,340 -
Other - - - -
Total 40,477 - 41,340 -
c.3) Securities held-to-maturity subject to repurchase agreements : None.
c.4) Securities held-to-maturity held for structural position: None.
6. Information on investments (Net):
a.1) Information on unconsolidated participations :
Group's share
percentage-If
Address different voting Group's risk group
percentage(%) share percentage
Description (City/ Country) (%)
Varlik Yatirim Ortakligi A.S. Istanbul /Turkey 24.40 34.00
a.2) Information on investments as presented in table a.1:(*):
Marketable Current
Securities Period
Total Total Total Interest Income Income/Loss Prior Period
Assets Income Income/Loss
Equity Fixed Assets Fair Value
1,296 1,276 6 - 56 (95) 55 1,230
(*) The financial statements of Varlik Yatirim Ortakligi A.S. are prepared
in accordance with the Capital Market Board Regulations. The current period data
is presented as of March 31, 2003 and the prior period income / loss amounts are
presented with their nominal values as of March 31, 2002.
a.3) Out of Group members / shareholders who has the control power with the
parent company and/or other members of the financial group are explained: 66%
shares of the unconsolidated participation Varlik Yatirim Ortakligi A.S. is
publicly traded.
a.4) The reason for not consolidating the unconsolidated participations and
the method of recording the unconsolidated participations at the Parent Bank's
financials: The participation is not consolidated due to materiality principle,
is quoted at the stock exchange and is valued by fair value.
b) Information on the consolidated participations:
b.1) Information on the consolidated participations:
Current Period Prior Period
Balance at the beginning of the period 5,980 4,788
Movements during the period - 1,193
Purchases - 755
Free shares obtained profit from current
year's share - 437
Dividends from current year income - -
Sales - -
Revaluation increase - -
Provision for impairment - -
Balance at the end of the period 5,980 5,980
Capital commitments
Share percentage at the end of the period (%) %50.00 %50.00
b.2) Valuation of investments made to the consolidated participations:
Current Period Prior Period
Valuation with cost 5,980 5,980
Valuation with fair value - -
Valuation with equity method - -
Total 5,980 5,980
The above mentioned participation is stated at cost at the unconsolidated
financial statement of the Parent Company Bank.
b.3) Sectoral information and the related carrying amounts on consolidated
investments:
Participations Current Period Prior Period
Insurance companies/TEB Sigorta A.S.Sigorta
Sirketleri / TEB Sigorta 5,980 5,980
Total 5,980 5,980
b.4) Investments which are quoted to a stock exchange: None.
b.5) Information related to investments that are included in consolidation:
Group's share
percentage-If
Address (City / different voting Group's risk group Method of
Country)) percentage(%) share percentage Consolidation
Description (%)
TEB Sigorta A.S. Istanbul / Turkey 50.00 50.00 Full
Since the management of the company is controlled by the Parent Bank, line by
line consolidation method is used.
Participation as presented above (*):
Income from Current
Marketable Period
Total Fixed Securities Profit /
Assets Portfolio Loss
Shareholders' Interest Prior Period Fair
Income Profit / Value
Total Equity Loss
Assets
23,319 4,836 425 124 60 (2,780) 582 -
(*) The financial statements of TEB Sigorta A.S. is prepared in accordance with
the principles of Insurance Law and the current year data is stated as of March
31, 2003 and the previous period data is stated as of March 31, 2002 by the
purchasing power as of March 31, 2003.
b.6) Information on consolidated investments which are sold in current
period : None.
b.7) Consolidated investments purchased in the current period: None.
7. Information on Subsidiaries (Net):
a) Information on unconsolidated subsidiaries:
TEB Kiymetli Madenler Anonim Sirketi is not included in the consolidation in
accordance with AAR's materiality principle.
a.1) Information on unconsolidated subsidiaries:
Group's share Group's risk group
percentage-If different share percentage
voting percentage(%) (%)
Description Address(City/ Country)
TEB Kiymetli Madenler A.S. Istanbul/Turkey 66.00 75.00
a.2) Information on subsidiaries as presented in table a.1:
Income from
Marketable
Securities Current
Portfolio (*) Period
Shareholders'Equity Total Fixed Interest Profit / Prior Period Fair
(*) Assets(*) Income (*) Loss (*) Profit / Loss Value (*)
Total (*)
Assets
278 270 - - - (1) 40 -
b) Information on the consolidated subsidiaries.
b.1) Information on the consolidated subsidiaries:
Current Period Prior Period
Balance at the beginning of the period 125,348 111,516
Movements during the period 10,121 13,832
Purchases - 7,728
Free shares obtained profit from current year's share 12,202 5,080
Dividends from current year income - -
Sales - -
Revaluation increase (*) (2,081) 1,024
Provision for impairment - -
Balance at the end of the period 135,469 125,348
Capital commitments - -
Share percentage at the end of the period (%)
(*) The exchange income generated from the difference between the devaluation
and inflation of the foreign subsidiaries.
b.2) Valuation of investments made to the consolidated subsidiaries:
Subsidiaries denominated in Turkish Lira are reflected by restating their costs
and the capital increases after deducting the ones generated by means of adding
the values accumulated at the revaluation like funds to the capital of the
subsidiaries with the conversion factors applicable for the relevant dates.
Subsidiaries denominated in foreign currency are translated into Turkish Lira by
applying the exchange rates prevailing at balance sheet dates. When there is a
permanent diminution in value of the subsidiaries then a provision is set.
Current Period Prior Period
Valuation with cost 135,469 125,348
Valuation with fair value - -
Valuation with equity method - -
b.3) Sectoral information on consolidated subsidiaries and the related
carrying amounts:
Current Prior Period
Period
Banks / The Economy Bank N.V. 55,511 48,299
Other Financial Sub. / Petek International Holdings B.V. 833 870
TEB Yatirim Men.Deg. A.S. 30,106 27,158
TEB Portfoy Yonetimi A.S. 3,251 3,251
Leasing Companies / TEB Finansal Kiralama A.S. 28,182 28,182
Factoring Companies / TEB Factoring A.S. 17,586 17,589
135,469 125,348
Total
b.4) Consolidated subsidiaries which are quoted to a stock exchange: None.
b.5) Information related to subsidiaries that are included in consolidation:
Group's share Group's risk
percentage-If group share
Address (City / different voting percentage Method of
Country)) percentage(%) (%) Consolidation
Description
The Economy Bank N.V. The Netherlands 100.00 - Full
Petek International Holdings B.V. The Netherlands 100.00 - Full
TEB Yatirim Menkul Degerler A.S. Istanbul/Turkey 74.80 25.20 Full
TEB Portfoy Yonetimi A.S. Istanbul/Turkey 55.89 44.11 Full
TEB Finansal Kiralama A.S. Istanbul/Turkey 68.76 31.24 Full
TEB Factoring A.S. Istanbul/Turkey 65.80 34.20 Full
Information on subsidiaries as presented in table 10. b.5:
Income from Current
Total Marketable Period
Total Shareholders' Fixed Interest Securities Profit / Prior Period Fair
Portfolio (*) Loss (*) Profit / Loss
Assets (*) Equity (*) Assets (*) Income (*) (*) Value
1,239,846 83,633 759 2,354 790 1,020 8,112 -
1,886 1,886 - - - 1,414 3,262 -
16,777 14,209 408 277 525 318 2,983 -
4,397 3,951 646 225 815 365 876 -
154,935 38,623 123,011 279 63 6,546 4,141 -
64,982 7,952 194 3,440 - 1,274 500 -
(*) From statutory historical financial statements
b.6) Information on the consolidated subsidiaries that were disposed in
current period: None.
b.7) Information on the consolidated subsidiaries purchased in current
period: None.
8. Information on financial lease receivables (Net):
a) Aging of leasing receivables:
Current Period Prior Period
Gross Net Gross Net
Less than 1 year 69,457 66,956 71,475 62,471
Between 1-4 years 45,139 34,111 33,169 31,175
Over 4 years 1,144 1,086 4,304 1,941
Total 115,740 102,153 108,947 95,587
9. Information on receivables arising from term sales of assets included
in miscellaneous receivables: None.
10. Explanations related to interest and income accruals:
a) Information about accrued interest and income receivables of loans:
Current Period Prior Period
Accrued interest and income receivables TP YP TP YP
Interest accruals - due 129 2 256 -
Interest accruals - not due 11,075 9,973 10,248 11,033
Loan commissions and other income accruals - due - - - -
Loan commissions and other income accruals - not 15 1 12 1
due
Total 11,219 9,976 10,517 11,034
b) Information on other interest and income accruals:
Current Period Prior Period
Other interest and income accruals TL FC TL FC
Trading securities 4,460 507 3,906 126
Securities available for sale - 393 - 401
Securities held to maturity 888 133 823 76
Interest accruals of reverse repo transactions 15 - - -
Interest accruals of reserve deposits 1,222 221 1,034 278
Income accruals of financial derivative instruments 2,919 139 4,198 354
Interest and income accruals - - - -
Income accrual of foreign exchange gains 2,919 139 4,198 354
Income accruals of financial lease income 160 802 148 675
Other 6,014 807 6,431 599
Total 15,518 3,002 16,540 2,510
11. Information on other assets:
a) Information on prepaid expenses, taxes and similar items:
Current Period Prior Period
Deferred tax 2,389 2,296
Assets held for sale - -
Advances given 309 208
Prepaid rent expenses 1,640 463
Transaction cost related to financial liabilities 1,427 2,310
Prepaid taxes 16,204 12,130
Financial lease agreements in progress 8,300 1,571
Leasing premium receivable 12,159 14,912
Other 23,088 10,485
Total 65,516 44,375
b) Other assets and liabilities which exceed 10 % of the balance sheet total
(excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None.
II- Footnotes and Explanations Related to the Consolidated Liabilities
1. a) Information on maturity structure of deposits:
a.1) Current period :
Demand 7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Accounts month Year over
Saving deposits 19,016 6,709 70,977 51,626 18,080 3,487 12,935
Foreign currency 408,603 9,838 470,681 308,035 36,661 43,149 31,392
deposits
Residents in Turkey 388,908 9,831 459,027 296,138 35,502 40,764 30,909
Residents abroad 19,695 7 11,654 11,897 1,159 2,385 483
Public sector deposits 11,283 - - - - - -
Commercial deposits 176,667 1,743 538,692 123,903 23,059 104,883 74,888
Other institutions 31,171 - 1,522 82 9 1 -
deposits
Precious metals deposits 9,548 - 4,582 367 - - 1,430
InterGroup deposits 12,160 - 29,880 13,214 - - 1,232
Central Group of Turkey - - - - - - -
Domestic Groups 7,602 - - 2,000 - - 1,232
Foreign Groups 4,558 - 29,880 11,214 - - -
Special finance houses - - - - - - -
Other - - - - - - -
Total 668,448 18,290 1,116,334 497,227 77,809 151,520 121,877
a.2) Prior period:
Demand 7 day Call Up to 1 1-3 Month 3-6 Month 6 Month-1 1 Year and
Accounts month Year over
Saving deposits 19,738 - 87,942 43,255 14,086 3,676 15,138
Foreign currency 514,287 - 1,337,562 399,207 83,942 86,065 184,319
deposits
Residents in Turkey 441,176 - 554,335 344,610 33,215 7,945 379
Residents abroad 73,111 - 783,227 54,597 50,727 78,120 183,940
Public sector deposits 39 - - - - - -
Commercial deposits 60,888 - 107,910 4,805 9,562 6 15
Other institutions 36,818 - 482 16 9 1 -
deposits
Precious metals deposits 10,918 - - 12,731 - 1,589 -
InterGroup deposits 22,395 - 77,884 17,107 - 1,124 -
Central Group of Turkey - - - - - - -
Domestic Groups 12,395 - - - - 1,124 -
Foreign Groups 10,000 - 77,884 17,107 - - -
Special finance houses - - - - - - -
Other - - - - - - -
Total 665,083 - 1,611,780 477,121 107,599 92,461 199,472
b.1) Information on saving deposits under the guarantee of saving deposit
insurance and exceeding the limit of saving deposit insurance:
Under the Under the Exceeding
guarantee of guarantee of the limit of
saving saving Exceeding the
deposit deposit saving limit of
Saving Deposits insurance insurance deposit
saving
deposit
Cari Donem Onceki Donem Cari Donem Onceki Donem
Saving deposits 42,125 27,388 140,707 156,447
Foreign currency saving deposits 309,023 216,769 453,558 709,659
Other deposits in the form of saving deposits 18 764 7,826 7,424
Foreign branches' deposits under foreign - - - -
authorities' insurance
Off-shore Grouping regions' deposits under - -
foreign authorities' insurance
- -
Total 351,166 244,921 602,091 873,530
b.2) The Group which has settled abroad should disclose, the total amount of
savings deposit in Turkey branch, and insured in the country of head office :
None
b.3) Saving deposits which are not under the guarantee of deposit insurance
fund : None.
2. Information on funds provided from repurchase
agreement transactions:
Current Period Prior Period
TL FC TL FC
From domestic transactions 11,647 - 24,617 -
Financial institutions and organizations 5,000 - 14,611 -
Other institutions and organizations 1,801 - 4,546 -
Real persons 4,846 - 5,459 -
From foreign transactions - - 1,009 -
Financial institutions and organizations - - - -
Other institutions and organizations - - 1,008 -
Real persons - - 1 -
Total 11,647 - 25,626 -
3. a) Information on funds borrowed:
Current Period Prior Period
TL FC TL FC
Short-term 32,076 306,406 39,710 303,168
Medium and long-term - 85,263 - 98,696
Total 32,076 391,669 39,710 401,864
4. a) Information on debt securities issued: None.
b) The explanation on the maturity structure, interest rate, type of currency
of the issued marketable securities : None.
5. Explanation on funds: None
6. Explanation on miscellaneous payables:
Current Period Prior Period
Total amount of cash collateral obtained 241 135
The table consists of blocked accounts regarding cash collateral, loans, import
and export transactions.
7. Other assets and liabilities which exceed 10 % of the balance sheet
total (excluding off-balance sheet commitments) and breakdown of these which
constitute at least 20% of grand total: None
8. Explanations on liabilities generated from financial lease payables:
None
9. Information on interest and expense accruals:
Current Period Prior Period
TL FC TL FC
Accrued interest on deposits 6,293 7,127 5,957 9,923
Accrued interest on funds borrowed 2,523 3,389 2,316 2,456
Accrued interest on bonds - - - -
Accrued interest on repurchase 17 - 31 -
agreement transactions
Accrued interest on derivative 7,857 - 5,249 -
financial instruments
Accrued interest and expense - - - -
Foreign exchange losses accrued 7,857 - 5,249 -
Other interest and expense accruals 3,518 1,382 1,128 925
Total 20,208 11,898 14,681 13,304
10. Provisions and subordinated loans:
a) Information on general provisions:
Current Period Prior Period
General provisions 6,470 6,848
Provisions for First Group Loans and Receivables 5,498 5,811
Provisions for Second Group Loans and Receivables - 35
Provisions for Non Cash Loans 972 1,003
Others - -
Total 6,470 6,848
b) Information on employee termination benefits and notice indemnity:
5 PR 4 PR 3 PR 2 PR Prior PR Current PR
Actual Payments of Employee 56 107 947 662 435 -
Termination Benefits (**)
Reserve for Employee Termination 1,580 3,140 4,456 6,912 10,972 13,736
Benefits and Notice Indemnity (**)
Actual Payment Ratio 3.57% 3.40% 21.24% 9.59% 3.96% -
Ratio of reserve for Employee 8.35%
Termination Benefits and Notice
Indemnity (*)
Possible reserve for Employee 787
Termination Benefits and Notice
Indemnity
(*) 5-year actual payment rate.
(**) The liability and payment amounts regarding the prior periods are stated at
historical cost.,
As of March 31, 2003, TL 787 of reserve for employee termination benefits and
notice indemnity was reflected to the financial statements of Parent Bank
corresponding to 8.35% of total liability of TL 13,736.
The consolidated subsidiaries have calculated reserve for employee termination
benefits and notice indemnity in accordance with the regulations they apply, and
reflected an amount of TL 924 into their financial statements as of March 31,
2003.
c) Information on free reserves for possible losses : None.
d) Information on subordinated loans:
Current Period Prior Period
TL FC TL FC
From Domestic Groups - - - -
From Other Domestic Institutions - - - -
From Foreign Groups - - - -
From Other Foreign Institutions - 25,501 - 27,644
Total - 25,501 - 27,644
11. Information of Shareholders' Equity:
a) Presentation of paid-in capital:
Current Period Prior Period
Common stock 55,125 55,125
Preferred stock - -
b) Paid-in capital amount, explanation as to whether the registered share
capital system is applicable to the Group if so, amount of registered share
capital ceiling:
Capital System Paid-in capital Ceiling
Registered capital system 55,125 100,000
c) Information on share capital increases and their sources; other
information on increased capital shares in current period: None.
d) Information on share capital increases from revaluation funds: None.
e) Capital commitments in the last fiscal year and at the end of the
following interim period, the general purpose of these commitments and projected
resources required to meet these commitments : None.
f) Indicators of the Group's income, profit and liquidity for the previous
periods and within these indicators possible affects on capital fore sighting
uncertainty : None.
g) Information on privileged shares:
7 % of the Parent Bank's remaining net income and tax after deducting
legal reserves and first dividends, corresponding to the Group's 60,000 shares
of TL 30,000,000 (in full TL) is distributed to the founder shares.
12. a) Common stock issue premiums, shares and equity instruments: None.
13. Information on shareholders having more than 10 % share:
Name/Commercial title Amounts Share Percentage Paid-in capital Unpaid portion
TEB Mali Yatirimlar A.S. 38,631 %70.08 38,631 -
Total 38,631 %70.08 38,631 -
III. Footnotes and Explanations Related to the Consolidated Income
Statement
There is no fundamental error for any groups or items related to the prior
period. There is no change in accounting estimates for the fiscal year.
The breakdown of other interest and non-interest income and expense accounts
total to 20% of the items that exceed 10% of the related totals are shown below.
Other interest expense amounting to TL 4,130 includes interest expense on
marketable securities subject to repurchase agreements amounting to TL 3,945.
The total other fees and commissions received amounting to TL 9,217 majorly
consists of credit card fees and commissions amounting to TL 1,987 and brokerage
commissons amounting to TL 2,173. Other fees and commission expense totaling to
TL 3,340 majorly consists of fees and commissons given to credit card
tarnsactions totaling to TL 1,661, and fees and commissons paid for the
transactions generated from the interbank money market totalling to TL 537.
1. a) Information on interest income received from investments and
subsidiaries: None.
b) Information on financial lease income : None.
c) Interest received from reverse repurchase agreement transactions:
None
Current Period Prior Period
TL FC TL FC
Interest received from reverse repurchase 533 - 406 -
agreement transactions
2. a) Information on interest expense to investments and subsidiaries:
None.
b) Information on financial lease expenses : None.
c) Distribution of interest expense on deposits based on maturity of
deposits :
Time Deposits
Demand Up to 1 Up to 3 Up to 6 Up to 1 More than 1
Deposits Month Months Months Year Year
Account name Total
TL
Group deposits 2 3,115 - - - - 3,117
Saving deposits 59 7,345 5,257 2,052 457 1,640 16,810
Public sector deposits - - - - - - -
Commercial deposits 721 7,823 1,774 213 1 5,038 15,570
Other deposits 6 76 14 1 - - 97
7 days call accounts - - - - - - -
Total 788 18,359 7,045 2,266 458 6,678 35,594
FC
Foreign currency deposits 317 4,321 3,255 315 149 623 8,980
(*)
7 days call accounts - - - - - - -
Precious metal deposits - 4 55 - 5 - 64
Total 317 4,325 3,310 315 154 623 9,044
Total 1,105 22,684 10,355 2,581 612 7,301 44,638
(*) Interest expense on foreign currency demand deposits includes TL 278 of
foreign Bank deposits interest expense.
d) Interest expense on repurchase agreements:
Current Period Prior Period(*)
TL FC TL FC
Interest expense on repurchase agreements 3,945 - - -
(*) Since interest on repurchase agreements are included in the Uniform Chart of
Accounts after February 1, 2002, the information for prior period is not
presented.
3. Net income/losses from marketable securities for investment purposes:
None
4. Information on other operating income :
The information on the factors affecting the Group's income including
extraordinary items and new developments, and the explanation on nature and
amount of income earned from extraordinary items : None.
5. Provision expenses of Groups for loans and other receivables:
Current Period Prior Period
Specific provisions for loans and other receivables 243 5,081
Unsecured - -
Other groups 243 5,081
General provision expenses 1,264 366
Marketable securities impairment expense 40 5
Provision for impairment* - -
Other 140 -
Total 1,687 5,452
(*) Provision for impairment related to participations, subsidiaries and
securities held to maturity
6.a) Income and expenses relating to investments and subsidiaries: None
b) The information on income and expense from related party transactions:
None.
c) The information on income and expense from related party transactions:
The Group has certain Grouping transactions with group companies. These are
commercial transactions, which are realized in line with market rates. These are
reflected in income statement. The related amounts are presented in Part XI..
7. The explanations on net income / loss for the period:
a) Income/loss related to minority shares:
Current Period Prior Period
Income and loss related to minority shares (1,638) 1,127
8. Nature and amount of changes in accounting estimates, which have a
material effects on current period or expected to have a material effect on
subsequent periods : None.
IV- Footnotes and Explanations Related to the Consolidated Off-balance Sheet
Commitments
1.a) Disclosure to be made separately from other contingent liabilities:
a.1) The Group's share in contingent liabilities of joint ventures together
with other ventures : None.
a.2) Share of joint ventures in their own contingent liabilities: None.
a.3) The Group's contingent liabilities resulting obligations of other
ventures in joint ventures : None.
b) Accounting and presentation of contingent assets and liabilities in the
financial statements :
b.1) For contingent assets, if realization probability is close to certain,
then it is accounted. If realization probability is low, then it is explained in
the footnotes. As of March 31, 2003 there are no contingent assets needed to be
explained.
b.2) For contingent liabilities, if realization probability is close to
certain, then provision is set. If there is low or no realization probability,
then it is explained in the footnotes : None.
2. Information on off-balance sheet commitments:
a) Nature and amount of irrevocable loan commitments: As of 31 March 2003
and December 31, 2002, credit card spending limit commitments are TL 72,817 and
TL 75,681, respectively.
b) Nature and amount of contingent loss and commitments from off-balance
sheet items including below statements:
The Group, within the context of Grouping activities, undertakes certain
commitments, consisting of loan commitments, letters of guarantee, acceptance
credits and letters of credit.
b.1) Non-cash loans including guarantees, acceptances, financial collaterals
and other letters of credits:
As of March 31, 2003 total guarantees and commitments consist of
letter of guarantees amounting to TL 582,328 (December 31, 2002 - TL 652,598),
acceptances amounting to TL 52,195 (December 31, 2002 - TL 45,363), and letters
of credit amounting to TL 348,603 (December 31, 2002 - TL 361,895).
b.2) Guarantees, surety ships and similar transactions : The Group has other
commitments and contingencies amounting TL 20,586 (December 31, 2002 - TL
10,190) other than the ones explained in article b.1).
3.a) Non-cash loans:
Current Period Prior Period
Guarantees given against cash loans 39,035 67,381
With maturity of 1 year or less than 1 year 8,504 25,247
With maturity of more than 1 year 30,531 42,134
Other non-cash loans 964,677 1,002,665
Total 1,003,712 1,070,046
b) Collateral, mortgage and other restrictions on tangible fixed assets,
the amount of capital expenditures related to expenses construction of tangible
fixed assets, intangible fixed asset purchase commitments: None.
4. The information on the Group's rating by in the international rating
introductions:
The results of the trading performed by Moody's Investor Services and Fitch
Ratings are shown below.
Moody's Investor Services: January 2002
Group Financial Strength D+
Long Term FX Deposits B3
Fitch Ratings: March 2003
Foreign Currency Commitments
Long Term B -
View Negative
Turkish Lira Commitments
Long Term B -
View Negative
National
Long Term A (tur)
View Negative
Individual Rating C/D
Support Points 4T
V- Footnotes and Explanations Related to the Risk Group of the Parent
Bank
1. Volume of The Bank's risk group transactions, income and expense
amounts involved and outstanding loan and deposit balances:
a) Current Period:
Investments and Direct and indirect Other entities included in
Bank's Risk Group (*) subsidiaries shareholders of the Group related parties
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other receivables
Balance at beginning of period - - 113,493 7,564 11,412 4,915
Balance at end of period - - 115,505 1,741 281 1,847
Interest and commission income - - 2,448 4 2,033 30
b) Prior Period:
Investments and Direct and indirect Other entities included in
Bank's Risk Group (*) subsidiaries shareholders of the related parties
Group
Cash Non-cash Cash Non-cash Cash Non-cash
Loans and other receivables
Balance at beginning of period - - 24,170 1,346 121,246 6,450
Balance at end of period - - 113,493 7,564 11,412 4,915
Interest and commission income - - 4,882 514 11,763 615
c.1) Information on Bank's Risk Group deposits balances:
Investments and Direct and indirect Other entities included in
Bank's Risk Group (*) subsidiaries shareholders of the
Group related parties
Deposits Current Prior Current Prior Current Prior
period period
period period period period
Balance at beginning of - - 210,318 66,752 868,729 365,896
period
Balance at end of period - - 9,832 210,318 958,190 868,729
Interest on deposits - - 42 3,436 6,217 50,186
c.2) Information on forward and option agreements and other similar
agreements made with related parties:
Bank's Risk Group (*) Investments and Direct and indirect Other entities included
subsidiaries shareholders of the Group in related parties
Current Prior Current Prior Current Prior
period
period period period period period
Trading transactions 75,761 74,331 65,259 45,834
Beginning of period - - 48,679 26,039 27,520 17,619
End of period - - 27,608 48,679 36,947 27,520
Total income/loss - - (526) (387) 792 695
Hedging transactions purposes
Beginning of period - - - - - -
End of period - - - - - -
Total income/loss - -
(*) The scope of the related parties are defined in the Article 20-2 of
the "Regulation on the Establishment and Operations of Banks".
2. Disclosures for related parties
a) The relations of the Group with the entities controlled by the Group and
its related parties, regardless of whether there are any transactions or not:
The Parent Bank enters into banking transactions with group companies in
accordance with the Banking Law. These are commercial transactions and realized
on an arms-length basis.
b) Besides the structure of relationship, nature of the transaction, amount
and ratio to the total volume of transactions, amount of major items and ratio
to all items, pricing policies and other factors:
% According to the Amounts at
the Financial Statements
Amount
Cash loans 115,786 7.97
Noncash loans 3,588 0.35
Deposits 968,022 36.51
Forward transactions and option agreements 141,020 13.04
These transactions are priced in accordance with the general pricing policies of
the Bank and are in line with market rates.
c) In the case that disclosing items separately, total of similar items is
disclosed in order to present the total impact on financial statements :
Explained in the article b.
d) Investments accounted for under the equity method : None.
e) Disclosures related to purchase and sale of real estate and other
assets, trading of services, agency contracts, leasing contracts, transferring
information as a result of research and development, license contracts,
financing (loans and cash or real capital supports included), guarantees, and
management contracts :
The Group has financial lease agreements with TEB Finansal Kiralama A.S. The
total leasing obligations related to these agreements amounted to TL 6,451.
Additionally, the Group provides agency services for TEB Sigorta A.S. and TEB
Yatirim Menkul Degerler A.S.
Within the limits of the Grouping Law, the Group renders cash and
non-cash loans to its related parties and the ratio of these to the Group's
total cash and non-cash loan portfolio is 5.39 %. Amounts of these loans are
explained in the note 1a.
As of March 31, 2003 the Group has no purchases and sale of real estate and
other assets, transfer of information as a result of research and development,
license and management contracts with the related parties.
VI- Footenotes and Explanations Related to Inflation Accounting
Inflation Accounting
The accompanying financial statements are prepared by applying inflation
accounting to the financial statements, which are prepared on a historical cost
basis, except for the revaluation of fixed assets in line with Turkish Tax
Legislation, in accordance with the provisions of Communique No : 14 "Accounting
Standard Related to the Preparation of Financial Statements in Hyperinflationary
Periods" related to ARR. Communique No:14 requires Groups to restate their
financials in the equivalent purchasing power of Turkish Lira at the balance
sheet date. One characteristic that necessitates the application of inflation
accounting under the provisions of Communique No : 14 is a cumulative three-year
inflation rate approaching or exceeding 100%. As of March 31, 2003 based on the
wholesale price indices announced by the State Institute of Statistics, the
cumulative three-year inflation rate in Turkey is 224%.
Communique No:14 requires that the financial statements should be restated in
the equivalent purchasing power at the balance sheet date and the financial
statements of prior year should be restated in their entirety to the measuring
unit current at the balance sheet date.
The main guidelines for inflation accounting are as follows:
Cash and monetary assets and liabilities, which maintain their nominal balances
but experience a decline in purchasing power are not restated because they are
already expressed in terms of the monetary unit current at that balance sheet
date.
Non-monetary assets and liabilities which are not carried at amounts current at
the balance sheet date and other components of shareholders' equity (except for
the revaluation surplus which is eliminated) are restated by applying the
relevant conversion factors; being the change in the general price index from
the date of acquisition to the closing date. The inflation adjusted share
capital amount has been derived by indexing each capital increase other than
bonus shares from statutory revaluation fund from the date they were
contributed. Transfers to share capital from general reserves, gain on sale of
property and investments and inappropriate profits are considered as cash
contributions and are restated from the date of contribution.
Fixed assets subject to depreciation are restated from their historical
acquisition costs after eliminating the statutory revaluation increments.
Depreciation is not separately restated in the income statement since it is
computed over restated amounts.
Non-monetary items reflected at current values are not restated since they are
already stated in the current purchasing power.
Investments and subsidiaries denominated in Turkish Lira are reflected at
restated costs by converting historical acquisition costs, excluding free shares
from revaluation fund, with the relevant conversion factors. Transfers to share
capital from general reserves, gain on sale of property and investments and
inappropriate profits are considered as cash contributions and are restated from
the date of contribution. Investments and subsidiaries denominated in foreign
currency are converted to Turkish Lira with the exchange rates prevailing and
year-end.
All items in the statements of income are restated by applying the appropriate
conversion factors.
The effect of inflation on the Group's net monetary position is included in the
statements of income and separately disclosed as a net monetary gain or loss.
The effect of inflation accounting on prior year financial statements in
included in retained earnings and the effect of restatement is disclosed
separately under shareholders' equity.
Indices and conversion factors that are used to restate the accompanying the
financial statements as of March 31, 2003, reflecting the restatement for the
changes in the general purchasing power of the Turkish is as follows:
Conversion Factors
Index
March 31, 2003 7,281.8 1.000
March 31, 2002 5,387.9 1.352
December 31, 2002 6,478,8 1.124
December 31, 2001 4,951.7 1.471
December 31, 2000 2,626.0 2.773
Restatement of balance sheet and income statement items through the use of a
general price index and relevant conversion factors does not necessarily mean
that the Group could realize or settle the same values of assets and liabilities
as indicated in the balance sheets. Similarly, it does not necessarily mean that
the Group could return or settle the same values of equity to its shareholders.
Explanations regarding the economical life of assets subject to depreciation,
depreciation calculation made in accordance with the regulations and indexed
amounts, and whether expertise values are used to determine the fair values of
these assets:
In accordance with Communique No :14, the Group obtains expertise reports for
its buildings.
As of March 31, 2003 the total amount of legal reserves and general reserves are
TL 7,555 and TL 28,769, respectively, in the Bank's statutory books of account.
Balance sheet and income statement for the interim period ended March 31, 2003
are reviewed. Balance sheet as of December 31, 2002, is audited. Income
statement for the interim period ended March 31, 2002 is unaudited.
Income statement items do not have seasonality. However, restatement of income
statement items were made with monthly indices.
VII- Explanations Related to Subsequent Events
a) Disclosure related to subsequent events and their impact on the financial
statements as required by the related standard:
a.1) In accordance with the decision related with the distribution of
profit, declared at the Annual General Meeting of the Bank dated March 27, 2003,
the Bank has started to pay dividends to its shareholders at a 27.61% rate on
April 4, 2003.
b) The impact of significant changes in foreign exchange rates subsequent
to the balance sheet date on the foreign currency transactions, items and on the
financial statements of the Group : There are no significant changes.
SECTION SIX
REPORT OF INDEPENDENT AUDITORS
I. Explanations on the Report of Independent Auditors:
The consolidated interim financial statements of the Group were reviewed by
Guney Serbest Muhasebeci Mali Musavirlik A.S. (An Affiliated Firm of Ernst &
Young International) and the review report of independent auditors, dated May
28, 2003, is presented preceding the consolidated interim financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFEAKSEDLDDEFE
