Şekerbank
Türk Anonim Şirketi and
Its Financial Subsidiaries
Consolidated Financial Statements
As of and for the Six-Month Period Ended 30 June 2019
With Auditors’ Report Thereon
(Convenience Translation of Consolidated
Financial Statements and Related Disclosures and Footnotes
Originally Issued in Turkish)
LIMITED REVIEW REPORT
FOR THE INTERIM FINANCIAL INFORMATION
To the General Assembly of Şekerbank T.A.Ş.
Introduction
We have reviewed the accompanying consolidated balance sheet of Şekerbank T.A.Ş. (“the Bank”) and
its consolidated financial affiliates (together will be referred as “the Group”) as at 30 June 2019, and the
consolidated statement of income, consolidated statement of income and expense items under
shareholders’ equity, consolidated statement of changes in shareholders’ equity and consolidated
statement of cash flows for the six-month period then ended, and a summary of significant accounting
policies and other explanatory notes. The Bank management is responsible for the preparation and fair
presentation of the accompanying interim financial information in accordance with “the Banking
Regulation and Supervision Agency (“BRSA”) Accounting and Reporting Regulations” including the
regulation on “The Procedures and Principles Regarding Banks’ Accounting Practices and Maintaining
Documents” published in the Official Gazette dated 1 November 2006 with No. 26333, and other
regulations on accounting records of banks published by the Banking Regulation and Supervision Board
and circulars and pronouncements published by the BRSA and Turkish Accounting Standard 34
“Interim Financial Reporting” principles for the matters not legislated by the aforementioned
regulations. Our responsibility is to express a conclusion on this interim financial information based on
our review.
Scope of Review
We conducted our review in accordance with the Independent Auditing Standard on Review Engagements
2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A
review of interim financial information consists of making inquiries, primarily of persons responsible for
financial reporting process, and applying analytical and other review procedures. A review of interim
financial information is substantially less in scope than an independent audit conducted in accordance
with Independent Auditing Standards and the objective of which is to express an opinion on the financial
statements. Consequently, a review of the interim financial information does not provide assurance that
the audit firm will be aware of all significant matters which would have been identified in an audit.
Accordingly, we do not express an audit opinion.
Basis for Qualified Conclusion
As of the balance sheet date, loans granted by the Group which are overdue amounting to TRL 554,420
thousands of principal and TRL 71,958 thousands of income accrual, have not been classified under
"Non-performing Loans" in accordance with the Regulation on Procedures and Principles for the
Classification of Loans and the Provisions to be Provided for these Loans ("Regulation"). If the Group
had classified this portfolio as “Non-performing Loans”, non-performing loans would have been TRL
626,378 thousands higher and expected credit loss would have been TRL 234,636 thousands higher. On
the other hand, the accompanying consolidated financial statements include a general reserve of total
TRL 114,504 thousands of the Parent Bank for the possible effects of the negative circumstances which
may arise in economy. As of the balance sheet date, if the loans overdue had been classified as non-
performing loans with expected credit loss provisions provided and general reserve had not been
booked, current period net loss would have been TRL 93,703 thousands higher, considering the tax
effect.
Qualified Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
consolidated interim financial information does not present fairly, in all material respects, the financial
position of Şekerbank T.A.Ş. and its consolidated financial affiliates as at 30 June 2019, and of the
results of its operations and its cash flows for the six-month period then ended in accordance with the
BRSA Accounting and Reporting Regulations.
Report on Other Legal and Regulatory Requirements
Based on our review, nothing has come to our attention that causes us to believe that the interim
financial information provided in the Management’s interim report included in section seven of the
accompanying consolidated financial statements, is not presented fairly, in all material respects, and is
not consistent with the reviewed interim financial statements and the explanatory notes.
Additional paragraph for English translation:
The effect of the differences between the accounting principles summarized in Section 3 and the
accounting principles generally accepted in countries in which the accompanying financial statements are
to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and
reflected in the accompanying financial statements. The accounting principles used in the preparation of
the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying
financial statements are not intended to present the Bank’s financial position and results of its operations
in accordance with accounting principles generally accepted in such countries of users of the financial
statements and IFRS.
DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK AŞ
Member of DELOITTE TOUCHE TOHMATSU LIMITED
Müjde ASLAN
Partner
İstanbul, 9 August 2019
THE CONSOLIDATED FINANCIAL REPORT OF ŞEKERBANK T.A.Ş.
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2019
The consolidated financial report the six-month period designed by the Banking Regulation and Supervision
Agency in line with Communiqué on Financial Statements to be Publicly Announced and the Related Policies and
Disclosures consists of the sections listed below:
GENERAL INFORMATION ABOUT THE PARENT BANK
CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE PARENT BANK
EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED
INFORMATION ON FINANCIAL POSITION AND RISK MANAGEMENT OF THE GROUP
WHICH IS UNDER CONSOLIDATION
EXPLANATORY DISCLOSURES AND FOOTNOTES ON CONSOLIDATED FINANCIAL
STATEMENTS
LIMITED REVIEW REPORT
INTERIM ACTIVITY REPORT
Subsidiaries whose financial statements have been consolidated in the consolidated financial report are as follows:
Subsidiaries
Şekerbank (Kıbrıs) Ltd.
Şekerbank International Banking Unit Ltd.
Şeker Faktoring A.Ş.
Şeker Yatırım Menkul Değerler A.Ş.
Şeker Finansal Kiralama A.Ş.
Şeker Finansman A.Ş.
Zahlungsdienste GmbH der Şekerbank T.A.Ş.
The consolidated financial statements for the six-month period and the explanatory footnotes and disclosures,
unless otherwise indicated, are prepared in Thousands of Turkish Lira, in accordance with the Communiqué on
Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial
Reporting Standards, related communiqués and the Banks’ records, have been independently reviewed and
presented as attached.
The consolidated 30 June 2019 financial statements are reviewed and they do not include any false explanation in
material subjects and absences that may result in misleading statements and fairly reflect the Bank’s financial
position, the risks faced and uncertainty.
Dr. Hasan Basri GÖKTAN
Erdal ERDEM Üzeyir BAYSAL
Chairman of The Board of
Directors
General Manager
Head of the Audit
Committee
Aidar RYSKULOV Çetin AYDIN Selim Güray ÇELİK Orhan ULUYOL
Member of the Audit
Committee
Member of the Audit
Committee
Executive Vice President
Group Head
Information related to responsible personnel for the questions about financial statements:
Name-Surname / Title : Oya SARI / Investor Relations and Structured Finance Manager
Telephone No : (212) 319 71 58
Fax No : (212) 319 71 62
Address : Emniyet Evleri Mah. Eski Büyükdere Cad. No:1/1A
34415 Kağıthane / İstanbul
Telephone : (212) 319 70 00
Fax : (212) 319 73 79
Web Site : www.sekerbank.com.tr
E-mail Address : [email protected]
INDEX
Page Number
SECTION ONE
General Information
I. Parent Bank’s Incorporation Date, Beginning Status, History of the Bank Containing the Changes in the Mentioned Status 1
II. Explanations Regarding Parent Bank’s Shareholding Structure, Shareholders Holding Directly or Indirectly, Collectively or Individually, the
Managing and Controlling Power and Changes in Current Year, if any and Explanations on the Controlling Group of the Bank 1
III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Executive Vice Presidents
and Their Shares and Their Rights of Responsibility in the Parent Bank 2
IV. Information about the person and institutions that have qualified shares in the Parent Bank 2
V. Summary on the Parent Bank’s Functions and Areas of Activity 3
VI. Differences Between The Communique On Preparation Of Consolidated Financial Statements Of Banks And Turkish Accounting Standards And
Short Explanatıon About The Institutions Subject To Line-By-Line Method Or Proportional Consolidation And Institutions Which Are Deducted
From Equity Or Not Included In These Three Methods 3
VII. The Existing Or Potential, Actual Or Legal Obstacles On The Transfer Of Shareholders’ Equity Between The Parent Bank And its Subsidiaries Or
The Reimbursement Of Liabilities 3
SECTION TWO
Consolidated Financial Statements
I. Consolidated Balance Sheet (Consolidated Statement of Financial Position) 5
II. Consolidated Statement of Off Balance Sheet Contingencies and Commitments 7
III. Consolidated Statement of Income 8
IV. Consolidated Statement of Profit Or Loss And Other Comprehensive Income 9
V. Consolidated Statement of Changes in Shareholders’ Equity 10
VI. Consolidated Statement of Cash Flows 11
SECTION THREE Accounting Principles
I. Basis of Presentation 12
II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions 12
III. Explanations on Associates and Consolidated Subsidiaries 13
IV. Explanations on Forward and Option Contracts and Derivative Instruments 14
V. Explanations on Interest Income and Expenses 15
VI. Explanations on Fees and Commission Income and Expenses 15
VII. Explanations on Financial Assets 16
VIII. Explanations on Impairment of Financial Assets 18
IX. Explanations on Offsetting of Financial Assets and Liabilities 19
X. Explanations on Sales and Repurchase Agreements and Lending of Securities 19
XI. Explanations on Assets Held For Sale and Discontinued Operations 20
XII. Explanations on Goodwill and Other Intangible Assets 20
XIII. Explanations on Tangible Fixed Assets 21
XIV. Explanations on Leasing Transactions 21
XV. Explanations on Provisions and Contingent Liabilities 22
XVI. Explanations on Liabilities Regarding Employee Benefits 22
XVII. Explanations on Taxation 24
XVIII. Additional Explanations on Borrowings 25
XIX. Explanations on Share Certificates 26
XX. Explanations on Independent Guarantees and Acceptances 26
XXI. Explanations on Government Incentives 26
XXII. Explanations on Segment Reporting 27
XXIII. Explanations on Other Matters 28
SECTION FOUR Information Related to Consolidated Financial Position and Risk Management of the Bank
I. Explanations Related to Consolidated Shareholders’ Equity 29
II. Explanations Related to Consolidated Currency Risk 40
III. Explanations Related to the Consolidated Interest Rate Risk 42
IV. Explanations Related to Equity Securities Position Risk of Equity Securities in Banking Book 45
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated Liquidity Coverage Ratio 46
VI. Explanations Related to Consolidated Leverage Ratio 53
VII. Explanations Related to Consolidated Risk Management 55
VIII. Explanations Related to Transactions Made on Behalf of Others and Transactions Based On Trust 56
SECTION FIVE Explanations and Disclosures on Consolidated Financial Statements
I. Explanations Related to the Consolidated Assets 70
II. Explanations Related to the Consolidated Liabilities 86
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and Commitments 97
IV. Explanations Related to the Consolidated Statement of Income 101
V. Explanations on the Risk Group of the Parent Bank 106
VI. Explanations and Notes Related to Subsequent Events 108
SECTION SIX Auditors’ Review Report
I. Explanations on the Auditors’ Review Report 108
II. Other Footnotes and Explanations Prepared by the Independent Auditors 108
SECTION SEVEN Information on Interim Activity Report
I. Interim Period Reports Included the Board of Directors Chairman and General Manager’s
Assessments of the Bank for the Interim Activities 109
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
1
SECTION ONE
GENERAL INFORMATION
I. Parent Bank’s Incorporation Date, Beginning Status, History of the Bank Containing the Changes in
the Mentioned Status
Şekerbank T.A.Ş. (“the Parent Bank”) founded as a Turkish bank by 14 partners started its operations in
1953 as Pancar Kooperatifleri Bankası A.Ş. in Eskişehir, and in 1956 the Bank changed its name to
Şekerbank T.A.Ş and moved its headquarters to Ankara in 1956. 15 % of the Parent Bank shares were
offered to public in 1997 and currently 34.19 % of the Parent Bank shares are publicly traded. The Parent
Bank’s one of the main shareholders, Şekerbank T.A.Ş. Personeli Munzam Sosyal Güvenlik ve
Yardımlaşma Sandığı Vakfı, provide its members with additional social rights and retirement assurances
within the social security system. The Parent Bank has affiliates and subsidiaries in the finance, real estate
and tourism sectors.
Business line of the Parent Bank covers extending all kinds of cash and non-cash loans in Turkish Lira and
foreign currency and carrying out capital market transactions, accepting deposits in TRL and FC and
providing other banking services.
II. Explanations Regarding The Parent Bank’s Shareholding Structure, Shareholders Holding
Directly or Indirectly, Collectively or Individually, the Managing and Controlling Power
and Changes in Current Year, if any and Explanations on the Controlling Group of the
Parent Bank
Name of Shareholders Amounts
of Share
Share
(%)
Paid in
Capital
Unpaid
Capital
Şekerbank T.A.Ş. Personeli
Munzam Sosyal Güvenlik ve
Yardımlaşma Sandığı Vakfı 410,389 35.44 410,389
-
- Samruk-Kazyna, the National
Welfare Fund of Kazakhstan 224,353 19.37 224,353 - Şekerbank T.A.Ş. 109,212 9.43 109,212 -
Others 18,092 1.57 18,092 -
Public Offerings 395,954 34.19 395,954 -
Total 1,158,000 100.00 1,158,000 -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
2
SECTION ONE (cont’d)
GENERAL INFORMATION (cont’d)
III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit
Committee, General Manager and Executive Vice Presidents and Their Shares and Their
Rights of Responsibility in the Bank
Title Name and Surname Responsibility Areas
Chairman of the Board of Directors Dr.Hasan Basri Göktan
Chairman & Executive Board Member, Credit Committee,
Corporate Governance Committee, Remuneration
Committee
General Manager Erdal Erdem
Board Member, General Manager, Credit Committee,
Observer in the Remuneration Committee
Members of the Board of Directors Beibit Karymsakov Vice-Chairman, Remuneration Committee
Emin Erdem Executive Board Member, Credit Committee
Erdal Batmaz Executive Board Member
Nariman Zharkinbayev
Executive Board Member, Credit Committee, Corporate
Governance Committee
Üzeyir Baysal (*) Corporate Governance Committee, Audit Committee
Halit Haydar Yıldız Renumeration Committee
Aidar Ryskulov (*) Audit Committee
Almat Zhamiyev Corporate Governance Committee Çetin Aydın (*) Audit Committee
Mehmet Ayhan Altıntaş
Independent Member, Internal Systems, Corporate
Governance Committee
Executive Vice Presidents Hüseyin Üst Credit Monitoring & Follow-Up
Nihat Büyükbozkoyun Operations
Selim Güray Çelik
Financial Control, Reporting, Budget and Performance
Management, Corporate Governance Committee
Gökhan Ertürk Agricultural & Individual Banking Marketing
Umut Ülbegi Corporate and Commercial Banking Marketing
Salih Zeki Önder Financial Institutions
Ahmet Hakan Eken Credit Management
Aybala Şimşek Strategy and Human Resources
Aytay Tolga Şenefe Treasury
(*) According to Communiqué On Corporate Governance Principles of Capital Markets Board, No: II-17.1, Audit Committee members of the
banks are accepted as independent members of the Board of Directors.
The Chairman of the Board of Directors Dr. Hasan Basri Göktan has total shares of 0.05 % in nominal,
amounting to TRL 577 Thousand; which is obtained from public offering.
IV. Information About the Persons and Institutions That Have Qualified Shares in the Parent
Bank:
Name/ Commercial Name
Amounts of
Share in
TRL Thousand Share (%)
Paid in Capital
In TRL
Thousand
Unpaid
Capital
Şekerbank T.A.Ş.
Personeli Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı 410,389 35.44 410,389 -
Samruk-Kazyna, the National Well-fare Fund of Kazakhstan 224,353 19.37 224,353 -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
3
SECTION ONE (cont’d)
GENERAL INFORMATION (cont’d)
V. Summary on the Parent Bank’s Functions and Areas of Activity
Business line of the Parent Bank covers extending all kinds of cash and non-cash loans in Turkish Lira and
foreign currency and carrying out capital market transactions, accepting deposits in TRL and FC and providing
other banking services. As of 30 June 2019, the Parent Bank has 273 domestic branches (31 December 2018 -
273 domestic branches).
VI. Differences Between The Communiqué On Preparation Of Consolidated Financial
Statements Of Banks And Turkish Accounting Standards And Short Explanation About
The Institutions Subject To Line-By-Line Method Or Proportional Consolidation And
Institutions Which Are Deducted From Equity Or Not Included In These Three Methods
According to the Communique On Preparation Of Consolidated Financial Statements Of Banks, the Bank’s
subsidiaries Şekerbank (Kıbrıs) Ltd., Şeker Finansal Kiralama A.Ş., Şekerbank International Banking Unit Ltd.,
Şeker Yatırım Menkul Değerler A.Ş., Şeker Faktoring A.Ş., Şeker Finansman A.Ş. and Zahlungsdienste GmbH
der Şekerbank T.A.Ş. are included in the scope of consolidation by line-by-line method and Şeker Proje
Geliştirme ve Gayrimenkul Yatırım A.Ş. is not subject to consolidation as it is not a financial subsidiary.
Seltur Turistik İşletmeler Yatırım A.Ş. is not consolidated in the financial statements since the Parent Bank has
no control and it is not a financial subsidiary.
According to Turkish Accounting Standards, all financial and non-financial subsidiaries are consolidated.
VII. The Existing Or Potential, Actual Or Legal Obstacles On The Transfer Of Shareholders'
Equity Between The Parent Bank And its Subsidiaries Or The Reimbursement Of
Liabilities
There is no immediate transfer of the shareholders’ equity between the Parent Bank and its subsidiaries. Dividend
distribution from shareholders’ equity is done according to related regulations. There is no existing or potential,
actual or legal obstacle to the repayment of liabilities between the Parent Bank and its subsidiaries.
4
SECTION TWO
CONSOLIDATED FINANCIAL STATEMENTS
I. Consolidated Balance Sheet (Consolidated Statement of Financial Position)
II. Consolidated Statement of Off Balance Sheet Contingencies and Commitments
III. Consolidated Statement of Income
IV. Consolidated Statement of Profıt Or Loss And Other Comprehensive Income
V. Consolidated Statement of Changes in Shareholders’ Equity
VI. Consolidated Statement of Cash Flows
The accompanying explanations and notes form an integral part of these financial statements.
5
ŞEKERBANK T.A.Ş. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)
TRL THOUSAND
Reviewed Audited
CURRENT PERIOD PRIOR PERIOD
ASSETS Note 30.06.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
I. FINANCIAL ASSETS (Net) 1,633,329 3,272,348 4,905,677 2,029,685 3,106,942 5,136,627
1.1 Cash and Cash Equivalents 666,001 3,189,344 3,855,345 1,002,175 2,866,083 3,868,258
1.1.1 Cash and Balances with Central Bank (1) 631,133 2,727,150 3,358,283 930,193 2,689,044 3,619,237
1.1.2 Banks (3) 31,200 456,410 487,610 34,699 171,320 206,019
1.1.3 Money Market Placements 5,400 5,792 11,192 53,365 5,827 59,192
1.1.4 Expected Losses (-) (1,732) (8) (1,740) (16,082) (108) (16,190)
1.2 Financial Assets at Fair Value Through Profit and Loss (2) 275,696 9,570 285,266 297,944 9,524 307,468
1.2.1 Public Sector Debt Securities 19,634 9,570 29,204 16,048 9,524 25,572
1.2.2 Equity Securities - - - - - -
1.2.3 Other Financial Assets 256,062 - 256,062 281,896 - 281,896
1.3 Financial Assets at Fair Value Through Comprehensive Income (4) 580,438 21,934 602,372 562,381 15,301 577,682
1.3.1 Public Sector Debt Securities 572,861 - 572,861 554,804 - 554,804
1.3.2 Equity Securities 7,577 21,934 29,511 7,577 15,301 22,878
1.3.3 Other Financial Assets - - - - - -
1.4 Derivative Financial Assets (2),(11) 111,194 51,500 162,694 167,185 216,034 383,219
1.4.1
Derivative Financial Assets Measured at Fair Value Through Profit
and Loss 111,194 51,500 162,694 167,185 216,034 383,219
1.4.2
Derivative Financial Assets Measured at Fair Value Through
Comprehensive Income - - - - - -
II. FINANCIAL ASSETS AT AMORTISED COST (NET) 16,680,159 7,832,436 24,512,595 17,075,998 8,087,659 25,163,657
2.1 Loans (5) 15,803,357 6,463,432 22,266,789 15,601,077 6,807,102 22,408,179
2.2 Leasing Receivables (10) 191,641 317,859 509,500 194,366 313,846 508,212
2.3 Factoring Receivables 460,835 - 460,835 443,913 - 443,913
2.4 Financial Assets at Amortised Cost (6) 1,974,148 1,061,825 3,035,973 2,452,249 976,473 3,428,722
2.4.1 Public Sector Debt Securities 1,969,708 318,397 2,288,105 2,447,744 293,076 2,740,820
2.4.2 Other Financial Assets 4,440 743,428 747,868 4,505 683,397 687,902
2.5 Expected Losses (-) (1,749,822) (10,680) (1,760,502) (1,615,607) (9,762) (1,625,369)
III. ASSETS HELD FOR SALE AND DISCONTINUED
OPERATIONS (Net) (16) 510,042 - 510,042 320,984 - 320,984
3.1 Held for sale 510,042 - 510,042 320,984 - 320,984
3.2 Discontinued operations - - - - - -
IV. OWNERSHIP INVESTMENTS (Net)
614,789 - 614,789 612,829 - 612,829
4.1 Associates (Net) (7) 4,236 - 4,236 4,236 - 4,236
4.1.1 Associates Consolidated Under Equity Accounting - - - - - -
4.1.2 Unconsolidated Associates 4,236 - 4,236 4,236 - 4,236
4.2 Subsidiaries (Net) (8) 610,553 - 610,553 608,593 - 608,593
4.2.1 Unconsolidated Financial Investments in Subsidiaries - - - - - -
4.2.2 Unconsolidated Non-Financial Investments in Subsidiaries 610,553 - 610,553 608,593 - 608,593
4.3 Joint Ventures (Net) (9) - - - - - -
4.3.1 Joint-Ventures Consolidated Under Equity Accounting - - - - - -
4.3.2 Unconsolidated Joint-Ventures - - - - - -
V. TANGIBLE ASSETS (Net) (12) 884,627 3,857 888,484 708,376 3,456 711,832
VI. INTANGIBLE ASSETS (Net) (13) 111,445 - 111,445 94,111 - 94,111
6.1 Goodwill - - - - - -
6.2 Other 111,445 - 111,445 94,111 - 94,111
VII. INVESTMENT PROPERTY (Net) (14) 65,337 - 65,337 61,125 - 61,125
VIII. CURRENT TAX ASSET 18,344 - 18,344 5,369 - 5,369
IX. DEFERRED TAX ASSET (15) 240,008 - 240,008 173,996 - 173,996
X. OTHER ASSETS (Net) (17) 416,169 323,646 739,815 492,004 192,250 684,254
TOTAL ASSETS 21,174,249 11,432,287 32,606,536 21,574,477 11,390,307 32,964,784
The accompanying explanations and notes form an integral part of these financial statements.
6
ŞEKERBANK T.A.Ş. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)
TRL THOUSAND
Reviewed Audited
CURRENT PERIOD PRIOR PERIOD
LIABILITIES Note 30.06.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
I. DEPOSITS (1) 12,519,028 11,432,627 23,951,655 12,835,889 10,104,968 22,940,857
II. FUNDS BORROWED (3) 503,938 2,068,196 2,572,134 473,392 3,126,688 3,600,080
III. MONEY MARKET BALANCES (4) 551,156 - 551,156 192,096 - 192,096
IV. MARKETABLE SECURITIES ISSUED (Net) (5) 911,115 - 911,115 1,243,684 - 1,243,684
4.1 Bills 515,662 - 515,662 516,302 - 516,302
4.2 Asset backed securities 380,319 - 380,319 701,850 - 701,850
4.3 Bonds 15,134 - 15,134 25,532 - 25,532
V. FUNDS - - - - - -
5.1 Borrower funds - - - - - -
5.2 Other - - - - - -
VI.
FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
THROUGH PROFIT AND LOSS - - - - - -
VII. DERIVATIVE FINANCIAL LIABILITIES (2),(8) 26,711 89,618 116,329 30,261 91,824 122,085
7.1
Derivative Financial Liabilities Measured at Fair Value Through
Profit and Loss 26,711 89,618 116,329 30,261 91,824 122,085
7.2
Derivative Financial Liabilities Measured at Fair Value Through
Comprehensive Income - - - - - -
VIII. FACTORING PAYABLES 2,202 - 2,202 554 - 554
IX. LEASE PAYABLES (Net) (7) 204,336 13,861 218,197 12,363 12,744 25,107
X. PROVISIONS (9) 562,976 1,141 564,117 486,646 4,236 490,882
10.1 Restructuring provisions - - - - - -
10.2 Reserve for employee benefits 101,809 565 102,374 87,508 533 88,041
10.3 Insurance technical provisions (Net) - - - - - -
10.4 Other provisions 461,167 576 461,743 399,138 3,703 402,841
XI. CURRENT TAX LIABILITY (10) 63,092 41 63,133 63,038 45 63,083
XII. DEFERRED TAX LIABILITY (10) 67 - 67 1,532 - 1,532
XIII.
PAYABLES RELATED TO ASSETS HELD FOR SALE AND
DISCONTINUED OPERATIONS (Net) (11)
- - - - - -
13.1 Held for sale - - - - - -
13.2 Discontinued operations - - - - - -
XIV. SUBORDINATED DEBTS (12) 452,399 491,548 943,947 452,571 451,050 903,621
14.1 Loans - - - - - -
14.2 Other Debt Instruments 452,399 491,548 943,947 452,571 451,050 903,621
XV. OTHER LIABILITIES (6) 288,936 243,891 532,827 505,778 422,595 928,373
XVI. SHAREHOLDERS' EQUITY (13) 2,142,524 37,133 2,179,657 2,423,436 29,394 2,452,830
16.1 Paid-in capital 1,158,000 - 1,158,000 1,158,000 - 1,158,000
16.2 Capital Reserves (164,115) - (164,115) (164,083) - (164,083)
16.2.1 Share Premium 1,835 - 1,835 1,835 - 1,835
16.2.2 Share Cancellation Profits - - - - - -
16.2.3 Other Capital Reserves (165,950) - (165,950) (165,918) - (165,918)
16.3
Other Comprehensive Income/Expense Items not to be Recycled to
Profit or Loss 68,840 - 68,840 68,744 - 68,744
16.4
Other Comprehensive Income/Expense Items to be Recycled to
Profit or Loss (8,906) 31,800 22,894 (9,167) 24,511 15,344
16.5 Profit Reserves 1,368,445 5,336 1,373,781 1,758,536 4,146 1,762,682
16.5.1 Legal Reserves 301,280 5,410 306,690 296,784 4,220 301,004
16.5.2 Status Reserves - - - - - -
16.5.3 Extraordinary Reserves 980,762 - 980,762 1,375,349 - 1,375,349
16.5.4 Other Profit Reserves 86,403 (74) 86,329 86,403 (74) 86,329
16.6 Profit or Loss (315,393) (1,666) (317,059) (427,440) (766) (428,206)
16.6.1 Prior Years’ Income/ (Loss) (36,996) (2,309) (39,305) (515,982) (1,622) (517,604)
16.6.2 Current Year Income/ (Loss) (278,397) 643 (277,754) 88,542 856 89,398
16.7 Minority Shares 35,653 1,663 37,316 38,846 1,503 40,349
TOTAL LIABILITIES 18,228,480 14,378,056 32,606,536 18,721,240 14,243,544 32,964,784
The accompanying explanations and notes form an integral part of these financial statements.
7
ŞEKERBANK T.A.Ş. CONSOLIDATED OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS
TRL THOUSAND
Reviewed Audited
CURRENT PERIOD PRIOR PERIOD
Note 30.06.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
A. OFF BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III) 11,546,363 13,808,097 25,354,460 11,200,444 10,906,698 22,107,142
I. GUARANTEES AND SURETIES (1) 3,202,574 2,270,178 5,472,752 3,399,645 2,519,339 5,918,984
1.1. Letters of guarantee
3,195,313 883,801 4,079,114 3,392,210 993,034 4,385,244
1.1.1. Guarantees subject to State Tender Law
167,412 3,438 170,850 148,504 3,772 152,276
1.1.2. Guarantees given for foreign trade operations
- - - - - -
1.1.3. Other letters of guarantee
3,027,901 880,363 3,908,264 3,243,706 989,262 4,232,968
1.2. Bank loans
- 131,798 131,798 - 132,949 132,949
1.2.1. Import letter of acceptance
- 131,798 131,798 - 132,949 132,949
1.2.2. Other bank acceptances
- - - - - -
1.3. Letters of credit
1,216 204,561 205,777 1,976 260,858 262,834
1.3.1. Documentary letters of credit
1,216 204,561 205,777 1,976 260,858 262,834
1.3.2. Other letters of credit
- - - - - -
1.4. Prefinancing given as guarantee
- - - - - -
1.5. Endorsements
- 404,322 404,322 - 174,680 174,680
1.5.1. Endorsements to the Central Bank of Turkey
- 404,322 404,322 - 174,680 174,680
1.5.2. Other endorsements
- - - - - -
1.6. Purchase guarantees for securities issued
- - - - - -
1.7. Factoring guarantees
- - - - - -
1.8. Other guarantees
6,045 645,696 651,741 5,459 957,818 963,277
1.9. Other sureties
- - - - - -
II. COMMITMENTS (1) 3,861,621 1,798,776 5,660,397 2,587,245 86,990 2,674,235
2.1. Irrevocable commitments
3,357,320 1,797,528 5,154,848 2,050,562 84,759 2,135,321
2.1.1. Forward asset purchase commitments
1,190,473 1,784,669 2,975,142 22,231 73,933 96,164
2.1.2. Forward deposit purchase and sales commitments
- - - - - -
2.1.3. Share capital commitment to associates and subsidiaries
- - - - - -
2.1.4. Loan granting commitments
1,039,490 12,859 1,052,349 976,300 10,826 987,126
2.1.5. Securities underwriting commitments
- - - - - -
2.1.6. Commitments for reserve deposit requirements
- - - - - -
2.1.7. Payment commitment for checks
411,091 - 411,091 341,685 - 341,685
2.1.8. Tax and fund liabilities from export commitments
10,776 - 10,776 10,032 - 10,032
2.1.9. Commitments for credit card expenditure limits
513,128 - 513,128 473,944 - 473,944
2.1.10. Commitments for promotions related with credit cards and banking activities
525 - 525 501 - 501
2.1.11. Receivables from short sale commitments on securities
- - - - - -
2.1.12. Payables for short sale commitments on securities
- - - - - -
2.1.13. Other irrevocable commitments
191,837 - 191,837 225,869 - 225,869
2.2. Revocable commitments (4) 504,301 1,248 505,549 536,683 2,231 538,914
2.2.1. Revocable loan granting commitments
504,071 - 504,071 535,704 - 535,704
2.2.2. Other revocable commitments
230 1,248 1,478 979 2,231 3,210
III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 4,482,168 9,739,143 14,221,311 5,213,554 8,300,369 13,513,923
3.1 Derivative financial instruments for hedging purposes
930,000 - 930,000 936,000 - 936,000
3.1.1 Fair value hedge
930,000 - 930,000 936,000 - 936,000
3.1.2 Cash flow hedge
- - - - - -
3.1.3 Hedge of net investment in foreign operations
- - - - - -
3.2 Held for trading transactions
3,552,168 9,739,143 13,291,311 4,277,554 8,300,369 12,577,923
3.2.1 Forward foreign currency buy/sell transactions
212,180 601,942 814,122 447,560 672,968 1,120,528
3.2.1.1 Forward foreign currency transactions-buy
132,168 267,939 400,107 231,148 332,755 563,903
3.2.1.2 Forward foreign currency transactions-sell
80,012 334,003 414,015 216,412 340,213 556,625
3.2.2 Swap transactions related to f.c. and interest rates
3,115,999 7,861,073 10,977,072 3,371,929 6,908,365 10,280,294
3.2.2.1 Foreign currency swap-buy
1,637 4,936,523 4,938,160 693,999 3,847,410 4,541,409
3.2.2.2 Foreign currency swap-sell
3,094,362 1,628,202 4,722,564 2,327,930 1,865,237 4,193,167
3.2.2.3 Interest rate swaps-buy
10,000 648,174 658,174 175,000 597,859 772,859
3.2.2.4 Interest rate swaps-sell
10,000 648,174 658,174 175,000 597,859 772,859
3.2.3 Foreign currency, interest rate and securities options
223,989 1,125,517 1,349,506 458,065 610,742 1,068,807
3.2.3.1 Foreign currency options-buy
77,860 590,312 668,172 234,015 289,080 523,095
3.2.3.2 Foreign currency options-sell
146,129 535,205 681,334 224,050 321,662 545,712
3.2.3.3 Interest rate options-buy
- - - - - -
3.2.3.4 Interest rate options-sell
- - - - - -
3.2.3.5 Securities options-buy
- - - - - -
3.2.3.6 Securities options-sell
- - - - - -
3.2.4 Foreign currency futures
- - - - - -
3.2.4.1 Foreign currency futures-buy
- - - - - -
3.2.4.2 Foreign currency futures-sell
- - - - - -
3.2.5 Interest rate futures
- - - - - -
3.2.5.1 Interest rate futures-buy
- - - - - -
3.2.5.2 Interest rate futures-sell
- - - - - -
3.2.6 Other
- 150,611 150,611 - 108,294 108,294
B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 451,507,309 242,915,061 694,422,370 436,117,794 224,698,837 660,816,631
IV. ITEMS HELD IN CUSTODY
4,666,813 1,844,232 6,511,045 4,261,936 1,578,609 5,840,545
4.1. Customer fund and portfolio balances
- - - - - -
4.2. Investment securities held in custody
533,595 430,217 963,812 513,304 436,509 949,813
4.3. Checks received for collection
1,989,890 144,320 2,134,210 1,807,316 135,081 1,942,397
4.4. Commercial notes received for collection
86,031 420,739 506,770 64,174 158,429 222,603
4.5. Other assets received for collection
2,580 668,144 670,724 2,124 682,216 684,340
4.6. Assets received for public offering
- - - - - -
4.7. Other items under custody
2,054,716 180,812 2,235,528 1,875,017 166,374 2,041,391
4.8. Custodians
1 - 1 1 - 1
V. PLEDGED ITEMS
442,440,740 239,725,766 682,166,506 427,323,477 221,791,699 649,115,176
5.1. Marketable securities
22,000 64 22,064 22,000 59 22,059
5.2. Guarantee notes
104,644,825 41,321,970 145,966,795 100,340,591 38,821,464 139,162,055
5.3. Commodity
- - - - - -
5.4. Warranty
- - - - - -
5.5. Properties
30,083,723 14,163,633 44,247,356 29,033,655 12,149,563 41,183,218
5.6. Other pledged items
306,452,190 184,156,356 490,608,546 296,771,411 170,744,419 467,515,830
5.7. Pledged items-depository
1,238,002 83,743 1,321,745 1,155,820 76,194 1,232,014
VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES
4,399,756 1,345,063 5,744,819 4,532,381 1,328,529 5,860,910
TOTAL OFF BALANCE SHEET ACCOUNTS (A+B)
463,053,672 256,723,158 719,776,830 447,318,238 235,605,535 682,923,773
The accompanying explanations and notes form an integral part of these financial statements.
8
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF INCOME
TRL THOUSAND
Reviewed Reviewed Reviewed Reviewed
INCOME STATEMENT Dipnot CURRENT
PERIOD
CURRENT
PERIOD
PRIOR
PERIOD
PRIOR
PERIOD
01.01.2019 -
30.06.2019
01.04.2019 -
30.06.2019
01.01.2018 -
30.06.2018
01.04.2018 -
30.06.2018
I. INTEREST INCOME (1) 2,201,120 1,121,273 1,883,719 977,916
1.1 Interest on Loans 1,923,678 979,041 1,599,138 834,212
1.2 Interest Received From Reserve Deposits 29,480 15,345 18,950 10,120
1.3 Interest Received From Banks 21,162 11,448 11,696 5,107
1.4 Interest Received From Money Market Placements 2,780 930 43,502 25,820
1.5 Interest Received From Marketable Securities Portfolio 176,205 90,671 177,154 86,052
1.5.1 Financial Assets at Fair Value Through Profit and Loss 4,061 2,192 2,522 1,121
1.5.2 Financial Assets at Fair Value Through Comperehensive Income 45,157 20,976 10,905 3,895
1.5.3 Financial Assets at Amortised Cost
126,987 67,503 163,727 81,036
1.6 Financial Leasing Income
27,109 13,938 24,284 11,857
1.7 Other Interest Income 20,706 9,900 8,995 4,748
II. INTEREST EXPENSE (-) (2) 1,722,789 856,503 1,129,315 580,099
2.1 Interest on Deposits 1,282,606 645,810 796,356 407,809
2.2 Interest on Funds Borrowed 105,422 51,551 87,953 47,893
2.3 Interest on Money Market Transactions 84,918 27,828 77,115 34,828
2.4 Interest on Securities Issued 159,996 77,836 141,110 77,169
2.5 Leasing Interest Expense 21,462 10,758 1,633 676
2.6 Other Interest Expense 68,385 42,720 25,148 11,724
III. NET INTEREST/INCOME (I - II) 478,331 264,770 754,404 397,817
IV. NET FEES AND COMMISSIONS INCOME 191,502 93,069 177,480 84,299
4.1 Fees and Commissions Received 248,267 120,600 223,624 110,163
4.1.1 Non-cash Loans 39,212 19,583 37,286 18,520
4.1.2 Other 209,055 101,017 186,338 91,643
4.2 Fees and Commissions Paid
56,765 27,531 46,144 25,864
4.2.1 Non-cash Loans
1,020 514 524 275
4.2.2 Other
55,745 27,017 45,620 25,589
V. DIVIDEND INCOME (3) 3,693 3,672 1,230 1,230
VI. NET TRADING INCOME/LOSSES (NET) (4) (45,730) (61,396) (81,735) (31,721)
6.1 Trading gains/ (losses) on securities 15,008 47,930 3,218 89
6.2 Gains/(loses) on derivative financial transactions (7,054) (165,434) 449,358 404,565
6.3 Foreign exchange gains/ (losses) (53,684) 56,108 (534,311) (436,375)
VII. OTHER OPERATING INCOME (5) 62,543 32,134 41,379 22,446
VIII. TOTAL OPERATING PROFIT (III+IV+V+VI+VII) 690,339 332,249 892,758 474,071
IX. EXPECTED LOSSES PROVISIONS (-) (6) 402,852 219,536 163,247 75,420
X. OTHER PROVISIONS (-) (6) 54,738 52,385 123,201 76,379
XI. PERSONNEL EXPENSES (-) 272,184 138,231 221,033 117,264
XII. OTHER OPERATING EXPENSES (-) (7) 309,436 163,768 305,345 149,240
XIII. NET OPERATING INCOME/(LOSS) (VIII-IX-X-XI-XII) (348,871) (241,671) 79,932 55,768
XIV. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - - -
XV. GAIN / (LOSS) ON EQUITY METHOD - - - -
XVI. GAIN / (LOSS) ON NET MONETARY POSITION - - - -
XVII.
PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE
TAXES (XIII+...+XVI) (8) (348,871) (241,671) 79,932 55,768
XVIII. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) 68,435 50,543 (9,223) (13,984)
18.1 Current tax charge (164) 12,096 (19,490) (18,472)
18.2 Deferred tax charge (+) (5,011) 36,732 (77,634) (50,670)
18.3 Deferred tax credit (-) 73,610 1,715 87,901 55,158
XIX.
NET PROFIT/(LOSS) FROM CONTINUED
OPERATIONS(XVII±XVIII) (10) (280,436) (191,128) 70,709 41,784
XX. INCOME ON DISCONTINUED OPERATIONS - - - -
20.1 Income on assets held for sale - - - -
20.2
Income on sale of associates, subsidiaries and jointly controlled entities
(Joint vent.) - - - -
20.3 Income on other discontinued operations - - - -
XXI. LOSS FROM DISCONTINUED OPERATIONS (-) - - - -
21.1 Loss from assets held for sale - - - -
21.2
Loss on sale of associates, subsidiaries and jointly controlled entities (Joint
vent.) - - - -
21.3 Loss from other discontinued operations - - - -
XXII.
PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE
TAXES (XX-XXI) (8) - - - -
XXIII. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) (9) - - - -
23.1 Current tax charge - - - -
23.2 Deferred tax charge (+) - - - -
23.3 Deferred tax credit (-) - - - -
XXIV.
NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS
(XXII±XXIII) (10) - - - -
XXV. NET PROFIT/LOSS (XIX+XXIV) (11) (280,436) (191,128) 70,709 41,784
25.1 Group’s profit/loss
(277,754) (184,209) 65,195 36,264
25.2 Non-controlling interest (2,682) (6,919) 5,514 5,520
Earnings per share (0.24217) (0.16505) 0.06106 0.03608
The accompanying explanations and notes form an integral part of these financial statements.
9
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPEREHENSIVE INCOME
TRL THOUSAND
Reviewed Reviewed
CURRENT PERIOD PRIOR PERIOD
01.01.2019 -30.06.2019 01.01.2018-30.06.2018
I. PROFIT/LOSS FOR THE PERIOD (280,436) 70,709
II. OTHER COMREHENSIVE INCOME 7,681 (5,380)
2.1 Other Income/Expense Items not to be Recycled to Profit or Loss 96 -
2.1.1 Revaluation Surplus on Tangible Assets - -
2.1.2 Revaluation Surplus on Intangible Assets - -
2.1.3 Defined Benefit Plans' Actuarial Gains/Losses - -
2.1.4 Other Income/Expense Items not to be Recycled to Profit or Loss 120 -
2.1.5 Deferred Taxes on Other Comprehensive Income not to be Recycled to Profit or Loss (24) -
2.2 Other Income/Expense Items to be Recycled to Profit or Loss 7,585 (5,380)
2.2.1 Translation Differences 3,242 5,323
2.2.2 Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at
FVOCI 5,441 (13,435)
2.2.3 Gains/losses from Cash Flow Hedges - -
2.2.4 Gains/Losses on Hedges of Net Investments in Foreign Operations - -
2.2.5 Other Income/Expense Items to be Recycled to Profit or Loss - -
2.2.6 Deferred Taxes on Other Comprehensive Income to be Recycled to Profit or Loss (1,098) 2,732
III. TOTAL COMPREHENSIVE INCOME (I+II) (272,755) 65,329
The accompanying explanations and notes form an integral part of these financial statements.
10
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
TRL THOUSAND
Other Comprehensive Income/Expense
Items not to be Recycled to Profit or
Loss
Other Comprehensive Income/Expense Items
to be Recycled to Profit or Loss
CHANGES IN SHAREHOLDERS’ EQUITY Note
Paid-in
Capital
Share
Premium
Share
Certificate
Cancellation
Profits
Other
Capital
Reserves
Accumulated
Revaluation
Increase/
Decrease of
Fixed Asset
Accumulated
Remeasurement
Gain/Loss of
Defined Benefit
Pension Plan
Other
Foreign
Currency
Translation
Differences
Accumulated
Revaluation and/or
Remeasurement
Gain/Loss of the
Financial Assets at
Fair Value Through
Other Comprehensive
Income
Profit
Reserves
Prior
Period
Profit/
(Loss)
Current
Period
Profit/
(Loss)
Total
Equity
Before
Minority
Shares
Non-
controlling
Interest
Total
Equity Ref. Other
Reviewed
PRIOR PERIOD
01.01.2018 - 30.06.2018
I. Balances at Beginning of Period 1,158,000 1,834 - (165,654) 62,153 (13,199) - 10,219 (54,199) - 1,403,852 346,670 - 2,749,676 40,870 2,790,546
II. Correction Made as Per TAS 8 - - - - - - - - 60,152 - - (504,313) - (444,161) (5,006) (449,167)
2.1 Effect of Corrections - - - - - - - - - - - - - - - -
2.2 Effect of Changes in Accounting Policies - - - - - - - - 60,152 - - (504,313) - (444,161) (5,006) (449,167)
III. Adjusted Balances at the Beginning of the Period (I+II) (13) 1,158,000 1,834 - (165,654) 62,153 (13,199) - 10,219 5,953 - 1,403,852 (157,643) - 2,305,515 35,864 2,341,379
IV. Total Comprehensive Income - - - - - - - - - - - - 69,366 69,366 1,343 70,709
V. Capital Inrease in Cash - - - - - - - - - - - - - - - -
VI. Capital Inrease in Internal Sources - - - - - - - - - - - - - - - -
VII. Inflation Adjustment to Paid-in Capital - - - - - - - - - - - - - - - -
VIII. Convertible Bonds - - - - - - - - - - - - - - - -
IX. Subordinated Debt Instruments - - - - - - - - - - - - - - - -
X. Increase/ Decrease due to Other Changes - - - 39 - - - 5,323 (10,703) - (130) - - (5,471) (831) (6,302)
XI. Profit Distribution - - - - - - - - - - 358,713 (359,713) - (1,000) - (1,000)
11.1 Dividends Paid - - - - - - - - - - - (1,000) - (1,000) - (1,000)
11.2 Transfers to Reserves - - - - - - - - - - 358,713 (358,713) - - - -
11.3 Other - - - - - - - - - - - - - - - -
Balances at end of the period (III+IV…+X+XI) 1,158,000 1,834 - (165,615) 62,153 (13,199) - 15,542 (4,750) - 1,762,435 (517,356) 69,366 2,368,410 36,376 2,404,786
Reviewed
CURRENT PERIOD
01.01.2019 - 30.06.2019
I. Balances at Beginning of Period 1,158,000 1,835 - (165,918) 78,122 (9,378) - 20,464 (5,120) - 1,762,682 (428,206) - 2,412,481 40,349 2,452,830
II. Correction Made as Per TAS 8 - - - - - - - - - - - - - - - -
2.1 Effect of Corrections - - - - - - - - - - - - - - - -
2.2 Effect of Changes in Accounting Policies - - - - - - - - - - - - - - - -
III. Adjusted Balances at the Beginning of the Period (I+II) (13) 1,158,000 1,835 - (165,918) 78,122 (9,378) - 20,464 (5,120) - 1,762,682 (428,206) - 2,412,481 40,349 2,452,830
IV. Total Comprehensive Income - - - - - - - - - - - - (277,754) (277,754) (2,682) (280,436)
V. Capital Inrease in Cash - - - - - - - - - - - - - - - -
VI. Capital Inrease in Internal Sources - - - - - - - - - - - - - - - -
VII. Inflation Adjustment to Paid-in Capital - - - - - - - - - - - - - - - -
VIII. Convertible Bonds - - - - - - - - - - - - - - - -
IX. Subordinated Debt Instruments - - - - - - - - - - - - - - - -
X. Increase/ Decrease due to Other Changes - - - (32) 96 - - 3,207 4,343 - - - - 7,614 (351) 7,263
XI. Profit Distribution - - - - - - - - - - (388,901) 388,901 - - - -
11.1 Dividends Paid - - - - - - - - - - - - - - - -
11.2 Transfers to Reserves - - - - - - - - - - (388,901) 388,901 - - - -
11.3 Other - - - - - - - - - - - - - - - -
Balances at end of the period (III+IV…+X+XI) 1,158,000 1,835 - (165,950) 78,218 (9,378) - 23,671 (777) - 1,373,781 (39,305) (277,754) 2,142,341 37,316 2,179,657
11
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF CASH FLOWS
TRL THOUSAND
Reviewed Reviewed
Note CURRENT PERIOD PRIOR PERIOD
Ref. 01.01.2019 - 30.06.2019 01.01.2018 - 30.06.2018
A. CASH FLOWS FROM BANKING OPERATIONS
1.1 Operating Profit Before Changes in Operating Assets and Liabilities (621,388) (565,687)
1.1.1 Interest Received 2,307,157 1,415,064
1.1.2 Interest Paid (1,745,169) (1,112,092)
1.1.3 Dividend Received 1,289 1,230
1.1.4 Fees and Commissions Received 248,267 223,624
1.1.5 Other Income 266,050 383,393
1.1.6 Collections From Previously Written Off Loans 166,664 265,884
1.1.7 Cash Payments to Personnel and Service Suppliers (275,848) (253,503)
1.1.8 Taxes Paid (17,902) (15,759)
1.1.9 Others (1,571,896) (1,473,528)
1.2 Changes in Operating Assets and Liabilities (178,981) (937,624)
1.2.1 Net (Increase) Decrease in Financial Assets at Fair Value Through Profit or Loss 30,262 (35,167)
1.2.2 Net (Increase) Decrease in Due From Banks 6,675 (772)
1.2.3 Net (Increase) Decrease in Loans (44,394) (1,527,633)
1.2.4 Net (Increase) Decrease in Other Assets (386,939) (571,127)
1.2.5 Net Increase (Decrease) in Bank Deposits 217,898 (1,096,305)
1.2.6 Net Increase (Decrease) in Other Deposits 1,169,645 1,337,088
1.2.7 Net Increase (Decrease) in Financial Liabilities at Fair Value Through Profit or Loss - -
1.2.8 Net Increase (Decrease) in Funds Borrowed (794,048) 809,795
1.2.9 Net Increase (Decrease) in Matured Payables - -
1.2.10 Net Increase (Decrease) in Other Liabilities (378,080) 146,497
I. Net Cash Provided From Banking Operations (800,369) (1,503,311)
B. CASH FLOWS FROM INVESTING ACTIVITIES
II. Net Cash Flow Provided From Investing Activities 605,570 (8,227)
2.1 Cash Paid for Purchase of Entities Under Common Control, Associates and Subsidiaries - -
2.2 Cash Obtained From Sale of Entities Under Common Control, Associates and Subsidiaries - -
2.3 Purchases of Tangible Assets (11,825) (14,156)
2.4 Sales of Tangible Assets 33,183 70,107
2.5 Purchase of Financial Assets at Fair Value Through Comprehensive Income (23,288) (744,780)
2.6 Sale of Financial Assets at Fair Value Through Comprehensive Income 33,668 811,810
2.7 Purchase of Financial Assets at Amortised Cost - (192,326)
2.8 Sale of Financial Assets at Amortised Cost 607,379 74,618
2.9 Others (33,547) (13,500)
C. CASH FLOWS FROM FINANCING ACTIVITIES
III. Net Cash Provided from Financing Activities (75,769) 121,127
3.1 Cash Obtained from Funds Borrowed and Securities Issued 835,939 769,380
3.2 Cash Used for Repayment of Funds Borrowed and Securities Issued (872,059) (642,534)
3.3 Equity Instruments Issued - -
3.4 Dividends Paid - (1,000)
3.5 Payments for Leases (39,649) (4,719)
3.6 Others - -
IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents 71,099 119,380
V. Net Increase in Cash and Cash Equivalents (199,469) (1,271,031)
VI. Cash and Cash Equivalents at Beginning of the Period 2,044,583 3,889,468
VII. Cash and Cash Equivalents at End of the Period 1,845,114 2,618,437
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
12
SECTION THREE
ACCOUNTING PRINCIPLES
I. Basis of Presentation
The Parent Bank prepares financial statements and notes in accordance with the Turkish Accounting Standards
(TAS) and the Turkish Financial Reporting Standards (TFRS) and the related statements and guidances
announced by the Public Oversight, Accounting and Auditing Standards Authority (“POA”) and the
Communiqué on Banks’ Accounting Practice and Maintaining Documents, other regulations, communiqués and
circulars in respect of accounting and financial reporting and pronouncements issued by the Banking Regulation
and Supervision Agency (BRSA).
In accordance with the “Communique amending the Communique on the Financial Statements and Related
Disclosures and Footnotes to be Announced to Public by Banks” published in the Official Gazette dated 1
February 2019 with No. 30673, the accompanying previous period financial statements were made compatible
with the new financial statement formats.
Under the TFRS 16 Leases standard, published in the Official Gazette dated 16 April 2018 and numbered 30393,
operating leases are accounted in similar manner with the financial leasing transactions starting from 1 January
2019. According to this standard; leasing transactions are included in the balance sheet as Right-of-use Assets
and leasing liabilities. In accordance with the transition requiremnets of TFRS 16, prior period financial
statements and footnotes have not been restated. Implementation and impacts related to the transition of TFRS
16 are explained in Note XXIII of Section Three.
Accounting policies and valuation principles applied in the preparation of financial statements are disclosed in
the footnotes below.
Additional paragraph for convenience translation to English
The effects of differences between accounting principles and standards set out by regulations in conformity with
Article 37 and Article 38 of the Banking Act No. 5411, accounting principles generally accepted in countries in
which the accompanying consolidated financial statements are to be distributed and the International Financial
Reporting Standards (“IFRS”) have not been quantified in the accompanying consolidated financial statements.
Accordingly, the accompanying consolidated financial statements are not intended to present the financial
position, results of operations and changes in financial position and cash flows in accordance with the accounting
principles generally accepted in such countries and IFRS.
II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions
The Parent Bank aims to keep up its activities in every line of banking.
The Parent Bank shapes its strategies for financial instruments depending on the source of funds, which mainly
consists of deposits. Investment instruments are usually choosen from liquid instruments. A level of liquidity
which allows covering obligations of the Group is secured.
The Group controls risk by managing positions in harmony with market movements on the strength of short-term
strategies instead of carrying long-term currency positions in big amounts, in order to avoid risks which might
arise from floating currency (exchange rate) regime. A currency risk arising from customer transactions, the
Group tries to close by carrying out counter-transactions. Within the budget, limits are set in terms of maturity
and distribution of assets is determined.
Yield (return) and risk analyses are made in regard of maturity structure of balance sheet items, re-pricing
periods and interest rates, and appropriate investment decisions are made.
The Group off-balance sheet derivative transactions are managed by including such transactions in the total
currency and interest positions. Derivative transactions to be made by customers are carried out within loan and
risk limits established on customer basis. Currency swaps, in particular, being a larger part of the off-balance
sheet transactions, are carried out to manage the currency cash flow without causing currency and interest risks.
The Parent Bank aims to get longer-term funds (resources) in order to be able to hedge itself against risks arising
from short-term character of deposits, while trying to increase the share of floating interest rate items in its
assets.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
13
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions
(cont’d)
Gains or loss arising from foreign currency transactions are reflected to the statement of income as they are
realized during the year. Foreign currency assets and liabilities at each period-end are translated into Turkish lira
at the period-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. As of 30 June
2019 the Parent Bank converts its foreign currency transactions with the Parent Bank’s exchange rates and
subsidiaries of the Parent Bank converts their foreign currency transactions with the Central Bank’s exchange
rates.
There are no capitalized foreign exchange differences.
The information regarding the principles of foreign currency risk management is stated in the Section Four, Note
III. Foreign exchange gains and losses arising from conversion monetary financial assets are reflected to
“Foreign Exchange Gains / Losses” in the statement of income.
The foreign currency net investment in consolidated foreign subsidiaries are translated into Turkish Lira using
the Parent Bank’s exchange rate prevailing at the balance sheet date for their assets and liabilities and annual
average exchange rate for their statement of income items. The currency conversion derived from the
consolidated subsidiaries’ currency translation differences amounting to TRL 3,207 Thousand gain (31
December 2018 - TRL 10,245 Thousand gain) has been recorded in “Other Comprehensive Income/Expense
Items to be Reclassified to Profit or Loss” under shareholders’ equity.
III. Information on Consolidated Subsidiaries
The accompanying consolidated financial statements are prepared in accordance with “Communiqué on
Preparation of Consolidated Financial Statements of Banks” published in the Official Gazette dated 8 November
2006 numbered 26340. The Parent Bank and the subsidiaries included in the consolidation are referred to as “the
Group” in this report.
The financial statements of the subsidiaries, which were prepared in accordance with the prevailing principles
and rules regarding financial accounting and reporting standards in their respective country of incorporation and
the Turkish Commercial Code, Financial Leasing, Factoring and Financing Companies Law, communiqués of
the Capital Market Board and the BRSA, are duly adjusted in order to present their financial statements in
accordance with the accounting policies of the Parent Bank.
Explanations on Consolidation Method and Scope
The commercial names of the entities included in consolidation and the locations of the head offices of these
institutions are:
Commercial Name Head Office Consolidation Method
Şekerbank (Kıbrıs) Ltd. Nicosia/TRNC full consolidation
Şeker Finansal Kiralama A.Ş. Istanbul/Turkey full consolidation
Şekerbank International Banking Unit Ltd. Nicosia / TRNC full consolidation
Şeker Yatırım Menkul Değerler A.Ş. Istanbul/Turkey full consolidation
Şeker Faktoring A.Ş. Istanbul/Turkey full consolidation
Şeker Finansman A.Ş. Istanbul/Turkey full consolidation
Zahlungsdienste GmbH der Şekerbank T.A.Ş. Cologne/Germany full consolidation
When there are differences between the accounting policies of the subsidiaries and the Parent Bank, the financial
statements are adjusted in accordance with the principle of materiality. The financial statements of the
subsidiaries are prepared as of 30 June 2019.
The transactions and balances between the consolidated financial subsidiaries and the Parent Bank are bilaterally
eliminated.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
14
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
IV. Explanations on Forward and Option Contracts and Derivative Instruments
The Group’s derivative instruments mainly consist of foreign currency swaps, interest swaps, option and forward
foreign currency buy/sell transactions. Fair values of foreign currency forward and swap transactions are
determined by comparing the period end foreign exchange rates and current market foreign exchange rates at the
balance sheet date. The resulting gain or loss is reflected in the statement of income. In calculation of fair values
of the interest swap contracts, interest amounts to be paid or received upon the fixed interest rate in the contract
and interest amounts to be received or paid upon the floating interest rates in the contracts have been recalculated
and discounted in accordance to valid interest rates in the current market and the differences have been reflected
to the current term statement of income. Discounted values calculated using the interest rates between the
transaction date and repricing date and are used in determination of the fair values of interest rate swaps.
While some derivative transactions provide economic hedging, these transactions are subject to hedge
accounting. The purpose of hedge accounting; is to present the effect of the risk management activities using
appropriate financial instruments to manage certain risks that may affect profit or loss in the financial statements.
The Parent Bank performs the fair value hedge of a portfolio of financial assets or financial liabilities in
accordance with TFRS 9. Within this scope, the Parent Bank has preferred to apply TFRS 9 standard for hedge
accounting.
The Parent Bank enters into interest rate swap transactions in order to hedge the changes in fair values of fixed-
rate financial instruments. While applying fair value hedge accounting, the changes in fair values of hedging
instrument and hedged item are recognised in statement of income. The change in the fair value of the hedged
item of the fixed rate financial asset is shown in the financial statements together with the related asset as long as
the hedge is effective. If the hedged item is a fixed rate financial asset at fair value through profit or loss, then
any loss or gain on hedged risk is recognized in the income statement.
Hedge accounting applies to hedging only when all the following criteria are met:
The hedging relationship only includes suitable hedging instruments and hedged items.
At the beginning of the hedging relationship, there is a formal identification and certification of the risk
management objective and strategy that leads to the hedging relationship. This certification includes the
assessment of the Parent Bank on the hedging instrument, the hedged item and the structure of the
hedged risk, and whether the hedging relationship will provide an effective protection against the
hedged risk (including analysis of inefficiency resources in the hedging process and how the hedging
rate is determined).
The hedging relationship meets all of the following provisions for the effectiveness of the hedging.
There is an economic relationship between the hedged item and the hedging tool.
The credit risk effect is not dominated by changes in value arising from this economic relationship, and
the hedging rate in the hedging relationship is equal to the amount of the item that the entity actually
hedges and the amount calculated according to the amount of hedging that the entity actually uses to
hedge this item. However, the hedging shall not reflect an imbalance between the hedged item and the
hedging instrument’s weights, which is not consistent with the objectives of hedge accounting and will
result in hedging ineffectiveness.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
15
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
IV. Explanations on Forward and Option Contracts and Derivative Instruments (cont’d)
The effect of fair value hedge accounting is shown in the table below:
Type of Hedging
İnstrument
Hedged Item(asset and
liability) Hedged Risks
Fair Value
Difference of
Hedged Item
Net Fair Value of the Hedging
Instrument
Net
Gain/(Loss)
Recognised in
the Statement
of Income
Asset Liability
Interest Rate
Swaps
Fixed interest commercial
loans with installment
Fixed interest
rate risk (853) 1,770 - 407
Constant Maturity
Swap
Fixed interest government
bonds
Fixed interest
rate risk 17,273 3,442 (15,608) 2,601
The Parent Bank terminates hedge accounting forward only if the hedging relationship (or part of it) no longer
meets the required criteria (after considering rebalancing). This also applies if the hedging item is expired or
sold, terminated or used.
V. Explanations on Interest Income and Expenses
The interest income and expenses are accounted by accrual basis of accounting using the effective interest rate
(the ratio that equalizes the future cash flow of financial assets and liabilities to the current net book value).
Starting from 1 January 2018, the Group has started accruing interest income on non-performing loans. The
necessary provisions are reserved in the “Expected Loss Provisions” account in the income statement for the
calculated amount.
VI. Explanations on Fees and Commission Income and Expenses
Fees for various banking services are recorded as income when collected and prepaid commission income on
cash loans using the effective interest rate method and recorded as income in the related period.
Fees and commissions for funds borrowed paid to other financial institutions, as part of the transaction costs, are
recorded as prepaid expenses and using the effective interest rate expensed within the related periods.
The dividend income is reflected in the financial statements on a cash basis when the profit distribution is
realized by the associates and subsidiaries.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
16
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
VII. Explanations on Financial Assets
In the framework of “TFRS 9 Financial Instruments”, which was effective as of 1 January 2018, the Group
classifies its financial assets as “Financial assets at fair value through profit or loss”, “Financial assets at fair
value through other comprehensive income” or “Financial assets at amortised cost”. This classification is made
during initial recognition based on the contractual cash flow characteristics with the business model of the
financial assets determined by management.
Financial assets are recognized or derecognized according to the provision ‘Taking into Financial Statements and
Excluding the Financial Statements’ of section three of TFRS 9.
Financial instruments have the feature of detecting, affecting and diminishing liquidity, credit and interest risks
in the financial statements. All regular way purchases and sales of financial assets are recognized on the
settlement date i.e. the date that the asset is delivered to or by the Group. Settlement date accounting requires (a)
accounting of the asset when acquired by the Group and (b) disposing of the asset out of the balance sheet on the
date settled by the Group; and accounting of gain or loss upon disposal. In case of application of settlement date
accounting, for the financial assets at fair value through profit and loss and financial assets at fair value through
other comprehensive income the Group accounts for the changes that occur in the fair value of the asset in the
period between trade transaction date and settlement date.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the
time frame generally established by regulation or convention in the market place. Changes in fair value of assets
to be received during the period between the trade date and the settlement date are accounted in the same way as
the acquired assets. Fair value differences are not accounted for financial assets presented at amortized cost; gain
or loss of financial assets at fair value through profit and loss is reflected in the statement of income; gain or loss
of financial assets at fair value through other comprehensive income is accounted for in the other comprehensive
income.
The following are details of the financial instruments that are classified in the financial statements.
Financial Assets at Fair Value Through Profit and Loss Financial assets at fair value through profit and loss are financial assets other than the ones that are managed
with business model that aims to hold assets to collect contractual cash flows or to collect cash flows that are
solely payments of principal and interest on the principal outstanding amount; and that are either acquired for
generating a profit from short-term fluctuations in prices or are financial assets included in a portfolio aiming to
short-term profit taking.
The fair value of financial assets at fair value thourgh profit and loss, which are traded in active markets, is
determined according to the price of the stock exchange and in the case that the stock market price is not
available, according to the price in the Official Gazette. Where there is no quoted price in an active market, the
fair value is determined by using other methods specified in TFRS 13.
Financial assets at the fair value through profit or loss are initially recognized at fair value. The positive
difference between the cost and fair value of such securities is accounted as interest and income accrual, and the
negative difference between the cost and fair value is accounted as loss accrual in the profit and loss.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
17
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
VII. Explanations on Financial Assets (cont’d)
Financial Assets at Fair Value Through Other Comprehensive Income The financial assets, which are acquired with the aim to collect the contractual cash flows and to sell the
financial asset in future, are classified as financial assets at fair value through other comprehensive income.
The Bank’s management may retain both the contractual cash flows as well as the portfolio for sale, in order to
meet daily liquidity needs, maintain a certain level of interest income and align the maturity of financial assets
with the valuation of the financial liabilities for funding purposes.
Financial assets at fair value through other comprehensive income are initially recognized at fair value including
transaction costs.
The results of the subsequent changes in the fair value of financial assets at fair value through other
comprehensive income, namely unrealized gain or loss are recorded in “Other Comprehensive Income/Expense
Items to be Reclassified to Profit or Loss”. Accumulated fair value gain or loss, reflected in equity, is recorded to
the income statement when the said financial assets are disposed.
The fair value of financial assets at fair value through other comprehensive income, which are traded in active
markets is determined according to the price of the stock exchange and in the case that the stock market price is
not available, according to the price in the Official Gazette. Where there is no quoted price in an active market,
the fair value is determined by using other methods specified in TFRS 13. The financial assets at Fair Value
Through Other Comprehensive Income, that are unquoted on the stock exchange, amount to TRL 29,511
Thousand (31 December 2018 - TRL 22,878 Thousand) and are classified under “Equity securities” in the
current period.
Financial Assets at Amortised Cost
A financial asset is classified as a financial asset measured at amortized cost, if the financial asset is held within
the scope of a business model for the collection of contractual cash flows and the contractual terms of the
financial asset result in cash flows that include payments arising only from principal and interest on the principal
amounts on specific dates.
After the initial recognition, provision for impairment to be deducted, if any, financial assets at amortized cost
are measured at discounted value using effective interest method (internal rate of return).
Interest earned from financial assets measured at amortized cost is recorded as interest income.
The Group classifies financial assets in accordance with the classifications explained above during the
acquisition of the mentioned assets.
In the securities portfolio of the Parent Bank, consumer prices (CPI) indexed bonds are available. These
securities are valued and accounted using the effective interest rate method based on the real coupon rates of the
CPI - indexed government bonds and the reference inflation index at the issue date and the estimated inflation
rate. As stated in the Treasury and Finance Ministry's CPI Indexed Bonds Investor Guide, the reference indices
used in the calculation of the actual coupon and redemption amounts of these securities are calculated by
interpolation with the CPI of two months prior and the CPI of three months prior. The Parent Bank has started to
determine the estimated inflation rate accordingly. The inflation rate estimated by the Central Bank and the
Parent Bank will be updated when necessary. Accounting of coupon and redemption payments are made by
considering the real inflation indices.As of balance sheet date, the estimated inflation rate of consumer prices
(CPI) indexed bonds had a positive effect on the period loss amounting to TRL 36,979 Thousand.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
18
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
VII. Explanations on Financial Assets (cont’d)
Loans
Loans, other than those with intention to be sold, are the financial assets , the contractual terms of which result in
cash flows that include payments arising only from principal and interest on the principal amounts on specific
dates.
The Group initially recognises loans at the cost of the acquisition and accounts for at the amortized cost using the
effective interest method in subsequent periods besides Group reflects swaps, used for funding of long term
fixed interest rate TRL loan portfolio, with fair value in the financial statements. The Group has initially
classified the long term fixed interest rate TRL loan portfolio funded through swaps as “Loans at Fair Value
Through Profit and Loss” and follows it at fair value in the financial statements.
As of 30 June 2019, the fair value of these loans is TRL 214,467 Thousand and is shown under Financial Assets
at Fair Value Through Profit and Loss Other Financial Assets line in the balance sheet (31 December 2018 -
TRL 221,879 Thousand) .
Foreign currency-indexed individual and commercial loans are shown under Turkish Currency (“TRL”) accounts
after having been converted into Turkish Lira at exchange rate at transaction date. Repayments are calculated at
exchange rate at date of payment and exchange rate differences encountered are reflected in profit and loss
accounts. Net foreign exchange gains of the foreign currency indexed loans are presented under foreign
exchange gain/loss.
VIII. Explanations on Impairment of Financial Assets
Expected Loss Provision
Starting from 1 January 2018, the Group recognizes the impairment in accordance with the TFRS 9 “Regulation
on the Procedures and Principles for Classification of Loans by Banks and Provisions to be set aside” published
in the Official Gazette No. 29750 dated 22 June 2016.
Within this framework, evaluation of the expected loss provisions is applied for the financial lease recievables,
contractual assets, credit commitments and financial guarantee contracts that are not measured at fair value
through profit or loss, financial assets measured at amortized cost and fair value through other comprehensive
income.
The expected loss provisions measured and recorded at the initial recognition of the financial asset and updated
according to the rate of the impairment on the credit risk in accordance with measurement performed at each
reporting date to reflect changes in credit risk.
The basic principle of the expected credit loss model is to reflect the deterioration or improvement in credit risk
to the general pattern. The expected loss measurement is aimed to identify the degree of credit deterioration at
the first issuance of the loan and to reflect the changes in the expected credit loss during the lifetime of the
related loan.
Financial assets are classified into the following three categories based on the degree of the credit risks observed
at the initial recognition of financial assets:
12 Months Expected Loss Provision (First Stage):
For the financial assets at initial recognition or that do not have a significant increase in credit risk since initial
recognition, the expected credit loan loss provision is calculated for 12 months.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
19
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
VIII. Explanations on Impairment of Financial Assets (cont’d)
Significant Increase in Credit Risk (Second Stage):
In the event of a significant increase in credit risk since initial recognition, the financial asset is transferred to
Stage 2. Expected credit loss provision is determined by the expected credit loss for the life-time of the related
financial asset.
The main reasons for the significant increase in the credit risk and its transfer to the second stage are as follows:
Number of overdue loan dates exceeding 30 days.
The presence of loans under restructuring due to financial difficulties.
Suggesting to ‘Liquidate Risk’ to the customers by the Bank's early warning system.
Default (Third Stage):
The Parent Bank takes into account the following criteria for the classification of a financial asset as a default;
Overdue by more than 90 days
The Group’s observation that the debtor cannot fulfill his / her debts related to the loan although it is not
more than 90 days.
Life expectancy for these assets is recorded as credit loss.
The Parent Bank measures the expected loss provisions for a financial asset to reflect the following:
A weighted and unbiased amount of loss based on probabilities of default determined taking into
account possible outcomes,
Time value of money,
Reasonable and supportable information on estimates of past events, current conditions, and future
economic conditions without undue cost or effort as of the reporting date.
IX. IX. Explanations on Offsetting of Financial Assets and Liabilities
Financial assets and liabilities are offset when the Group has a legally enforceable right to set off, and the
intention of collecting or paying the net amount of related assets and liabilities or the right to offset the assets
and liabilities simultaneously.
X. Explanations on Sales and Repurchase Agreements and Lending of Securities
The sales and purchase of government securities under repurchase agreements made with the customers are being
recorded in the balance sheet accounts in accordance with the Uniform Chart of Accounts. Accordingly in the
financial statements, the government bonds and treasury bills sold to customers under repurchase agreements are
classified under Financial Assets at Fair Value Through Profit and Loss, Financial Assets at Fair Value Through
Other Comprehensive Income and Financial assets at amortised cost depending on the portfolio they are
originally included in and are valued according to the valuation principles of the related portfolios. Funds
obtained from repurchase agreements are classified as a separate sub-account under money market borrowings
account in the liabilities.
The income and expenses from these transactions are reflected in the “Interest Income on Marketable Securities”
and “Interest Expense on Money Market Borrowings” accounts in the statement of income.
As of 30 June 2019, the Group has no reverse repo transactions (31 December 2018 – None).
As of 30 June 2019 , the Group does not have marketable securities lending transactions (31 December 2018 -
None).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
20
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XI. Explanations on Assets Held for Sale and Discontinued Operations
Assets held for sale are those assets or group of assets, which will be disposed under a plan prepared by the
management regarding the sale of those asset or the group of assets that have high probability of sale together
with an active program for determination of buyers and plan completion date. Those assets (or else the group of
assets) are marketed in conformity with its fair value. On the other hand, the mentioned sale is expected to be
recorded at the completed sale within one year after the classification date; and the necessary transactions and
procedures to complete the plan should demonstrate the fact that the possibility of making significant changes or
cancelling the plan is low.
As of 30 June 2019, the Group has TRL 510,042 Thousand assets held for sale (31 December 2018 - TRL
320,984 Thousand).
A discontinued operation is a division of a Group that is either disposed or held for sale. Results of discontinued
operations are included in the statement of income separately.
The Group does not have any discontinued operations.
XII. Explanations on Goodwill and Other Intangible Assets
There is no goodwill regarding the investments in associates and subsidiaries.
Intangible assets are accounted for at restated cost until 31 December 2004 in accordance with inflation
accounting and are amortized with straight-line method. After 31 December 2004 the cost of assets subject to
amortization is restated as the acquisition cost and any other costs incurred in order to make the intangible asset
ready for use less reserve for impairment, if any, are amortized on a straight-line method. The cost of assets
subject to amortization is restated after deducting the exchange differences, capitalized financial expenses and
revaluation increases, if any, from the cost of the assets.
Those items classified as intangible assets mainly consist of software. These items are determined to have 5
years of amortization. Software is mainly outsourced and the related expenses are not capitalized.
There are no anticipated changes in the accounting estimates about the amortization rate and method and residual
values that would have a significant impact in the current and future periods.
The Group has no written-off intangible fixed assets, in the current period (31 December 2018 - None).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
21
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XIII. Explanations on Tangible Fixed Assets
The cost of the Parent Bank’s immovables has been adjusted for inflation until 31 December 2004. As of 31
December 2006, the Parent Bank changed its accounting policy and adopted revaluation method on annual basis
under scope of Standard on Tangible Fixed Assets (TAS 16) with respect to valuation of immovables included in
its tangible fixed assets. Tangible Fixed Assets’ appraisal valuation was conducted by an independent valuation
company as of 31 December 2018 and reflected in the financial statements, accordingly. The valuation
difference of immovables under equity as of 30 June 2019 is TRL 98,195 Thousand gross (after net off deferred
tax, net amount is TRL 82,569 Thousand) (31 December 2018 - TRL 98,195 Thousand gross, net-off deferred
tax amount TRL 82,569 Thousand).
Other tangible fixed assets were accounted at their restated costs in line with inflation accounting until 31
December 2004; afterwards the acquisition cost and any other cost incurred to prepare the fixed asset for usage
are reflected less reserve for impairment, if any, and depreciated on a straight-line method. Depreciation of assets
held less than one year as of the balance sheet date is accounted for proportionately. There is no change in
amortization method in current period and the annual rates used, which approximate rates based on the estimated
economic useful lives of the related assets, are as follows:
%
Buildings 2
Transportation vehicles 20
Furniture, fixtures and office equipment and others 2 – 33
Leasehold improvements During Leasehold
Gain or loss resulting from disposals of the tangible fixed assets is reflected to the statement of income as the
difference between the net proceeds and net book value.
Maintenance costs of tangible fixed assets are capitalized if they extend the economic useful life of related
assets. Other maintenance costs are expensed. There are no pledges, mortgages or other restrictions on the
tangible fixed assets.
There is no purchase commitments related to the tangible fixed assets.
The Group reviews the residual value and the useful life of buildings at each financial year-end and, if
expectations differ from previous estimates, the adjustments are accounted as a change in an accounting estimate
in accordance with TAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The Group has no written-off tangible fixed assets in the current period (31 December 2018 - None).
XIV. Explanations on Leasing Transactions
Fixed assets acquired through financial leasing are recorded as assets in the assets of the Group and liabilities
from leasing transactions in liabilities. In accordance with this standard, the leasing transactions, which consist
of foreign currency liabilities, are translated to Turkish Lira with the exchange rates prevailing at the transaction
dates and they are recorded as an asset or a liability. The foreign currency liabilities are translated to Turkish
Lira with the Parent Bank’s period end exchange rates. Subsidiaries’ foreign currency liabilities are translated to
Turkish Lira wih the Central Bank of the Republic of Turkey’s exchange rates. The increases/decreases
resulting from the differences in the foreign exchange rates are recorded as expense/income in the relevant
period. The financing cost resulting from leasing is distributed through the lease period to form a fixed interest
rate.
In addition to the interest expense, the Group records depreciation expense for the depreciable leased assets in
each period. The depreciation rate is determined in accordance with TAS 16 “Accounting Standard for Tangible
Fixed Assets” and the depreciation rate of these assets is 20 %.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
22
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XIV. Explanations on Leasing Transactions (cont’d)
With the “TFRS 16 Leases” standard which became effective as of 1 January 2019, the difference between the
operating lease and financial lease was removed and the lease transactions were started to be recognised under
“Tangible Fixed Assets” as an asset (tenure) and under “Liabilities from Leasing” as a liability. Impact and
application of TFRS 16 concerning the transition were explained in Section three, footnote XXIII.
The gross lease receivables including interest and principal amounts regarding the Group’s financial leasing
activities conducted by Şeker Finansal Kiralama A.Ş. 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 to create a
constant rate of return over the lessor’s net investment on the leased item
XV. Explanations on Provisions and Contingent Liabilities
Provisions are recognized when there is a present obligation, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are determined by using the Group’s best expectation of expenses in
fulfilling the obligation, and discounted to present value if material.
XVI. Explanations on Liabilities Regarding Employee Benefits
Defined Benefit Plans
In accordance with existing social legislation in Turkey, the Group is required to make lump-sum termination
indemnities over a 30 day salary for each employee who has completed over one year of service, whose
employment is terminated due to retirement or for reasons other than resignation or misconduct. The Group is
also required to make a payment for the period of notice calculated over each service year of the employee
whose employment is terminated for reasons other than resignation or misconduct. Total benefit is calculated in
accordance with TAS 19 “Turkish Accounting Standard on Employee Benefits”.
Such benefit plans are unfunded since there is no funding requirement in Turkey. The cost of providing benefits
to the employees for the services rendered by them under the defined benefit plan is determined by independent
actuaries annually using the projected unit credit method.
In calculating the related liability to be recorded in the financial statements for these defined benefit plans, the
Group uses independent actuaries and also makes assumptions and estimation relating to the discount rate to be
used, turnover of employees, future change in salaries/limits, etc. These estimations are reviewed annually.
According to TAS 19 published, actuarial gain/losses are recorded under equity. As of 30 June 2019, the
carrying value of employee benefit provisions is TRL 102,374 Thousand that consists of employee termination
benefit provisions amounting to TRL 90,007 Thousand and employee vacation pay provisions amounting to TRL
12,367 Thousand (31 December 2018 - total employee benefit provision was TRL 88,041 Thousand, employee
termination benefit provisions was TRL 79,953 Thousand and employee vacation pay provisions was TRL 8,088
Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
23
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XVI. Explanations on Liabilities Regarding Employee Benefits (cont’d)
Defined Contribution Plans
Şekerbank T.A.Ş. Pension Fund, of which most of the Parent Bank’s employees are members, is established in
accordance with the provisional Article 20 of the Social Security Act No: 506. As per the provisional article No:
23 of the Banking Law No: 5411, the Bank pension funds, which were established within the framework of
Social Security Institution Law, should be transferred to the Social Security Institution within 3 years after the
issuance of the related law. Methods and principles related to the transfer have been determined as per the
Cabinet decision no: 2006/11345 made on 30 November 2006. However, the related article of the act has been
cancelled upon the President’s application filed on 2 November 2005 by the Supreme Court’s order no:
E.2005/39, K.2007/33 issued on 22 March 2007, which was published in the Official Gazette No: 26479 on 31
March 2007 and the execution of the decision was ceased as of the issuance date of the order.
After the justified decree related to cancelling the provisional article 23 of the Banking Law was announced by
the Constitutional Court in the Official Gazette dated 15 December 2007 and numbered 26731, the Turkish
Grand National Assembly started to work on establishing new legal regulations, and after it was approved at the
General Assembly of the TGNA, the Law numbered 5754 “Emendating Social Security and General Health
Insurance Act and Certain Laws and Decree Laws”, which was published in the Official Gazette dated 8 May
2008 and numbered 26870, came into effect. The new law decrees that the contributors of the Banks’ pension
funds, the ones who receive salaries or income from these funds and their rightful beneficiaries will be
transferred to the Social Security Institution and will be subject to this Law within 3 years after the release date
of the related article, without any need for further operation. The three year transfer period can be prolonged for
maximum 2 years by the Cabinet decision. However, related transfer period has been prolonged for 2 years by
the Cabinet decision dated 14 March 2011, which was published in the Official Gazette dated 9 April 2011 and
numbered 27900.
In addition, by the Law “Emendating Social Security and General Health Insurance Act”, which was published
in the Official Gazette dated 8 March 2012 and numbered 28227, this period of 2 years has been raised to 4 years
after that related transfer period has been prolonged for one more year by the Cabinet decision dated 08 April
2013, which was published in the Official Gazette dated 3 May 2013 and numbered 28636 also this period has
revalidated one more year by the Cabinet decision dated 24 February 2014, which was published in the Official
Gazette dated 30 April 2014 and numbered 28987. The Council of Ministers has been lastly authorized to
determine the transfer date in accordance with the last amendment in the first paragraph of the 20th provisional
article of Law No.5510 implemented by the Law No. 6645 on Amendment of the “Occupational Health and
Safety Law and Other Laws and Decree Laws” published in the Official Gazette dated 23 April 2015 and
numbered 29335. This authority was transferred to the President with the delegated legislation No.703 which
was published in the repetitive Official Gazette No. 30473 dated 9 July 2018.
The above mentioned law also includes the following:
Through a commission constituted by the attendance of one representative separately from the Social
Security Institution, the Presidency Ministry of Treasury and Finance, State Planning Organization,
Banking Regulation and Supervision Agency, Savings Deposit Insurance Fund, one from each pension
fund, and one representative from the organization employing pension fund contributors, related to the
transferred persons, the cash value of the liabilities of the pension fund as of the transfer date will be
calculated by considering their income and expenses in terms of the lines of insurance within the
context of the related Law, and technical interest rate of 9.80% will be used in the actuarial calculation
of the value in cash,
And that after the transfer of the pension fund contributors, the ones who receive salaries or income
from these funds and their rightful beneficiaries to the Social Security Institution, these persons’
uncovered social rights and payments, despite being included in the trust indenture that they are subject
to, will be continued to be covered by the pension funds and the employers of pension fund
contributors.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
24
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XVI. Explanations on Liabilities Regarding Employee Benefits (cont’d)
On the other hand, the application made on 19 June 2008 by the Republican People’s Party to the Constitutional
Court for the annulment and motion for stay of some articles, including the first paragraph of the provisional
article 20 of the Law, which covers provisions on transfers, was rejected in accordance with the decision taken at
the meeting of the afore-mentioned court on 30 March 2011.
The technical financial statements of the Pension Fund are reviewed by an actuary registered audit company in
accordance with the Article 21 of the Insurance Law numbered 5684 and the requirements of the “Actuary
Regulations”. There was TRL 159,499 Thousand actuarial deficit in the actuary report which was prepared using
a technical interest rate rate of 9.80 % in accordance with the basis set out in the Council of Ministers decision
no: 26377 on 15 December 2006 (31 December 2018 - TRL 159,499 Thousand actuarial deficit).
As of 30 June 2019, TRL 159,499 Thousand provision is recorded in the financial statements (31 December
2018 - TRL 159,499 Thousand).
XVII. Explanations on Taxation
Corporate tax
According to the Article 37 of the Corporate Tax Law, starting from 1 January 2006 earnings of companies will
be taxed by %20. In accordance with the regulation numbered 7061, “Amendments to Certain Tax Laws and
Other Certain Other Laws”, the tax rate has been set as 22 % for 2018, 2019 and 2020. The Council of Ministers
is authorized to reduce this rate up to 20% anytime.
The tax legislation requires advance tax payment to be calculated and paid based on earnings generated for each
quarter. The amounts thus calculated and paid are offset against the final tax liability for the year .
Annual tax returns are required to be filed between the first and twenty fifth day of the fourth month following
the balance sheet date and paid in one installment until the end of the related month.
Tax provision related with items that are credited or charged directly to equity are charged or credited to equity.
According to the Corporate Tax Law, tax losses can be carried forward for a maximum period of five years
following the year in which the losses are incurred. Tax authorities can inspect tax returns and the related
accounting records for a retrospective maximum period of five years.
Deferred Tax Liability / Asset
The Group calculates and reflects deferred tax asset or liability on timing differences which will result in taxable
or deductible amounts in determining taxable profit of future periods.
In accordance with TAS 12 “Turkish Accounting Standard on Income Taxes” and the changes in the circular of
the BRSA numbered BDDK.DZM.2/13/1-a-3 dated 8 December 2004, the Group calculated deferred tax asset
on all deductible temporary differences, if sufficient taxable profit in future periods to recover such amounts is
probable; as well as deferred tax liability on all taxable temporary differences. Deferred tax assets and liabilities
calculated for the subsidiaries subject to consolidation are shown netted in their financial statements. In
accordance with TAS 12, deferred tax assets and liabilities arising from the different subsidiaries subject to
consolidation are presented separately in the financial statements on a consolidated basis, without netting.
The net deferred tax asset is reflected under the deferred tax asset and the net deferred tax liability is reflected
under the deferred tax liability in the balance sheet. The deferred tax benefit of TRL 73,610 Thousand (30 June
2018 – TRL 87,901 Thousand) is stated under the tax provision line in the income statement, the deferred tax
expense of TRL 5,011 Thousand is presented in the deferred tax expense effect line in the income statement (30
June 2018 - TRL 77,634 Thousand).
Furthermore, as per the above circular of the BRSA, deferred tax benefit balance resulting from netting of
deferred tax assets and liabilities should not be used in dividend distribution and capital increase.
Effective from 1 January 2018, deferred tax assets have started to be calculated over the expected losses that are
temporary differences according to TFRS 9.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
25
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XVIII. Additional Explanations on Borrowings
In the case of assets that require significant time to be ready for use and sale, borrowing costs that are directly
attributable are included in the cost of the asset until the asset is ready for use or sale. Financial investment
income obtained by temporary placement of undisbursed investment loan in financial investments is offset
against borrowing costs qualified for capitalization.
All borrowing costs are recorded to the statement of income in the period they are incurred.
As of 30 June 2019 outstanding issued bonds amount of the Group is TRL 515,662 Thousand (31 December
2018 – TRL 516,302 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şekerbank T.A.Ş. 18.04.2019 48,500 77 days
Şekerbank T.A.Ş. 30.05.2019 60,000 70 days
Şekerbank T.A.Ş. 27.06.2019 100,000 98 days
Şeker Finansal Kiralama A.Ş. 05.09.2018 4,591 350 days
Şeker Finansal Kiralama A.Ş. 23.05.2019 30,750 64 days
Şeker Finansal Kiralama A.Ş. 26.04.2019 55,000 70 days
Şeker Finansal Kiralama A.Ş. 17.05.2019 42,500 82 days
Şeker Finansal Kiralama A.Ş. 21.06.2019 60,000 77 days
Şeker Faktoring A.Ş. 07.09.2018 1,000 364 days
Şeker Faktoring A.Ş. 22.03.2019 60,000 119 days
Şeker Faktoring A.Ş. 30.04.2019 40,000 72 days
Şeker Faktoring A.Ş. 09.05.2019 6,554 84 days
Şeker Faktoring A.Ş. 31.05.2019 20,326 70 days
Şeker Yatırım Menkul Değerler A.Ş. 23.05.2019 4,443 69 days
Şeker Yatırım Menkul Değerler A.Ş. 12.06.2019 18,711 70 days
As of 30 June 2019 outstanding issued marketable securities amount of the Group is TRL 15,134 Thousand and
details are shown the in table below (31 December 2018 – TRL 25,532 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şeker Finansal Kiralama A.Ş. 27.07.2018 2,895 420 days
Şeker Faktoring A.Ş. 05.07.2018 12,500 538 days
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
26
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XVIII. Additional Explanations on Borrowings (cont’d)
The Parent Bank issued Asset Covered Bond amounting to TRL 1,500,000 Thousand and details are shown in
the table below. Among the institutions and organizations investing up to this time are International Finance
Corporation (IFC), Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), UniCredit
Bank AG, European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD),
KfW Bankengruppe and qualified institutional investors. The transactions were conducted in line with the related
Capital Market Board regulation and the Parent Bank’s SME loans were used as collateral.
Issue Date Series Investors Amount
Remaining Principal
Amount Currency Maturity
25 November 2016 2016-1 IFC 180,000 180,000 TRL 13.09.2021
19 December 2017 2017-1 FMO 192,000 192,000 TRL 22.12.2020
As of 30 June 2019 the Group has the Asset Covered Bonds amounting to TRL 380,319 Thousand (31 December
2018 - TRL 701,850 Thousand).
The Group has not issued convertible bonds.
XIX. Explanations on Share Certificates
None.
XX. Explanations on Independent Guarantees and Acceptances
Acceptances are realized simultaneously with the payment dates of the customers and they are presented as
probable commitments in off-balance sheet accounts.
XXI. Explanations on Government Incentives
The Parent Bank’s subsidiary Şeker Finansal Kiralama A.Ş. has TRL 64,831 Thousand of unused investment
incentives as of 30 June 2019 (31 December 2018 – TRL 53,265 Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
27
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XXII. Explanations on Segment Reporting
The Group primarily deals with and engages in corporate, retail and SME finance in line with its strategy.
Current Period
Corporate SME
Retail
Other
Total
Net Interest Income 181,719 289,516 212,640 (205,544) 478,331
Net Fees and Commission Income and Other
Operating Income 73,490 146,100 15,369 19,086 254,045
Dividend Income 69 - - 3,624 3,693
Trading Profit/(Loss) 14,112 - (118) (59,724) (45,730)
Expected Loss Provisions (146,733) (256,119) - - (402,852)
Other Provision Expenses - - - (54,738) (54,738)
Personnel Expenses (12,692) - (1,537) (257,955) (272,184)
Other Operating Expenses (12,259) (27) (1,214) (295,936) (309,436)
Profit/(Loss) before taxes 97,706 179,470 225,140 (851,187) (348,871)
Tax Provision - - - - 68,435
Net Profit for the Period - - - - (280,436)
Current Period Commercial SME Retail
Treasury
/Investment Undistributed Total
Assets 7,445,797 12,952,825 1,305,922 8,206,465 2,695,527 32,606,536
Liabilities 4,560,996 1,835,221 17,555,438 5,094,681 3,560,200 32,606,536
Prior Period
Corporate SME
Retail
Other
Total
Net Interest Income 117,359 266,000 130,356 240,689 754,404
Net Fees and Commission Income and Other
Operating Income 66,029 115,967 21,163 15,700 218,859
Personnel Expenses - - - 1,230 1,230
Dividend Income 21,689 - (198) (103,226) (81,735)
Trading Profit/(Loss) (52,083) (111,164) - - (163,247)
Expected Loss Provisions - - - (123,201) (123,201)
Other Provision Expenses - - - (221,033) (221,033)
Other Operating Expenses (10,285) (2,395) (1,193) (291,472) (305,345)
Profit/(Loss) before taxes 142,709 268,408 150,128 (481,313) 79,932
Tax Provision - - - - (9,223)
Net Profit for the Period - - - - 70,709
Prior Period Commercial SME Retail
Treasury
/Investment Undistributed Total
Assets 8,452,154 12,183,332 1,321,375 8,343,423 2,664,500 32,964,784
Liabilities 4,206,451 2,139,806 16,594,600 6,061,566 3,962,361 32,964,784
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
28
SECTION THREE (cont’d)
ACCOUNTING PRINCIPLES (cont’d)
XXIII. Explanations on Other Matters
Explanations on IFRS 16 Leases Standard
With the “TFRS 16 Leases” standard which became effective as of 1 January 2019, the difference between the
operating lease and financial lease was removed and the lease transactions were started by lessees to be
recognised as “Right-of-use Assets” and “Liabilities from Leasing”. Impact and application of TFRS 16
concerning the transition were explained in Section three, footnote XXIX.
The Group has accounted for its leasing payments as of 1 January 2019 for the operational leases in the transition
to the first application with the present value discounted with the alternative borrowing interest rate on the
Bank's first application date as “Assets with Right to Use” and Liabilities from “Leasing Operations” as
liabilities.
The lease agreements for short-term lease agreements with 1 year and less than 1 year and the ATMs determined
by the Parent Bank as low value are considered within the scope of the exemption granted by the standard and
the payments related to these agreements are continued to be accounted for under “Other Operating Expenses” in
the period that they occur. In this context, TRL 3,815 Thousand payment was made in the related period.
The details of the accounted Right-of-use of the Assets are recognized as follows by basis of the asset:
1 January 2019 30 June 2019
Right-of-use of the Assets 188,553 171,081
Right-of-use of the Vehicles 12,089 14,932
Total 200,642 186,013
Depreciation expenses related to the asset usage right recognized are as follows:
30 June 2019
Right-of-use of the Real Estates 25,834
Right-of-use of the Vehicles 3,242
Total 29,076
The classification and adjustment effects of the first application of TFRS 16 Leases on 1 January 2019 are given
in the following tables.
31 December 2018
TFRS 16
Classification Effect
TFRS 16
Transition Effect 1 January 2019
Tangible Fixed Assets (Net) 711,832 1,114 199,528 912,474
Other Assets (Net) 684,254 (1,114) - 683,140
Liabilities from Leasing (Net) 25,107 - 198,547 223,654
(*) In accordance with TFRS 16, the Bank recognised prepaid rent payments amounting to TRL 1,114 Thousands under tangible assets as
right-of-use which were previously classified under other assets.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
29
SECTION FOUR
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT
I. Explanations Related to the Shareholders’ Equity
The method used for risk measurement in determining capital adequacy standard ratio; capital adequacy standard
ratio is calculated in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy
of Banks”, which was published on 23 October 2015 in the Official Gazette numbered 29511 and effective since
31 March 2016 and Communiqué on “Banks’ Equity” which was published on 5 September 2013 and in the
Official Gazette numbered 28756. The Group’s consolidated capital adequacy ratio in accordance with the
related communiqués is 12.51 % (31 December 2018 – 14.33 %).
In the computation of capital adequacy standard ratio, data prepared in accordance with statutory accounting
requirements are used. Additionally, the market risk exposure as well as the operational risk exposure are
calculated in accordance with the communiqué on the Communiqué on “Measurement and Assessment of
Capital Adequacy of Banks” and is taken into consideration in the capital adequacy standard ratio calculation.
The values deducted from the capital base in the shareholders’ equity computation are excluded while
calculating risk-weighted assets. Assets subject to depreciation and impairment among risk-weighted assets are
included in the calculations over their net book values after deducting the relative depreciations and provisions.
In the calculation process of credit risk, risk types are classified based on “Measurement and Assessment of
Capital Adequacy of Banks-Appendix 1” and financial collaterals taken into account according to the credit risk
mitigation techniques communiqué and classified in the related risk weight. According to the credit risk
mitigation techniques communiqué while simple approach is taken into account for banking book items, the
Group uses comprehensive approach for trading book items in the credit mitigation process
While calculating the basis of non-cash loans subject to credit risk, the net receivable amount from the counter
parties net of provision amount set in accordance with the “Communiqué on Methods and Principles for the
Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” is multiplied by
the loan conversion rates presented in the Article 5 and related clauses of the Communiqué on “Measurement
and Assessment of Capital Adequacy of Banks”, and calculated by applying the risk weights presented in the
Capital Adequacy Analysis Form.
In the calculation of counterparty credit risk, the current exposure method is used according to the Communiqué
on “Measurement and Assessment of Capital Adequacy of Banks” the Article 21 and Appendix 2.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
30
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Current Period
Amounts related to
treatment before
1/1/2014(*)
COMMON EQUITY TIER 1 CAPITAL
Paid-in capital following all debts in terms of claim in liquidation of the Bank 1,158,000 -
Share issue premiums 1,835 -
Reserves 1,401,983 -
Gains recognized in equity as per TAS 81,579 -
Profit - -
Current Period Profit - -
Prior Period Profit - -
Shares acquired free of charge from subsidiaries, affiliates and jointly controlled partnerships and cannot be
recognised within profit for the period - -
Minorities’ Share 30,482 -
Common Equity Tier 1 Capital Before Deductions 2,673,879 -
Deductions from Common Equity Tier 1 Capital
Common Equity as per the 1st clause of Provisional Article 9 of the Regulation on the Equity of Banks - -
Portion of the current and prior periods’ losses which cannot be covered through reserves and losses reflected
in equity in accordance with TAS 10,155 -
Improvement costs for operating leasing 66,367 -
Goodwill (net of related deferred tax liability) 111,445 -
Other intangibles other than mortgage-servicing rights (net of related deferred tax liability) - -
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of
related deferred tax liability) 52,147 -
Differences are not recognized at the fair value of assets and liabilities subject to hedge of cash flow risk - -
Communiqué Related to Principles of the amount credit risk calculated with the Internal Ratings Based
Approach, total expected loss amount exceeds the total provison - -
Gains arising from securitization transactions - -
Unrealized gains and losses due to changes in own credit risk on fair valued liabilities - -
Defined-benefit pension fund net assets - -
Direct and indirect investments of the Bank in its own Common Equity 175,996 -
Shares obtained contrary to the 4th clause of the 56th Article of the Law - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share
capital exceeding 10% of Common Equity of the Bank - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common
share capital exceeding 10% of Common Equity of the Bank - -
Portion of mortgage servicing rights exceeding 10% of the Common Equity - -
Portion of deferred tax assets based on temporary differences exceeding 10% of the Common Equity - -
Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the
Regulation on the Equity of Banks - -
Excess amount arising from the net long positions of investments in common equity items of banks and
financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued
common share capital 85,343 -
Excess amount arising from mortgage servicing rights - -
Excess amount arising from deferred tax assets based on temporary differences - -
Other items to be defined by the BRSA - -
Deductions to be made from common equity due to insufficient Additional Tier I Capital or Tier II Capital - -
Total Deductions From Common Equity Tier 1 Capital 416,110 -
Total Common Equity Tier 1 Capital 2,257,769 -
ADDITIONAL TIER I CAPITAL -
Preferred Stock not Included in Common Equity and the Related Share Premiums - -
Debt instruments and premiums approved by BRSA - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
31
Debt instruments and premiums approved by BRSA(Temporary Article 4) - -
Third parties’ share in the Additional Tier I capital - -
Third parties’ share in the Additional Tier I capital (Temporary Article 3) - -
Additional Tier I Capital before Deductions - -
Deductions from Additional Tier I Capital - -
Direct and indirect investments of the Bank in its own Additional Tier I Capital - -
Investments of Bank to Banks that invest in Bank's additional equity and components of equity issued by
financial institutions with compatible with Article 7. - -
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial
Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of
above Tier I Capital - -
The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital of
Unconsolidated Banks and Financial Institutions where the Bank Owns more than 10% of the Issued Share
Capital - -
Other items to be defined by the BRSA - -
Transition from the Core Capital to Continue to deduce Components - -
Goodwill and other intangible assets and related deferred tax liabilities which will not deducted from
Common Eguity Tier 1 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the
Regulation on Banks’ Own Funds (-) - -
Net deferred tax asset/liability which is not deducted from Common Eguity Tier 1 capital for the purposes of
the sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -
Deductions to be made from Tier I Capital in the case that adequate Additional Tier II Capital or is not
available (-) - -
Total Deductions From Additional Tier I Capital - -
Total Additional Tier I Capital - -
Total Tier I Capital (Tier I Capital=Common Equity+Additional Tier I Capital) 2,257,769 -
TIER II CAPITAL
Debt instruments and share issue premiums deemed suitable by the BRSA 939,184 -
Debt instruments and share issue premiums deemed suitable by BRSA (Temporary Article 4) - -
Third parties’ share in the Tier II Capital - -
Third parties’ share in the Tier II Capital (Temporary Article 3) - -
Provisions (Article 8 of the Regulation on the Equity of Banks) 18,746 -
Tier II Capital Before Deductions 957,930 -
Deductions From Tier II Capital
Direct and indirect investments of the Bank on its own Tier II Capital (-) - -
Investments of Bank to Banks that invest on Bank's Tier 2 and components of equity issued by financial
institutions with the conditions - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share
capital exceeding 10% of Common Equity of the Bank (-) - -
Portion of the total of net long positions of investments made in Additional Tier I Capital item of banks and
financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued
common share capital exceeding 10% of Common Equity of the Bank - -
Other items to be defined by the BRSA (-) - -
Total Deductions from Tier II Capital - -
Total Tier II Capital 957,930 -
Total Capital (The sum of Tier I Capital and Tier II Capital) 3,215,699 -
The Sum of Tier I Capital and Tier II Capital (Total Capital) - -
Deductions from Capital Loans granted contrary to the 50th and 51th Article of the Law - -
Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of
the Banking Law and the Assets Acquired against Overdue Receivables and Held for Sale but Retained more
than Five Years - -
Other items to be defined by the BRSA 6,309 -
In transition from Total Core Capital and Supplementary Capital (the capital) to Continue to
Deduction Components
The Sum of net long positions of investments (the portion which exceeds the 10% of Banks Common Equity)
in the capital of banking, financial and insurance entities that are outside the scope of regulatory
consolidation, where the bank does not own more than 10% of the issued common share capital of the entity
which will not deducted from Common Equity Tier 1 capital, Additional Tier 1 capital, Tier 2 capital for the
purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
32
The Sum of net long positions of investments in the Additional Tier 1 capital and Tier 2 capital of banking,
financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not
own more than 10% of the issued common share capital of the entity which will not deducted from Common
Equity Tier 1 cap7ital, Additional Tier 1 capital, Tier 2 capital for the purposes of the first sub-paragraph of
the Provisional Article 2 of the Regulation on Banks’ Own Funds - -
The Sum of net long positions of investments in the common stock of banking, financial and insurance
entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of
the issued common share capital of the entity, mortgage servicing rights, deferred tax assets arising from
temporary differences which will not deducted from Common Eguity Tier 1 capital for the purposes of the
first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds - -
TOTAL CAPITAL
Total Capital (The sum of Tier I Capital and Tier II Capital) 3,209,390 -
Total risk weighted amounts 25,647,012 -
CAPITAL ADEQUACY RATIOS
Core Capital Adequacy Ratio (%) 8.80 -
Tier 1 Capital Adequacy Ratio (%) 8.80 -
Capital Adequacy Ratio (%) 12.51
BUFFERS
Total additional Common Equity Tier 1 Capital requirement ratio (a+b+c) 2.55 -
a) Bank specific total common equity tier 1 capital ratio 2.50 -
b) Capital conservation buffer requirement 0.05 -
c) Systemically important bank buffer ratio (**) 0.00 -
The ratio of Additional Common Equity Tier 1 capital which will be calculated by the first paragraph of the
Article 4 of Regulation on Capital Conservation and Countercyclical Capital buffers to Risk Weighted Assets 2.80 -
Amounts below the Excess Limits as per the Deduction Principles
Portion of the total of net long positions of investments in equity items of unconsolidated banks and financial
institutions where the bank owns 10% or less of the issued share capital exceeding the 10% threshold of
above Tier I capital - -
Portion of the total of investments in equity items of unconsolidated banks and financial institutions where
the bank owns 10% or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -
Amount arising from deferred tax assets based on temporary differences - -
Limits related to provisions considered in Tier II calculation - -
Limits related to provisions considered in Tier II calculation
General provisions for standard based receivables (before limit of one hundred and twenty five
per ten Thousand) 18,746 -
Up to 1.25% of total risk-weighted amount of general reserves for receivables where the standard approach
used - -
Excess amount of total provision amount to credit risk Amount of the Internal Ratings Based Approach in
accordance with the Communiqué on the Calculation - -
Excess amount of total provision amount to 0,6% of risk weighted receivables of credit risk Amount of the
Internal Ratings Based Approach in accordance with the Communiqué on the Calculation - -
Debt instruments subjected to Article 4
(to be implemented between 1 January 2018 and 1 January 2022)
Upper limit for Additional Tier I Capital subjected to temprorary Article 4 - -
Amounts Excess the Limits of Additional Tier I Capital subjected to temprorary Article 4 - -
Upper limit for Additional Tier II Capital subjected to temprorary Article 4 - -
Amounts Excess the Limits of Additional Tier II Capital subjected to temprorary Article 4 - -
(*) Amounts in this column represent the amounts of items that are subject to transition provisions in accordance with the provisional
Articles of “Regulations regarding to changes on Regulation on Equity of Banks” effectuated on 1/1/2014 and taken into consideration at
the end of transition process.
(**) According to the paragraph 4 of the Article 4 of the Regulation on Systemically Important Banks only Systematically Important Bank,
which are not obligated to prepare consolidated financial statements, shall calculate this ratio and the rest banks shall report it as zero.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
33
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Prior Period
Amounts related to
treatment before
1/1/2014 (*)
COMMON EQUITY TIER 1 CAPITAL
Paid-in capital following all debts in terms of claim in liquidation of the Bank 1,158,000 -
Share issue premiums 1,835 -
Reserves 1,705,427 -
Gains recognized in equity as per TAS 69,591 -
Profit 89,398 -
Current Period Profit 89,398 -
Prior Period Profit - -
Shares acquired free of charge from subsidiaries, affiliates and jointly controlled partnerships and cannot be
recognised within profit for the period - -
Minorities’ Share 29,315 -
Common Equity Tier 1 Capital Before Deductions 3,053,566 -
Deductions from Common Equity Tier 1 Capital
Common Equity as per the 1st clause of Provisional Article 9 of the Regulation on the Equity of Banks - -
Portion of the current and prior periods’ losses which cannot be covered through reserves and losses reflected
in equity in accordance with TAS (14,498) -
Improvement costs for operating leasing 70,935 -
Goodwill (net of related tax liability) 94,111 -
Other intangibles other than mortgage-servicing rights (net of related tax liability) - -
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of
related tax liability) 69,529 -
Differences are not recognized at the fair value of assets and liabilities subject to hedge of cash flow risk - -
Communiqué Related to Principles of the amount credit risk calculated with the Internal Ratings Based
Approach, total expected loss amount exceeds the total provison - -
Gains arising from securitization transactions - -
Unrealized gains and losses due to changes in own credit risk on fair valued liabilities - -
Defined-benefit pension fund net assets - -
Direct and indirect investments of the Bank in its own Common Equity 175,996 -
Shares obtained contrary to the 4th clause of the 56th Article of the Law - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share
capital exceeding 10% of Common Equity of the Bank - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common
share capital exceeding 10% of Common Equity of the Bank - -
Portion of mortgage servicing rights exceeding 10% of the Common Equity - -
Portion of deferred tax assets based on temporary differences exceeding 10% of the Common Equity - -
Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the
Regulation on the Equity of Banks - -
Excess amount arising from the net long positions of investments in common equity items of banks and
financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued
common share capital 66,028 -
Excess amount arising from mortgage servicing rights - -
Excess amount arising from deferred tax assets based on temporary differences - -
Other items to be defined by the BRSA - -
Deductions to be made from common equity due to insufficient Additional Tier I Capital or Tier II Capital - -
Total Deductions From Common Equity Tier 1 Capital 396,073 -
Total Common Equity Tier 1 Capital 2,657,493 -
ADDITIONAL TIER I CAPITAL
Preferred Stock not Included in Common Equity and the Related Share Premiums - -
Debt instruments and premiums approved by BRSA
-
-
Debt instruments and premiums approved by BRSA(Temporary Article 4) - -
Third parties’ share in the Additional Tier I capital - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
34
Third parties’ share in the Additional Tier I capital (Temporary Article 3) - -
Additional Tier I Capital before Deductions - -
Deductions from Additional Tier I Capital
Direct and indirect investments of the Bank in its own Additional Tier I Capital - -
Investments of Bank to Banks that invest in Bank's additional equity and components of equity issued by
financial institutions with compatible with Article 7. - -
Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial
Institutions where the Bank Owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of
above Tier I Capital - -
The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital of
Unconsolidated Banks and Financial Institutions where the Bank Owns more than 10% of the Issued Share
Capital - -
Other items to be defined by the BRSA - -
Transition from the Core Capital to Continue to deduce Components
Goodwill and other intangible assets and related deferred tax liabilities which will not deducted from
Common Eguity Tier 1 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the
Regulation on Banks’ Own Funds (-) - -
Net deferred tax asset/liability which is not deducted from Common Eguity Tier 1 capital for the purposes of
the sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -
Deductions to be made from Tier I Capital in the case that adequate Additional Tier II Capital or is not
available (-) - -
Total Deductions From Additional Tier I Capital - -
Total Additional Tier I Capital - -
Total Tier I Capital (Tier I Capital=Common Equity+Additional Tier I Capital) 2,657,493 -
TIER II CAPITAL
Debt instruments and share issue premiums deemed suitable by the BRSA 898,885 -
Debt instruments and share issue premiums deemed suitable by BRSA (Temporary Article 4) - -
Third parties’ share in the Tier II Capital - -
Third parties’ share in the Tier II Capital (Temporary Article 3) - -
Provisions (Article 8 of the Regulation on the Equity of Banks) - -
Tier II Capital Before Deductions 898,885 -
Deductions From Tier II Capital
Direct and indirect investments of the Bank on its own Tier II Capital (-) - -
Investments of Bank to Banks that invest on Bank's Tier 2 and components of equity issued by financial
institutions with the conditions - -
Portion of the total of net long positions of investments made in equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share
capital exceeding 10% of Common Equity of the Bank (-) - -
Portion of the total of net long positions of investments made in Additional Tier I Capital item of banks and
financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued
common share capital exceeding 10% of Common Equity of the Bank - -
Other items to be defined by the BRSA (-) - -
Total Deductions from Tier II Capital - -
Total Tier II Capital 898,885 -
Total Capital (The sum of Tier I Capital and Tier II Capital) 3,556,378 -
The Sum of Tier I Capital and Tier II Capital (Total Capital) - -
Deductions from Capital Loans granted contrary to the 50th and 51th Article of the Law - -
Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of
the Banking Law and the Assets Acquired against Overdue Receivables and Held for Sale but Retained more
than Five Years - -
Other items to be defined by the BRSA 5,780 -
In transition from Total Core Capital and Supplementary Capital (the capital) to Continue to
Deduction Components
The Sum of net long positions of investments (the portion which exceeds the 10% of Banks Common Equity)
in the capital of banking, financial and insurance entities that are outside the scope of regulatory
consolidation, where the bank does not own more than 10% of the issued common share capital of the entity
which will not deducted from Common Equity Tier 1 capital, Additional Tier 1 capital, Tier 2 capital for the
purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds - -
The Sum of net long positions of investments in the Additional Tier 1 capital and Tier 2 capital of banking,
financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not
own more than 10% of the issued common share capital of the entity which will not deducted from Common
Equity Tier 1 capital, Additional Tier 1 capital, Tier 2 capital for the purposes of the first sub-paragraph of the
Provisional Article 2 of the Regulation on Banks’ Own Funds - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
35
The Sum of net long positions of investments in the common stock of banking, financial and insurance
entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of
the issued common share capital of the entity, mortgage servicing rights, deferred tax assets arising from
temporary differences which will not deducted from Common Eguity Tier 1 capital for the purposes of the
first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds - -
TOTAL CAPITAL
Total Capital (The sum of Tier I Capital and Tier II Capital) 3,550,598 -
Total risk weighted amounts 24,785,039 -
CAPITAL ADEQUACY RATIOS
Core Capital Adequacy Ratio (%) 10.72 -
Tier 1 Capital Adequacy Ratio (%) 10.72 -
Capital Adequacy Ratio (%) 14.33
BUFFERS
Total additional Common Equity Tier 1 Capital requirement ratio (a+b+c) 1.933 -
a) Bank specific total common equity tier 1 capital ratio 1.875 -
b) Capital conservation buffer requirement 0.058 -
c) Systemically important bank buffer ratio (**) 0.000 -
The ratio of Additional Common Equity Tier 1 capital which will be calculated by the first paragraph of the
Article 4 of Regulation on Capital Conservation and Countercyclical Capital buffers to Risk Weighted Assets 4.72 -
Amounts below the Excess Limits as per the Deduction Principles
Portion of the total of net long positions of investments in equity items of unconsolidated banks and financial
institutions where the bank owns 10% or less of the issued share capital exceeding the 10% threshold of
above Tier I capital - -
Portion of the total of investments in equity items of unconsolidated banks and financial institutions where
the bank owns 10% or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -
Amount arising from deferred tax assets based on temporary differences - -
Limits related to provisions considered in Tier II calculation - -
Limits related to provisions considered in Tier II calculation
General provisions for standard based receivables (before limit of one hundred and twenty five
per ten Thousand) - -
Up to 1.25% of total risk-weighted amount of general reserves for receivables where the standard approach
used - -
Excess amount of total provision amount to credit risk Amount of the Internal Ratings Based Approach in
accordance with the Communiqué on the Calculation - -
Excess amount of total provision amount to 0,6% of risk weighted receivables of credit risk Amount of the
Internal Ratings Based Approach in accordance with the Communiqué on the Calculation - -
Debt instruments subjected to Article 4
(to be implemented between 1 January 2018 and 1 January 2022)
Upper limit for Additional Tier I Capital subjected to temprorary Article 4 - -
Amounts Excess the Limits of Additional Tier I Capital subjected to temprorary Article 4 - -
Upper limit for Additional Tier II Capital subjected to temprorary Article 4 - -
Amounts Excess the Limits of Additional Tier II Capital subjected to temprorary Article 4 - -
(*) Amounts in this column represent the amounts of items that are subject to transition provisions in accordance with the provisional
Articles of “Regulations regarding to changes on Regulation on Equity of Banks” effectuated on 1/1/2014 and taken into consideration at
the end of transition process.
(**) According to the paragraph 4 of the Article 4 of the Regulation on Systemically Important Banks only Systematically Important Bank, which
are not obligated to prepare consolidated financial statements, shall calculate this ratio and the rest banks shall report it as zero.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
36
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Information on borrowing instruments to be included in the equity calculation:
Current Period
Issuer ŞEKERBANK T.A.Ş ŞEKERBANK T.A.Ş ŞEKERBANK T.A.Ş
Unique identifier
(eg CUSIP, ISIN or
Bloomberg identifier
for private placement) TRSSKBK52818 XS1626188491 TRSSKBKA2716
Governing law(s) of the
instrument
Subject to Turkish Regulations. It is
issued within the scope of the Debt
Instruments Disclosure of the Capital
Markets Board and the Regulation on
Equities of Banks of the BRSA.
Subject to Turkish Regulations. It
is issued within the scope of the
Debt Instruments Disclosure of the
Capital Markets Board and the
Regulation on Equities of Banks of
the BRSA.
Subject to Turkish Regulations. It is
issued within the scope of the Debt
Instruments Disclosure of the Capital
Markets Board and the Regulation on
Equities of Banks of the BRSA.
Regulatory treatment
Subject to 10%
deduction as of
1/1/2015 No No No
Eligible on
Unconsolidated/
consolidated / both
unconsolidated and
consolidated
Valid on Consolidated and
Unconsolidated Basis
Valid on Consolidated and
Unconsolidated Basis
Valid on Consolidated and
Unconsolidated Basis
Instrument type Subordinated Liabilities (Securities)
Subordinated Liabilities
(Securities)
Subordinated Liabilities (Securities)
Amount recognised in
regulatory capital
(Currency in million
TRL, as of most recent
reporting date) 150 489.2 300
Par value of instrument
(Million TRL) 150 489.2 300
Accounting
classification 346 347 346
Original date of
issuance 24.05.2018 12.06.2017 22.12.2017
Demand or time Time Time Time
Original maturity date 11.05.2028 12.06.2027 10.12.2027
Issuer call subject to
prior supervisory
approval Yes Yes Yes
Optional call date,
contingent call dates
and redemption amount
17 May 2023, TRL 150 Million (10
year maturity with early redemption
option in the 5th year, subject to
BRSA approval)
13 June 2022, USD 85 Million (10
year maturity with early
redemption option in the 5th year,
subject to BRSA approval)
16 December 2022, TRL 300 Million (10
year maturity with early redemption
option in the 5th year, subject to BRSA
approval)
Subsequent call dates,
if applicable - - -
Coupons / dividends
Fixed or floating
dividend/coupon
Variable interest (The Borrowing
instrument will make coupon
payments from the beginning of the
maturity to the date of redemption
(including the redemption date) once a
month (variable days).) Fixed
Variable interest (The Borrowing
instrument will make coupon payments
from the beginning of the maturity to the
date of redemption (including the
redemption date) once a month (variable
days).)
Coupon rate and any
related index
5 Years Term Indicator + 475 bps on
government securities 9.75% p.a.
5 Years Term Indicator + 475 bps on
government securities
Existence of a dividend
stopper - - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
37
Fully discretionary,
partially
discretionary or
mandatory Mandatory Mandatory Mandatory
Existence of step up or
other incentive to
redeem - - -
Noncumulative or
cumulative Noncumulative Noncumulative Noncumulative
Convertible or non-convertible
If convertible,
conversion trigger (s) - - -
If convertible, fully or
partially - - -
If convertible,
conversion rate - - -
If convertible,
mandatory or optional
conversion - - -
If convertible, specify
instrument type
convertible into - - -
If convertible, specify
issuer of instrument it
converts int - - -
Write-down feature
If write-down, write-
down trigger(s)
According to the Article 8 (2) (ğ) of
the Regulation on Equities of Banks,
the bonds have a write-off option. If,
in accordance with the related
regulation, there is a possibility of
abolishing the bank's operating permit
or transferring it to the SDIF in the
framework of the Article 71 of the
Banking Law due to the losses it
incurs, The Bank can write down
these bonds from the related financial
records with the decision of the
BRSA, in the event of the bankruptcy
Due to the losses incurred, in the
framework of Article 71 of the
Banking Law that: (1) the removal
and liquidation of the Bank's
operating permit or (2) the rights
of all its shareholders (except to
dividends), and the management
and supervision of the Bank, are to
be transferred to the SDIF on the
condition that losses are deducted
from the capital of existing
shareholders , the bonds can be
written-down.
According to the Article 8 (2) (ğ) of the
Regulation on Equities of Banks, the
bonds have a write-off option. If, in
accordance with the related regulation,
there is a possibility of abolishing the
bank's operating permit or transferring it
to the SDIF in the framework of the
Article 71 of the Banking Law due to the
losses it incurs, The Bank can write down
these bonds from the related financial
records with the decision of the BRSA, in
the event of the bankruptcy
If write-down, full or
partial Partially or fully Partially or fully Partially or fully
If write-down,
permanent or temporary Continuously Continuously Continuously
If temporary write-
down, description of
write-up mechanism - - -
Position in
subordination hierarchy
in liquidation (specify
instrument type
immediately senior to
instrument)
In priority of debt to be included in
the calculation of additional capital
and comes after deposits and all other
receivables
Before the capital, after all the
other creditors In priority of debt to
be included in the calculation of
additional capital and comes after
deposits and all other receivables
In priority of debt to be included in the
calculation of additional capital and
comes after deposits and all other
receivables
Whether conditions
which stands in article
of 7 and 8 of Banks’
shareholder equity law
are possessed or not
The instrument is in compliance with
article number 8.
The instrument is in compliance
with article number 8.
The instrument is in compliance with
article number 8.
According to article 7
and 8 of Banks’
shareholders equity law
that are not possessed
The instrument is not in compliant
with article numbered 7.
The instrument is not in compliant
with article numbered 7.
The instrument is not in compliant with
article numbered 7.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
38
SECTION FOUR (cont’d)
I INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Information on borrowing instruments to be included in the equity calculation (cont’d):
The Group, within the framework of its capital adequacy assessment process, determines limits for risks (credit
risk, market risk and operational risk) covered under the Capital Adequacy calculations as well as for risks
(concentration risk, interest rate risk in the banking book, liquidity risk, etc.) which are not covered under these
calculations. Thus, the Parent Bank determines its “Risk Limits” and with the help of these limits and by means
of applying stress tests and scenario analyses, it evaluates the adequacy of its capital level against a background
of its current and also projected activities.
The Group determines “Key Risk Indicators” as “early warning signals” within the context of the “Risk Limits”.
Both the “Risk Limits” and “Key Risk Indicators” are determined by taking into consideration the annual budget
and strategy; its risk appetite; the volume, qualifications and complexity of its products/services; its experience
and prior performance as well as the market conditions. The “Risk Limits” and “Key Risk Indicators” are
determined through risk based amounts and nominal amounts. In this scope, regulatory limits and applications,
Basel Committee applications, international best practices, concentrations and tolerance levels as well as criteria
based on the Group’s capital levels are used. In any case, the “Risk Limits” and “Key Risk Indicators” cannot
violate the Banking Law and related regulations.
The “Risk Limits” and “Key Risk Indicators” are reviewed and revised at least annually by the senior
management with respect to market conditions and changes in the Group’s strategies. The review process aims to
determine whether the current “Risk Limits” and “Key Risk Indicators” are meaningful and sufficient enough
compared to the risk appetite. The revised “Risk Limits” and “Key Risk Indicators” become effective upon the
approval of the Boards of Directors.
Reconciliation of capital items to balance sheet
The difference between Total Capital and Equity in the balance sheet mainly arises from expected credit loss
provisions arising from loans classified under stage 1 and stage 2 and subordinated loans. In the calculation of
Total Capital, up to 1.25% of the expected credit loss provision from stage 1 and stage 2 over the credit risk
amount and subordinated loans are taken into consideration as Tier II Capital. On the other hand, in the
calculation of the Total Capital, improvement costs for operating leases followed under tangible assets in the
balance sheet, intangible assets and related deferred tax liabilities, other items defined by the regulator are taken
into consideration as amounts deducted from Total Capital.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
39
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Information on borrowing instruments to be included in the equity calculation (cont’d):
T-1 T-2 T-3 T-4
TOTAL CAPITAL
Common Equity Tier 1 Capital 2,257,770 2,160,065 2,062,360 1,964,655
Transition Process Not Applied Common Equity Tier 1 Capital (*) 1,964,655 1,964,655 1,964,655 1,964,655
Tier I Capital 2,257,770 2,160,065 2,062,360 1,964,655
Transition Process Not Applied Tier I Capital (**) 1,964,655 1,964,655 1,964,655 1,964,655
Total Capital 3,209,390 3,198,596 3,187,803 3,177,009
Transition Process Not Applied Total Capital (***) 3,177,009 3,177,009 3,177,009 3,177,009
TOTAL RISK WEIGHTED AMOUNTS
Total risk weighted amounts 25,647,012 25,647,012 25,647,012 25,647,012
CAPITAL ADEQUACY RATIOS
Common Equity Tier 1 Capital Adequacy Ratio (%) 8.80 8.42 8.04 7.66
Transition Process Not Applied Common Equity Tier 1 Capital
Adequacy Ratio (%) (****) 7.67 7.670 7.67 7.67
Tier 1 Capital Adequacy Ratio (%) 8.80 8.42 8.04 7.66
Transition Process Not Applied Tier 1 Capital Adequacy Ratio (%)
(****) 7.67 7.67 7.67 7.67
Capital Adequacy Ratio (%) 12.51 12.47 12.43 12.39
Transition Process Not Applied Capital Adequacy Ratio (%) (****) 12.39 12.39 12.39 12.39
LEVERAGE RATIO
Leverage ratio total risk amount 42,896,167 42,896,167 42,896,167 42,896,167
Leverage ratio 5.42 5.04 4.81 4.58
Transition Process Not Applied Leverage ratio (%) (*****) 4.58 4.58 4.58 4.58
(*) Amount of Common Equity Tier 1 Capital in case of non-application of Provisional Article 5 of the Regulation on Equities of Banks.
(**)Amount of Tier I Capital in case of non-application of Provisional Article 5 of the Regulation on Equities of Banks.
(***)Amount of Total Capital in case of non-application of Provisional Article 5 of the Regulation on Equities of Banks.
(****)Amount of capital adequacy ratios calculated with equity componentsin case of non-application of Provisional Article 5 of the
Regulation on Equities of Banks.
(*****)Amount of leverage ratio calculated with equity components in case of non-application of Provisional Article 5 of the Regulation on
Equities of Banks.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
40
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
II. Explanations Related to Consolidated Currency Risk
Currency risk is the probability of loss that the Group may face, in its total on- and off-balance sheet accounts
and positions in foreign currencies, arising from changes in exchange rates.
The Parent Bank’s policies and procedures related to currency risk are in line with the “Regulation on Internal
Systems and Internal Capital Adequacy Asessment Process” and the “Regulation on Measurement and
Evaluation of the Capital Adequacy of Banks” and approved by the Parent Bank’s Board of Directors.
The Boards of Directors has approved limits (position limits, stop-loss limits) compliant with the regulatory
“Foreign Exchange Net General Position / Equity Standard Ratio” and based on the Group’s capital. These limits
are monitored on a daily basis and reviewed and revised at least once a year, with respect to market conditions
and changes in the Group’s strategies.
Within the context of Capital Adequacy, the Group’s currency risk within the market risk exposure is calculated
through the use of the “Standard Method” in line with the legislation. In these calculations, the Group’s foreign
currency assets and foreign currency liabilities together with the forward transactions and gold position are all
taken into consideration.
Within the Group, currency risk exposure is measured, monitored and reported on a daily basis. In this context,
“Value-at-Risk (VaR) Methods” are applied as internal model. Among these methods, the “Parametric Method”
that is also called as ‘’Variance Covariance Method’’ is used among the VaR Methods; while the “Historical
Simulation” and the “Monte Carlo Simulation” methods, on the other hand, are used for comparison, in times
when volatility increases to a great extent. VaR measurements are based on an observation period covering the
last 252 workdays and a 99 % confidence level. In “Economic Capital” measurements based on VaR, a 10-day
holding period is applied.
Additionally, stress tests and scenario analyses are applied in order to measure and monitor the impact of adverse
movements in the markets, while the effectiveness of the Parent Bank’s internal model is tested by using
retroperspective tests on a daily basis.
As of 30 June 2019, the Group’s balance sheet short position is TRL 1,738,867 Thousand (31 December 2018 –
TRL 1,649,176 Thousand short) and long position on the off balance sheet amounting to TRL 1,956,704
Thousand (31 December 2018 - TRL 1,861,972 Thousand long), resulting in total net long position of TRL
217,796 Thousand (31 December 2018 - TRL 212,796 Thousand total net long).
The announced current foreign exchange buying rates of the Parent Bank at 30 June 2019 and the previous five
working days in full TRL are as follows:
21.06.2019 24.06.2019 25.06.2019 26.06.2019 27.06.2019 28.06.2019
USD 5.7915 5.7444 5.7904 5.7630 5.7665 5.7551
CHF 5.8806 5.8717 5.9227 5.8883 5.8796 5.8894
GBP 7.3286 7.3077 7.3745 7.2939 7.3114 7.2855
100 JPY 5.3765 5.3377 5.3960 5.3439 5.3297 5.3317
EURO 6.5470 6.5409 6.5935 6.5476 6.5571 6.5507
The simple arithmetic averages of the major current foreign exchange buying rates of the Parent Bank for the
thirty days before 30 June 2019 are as follows:
Monthly Average
Foreign Exchange Rate
USD 5.8177
CHF 5.8578
GBP 7.3530
100 JPY 5.3650
EURO 6.5583
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
41
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
II. Explanations Related to Consolidated Currency Risk (cont’d)
Information on the foreign currency risk of the Group:
EUR USD Other FC Total
Current Period
Assets
Cash (Cash in Vault, Foreign Currency Cash, Money in Transit,
Cheques Purchased) and Balances with the Central Bank of Turkey 853,115 1,328,337 545,698 2,727,150
Banks 288,087 111,034 57,289 456,410
Financial Assets at Fair Value Through Profit and Loss 1,871 7,699 - 9,570
Money Market Placements 2,878 - 2,914 5,792
Financial Assets at Fair Value Through Other Comprehensive Income - 21,934 - 21,934
Loans (*) 5,318,599 2,565,153 67,077 7,950,829
Subsidiaries, Associates and Entities Under Common Control - - - -
Financial Assets at Amortised Cost - 1,061,453 372 1,061,825
Derivative Financial Assets For Hedging Purposes - - - -
Tangible Assets 217 3,640 - 3,857
Intangible Assets - - - -
Other Assets 54,371 231,421 12,528 298,320
Total Assets 6,519,138 5,330,671 685,878 12,535,687
Liabilities
Bank Deposits 1,101 340,447 228 341,776
Foreign Currency Deposits 5,026,534 5,464,876 599,441 11,090,851
Money Market Borrowings - - - -
Funds Provided From Other Financial Institutions 347,370 1,744,075 - 2,091,445
Securities Issued (**) - 491,548 - 491,548
Sundry Creditors 85,401 1,971 136,670 224,042
Other Liabilities 22,827 11,671 394 34,892
Total Liabilities 5,483,233 8,054,588 736,733 14,274,554
Net Balance Sheet Position 1,035,905 (2,723,917) (50,855) (1,738,867)
Net Off-Balance Sheet Position (1,053,756) 2,939,945 70,514 1,956,703
Financial Derivative Assets 1,315,364 5,039,028 385,865 6,740,257
Financial Derivative Liabilities 2,369,120 2,099,083 315,351 4,783,554
Non-Cash Loans 1,286,358 972,147 11,673 2,270,178
Prior Period
Total Assets 5,715,911 6,210,696 567,948 12,494,555
Total Liabilities 5,141,463 8,357,149 645,119 14,143,731
Net Balance Sheet Position 574,448 (2,146,453) (77,171) (1,649,176)
Net Off-Balance Sheet Position (573,274) 2,344,141 91,105 1,861,972
Financial Derivative Assets 1,297,444 3,612,606 207,991 5,118,041
Financial Derivative Liabilities 1,870,718 1,268,465 116,886 3,256,069
Non-Cash Loans 1,236,975 1,281,615 750 2,519,340
About Currency Risk Table as of 30 June 2019;
The principal amount of currency indexed loans amounting TRL 598,374 Thousand and accruals amounting TRL 571,164 Thousand are shown under loans.
The principal amount of currency indexed funds borrowed amounting to TRL 22,927 Thousand and accruals amounting TRL 322 Thousand are shown in the Funds Provided From Other
Financial Institutions line.
According to the regulation about Foreign Currency Net General Position / Equity Standard Ratio Calculation, Foreign Currency amounts that are not shown in the present currency risk
table are as follows: Derivative Financial Assets Held-for-Trading: TRL 51,500 Thousand
Prepaid expenses: TRL 18,774 Thousand .Derivative Financial Liabilities Held-for-Trading: TRL 89,618 Thousand
Unearned income from installment sale of assets: TRL 4,136Thousand, Receivables from foreign currency in equity: TRL 31,800 Thousand
Financial Derivative Asset amount includes TRL 315,019 Thousand forward asset purchase commitment and TRL 572,604 Thousand option contracts.
Financial Derivative Liabilities amount includes TRL 1,469,650 Thousand forward asset selling commitment and TRL 552,913 Thousand option contracts.
(**) Securities Issued includes also the issuances of subordinated debts amounting to TRL 491,548 Thousand which are shown under subordinated loans line in the balance sheet
About Currency Risk Table as of 31 December 2018;
The principal amount of currency indexed loans amounting TRL 758,949 Thousand and accruals amounting TRL 549,655 Thousand are shown under loans.
The principal amount of currency indexed funds borrowed amounting to TRL 21,098 Thousand and accruals amounting TRL 307 Thousand are shown in the Funds Provided From Other
Financial Institutions line. According to the regulation about Foreign Currency Net General Position / Equity Standard Ratio Calculation, Foreign Currency amounts that are not shown in
the present currency risk table are as follows: Derivative Financial Assets Held-for-Trading: TRL 383,219 Thousand
Marketable securities value increase fund: TRL 4,047 Thousand Prepaid expenses: TRL 19,287 Thousand .Derivative Financial Liabilities Held-for-Trading: TRL 91,824 Thousand
Unearned income from installment sale of assets: TRL 3,965 Thousand, Receivables from foreign currency in equity: TRL 24,511 Thousand
Financial Derivative Asset amount includes TRL 34,411 Thousand forward asset purchase commitment and TRL 305,606 Thousand option contracts.
Financial Derivative Liabilities amount includes TRL 39,522 Thousand forward asset selling commitment and TRL 305,136 Thousand option contracts.
Securities Issued includes also the issuances of subordinated debts amounting to TRL 451,050 Thousand which are shown under subordinated loans line in the balance sheet
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
42
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
III. Explanations Related to Consolidated Interest Rate Risk
Interest rate risk is the possibility of loss that the Group may face, in relation to its structural position arising
from adverse movements in interest rates.
The Parent Bank’s policies and procedures related to interest rate risk are in line with the “Regulation on Internal
Systems and Internal Capital Adequacy Asessment Process” and the “Regulation on Measurement and
Evaluation of the Capital Adequacy of Banks” and approved by the Board of Directors.
Within the context of Capital Adequacy, the Group’s interest rate risk within the market risk exposure is
calculated through the use of the “Standard Method” in line with the legislation.
The Group takes interest rate risk positions in both the trading book and banking book. The interest rate risk
arising from the trading book is evaluated within the scope of market risk, and thus, measured, monitored, and
managed in line with market risk policies and procedures.
Within the Parent Bank, interest rate risk exposure is measured, monitored and reported on a daily basis. In this
context, “Value-at-Risk (VaR) Methods” are applied as internal model.
Among these methods, the “Parametric Method” that is also called as ‘’Variance Covariance Method’’ is used
among the VaR Methods; while the “Historical Simulation” and the “Monte Carlo Simulation” methods, on the
other hand, are used for comparison, in times when volatility increases to a great extent.
VaR measurements are based on an observation period covering the last 252 workdays and a 99 % confidence
level. In “Economic Capital” measurements based on VaR, a 10-day holding period is applied.
Additionally, stress tests and scenario analyses are applied in order to measure and monitor the impact of adverse
movements in the markets, while the effectiveness of the Parent Bank’s internal model is tested by using back
tests on a daily basis.
The interest rate risk arising from the Group’s banking accounts is measured, monitored and managed within the
scope of assets and liabilities risk. In this context, gap analyses, duration and economic value analyses as well as
sensitivity analyses are evaluated on a weekly basis by the Parent Bank’s Asset Liability Committee.
Simulations on net interest income are performed according to macroeconomic indicator estimations in the
Parent Bank’s budget targets, while the potential negative impact of adverse movements in market interest rates
on the financial position and cash flows is minimized through target revisions. The Group management monitors
the market interest rates on a daily basis, and is able to change the interest rates applied by the Group whenever
it is necessary by ALCO decisions.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
43
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
III. Explanations Related to Consolidated Interest Rate Risk (cont’d)
Average interest rates applied to monetary financial instruments
EUR USD JPY TRL
Current Period (*)
Assets
Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased)
and Balances with the Central Bank of Turkey - - - -
Banks 0.01 2.36 0.52 24.99
Financial Assets at Fair Value Through Profit and Loss 2.78 5.42 - 8.64
Money Market Placements - - - 27.23
Financial Assets at Fair Value Through Other Comprehensive Income - - - 16.49
Loans 6.85 9.36 2.88 21.67
Financial Assets at Amortised Cost - 5.05 - 5.21
Liabilities
Bank Deposits 1.02 2.60 - 24.62
Other Deposits 1.80 3.55 0.88 20.76
Money Market Borrowings - - - 24.34
Sundry Creditors 0.36 2.35 - -
Securities Issued - 6.82 - 9.66
Funds Provided From Other Financial Institutions 1.75 4.06 - 11.25
(*) Interest rates belong to the Parent Bank.
(*) Interest rates belong to the Parent Bank.
EUR USD JPY TRL
Prior Period (*)
Assets
Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques
Purchased) and Balances with the Central Bank of Turkey - - - -
Due From Other Banks and Financial Institutions 0.01 2.19 0.50 13.50
Financial Assets at Fair Value Through Profit and Loss 2.12 5.33 - 10.97
Money Market Placements - - - 15.25
Financial Assets Available-for-Sale - 4.40 - 11.62
Loans 6.07 8.65 3.53 19.24
Held-to-Maturity Investments - 5.06 - 3.96
Liabilities
Bank Deposits 1.35 3.88 - 18.00
Other Deposits 1.98 4.18 0.80 17.94
Money Market Borrowings - 2.00 - 16.78
Sundry Creditors 0.33 1.98 - -
Securities Issued - 6.82 - 13.03
Funds Provided From Other Financial Institutions 1.30 3.64 - 9.49
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
44
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
III. Explanations Related to Consolidated Interest Rate Risk (cont’d)
Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based
on repricing dates)
(*) The subordinated debt instruments in balance sheet also includes the TRL 943,947 Thousand bonds issued as subordinated loans.
(**) TRL 214,467 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements.
Current Period Up to 1
Month 1-3 Months 3-12 Months 1-5 Years
5 Years and
Over
Non-Interest
Bearing Total
Assets
Cash (Cash in Vault, Foreign Currency
Cash, Money in Transit, Cheques
Purchased) and Balances with the Central
Bank of Turkey 63,887 - - - - 3,294,396 3,358,283
Banks 339,001 - - 488 - 148,121 487,610
Financial Assets at Fair Value Through
Profit and Loss (**) 22,503 11,145 14,269 3,087 14,771 5,024 70,799
Money Market Placements 11,192 - - - - - 11,192
Financial Assets at Fair Value Through
Other Comprehensive Income - 3,415 66,972 502,474 21,934 7,577 602,372
Loans(**) 6,591,694 2,639,552 5,372,308 6,604,446 678,026 1,570,190 23,456,216
Financial Assets at Amortised Cost 162,036 342,065 1,351,518 816,257 364,097 - 3,035,973
Other Assets 482,018 33,445 25,910 117,744 7,935 917,039 1,584,091
Total Assets 7,672,331 3,029,622 6,830,977 8,044,496 1,086,763 5,942,347 32,606,536
Liabilities
Bank Deposits 179,276 94,000 7,076 118 - 145,135 425,605
Other Deposits 15,112,742 4,104,278 1,583,792 52,473 - 2,672,765 23,526,050
Money Market Borrowings 551,156 - - - - - 551,156
Sundry Creditors 14,349 23,202 - 2,305 - 342,357 382,213
Securities Issued (*) 692,632 376,882 785,548 - - - 1,855,062
Funds Provided From Other Financial
Institutions 255,090 534,283 966,282 189,914 414,942 211,623 2,572,134
Other Liabilities 151,472 - 48,284 241,636 95,704 2,757,220 3,294,316
Total Liabilities 16,956,717 5,132,645 3,390,982 486,446 510,646 6,129,100 32,606,536
Balance Sheet Long Position - - 3,439,995 7,558,050 576,117 - 11,574,162
Balance Sheet Short Position (9,284,386) (2,103,023) - - - (186,753) (11,574,162)
Off-Balance Sheet Long Position 1,098,174 35,000 - - - - 1,133,174
Off-Balance Sheet Short Position - (20,000) - (465,000) (648,174) - (1,133,174)
Total Position (8,186,212) (2,088,023) 3,439,995 7,093,050 (72,057) (186,753) -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
45
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
III. Explanations Related to Consolidated Interest Rate Risk (cont’d)
Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based
on repricing dates) (cont’d)
(*) The subordinated debt instruments in balance sheet also includes the TRL 903,621 Thousand bonds issued as subordinated loans.
(**) TRL 221,879 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements.
IV. Explanations Related to Consolidated Position Risk of Equity Securities in Banking
Book
Consolidated Position Risk of Equity Securities in Banking Book: None
Prior Period Up to 1
Month 1-3 Months 3-12 Months 1-5 Years
5 Years and
Over
Non-Interest
Bearing Total
Assets
Cash (Cash in Vault, Foreign Currency
Cash, Money in Transit, Cheques
Purchased) and Balances with the Central
Bank of Turkey 362,591 - - - - 3,256,646 3,619,237
Due From Other Banks and Financial
Institutions 96,086 120 - 7,163 - 102,650 206,019
Financial Assets at Fair Value Through
Profit and Loss (**) 8,720 14,134 45,849 4,305 9,716 2,865 85,589
Money Market Placements 59,192 - - - - - 59,192
Financial Assets Available-for-Sale - 51 62,638 484,897 22,679 7,417 577,682
Loans (**) 8,117,661 2,787,656 3,664,133 7,146,503 600,578 1,265,652 23,582,183
Held-to-Maturity Investments 378 862,475 1,470,553 614,070 481,246 - 3,428,722
Other Assets 583,236 23,675 75,869 106,364 4,106 612,910 1,406,160
Total Assets 9,227,864 3,688,111 5,319,042 8,363,302 1,118,325 5,248,140 32,964,784
Liabilities
Bank Deposits 291,011 60,429 14,606 10,183 - 189,527 565,756
Other Deposits 12,480,853 4,552,006 2,612,359 78,245 - 2,651,638 22,375,101
Money Market Borrowings 192,096 - - - - - 192,096
Sundry Creditors 144,603 44,888 - 3,138 - 359,183 551,812
Securities Issued (*) 653,529 812,299 681,477 - - - 2,147,305
Funds Provided From Other Financial
Institutions 476,886 1,053,366 830,539 639,584 379,276 220,429 3,600,080
Other Liabilities 332,016 - 90,725 129,134 2,041 2,978,718 3,532,634
Total Liabilities 14,570,994 6,522,988 4,229,706 860,284 381,317 6,399,495 32,964,784
Balance Sheet Long Position - - 1,089,336 7,503,018 737,008 - 9,329,362
Balance Sheet Short Position (5,343,130) (2,834,877) - - - (1,151,355) (9,329,362)
Off-Balance Sheet Long Position 50,000 100,000 50,000 468,000 597,859 - 1,265,859
Off-Balance Sheet Short Position (50,000) (100,000) (50,000) (468,000) (597,859) - (1,265,859)
Total Position (5,343,130) (2,834,877) 1,089,336 7,503,018 737,008 (1,151,355) -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
46
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio
Liquidity risk refers the incapability of the Group to have cash or cash inflow at a level that will cover the cash
outflow fully and in a timely fashion, due to the instability in cash flow.
The Group may be exposed to liquidity risk due to the below factors:
Funding related liquidity risk due to the Group’s inability to meet the anticipated and unforeseen
existing and potential cash flow and collateral requirements properly, without affecting its daily
operations or financial structure,
The liquidity risk arising from the the lack of required depth in the markets or excessive volatility
owing to the inability of the Group’s to balance or close any position over market prices.
a) Information on risk capacity of the Group, responsibilities and structure of liquidity risk management,
the Group’s internal liquidity risk reporting, communication between the Board of Directors and
business lines on liquidity risk strategy, policy and application:
The main policy of the Group is to maintain an asset structure that it will be sufficient to fulfill all its obligations
through the use of liquid sources in time and in a sound manner.
The objective of the liquidity risk management is to maintain the Group’s financial stability by means of
maintaining the Group’s liquidity risk exposure at measurable and tolerable levels. Thus, it is also the objective
to protect the shareholders from any potential loss that might arise from adverse movements in the Group’s
liquidity position.
The Group’s policies and procedures related to the liquidity risk are approved by the Group’s Board of
Directors.
The major factors mentioned below are addressed in those policies and procedures:
The Oversight of the Board of Directors:
- The Board of Directors approves policies and procedures related to the liquidity risk, all in line with the
Parent Bank’s annual budget and the growth strategies for medium and long term.
- The Board of Directors plans the capital structure to cover the Parent Bank’s liquidity risk profile, all in line
with the Parent Bank’s annual budget and the growth strategies for medium and long term.
- The Board of Directors segregates the duties, authorities and responsibilities related to measuring,
monitoring, controlling, auditing and management of the liquidity risk, through internal regulations on related
committies and units.
The Oversight of the Senior Management:
- The Parent Bank’s senior management implements systems and standards related to measuring, monitoring,
controling, auditing and management of the liquidity risk, with respect to its duties, authorities, and
responsibility areas.
- The Parent Bank’s senior management takes measures to ensure the development of technical konwledge and
competencies of human resources as well as information systems infrastructure so that the measuring,
monitoring, controling and auditing of the liquidity risk, are all executed in a sound manner.
- The Parent Bank’s senior management analyses potential liquidity risk which may arise from the new
banking products and services which the Bank plans to implement.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
47
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
The Parent Bank’s Board of Directors and senior management segregate the responsibilities within the scope of
the liquidity risk management among the Asset Liability Committee, Treasury Department and Risk
Management Unit.
Accordingly, the Parent Bank’s Board of Directors set the Asset Liability Committee (ALCO) as the senior
management committee responsible for management of the Group’s balance sheet, usage of funds, and financial
management. ALCO sets the strategies for management of the balance sheet, funding, source planning and
liquidity as well as conducting stress tests and scenario analyses. The Treasury Unit implement these strategies
in order to manage liquidity.
The Boards of Directors have approved “Risk Limits” and “Key Risk Indicators” as part of the policies and
procedures related to the liquidity risk. The compliance with these limits are monitored on a regular basis; all of
which are reviewed and revised (if deemed necessary) at least once a year, with respect to the market conditions
and changes in the strategies.
The compliance with the “Risk Limits” is a mandatory agenda item in the regular monthly meetings of the
Boards of Directors.
The liquidity risk profile is analysed, monitored, and assessed by the Risk Management Unit of the Parent Bank.
The said Unit presents its findings through those assessments as well as the compliance with the “Risk Limits” to
ALCO on a weekly basis and to the Board of Directors of the Parent Bank on a monthly basis.
b) Information on the centralization degree of liquidity management and funding strategy and the
functioning between the Parent Bank and the Parent Bank’s subsidiaries:
The management of liquidity has a decentralised structure. In this context, each subsidiary executes its liquidity
management function by its own units/departments/services responsible for carrying out the function of the
financial management. Besides, the Parent Bank provides funding to its subsidiaries in line with the regulatory
limits while also considering the market conditions.
The Parent Bank’s liquidity management is carried out in line with budgeted growth strategies and taking into
account the legal requirements, as well as current market conditions and expectations regarding economic and
financial conjuncture.
In liquidity management, liquidity planning is realized by predicting the effects of global conditions both on the
country and on the sector.
In liquidity management policy, the stable core deposit base is determined as the Parent Bank’s main funding
resources. In order to increase the diversity of funding resources, domestic and foreign capital markets are
utilized for medium and long-term funding sources. To prevent the concentration risk of liquidity obligations, the
concentration limits for deposit and non-deposit indebtment is closely monitored. Liquidity ratios (LCR, NSFR)
are followed and liquidity projections are performed within the scope of Basel III.
c) Information on the Parent Bank’s funding strategy including the policies on funding types and variety
of maturities:
Liquidity refers to the capability of the Group to fund its asset growth and obligations without being subject to
unacceptable loss in a timely fashion.
The factors assessed in the Group’s liquidity management are the predicted asset quality projection for the
current and the future period, funding requirement projection for the current and future period, creating easily
liquidated assets, creating assets which have regular cash flow, diversification of fund resources and preventing
concentration.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
48
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
Deposits are the foundation of the Group’s liquidity. Maintaining a deposit structure with low cost that shows
stable growth is essential. To that end, an interest rate policy compatible with annual budget is applied for
liquidity management.
In order to meet the liquidity requirements that may arise due to market fluctations, special attention is paid to
ensure availability of sufficient liquidity based on the continious projections made for Turkish Lira and Foreign
Currency cash flows. Based on cash flow projections, price is differentiated for different maturity buckets, and
measures to meet liqudity requirements are taken accordingly. Moreover, potential alternative sources of liqudity
are determined to be used in case of emergency.
In order to ensure effectiveness and sustainability of liquidity management, funding sources for the subsidiaries
that are subject toconsalidation and the diversification possibilities are evaluated taking into consideration
markets, instruments and funds providers. The liquidity position of the subsidiaries that are subject to
consolidation is continuously monitored by the Parent Bank.
d) Information on liquidity management on the basis of currencies constituting a minimum of five percent
of the Parent Bank’s total liabilities:
In order to measure and monitor the impact of the liquidity risk, the Parent Bank uses cash flow gap analyses
indicating both current and future transactions. The Parent Bank, uses Board of Director’s approved maturity
projections for off-balance sheet items as base in these analyses. Within these projections, the behavioral
analyses are used for debtor current accounts, overdraft accounts, demand deposit accounts and time deposit
accounts.
In the cashflow gap analyses:
- Aggregate, Turkish Lira and foreign currency items are tabulated seperately;
- Calculation for currency items that exceed 5 % of the Parent Bank’s total assets (USD, EUR, etc. items) are
done seperately;
- Currency items that do not exceed 5 % of the Parent Bank’s total assets are aggregated with the EUR items.
e) Information on liquidity risk mitigation techniques:
Within the liquidity reduction techniques, concentrating on a regular cash flow structure in its assets,
establishing a broadly-based structure in its liabilities, regularly issuing bank securities as an altenative funding
source, diversifying the sources of funding by concentrating long-term finance resources from the financial
institutions such as covered bonds, syndications and others and maintaining the liquidity buffer takes place.
f) Information on the use of stress tests:
With the liquidity stress tests, both the amount and cost of the liquidity requirement are assessed. In this way,
within the context of ICAAP , the levels to be occurred as a result of probable fluctuations in the Liquity
Coverage Ratio and the probable maturity liquidity ratios cash flows, collateral liabilities and funding facilities
approximately for the next 3-year horizon are assessed.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
49
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
g) General information on urgent and unexpected liquidity situation plans:
The Group’s O/N repo limits in the Central Bank of the Turkish Republic and Borsa Istanbul Stock Exchange as
well as unutilised limits are also regularly monitored. As a precaution for a worst-case scenario such as the
withdrawal of all demand deposits, it is essential to keep limits unused equal to the amount of current demand
deposits. Within this scope, the Parent Bank’s ALCO set the alternative liquidity strategies with regards to the
current market environment.
“Liquidity Management Urgent Action Plan” was set, which defines the level of coverage, implementation
guidelines, possible scenarios, emergency action plan, available funding sources, and the obstacles to be
addressed.
Consolidated Liquidity Coverage Ratio:
The liquidity ratio which is calculated pursuant to BRSA's "Regulation on Calculation of Banks' Liquidity
Coverage Ratio" in order to make ensure that the Group has high-quality liquidity asset stock sufficient to cover
the net cash outflows in order to identify the Bank's minimum liquidity level.
These ratios are effected by the levels of a Group’s liquid assets which can be liquidified easily and the cash in-
flows as well as the cash out-flows arising from a Group’s assets, liabilities and also off balance sheet items.
In the second quarter of 2019, the average total liquidity coverage ratio decreased compared to previous quarter’s
average. The average total liquidity coverage ratio, which was 163.4 in the previous quarter and increased to
126.4 with the increase in the net cash outflow level despite the increase in high quality liquid assets. The ratio
of FX liquidity coverage on average has increased to 289.4 in comparison to the previous quarter. Both of the
ratios are still above the minimum level predicted by the legislation.
The Group’s “high quality liquid assets” comprise of cash and the balance sheet items held within the Central
Bank of the Turkish Republic as well as borrowing instruments issued by the Turkish Treasury, which are not
subject to repurchase agreements or not pledged as collateral. The high quality liquid assets are represented by
cash (4.19%), balances with the central banks (74.79%) and first quality liquid borrowing instruments (21.01%).
Items that represent the cash outflows used in the calculation of liquidity coverage ratio include mainly the
deposit base, secured and unsecured borrowings, the securities issued and off balance sheet transactions. Main
items of the cash inflows iclude secured and unsecured receivables and other cash inflows. Other cash inflows
and outflows derive from derivative transactions and the cash flows of the derivative financial instruments are
included in the calculation.
While the effect of derivative transactions on the net cash outflow is limited, the fluctuations in the volume of
foreign currency derivatives can effect FC liquidity coverage ratio.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
50
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
Consolidated Liquidity Coverage Ratio (cont’d):
The major funding source for the Group is the deposit bases. In addition to the deposits, the another main sources
of funding include funds received through REPO transactions, issued securities, long-term recources obatined
from the financial institutions (Covered Bonds, syndications, and other).
Current Period Total Unweighted Value
(Average) (*)
Total Weighted Value
(Average) (*)
TRL+FC FC TRL+FC FC
HIGH QUALITY LIQUID ASSETS
1 Total high-quality liquid assets (HQLA) 6,672,349 3,174,690
CASH OUTFLOW
2
Retail deposits and deposits from small
business customers, of which: 18,821,820 8,804,100 1,635,582 880,410
3 Stable deposits 4,932,000 - 246,600 -
4 Less stable deposits 13,889,820 8,804,100 1,388,982 880,410
5 Unsecured wholesale funding, of which: 6,997,180 3,757,742 4,669,030 2,217,611
6 Operational deposits 866,936 736,220 216,734 184,055
7 Non-operational deposits 4,533,733 2,331,596 2,855,785 1,343,630
8 Unsecured funding 1,596,511 689,926 1,596,511 689,926
9 Secured wholesale funding 24,674 -
10 Other cash outflows of which: 2,178,412 453,668 2,178,412 453,668
11
Outflows related to derivative exposures and
other collateral requirements 2,023,826 299,082 2,023,826 299,082
12
Outflows related to restructured financial
instruments - - - -
13
Payment commitments and other off-balance
sheet commitments granted for debts to
financial markets 154,586 154,586 154,586 154,586
14
Other revocable off-balance sheet
commitments and contractual obligations 117,800 120,280 5,890 6,014
15
Other irrevocable or conditionally revocable
off-balance sheet obligations 4,069,852 634,412 755,012 94,114
16 TOTAL CASH OUTFLOWS 9,268,600 3,651,817
17 Secured receivables - - - -
18 Unsecured receivables 2,897,995 958,591 1,956,743 806,847
19 Other cash inflows 2,034,547 1,748,122 2,034,547 1,748,122
20 TOTAL CASH INFLOWS 4,932,542 2,706,713 3,991,290 2,554,969
Total Adjusted
Value
21 TOTAL HQLA
6,672,349 3,174,690
22 TOTAL NET CASH OUTFLOWS
5,277,310 1,096,848
23 LIQUIDITY COVERAGE RATIO (%)
126.43 289.44
(*) The average of last three months’ liquidity coverage ratio calculated based on monthly simple averages.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
51
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
Consolidated Liquidity Coverage Ratio (cont’d):
Prior Period Total Unweighted Value
(Average) (*)
Total Weighted Value
(Average) (*)
TRL+FC FC TRL+FC FC
HIGH QUALITY LIQUID ASSETS
1 Total high-quality liquid assets (HQLA) 5,734,703 2,327,557
CASH OUTFLOW
2
Retail deposits and deposits from small
business customers, of which: 17,732,290 6,893,820 1,521,103 689,382
3 Stable deposits 5,042,520 - 252,126 -
4 Less stable deposits 12,689,770 6,893,820 1,268,977 689,382
5 Unsecured wholesale funding, of which: 6,438,294 3,557,557 3,988,098 1,988,633
6 Operational deposits 808,592 612,308 202,148 153,077
7 Non-operational deposits 4,202,747 2,406,010 2,358,995 1,296,317
8 Unsecured funding 1,426,955 539,239 1,426,955 539,239
9 Secured wholesale funding - -
10 Other cash outflows of which: 1,137,811 496,268 1,137,811 496,268
11
Outflows related to derivative exposures and
other collateral requirements 1,039,235 397,692 1,039,235 397,692
12 Outflows related to restructured financial instruments - - - -
13
Payment commitments and other off-balance sheet commitments granted
for debts to financial markets 98,576 98,576 98,576 98,576
14
Other revocable off-balance sheet
commitments and contractual obligations 140,120 142,540 7,006 7,127
15
Other irrevocable or conditionally revocable
off-balance sheet obligations 4,154,370 638,136 733,751 94,131
16 TOTAL CASH OUTFLOWS 7,387,769 3,275,541
17 Secured receivables - - - 9,993
18 Unsecured receivables 117,415,690 38,688,001 3,007,364 1,673,286
19 Other cash inflows 1,107,055 697,459 1,197,582 697,459
20 TOTAL CASH INFLOWS 118,522,745 39,385,460 4,204,946 2,380,738
Total Adjusted
Value
21 TOTAL HQLA
5,734,703 2,327,557
22 TOTAL NET CASH OUTFLOWS
3,182,823 894,803
23 LIQUIDITY COVERAGE RATIO (%)
180.18 260.12
(*) The average of last three months’ liquidity coverage ratio calculated based on monthly simple averages.
The information on the highest and the lowest weekly liquidity coverage ratio during the last three months of
2018 and second three months of 2019 is presented below.
Current Period
TRL+FC FC
April 136.77 315.04
May 124.18 240.15
June 119.07 277.56
Prior Period
TRL+FC FC
October 191.52 215.98
November 154.95 229.94
December 181.25 243.57
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
52
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
V. Explanations Related to Consolidated Liquidity Risk Management and Consolidated
Liquidity Coverage Ratio (cont’d)
Presentation of assets and liabilities according to their remaining maturities:
Demand
Up to 1
Month 1-3 Months
3-12
Months 1-5 Years 5 Years
and Over
Undistributed
(*)
Total
Current Period
Assets
Cash (Cash in Vault, Foreign
Currency Cash, Money in Transit,
Cheques Purchased) and Balances
with the Central Bank of Turkey 1,820,020 1,538,263 - - - - - 3,358,283
Banks 148,121 339,001 - - 488 - - 487,610
Financial Assets at Fair Value
Through Profit and Loss - 22,503 11,145 13,942 3,414 14,771 5,024 70,799
Money Market Placements - 11,192 - - - - - 11,192
Financial Assets at Fair Value
Through Other Comprehensive
Income 7,417 - 3,415 4,823 564,623 22,094 - 602,372
Loans (**)(****) 316,479 1,774,658 4,196,780 3,224,213 10,180,980 2,288,611 1,474,495 23,456,216
Financial Assets at Amortised Cost - 161,645 - 569,557 1,615,512 689,259 - 3,035,973
Other Assets 223,139 463,213 33,445 25,910 117,744 7,935 712,705 1,584,091
Total Assets 2,515,176 4,310,475 4,244,785 3,838,445 12,482,761 3,022,670 2,192,224 32,606,536
Liabilities
Bank Deposits 145,135 179,276 94,000 7,076 118 - - 425,605
Other Deposits 2,672,765 15,112,466 4,101,935 1,578,875 60,008 1 - 23,526,050
Funds Provided From Other Financial
Institutions 789 227,147 335,734 565,325 392,914 1,050,225 - 2,572,134
Money Market Borrowings - 551,156 - - - - - 551,156
Securities Issued (***) - 240,234 189,170 101,392 380,319 943,947 - 1,855,062
Sundry Creditors 339,319 13,995 23,531 2,617 1,461 - 1,290 382,213
Other Liabilities 350,712 150,783 216,741 66,594 228,523 101,306 2,179,657 3,294,316
Total Liabilities 3,508,720 16,475,057 4,961,111 2,321,879 1,063,343 2,095,479 2,180,947 32,606,536
Liquidity Gap (993,544) (12,164,582) (716,326) 1,516,566 11,419,418 927,191 11,277 -
Net Off-Balance Sheet Position - (5,727) (15,822) (14,204) (90,350) - - (126,103)
Derivative Financial Assets - 6,420,838 375,466 385,202 705,495 648,174 - 8,535,175
Derivative Financial Liabilities - 6,426,565 391,288 399,406 795,845 648,174 - 8,661,278
Non-Cash Loans 1,919,801 249,280 428,893 2,325,797 451,523 97,446 12 5,472,752
Prior Period
Total Assets 2,752,242 4,120,483 4,941,674 2,931,775 12,569,415 3,443,927 2,205,268 32,964,784
Total Liabilities 3,627,831 14,000,573 5,928,681 3,779,231 1,278,667 1,896,971 2,452,830 32,964,784
Liquidity Gap (875,589) (9,880,090) (987,007) (847,456) 11,290,748 1,546,956 (247,562) -
Net Off-Balance Sheet Position - 95,732 (5,459) 10,214 (88,428) - - 12,059
Derivative Financial Assets - 4,455,567 587,339 489,237 681,071 597,859 - 6,811,073
Derivative Financial Liabilities - 4,359,835 592,798 479,023 769,499 597,859 - 6,799,014
Non-Cash Loans 2,082,767 238,777 560,449 2,200,668 737,914 98,410 - 5,918,985
(*) Those assets such as tangible assets, investments in subsidiaries and associates, office supply inventory, prepaid expenses and non-performing loans,
which are necessary for continuation of banking activities, unavailable for conversion into cash in a short term and other assets account and equity
accounts are classified under “Undistributed”.
(**) Overdraft Loans are presented in 1-3 months period.
(***) The subordinated loans in balance sheet also includes the TRL 943,947 Thousand bonds issued as subordinated loans.
(****) TRL 214,467 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
53
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
VI. Explanations Related to Consolidated Leverage Ratio
a. Information on subjects that causes difference in leverage ratio between current and
prior periods
The Group’s consolidated leverage ratio calculated according to “Regulation on Measurement and Assessment
of Leverage Ratios of Banks” is 5.42 % (31 December 2018 – 6.27 %). Change in the leverage ratio is mainly
due to the increase of the on balance sheet assets. The minimum leverage ratio set by the above mentioned
regulation is 3 %.
b. Comparison table of total assets and total risk amounts in the financial statements
prepared in accordance with TAS :
Current Period (**) Prior Period (**)
Total assets in the consolidated financial statements prepared in accordance with
TAS (*) 33,028,923 33,186,347
Differences between the total assets in the consolidated financial statements
prepared in accordance with TAS and the total assets in the consolidated financial
statements prepared in accordance with Communique on Preparation of
Consolidated Financial Statements of the Banks 64,139 56,661
Differences between the balances of derivative financial instruments and the
credit derivatives in the consolidated financial statements prepared in accordance
with the Communique on Preparation of Consolidated Financial Statements of the
Banks and their risk exposures (132,771) (262,411)
Differences between the balances of securities financing transactions in the
consolidated financial statements prepared in accordance with the Communique
on Preparation of Consolidated Financial Statements of the Banks and their risk
exposures 42,565 4,380
Differences between off- balance sheet itmes in the consolidated financial
statements prepared in accordance with the Communique on Preparation of
Consolidated Financial Statements of the Banks and their risk exposures 2,855,045 2,881,188
Other differences in the consolidated financial statements prepared in accordance
with the Communique on Preparation of Consolidated Financial Statements of the
Banks and their risk exposures -
Total Risk 42,896,167 42,062,407
(*) The consolidated financial statements as of 31 December 2018 in current period and 31 December 2017 in prior period prepared in
accordance with the sixth paragraph of the Article 5 of the Communique on Preparation of Consolidated Financial Statements of the Banks.
(**) The arithmetic average of the last 3 months in the related periods.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
54
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
VI. Explanations Related to Consolidated Leverage Ratio (cont’d)
c. Disclosure of Leverage Ratio template
On-balance sheet assets Current Period (*) Prior Period (*)
1
On-balance sheet items (excluding derivative financial instruments
and credit derivatives but including collateral) 33,511,597 33,435,723
2 (Assets deducted in determining Tier 1 capital) (418,943) (410,250)
3 Total on-balance sheet risks (sum of lines 1 and 2) 33,092,654 33,025,473
Derivative financial instruments and credit derivatives
4
Replacement cost associated with all derivative instruments and
credit derivatives 213,779 502,592
5
Add-on amounts for PFE associated with all derivative instruments
and credit derivatives 88,827 90,884
6
Total risks of derivative financial instruments and credit derivatives
(sum of lines 4 to 5) 302,606 593,476
Securities or commodity financing transactions (SCFT)
7 Risks from SCFT assets - -
8 Risks from brokerage activities related exposures 42,565 4,380
9
Total risks related with securities or commodity financing
transactions (sum of lines 7 to 8) 42,565 4,380
Other off-balance sheet transactions
10 Gross notional amounts of off-balance sheet transactions 9,898,279 8,923,422
11 (Adjustments for conversion to credit equivalent amounts) (439,937) (484,344)
12 Total risks of off-balance sheet items (sum of lines 10 and 11) 9,458,342 8,439,078
Capital and total risks
13 Tier 1 capital 2,322,451 2,636,681
14 Total risks (sum of lines 3, 6, 9 and 12) 42,896,167 42,062,407
Leverage ratio
15 Leverage ratio 5.42 6.27
(*) Amounts in the table are three-month average amounts
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
55
SECTION FOUR (cont’d)
INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION AND RISK
MANAGEMENT (cont’d)
VII. Explanations Related to Consolidated Risk Management
Notes and explanations in this section have been prepared in accordance with the Communiqué on ‘‘Disclosures
about Risk Management to Be Announced to Public by Banks’’ that have been published in the Official Gazette
no. 29511 on 23 October 2015.
a. Risk Management Approach and Risk Weighted Amounts
a.1. Overview of Risk Weighted Amount
a b c
Risk Weighted Amount
Minimum
capital
requirement
Current Period Prior Period Current Period
1 Credit risk (excluding counterparty credit risk) (CCR) 22,198,655 21,508,128 1,775,892
2 Standardised approach (SA) 22,198,655 21,508,128 1,775,892
3 Internal rating-based (IRB) approach -
4 Counterparty credit risk 159,671 272,701 12,774
5
Standardised approach for counterparty credit
risk (SA-CCR) 159,671 272,701 12,774
6 Internal model method (IMM) - - -
7
Basic risk weight approach to internal models equity position in the banking
account - - - 8 Investments made in collective investment companies – look-through approach - - -
9 Investments made in collective investment companies – mandate-based approach - - -
10
Investments made in collective investment companies – 1250% weighted risk
approach - - -
11 Settlement risk - - -
12 Securitization positions in banking accounts - - -
13 IRB ratings-based approach (RBA) - - -
14 IRB Supervisory Formula Approach (SFA) - - -
15 SA/simplified supervisory formula approach (SSFA) - - -
16 Market risk 423,075 458,012 33,846
17 Standardised approach (SA) 423,075 458,012 33,846
18 Internal model approaches (IMM) -
19 Operational Risk 2,865,611 2,546,198 229,249
20 Basic Indicator Approach 2,865,611 2,546,198 229,249
21 Standart Approach - - -
22 Advanced measurement approach - - -
23
The amount of the discount threshold under the equity
(subject to a 250% risk weight) - - -
24 Floor adjustment - - -
25 Total (1+4+7+8+9+10+11+12+16+19+23+24) 25,647,012 24,785,039 2,051,761
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
56
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk
b.1) Credit quality of assets
Current Period
Gross carrying value in financial statements
prepared in accordance witlı Tıırkish Accounting
Standards (TAS) Alliances/amortisation
and impairments Net values
Defaulted Non-defaıılted
1 Loans 1,622,932 21,833,284 1,751,672 21,704,544
2 Debt securities - 10,622,941 18,198 10,604,743
3 Off-balance sheet exposures 157,408 8,305,697 81,760 8,381,345
4 Total 1,780,340 40,761,922 1,851,630 40,690,632
Prior Period
Gross carrying value in financial statements
prepared in accordance witlı Tıırkish Accounting
Standards (TAS)
Alliances/amortisation
and impairments Net values
Defaulted Non-defaıılted
1 Loans 1,345,677 22,250,503 986,482 22,609,698
2 Debt securities - 10,609,374 - 10,609,374
3 Off-balance sheet exposures 135,706 8,840,894 46,275 8,930,325
4 Total 1,481,383 41,700,771 1,032,757 42,149,397
b.2) Changes in stock of default loans and debt securities
Current Period Prior Period
1
Defaulted loans and debt securities at end of the previous reporting
period 1,345,677 1,164,608
2 Loans and debt securities that have defaulted since the last reporting period 646,910 1,023,866
3 Receivables back to non-defaulted status - -
4 Amounts written off (202,991) (102,505)
5 Other changes (166,664) (740,292)
6 Defaulted loans and debt securities at end of the reporting period 1,622,932 1,345,677
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
57
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk (cont’d)
b.3) Credit risk mitigation techniques
Current
Period
Exposures unsecured
(according to TAS)
Exposures
secured by
collateral
Amount of
Collateral
Exposures
secured by
financial
guarantees
Amount of
Financial
guarantees
Exposures
secured by
credit
derivatives
Amounts
secured by
credit
derivatives
1 Loans 12,620,967 9,212,317 6,764,483 - - - -
2 Debt
securities 10,622,941 - - - - - -
3 Total 23,243,908 9,212,317 6,764,483 - - - -
4 Of which defaulted 1,780,340 - - - - - -
Prior
Period
Exposures unsecured
(according to TAS)
Exposures
secured by
collateral
Amount of
Collateral
Exposures
secured by
financial
guarantees
Amount of
Financial
guarantees
Exposures
secured by
credit
derivatives
Amounts
secured by
credit
derivatives
1 Loans 13,328,364 8,922,139 7,367,379 - - - -
2 Debt
securities 10,609,374 - - - - - -
3 Total 23,937,738 8,922,139 7,367,379 - - - -
4 Of which defaulted 1,090,262 255,415 531,644 - - - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
58
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk (cont’d)
b.4) Credit risk exposure and credit risk mitigation techniques
Current Period Exposures before CCF and
credit risk mitigation
Exposures post-CCF and
credit risk mitigation
Risk
weighted amounts
and Risk weighted
amounts density
Risk classes
On-balance
sheet anıoıınt
Off-balance
Slıeet amount
On-balance
Sheet amount
Off-balance
Sheet amount
Risk
weighted
amounts
Risk weighted
amounts
density
1
Exposures to sovereigns and
their central banks 6,178,832 6,043 6,178,832 6,043 190,258 3.08%
2
Exposures to regional and local
governments 59,711 88 59,711 44 31,004 51.92%
3
Exposures to administrative
bodies and non-commercial
entities 95,093 14,769 95,093 7,150 96,636 101.62%
4
Exposures to multilateral
development banks - - - - - -
5
Exposures to intemational
organizations - - - - - -
6
Exposures to banks and
brokerage houses 1,542,074 1,238,176 1,542,074 998,059 1,173,831 76.12%
7 Exposures to corporates 9,025,551 3,883,337 9,025,551 1,755,754 9,457,048 104.78%
8 Retail exposures 6,347,086 2,600,903 6,347,086 915,461 4,258,401 67.09%
9
Exposures secured by
residential property 1,780,411 250,053 1,780,411 132,147 701,477 39.40%
10
Exposures secured by
commercial property 4,225,150 387,562 4,225,150 209,738 2,259,649 53.48%
11 Past-due items 490,095 - 490,095 - 365,700 74.62%
12
Exposures in high-risk
categories 62,328 - 62,328 - 93,492 150.00%
13
Exposures in tlıe form of bonds
secured by mortgages - - - - - -
14
Short term exposures to banks,
brokerage houses and corporates - - - - - -
15
Exposures in tlıe form of
collective investment
undertakings - - - - - -
16 Other exposures 3,187,613 528 3,187,252 108 2,721,060 85.37%
17 Equity share investments - - - - - -
18 Total 32,993,944 8,381,459 32,993,583 4,024,504 21,348,556 64.71%
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
59
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk (cont’d)
b.4) Credit risk exposure and credit risk mitigation techniques (cont’d)
Prior Period Exposures before CCF and
credit risk mitigation
Exposures post-CCF and
credit risk mitigation
Risk
weighted amounts
and Risk weighted
amounts density
Risk classes
On-balance
sheet anıoıınt
Off-balance
Slıeet amount
On-balance
Sheet amount
Off-balance
Sheet amount
Risk
weighted
amounts
Risk weighted
amounts
density
1
Exposures to sovereigns and
their central banks 6,642,781 5,954 6,642,781 5,954 330,010 4.97%
2
Exposures to regional and local
governments 61,155 40 61,155 20 31,888 52.14%
3
Exposures to administrative
bodies and non-commercial
entities 109,092 14,605 109,092 7,108 113,157 103.73%
4
Exposures to multilateral
development banks - - - - - -
5
Exposures to intemational
organizations - - - - - -
6
Exposures to banks and
brokerage houses 1,314,916 1,721,600 1,314,916 1,502,182 1,265,272 96.22%
7 Exposures to corporates 9,818,855 4,270,698 9,818,855 1,872,326 9,763,917 99.44%
8 Retail exposures 6,143,092 2,285,131 6,143,092 783,378 3,713,691 60.45%
9
Exposures secured by
residential property 1,667,764 245,981 1,667,764 131,571 659,174 39.52%
10
Exposures secured by
commercial property 4,057,250 385,812 4,057,250 244,500 2,193,514 54.06%
11 Past-due items 325,387 - 325,387 - 236,432 72.66%
12
Exposures in high-risk
categories 66,941 - 66,941 - 100,378 149.95%
13
Exposures in tlıe form of bonds
secured by mortgages - - - - - -
14
Short term exposures to banks,
brokerage houses and corporates - - - - - -
15
Exposures in tlıe form of
collective investment
undertakings - - - - - -
16 Other exposures 3,012,057 504 3,011,711 102 2,368,484 78.64%
17 Equity share investments - - - - - -
18 Total 33,219,290 8,930,325 33,218,944 4,547,141 20,775,917 62.54%
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
60
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT (cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk (cont’d)
b.5) Exposures by asset classes and risk weights
Current Period 0% 10% 20% 35%
50%
secured by
property
mortgage 75%
100% 150% 200% Other
Total risk
amount
Regulatory portfolio
1 Exposures to sovereigns and their central banks 5,815,050 - - - 359,134 - 10,691 - - - 6,184,875
2 Exposures to regional and local government - - - - 57,499 - 2,256 - - - 59,755
3
Exposures to administrative bodies and non-commercial
entities 5,607 - - - - - 96,636 - - - 102,243
4 Exposures to multilateral development banks - - - - - - - - - - -
5 Exposures to international organizations - - - - - - - - - - -
6 Exposures to banks and brokerage houses 115,378 - 160,822 - 2,244,533 - 19,400 - - - 2,540,133
7 Exposures to corporates 1,053,541 - 163,070 - 279,744 1,559 9,283,391 - - - 10,781,305
8 Retail exposures 1,554,652 - 6,036 - 77,510 5,623,641 708 - - - 7,262,547
9 Exposures secured by residential property - - - 1,862,421 1,016 - 49,121 - - - 1,912,558
10 Exposures secured by commercial property - - - - 4,350,479 - 84,409 - - - 4,434,888
11 Past-due items - - - - 248,877 34 241,080 104 - - 490,095
12 Exposures in high-risk categories - - - - - - - 62,328 - - 62,328
13 Exposures in the form of bonds secured by mortgages - - - - - - - - - - -
14
Short term exposures to banks, brokerage houses and
corporates - - - - - - - - - - -
15
Exposures in the form of collective investment
undertakings - - - - - - - - - - -
16 Equity share investments - - - - - - - - - - -
17 Other exposures 312,355 - 112 - 307,711 - 2,567,182 - - - 3,187,360
18 Total 8,856,583 - 330,040 1,862,421 7,926,503 5,625,234 12,354,874 62,432 - - 37,018,087
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
61
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT (cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
b) Explanations on Credit Risk (cont’d)
b.5) Exposures by asset classes and risk weights (cont’d)
Prior Period 0% 10% 20% 35%
50%
secured by
property
mortgage 75%
100% 150% 200% Other
Total risk
amount
Regulatory portfolio
1 Exposures to sovereigns and their central banks 6,002,543 - - - 632,365 - 13,827 - - - 6,648,735
2 Exposures to regional and local government - - - - 58,570 - 2,605 - - - 61,175
3
Exposures to administrative bodies and non-commercial
entities 3,044 - - - - - 113,156 - - - 116,200
4 Exposures to multilateral development banks - - - - - - - - - - -
5 Exposures to international organizations - - - - - - - - - - -
6 Exposures to banks and brokerage houses 232,116 - 130,991 - 2,429,836 - 24,155 - - - 2,817,098
7 Exposures to corporates 1,666,776 - 157,065 - 268,857 1,627 9,596,856 - - - 11,691,181
8 Retail exposures 1,932,088 - 1,746 - 125,073 4,867,036 527 - - - 6,926,470
9 Exposures secured by residential property - - - 1,753,018 1,399 - 44,918 - - - 1,799,335
10 Exposures secured by commercial property - - - - 4,216,471 - 85,279 - - - 4,301,750
11 Past-due items - - - - 177,947 - 147,404 36 - - 325,387
12 Exposures in high-risk categories - - - - - 45 - 66,896 - - 66,941
13 Exposures in the form of bonds secured by mortgages - - - - - - - - - - -
14
Short term exposures to banks, brokerage houses and
corporates - - - - - - - - - - -
15
Exposures in the form of collective investment
undertakings - - - - - - - - - - -
16 Equity share investments - - - - - - - - - - -
17 Other exposures 523,721 - 107 - 239,047 - 2,248,938 - - - 3,011,813
18 Total 10,360,288 - 289,909 1,753,018 8,149,565 4,868,708 12,277,665 66,932 - - 37,766,085
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
62
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk
c.1) Analysis of counterparty credit risk exposure by approach
Current Period
Replacement
cost
Potential
future
exposure EEPE
Alpha used for
computing
regulatory
exposure at
default
Exposure
at default
after CRM RWA
1
Standardised Approach -
Counterparty credit risk (for
derivatives) 327,421 212,249 - 1.4 237,519 136,912
2
Internal Model Method (for
repo transactions, securities
or commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
3
Simple Approach for credit
risk mitigation (for repo
transactions, securities or
commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
4
Comprehensive Approach
for credit risk mitigation (for
repo transactions, securities
or commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
5
Value-at-Risk (VaR) for repo
transactions, securities or
commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions - - - - 451 34
6 Total 327,421 212,249 - - 237,970 136,946
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
63
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.1) Analysis of counterparty credit risk exposure by approach (cont’d)
Prior Period
Replacement
cost
Potential
future
exposure EEPE
Alpha used for
computing
regulatory
exposure at
default
Exposure
at default
after CRM RWA
1 Standardised Approach -
Counterparty credit risk (for
derivatives) 771,456 170,726 - 1.4 453,430 251,090
2
Internal Model Method (for
repo transactions, securities
or commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
3
Simple Approach for credit
risk mitigation (for repo
transactions, securities or
commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
4
Comprehensive Approach
for credit risk mitigation (for
repo transactions, securities
or commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions) - - - - - -
5
Value-at-Risk (VaR) for repo
transactions, securities or
commodity lending or
borrowing transactions, long
settlement transactions and
securities financing
transactions - - - - 319 99
6 Total 771,456 170,726 - - 453,749 251,189
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
64
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.2) Capital requirement for credit valuation adjustment:
Current Period Prior Period
EAD post-
credit risk
mitigation
Risk weighted
amounts
EAD post-
credit risk
mitigation
Risk weighted
amounts
Total portfolios subject to the Advanced credit
valuation adjustment capital obligation
1 (i) VaR component (including the 3×multiplier) - - - -
2
(ii) Stressed VaR component (including the
3×multiplier) - - - -
3
All portfolios subject to the Standardised credit
valuation adjustment capital obligation 920,960 73,677 886,497 70,920
4 Total subject to the credit valuation adjustment
capital obligation 920,960 73,677 886,497 70,920
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
65
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT (cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.3) Counterparty credit risk exposures by risk class and risk weights
Current Period 0% 10% 20% 50% 75% 100%
150% Other
Total credit
exposure
Risk weight/ Regulatory portfolio
Exposures to sovereignsand their central banks 283 - - 6,043 - - - - 3,022
Exposures to regional and local governments - - - - - - - - -
Exposures to administrative bodies
and non-commercial entities - - - - - - - - -
Exposures to multilateral development banks - - - - - - - - -
Exposures to international organizations - - - - - - - - -
Exposures to banks and brokerage houses - - 6,936 182,966 - - - - 92,870
Exposures to corporates - - - 40 - 39,028 - - 39,048
Retail exposures - - - - 2,674 - - - 2,006
Exposures secured by residential property - - - - - - - - -
Exposures secured by commercial property - - - - - - - - -
Past-due items - - - - - - - - -
Exposures in high-risk categories - - - - - - - - -
Exposures in the form of bonds secured by
mortgages - - - - - - - - -
Short term exposures to banks, brokerage houses
and corporates - - - - - - - - -
Exposures in the form of collective investment
undertakings - - - - - - - - -
Equity share investments - - - - - - - - -
Other exposures - - - - - - - - -
Other assets - - - - - - - - -
Total 283 - 6,936 189,049 2,674 39,028 - - 136,946
(*)Total credit exposure: the amount relevant for the capital requirements calculation, having applied CRM techniques.
(**)Other assets: the amount excludes exposures to “Central counterparty” which is reported in Counterparty credit risk.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
66
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT (cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.3) Counterparty credit risk exposures by risk class and risk weights(cont’d)
Prior Period 0% 10% 20% 50% 75% 100%
150% Other
Total credit
exposure
Risk weight/ Regulatory portfolio
Exposures to sovereignsand their central banks - - - 5,954 - - - - 2,977
Exposures to regional and local governments - - - - - - - - -
Exposures to administrative bodies
and non-commercial entities - - - - - 1 - - 1
Exposures to multilateral development banks - - - - - - - - -
Exposures to international organizations - - - - - - - - -
Exposures to banks and brokerage houses - - 5,199 389,089 - - - - 195,584
Exposures to corporates - - - - - 49,954 - - 49,954
Retail exposures - - - - 3,564 - - - 2,673
Exposures secured by residential property - - - - - - - - -
Exposures secured by commercial property - - - - - - - - -
Past-due items - - - - - - - - -
Exposures in high-risk categories - - - - - - - - -
Exposures in the form of bonds secured by
mortgages - - - - - - - - -
Short term exposures to banks, brokerage houses
and corporates - - - - - - - - -
Exposures in the form of collective investment
undertakings - - - - - - - - -
Equity share investments - - - - - - - - -
Other exposures - - - - - - - - -
Other assets - - - - - - - - -
Total - - 5,199 395,043 3,564 49,955 - - 251,189
(*)Total credit exposure: the amount relevant for the capital requirements calculation, having applied CRM techniques.
(**)Other assets: the amount excludes exposures to “Central counterparty” which is reported in Counterparty credit risk.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
67
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.4) Collaterals for counterparty credit risk
Current Period Collateral for derivative transactions
Collateral for other
transactions
Fair value of collateral
received Fair value of collateral given Collateral
received
Collateral
given
Segregated Unsegregated Segregated Unsegregated
Cash-domestic currency - - - 37 - 40,647
Cash-foreign currency 129,142 - 313,131 - - -
Domestic sovereign bonds/bills - - 55,077 - - 1,306,585
Other sovereign bonds/bills - - - - - 311,130
Government agency bonds/bills - - - - - -
Corporate bonds/bills - - - - - -
Equity securities - - - - - -
Other collateral - - - - - 140,585
Total 217,522 - 546,650 37 - 1,798,948
Prior Period Collateral for derivative transactions
Collateral for other
transactions
Fair value of collateral
received Fair value of collateral given Collateral
received
Collateral
given
Segregated Unsegregated Segregated Unsegregated
Cash-domestic currency - - - 52 - 69,477
Cash-foreign currency 248,839 - 151,287 - - -
Domestic sovereign bonds/bills - - - - - 834,542
Other sovereign bonds/bills - - - - - 252,757
Government agency bonds/bills - - - - - -
Corporate bonds/bills - - - - - -
Equity securities - - - - - -
Other collateral - - - - - 140,501
Total 248,839 - 151,287 52 - 1,297,277
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
68
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
c) Explanations on Counterparty Credit Risk (cont’d)
c.5 ) Credit derivatives: None.
c.6) Exposures to central counterparties
Current Period Prior Period
a b a b
Exposure at
default (post
CRM) RWA
Exposure at default
(post CRM) RWA
1 Exposure to Qualified Central Counterparties
(total)
2
Exposures for trade risks at QCCPs (excluding
initial margin and default fund contributions); of
which - - - -
3 (i) OTC Derivatives - - - -
4 (ii) Other Financial Derivatives - - - -
5
(iii) Repo transactions, marketable securities or
EMTIA lending or borrowing transactions,
security transactions with credit 451 34 319 99
6
(iv) Netting sets where cross-product netting has
been approved - - - -
7 Segregated initial margin - - - -
8 Non-segregated initial margin - - - -
9 Pre-funded default fund contributions - - - -
10 Unfunded default fund contributions - - - -
11 Exposures to non- Qualified Central
Counterparties (total) - -
12
Exposures for trades at non-QCCPs (excluding
initial margin and default fund contributions); of
which - - - -
13 (i) OTC Derivatives - - - -
14 (ii) Exchange-traded Derivatives - - - -
15 (iii) Securities financing transactions - - - -
16
(iv) Netting sets where cross-product netting has
been approved - - - -
17 Segregated initial margin - - - -
18 Non-segregated initial margin - - - -
19 Pre-funded default fund contributions - - - -
20 Unfunded default fund contributions - - - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
69
SECTION FOUR (cont’d)
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT
(cont’d)
VIII. Explanations Related to Consolidated Risk Management (cont’d)
d) Explanations on Securitization The Bank has no securitization transactions.
e) Explanations on Market Risk
e.1) Market risk under standardised approach
Risk weighted amounts
Current Period Prior Period
Outright products 29,271 33,069
1 Interest rate risk (general and specific) 9,968 13,590
2 Equity risk (general and specific) - -
3 Foreign exchange risk 19,303 19,479
4 Commodity risk - -
Options 4,575 3,572
5 Simplified approach - -
6 Delta-plus method 4,575 3,572
7 Scenario approach - -
8 Securitisation - -
9 Total 33,846 36,641
VIII. Explanations Related to Transactions Made on Behalf of Others and Transactions Based
On Trust
The Parent Bank performs securities buying and selling transactions, brokerage and custody services on behalf
of customers. There are no transactions made with other financial institutions under the trust transaction contract and direct
financial services provided within this scope.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
70
SECTION FIVE
EXPLANATIONS AND DISCLOSURES ON THE
FINANCIAL STATEMENTS
I. Explanations Related to the Consolidated Assets
1. Information related to cash equivalents and the account of the Central Bank of the Republic of
Turkey (the “CBRT”) :
a) Information on Cash and Balances with the Central Bank of Turkey:
Current Period Prior Period
TRL FC TRL FC
Cash in TRL/Foreign Currency 109,784 205,046 133,420 392,847
Balances with the Central Bank of Turkey 521,349 2,522,097 796,773 2,296,190
Other - 7 - 7
Total 631,133 2,727,150 930,193 2,689,044
b) Information related to the account of the Central Bank of Turkey:
Current Period Prior Period
TRL FC TRL FC
Unrestricted demand deposit 521,349 2,505,117 796,773 1,978,035
Unrestricted time deposit - - - 2
Restricted time deposit - 16,980 - 318,153
Total 521,349 2,522,097 796,773 2,296,190
The reserve deposits include TRL 1,487,176 Thousand of FC unrestricted demand deposit (31 December 2018 – TRL 1,034,773 Thousand)
and TRL 521,149 Thousand (31 December 2018 – TRL 793,416 Thousand) of the TRL unrestricted demand deposit. TRL unrestricted
demand deposit includes the reserve deposit amount that is held in the Central Bank of the Turkish Republic on average.
CBRT amounts include the funds of Şekerbank (Kıbrıs) Ltd. held with the Central Bank of Turkish Republic of Northern Cyprus. The
Central Bank of Turkish Republic of Northern Cyprus amount is TRL 44,478 Thousand and it includes TRL 19,340 Thousand reserve
deposit amount (31 December 2018 – TRL 41,932 Thousand Central Bank amount and it includes TRL 17,047 Thousand reserve deposit
amount).
In accordance with the principles of the Communiqué numbered 2013/15 of The Central Bank of Turkey on "Required Reserves” the
required reserve ratios to be held in the Central Bank of Turkey vary according to the currency denomination and term of the liabilities
subject to the reserve requirements. Thus, the reserve requirement rate range between 1% - 7% (31 December 2018 – -1.5% - 8%) is
applied for TRL deposits, participation funds and other liabilities and 5% - 21% (31 December 2018 – 4% – 20%) for FX deposits,
participation funds and other liabilities.
The Central Bank of the Turkish Republic of Northern Cyprus, with the decision of the Board of Directors numbered 2018/1005, Legal
Reserves Ratiosubjected to separation According to the Deposit Maturity Group,TRL and FC deposits and other liabilities are applied in
the range of 4% - 7%.
2. Information on financial assets at fair value through profit and loss (net):
i. Information on financial assets at fair value through profit and loss given as collateral or blocked:
None (31 December 2018 – None).
ii. Financial assets at fair value through profit and loss subject to repurchase agreements:
Net book value of unrestricted financial assets at fair value through profit and loss is TRL 70,799
Thousand (31 December 2018 – TRL 85,589 Thousand).
iii. Positive differences related to derivative financial assets held-for-trading:
Derivative financial assets held for trading are classified in the financial statements as Fair Value of
Derivative financial assets through profit and loss.
Derivatives Held for Trading
Current Period Prior Period
TRL FC TRL FC
Forward Transactions - 40,135 - 53,261
Swap Transactions 105,917 5,055 160,213 152,620
Futures Transactions - - - -
Options 65 6,310 106 10,153
Other - - - -
Total 105,982 51,500 160,319 216,034
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
71
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
iv. Loans at fair value through profit and loss:
Current Period Prior Period
Opening Balance 221,879 266,683
Additions (+) 7,827 16,239
Change in Interest Rates (*) 120 (15,056)
Change in Credit Risk (**) 1,546 (3,369)
Impairment Provision (987) (152)
Collections (-) (15,918) (42,466)
Net Balance 214,467 221,879
(*) Change in interest rates shows the effect of TRLIBOR (basic interest rate) difference on loans at fair value through profit and loss
between two periods.
(**) Change in credit risk shows the effect of the difference of basic interest rates and similar loans interest rates on loans at fair value
through profit and loss.
As of 30 June 2019, the value of the loans amounting to TRL 214,467 Thousand (31 December 2018 – TRL
221,879 Thousand) and classified as Financial assets at Fair Value Throught Profit and Loss discounted using
the effective interest rate method is TRL 241,691 Thousand (31 December 2018 – TRL 235,302 Thousand).
3. Information on banks:
Information on banks account:
Current Period Prior Period
TRL FC TRL FC
Banks 31,200 456,410 34,699 171,320
Domestic 31,198 252,764 34,676 64,767
Foreign 2 203,646 23 106,553
Branches and head office abroad - - - -
Total 31,200 456,410 34,699 171,320
4. Information on Financial Assets at Fair Value Through Other Comprehensive Income:
a.1. Information on financial assets at fair value through other comprehensive income given as collateral or
blocked:
Current Period Prior Period
TRL FC TRL FC
Share certificates - - - -
Bonds, Treasury bills and similar investment
securities 182,925 - 171,631 -
Other - - - -
Total 182,925 - 171,631 -
a.2. Financial assets at fair value through other comprehensive income subject to repurchase agreements:
Current Period Prior Period
TRL FC TRL FC
Government bonds 195,360 - - -
Treasury bills - - - -
Other public sector debt securities - - - -
Bank bonds and bank guaranteed bonds - - - -
Asset backed securities - - - -
Other - - - -
Total 195,360 - - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
72
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
4. Information on Financial Assets at Fair Value Through Other Comprehensive Income(cont’d):
Net book value of unrestricted financial assets at fair value through other comprehensive income is TRL 224,087
Thousand (31 December 2018 - TRL 406,051 Thousand).
b. Information on financial assets at fair value through other comprehensive income portfolio:
Current Period Prior Period
Debt securities 578,577 563,641
Quoted on a stock exchange 578,417 563,481
Not quoted on a stock exchange 160 160
Share certificates 31,333 24,700
Quoted on a stock exchange - -
Not quoted on a stock exchange 31,333 24,700
Impairment provision(-) (7,538) (10,659)
Total 602,372 577,682
5. Information on loans:
a. Information on all types of loans and advances given to shareholders and employees of the Group:
Current Period Prior Period
Cash Loans Non-Cash Loans Cash Loans Non-Cash Loans
Direct loans granted to shareholders 509 - 447 11
Corporate shareholders - - - -
Individual shareholders 509 - 447 11
Indirect loans granted to shareholders 420,972 19,048 898,986 18,697
Loans granted to employees 22,556 - 21,760 46
Total 444,037 19,048 921,193 18,754
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
73
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans(cont’d):
b. Information on standart loans and restructured loans under close monitoring: (*)
Cash loans Standard loans
Loans
under close monitoring
Out of the scope of Restructuring
Restructured
Amendment of Contract
Conditions
Refinanced
Non-specialized loans 16,363,975 1,469,953 487,152 1,168,463
Corporation loans 95,041 - 13,333 1,510
Export loans 4,742,527 96,653 - 31,844
Import loans 9,450 690 - 918
Loans given to
financial sector 94,973 142 - -
Consumer loans 832,274 46,109 8,098 9,459
Credit cards 248,286 10,015 - -
Other 10,341,424 1,316,344 465,721 1,124,732
Specialized loans 2,008,391 217,857 - 108,463
Other receivables 1,075 7,955 - -
Total 18,373,441 1,695,765 487,152 1,276,926
(*) TRL 200,694 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements.
Current Period Prior Period
Standard loans
Loans
under close
monitoring
Standard loans
Loans
under close monitoring
12 Months Expected Loss 131,119 - 112,960 -
Significant Increase in Credit Risk - 510,948 - 529,518
c. Loans and other receivables according to their maturity structure:
Standard Loans
Loans
Under Close Monitoring
Out of the Scope of
Restructuring Restructured
Short-term loans and other receivables 6,558,287 291,054 182,417
Medium and Long-term loans 11,815,154 1,404,711 1,581,661
Total 18,373,441 1,695,765 1,764,078
(*) TRL 200,694 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
74
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans (cont’d):
d. Information on consumer loans, individual credit cards, personnel loans and credit cards given to
personnel:
Short Term
Medium and
Long Term
Total
Consumer Loans-TRL 13,352 737,467 750,819
Mortgage Loans - 227,427 227,427
Vehicle Loans 262 8,226 8,488
General Purpose Loans 13,087 477,795 490,882
Other 3 24,019 24,022
Consumer Loans –Indexed to FC - 241 241
Mortgage Loans - 241 241
Vehicle Loans - - -
General Purpose Loans - - -
Other - - -
Consumer Loans-FC - 32,317 32,317
Mortgage Loans - 26,175 26,175
Vehicle Loans - 1,077 1,077
General Purpose Loans - 5,065 5,065
Other - - -
Individual Credit Cards-TRL 151,435 - 151,435
With Installments 40,142 - 40,142
Without Installments 111,293 - 111,293
Individual Credit Cards-FC 110 - 110
With Installments - - -
Without Installments 110 - 110
Personnel Loans-TRL 662 9,044 9,706
Mortgage Loans - 43 43
Vehicle Loans - - -
General Purpose Loans 661 7,196 7,857
Other 1 1,805 1,806
Personnel Loans- Indexed to FC - - -
Mortgage Loans - - -
Vehicle Loans - - -
General Purpose Loans - - -
Other - - -
Personnel Loans-FC - 1,461 1,461
Mortgage Loans - 1,086 1,086
Vehicle Loans - - -
General Purpose Loans - 375 375
Other - - -
Personnel Credit Cards-TRL 7,374 - 7,374
With Installments 2,086 - 2,086
Without Installments 5,288 - 5,288
Personnel Credit Cards-FC 9 - 9
With Installments - - -
Without Installments 9 - 9
Overdraft Accounts-TRL(Real Person) (*) 98,062 3,334 101,396
Overdraft Accounts-FC (Real Person) - - -
Total 271,004 783,864 1,054,868
(*) As of 30 June 2019, overdraft accounts for real persons include TRL 4,515 Thousand personnel overdraft account.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
75
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans (cont’d):
e. Information on commercial loans with installments and corporate credit cards:
Short Term
Medium and
Long Term
Total
Commercial loans with installment facility-TRL 370,950 4,695,679 5,066,629
Business Loans - 9,578 9,578
Vehicle Loans 3,558 43,843 47,401
General Purpose Loans 349,673 4,642,258 4,991,931
Other 17,719 - 17,719
Commercial loans with installment facility - Indexed to FC - 975,316 975,316
Business Loans - 1,670 1,670
Vehicle Loans - 13,698 13,698
General Purpose Loans - 959,948 959,948
Other - - -
Commercial loans with installment facility –FC 90,548 766,791 857,339
Business Loans - - -
Vehicle Loans - 682 682
General Purpose Loans 48,195 766,109 814,304
Other 42,353 - 42,353
Corporate Credit Cards-TRL 99,372 - 99,372
With Installments 21,237 - 21,237
Without Installments 78,135 - 78,135
Corporate Credit Cards-FC 1 - 1
With Installments - - -
Without Installments 1 - 1
Overdraft Accounts-TRL (Legal Entity) 137,345 - 137,345
Overdraft Accounts-FC (Legal Entity) - - -
Total 698,216 6,437,786 7,136,002
f. Loans according to borrowers:
Current Period Prior Period
Public 51,297 56,303
Private 21,781,987 22,183,841
Total 21,833,284 22,240,144
(*) TRL 200,694 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements (31
December 2018 – TRL 211,520 Thousand).
g. Domestic and foreign loans:
Current Period Prior Period
Domestic loans 21,779,641 22,186,916
Foreign loans 53,643 53,228
Total 21,833,284 22,240,144
(*) TRL 200,694 Thousand of loans is shown under Financial Assets at Fair Value through Profit and Loss in the financial statements(31
December 2018 – TRL 211,520 Thousand).
h. Loans granted to subsidiaries and associates: None (31 December 2018 - None).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
76
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans (cont’d):
i. Impaired Loans (Stage 3) provisions provided against loans:
Current Period Prior Period
Loans with limited collectability 47,660 40,689
Loans with doubtful collectability 206,154 125,649
Uncollectible loans 855,791 820,144
Total 1,109,605 986,482
j. Information on non-performing loans (Net):
j.1. Information on non-performing loans and restructured loans:
III. Group: IV. Group: V. Group
Loans with limited
collectability
Loans with doubtful
collectability
Uncollectable loans
Current Period
Gross amounts before Provisions(*) 109,725 416,324 1,096,883
Loans which are restructured 6,507 33,467 20,788
Prior Period
Gross amounts before Provisions(*) 99,764 230,961 1,014,952
Loans which are restructured 6,189 27,250 22,699
j.2. The movement of non-performing loans:
III. Group IV. Group V. Group
Loans with
limited
collectability
Loans with doubtful
collectability
Uncollectable loans
Prior period end balance 99,764 230,961 1,014,952
Additions (+) 296,442 273,864 76,604
Transfers from other categories of non-performing loans (+) - 212,519 216,669
Transfers to other categories of non-performing loans (-) 212,519 216,669 -
Collections (-) 31,227 55,456 79,981
Write-off (-) - - -
Sold (-) 42,735 28,895 131,361
Corporate and commercial loans 42,735 28,812 115,353
Retail loans - 39 11,129
Credit cards - 44 4,879
Current period end balance (*) 109,725 416,324 1,096,883
Provision (-) (*) 47,660 206,154 855,791
Net Balances on Balance Sheet 62,065 210,170 241,092
(*) TRL 13,773 Thousand (31 December 2018- TRL 10,359 Thousand ) net non-performing loans have been classified under “Financial
Assets at Fair Value through Profit and Loss”have been made.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
77
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans (cont’d):
j.3. Informations on non-performing loans and other receivables in foreign currency: In the current
period the Group has TRL 10,046 Thousand non-performing foreign currency loans and specific
provision for these loans amounting to TRL 10,046 Thousand (31 December 2018- TRL 9,219
Thousand non-performing foreign currency loans and TRL 9,219 Thousand specific provision).
j.4. Information regarding gross and net amounts of non-performing loans with respect to user groups:
III. Group IV. Group V. Group
Loans with limited
collectability
Loans with doubtful
collectability
Uncollectable loans
Current Period (Net) (*)
Loans to Real Persons and Legal Entities (Gross) 109,725 416,324 1,096,883
Provision (-) 47,660 206,154 855,791
Loans to Real Persons and Legal Entities (Net) 62,065 210,170 241,092
Banks (Gross) - - -
Provision (-) - - -
Banks (Net) - - -
Other Loans (Gross) - - -
Provision (-) - - -
Other Loans (Net) - - -
Prior Period (Net) (*)
Loans to Real Persons and Legal Entities (Gross) 99,764 230,961 1,014,952
Provision (-) 40,689 125,649 820,144
Loans to Real Persons and Legal Entities (Net) 59,075 105,312 194,808
Banks (Gross) - - -
Provision (-) - - -
Banks (Net) - - -
Other Loans (Gross) - - -
Provision (-) - - -
Other Loans (Net) - - -
j.5. Information on interest accruals for non-performing loans, rediscounts and valuation differences
and their provisions regarding the banks that allocate expected loan loss provisions according to
TFRS 9:
III. Grup IV. Grup V. Grup
Loans with limited
collectability
Loans with doubtful
collectability
Uncollectable loans
Current Period (Net)
Interest accruals, rediscounts and valuation differences 5,599 42,306 20,922
Provisions (-) 5,599 42,306 20,922
Prior Period (Net)
Interest accruals, rediscounts and valuation differences 6,812 15,415 2,449
Provisions (-) 6,812 15,415 2,449
k. Main principles of uncollectable loans and receivables:
The Parent Bank's management has adopted a provision policy for non-performing loans in accordance
with the Regulation on the Procedures and Principles Regarding Classification of Loans and Provisions to
be Reserved by BRSA (“Regulation”).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
78
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
5. Information on loans (cont’d):
l. Explanations on write-off policy:
The Parent Bank sold uncollectable non-performing loans amounting to TRL 202,991 Thousand to
Gelecek Varlık Yönetim A.Ş. (31 December 2018 - The Parent Bank sold uncollectable non-
performing loans amounting to TRL 92,492 Thousand for total cash amount of TRL 2,150 Thousand to
Birleşim Varlık Yönetim A.Ş. As of 28 November 2018, Şeker Faktoring A.Ş sold its receivables
amounting to TRL 10,013 Thousand through its revenue share agreement for total cash amount of
TRL 64 Thousand to Sümer Varlık Yönetim A.Ş. On 26 September 2018, Şeker Faktoring A.Ş.
liquidated TRL 52 Thousand from its non-performing receivables in accordance with the decision of
the Board of Directors).
6. Information on Financial Assets at Amortised Cost:
a.1. Information on investments at amortised cost given as collateral or blocked:
Current Period Prior Period
Treasury Bill - -
Bond and Similar Securities 1,469,801 957,904
Other - -
Total 1,469,801 957,904
a.2. Financial assets at amortised cost subject to repurchase agreements are TRL 119,231 Thousand (31
December 2018 - TRL 131,270 Thousand).
b. Information on public sector debt investments at amortised cost:
Current Period Prior Period
Government Bonds 1,969,708 2,447,744
Treasury Bills 318,397 293,076
Other Public Sector Debt Securities - -
Total 2,288,105 2,740,820
Net book value of unrestricted financial assets at amortised cost is TRL 1,446,941 Thousand (31 December
2018 - TRL 2,339,548 Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
79
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
6. Information on Financial Assets at Amortised Cost (cont’d):
c. Information on financial assets at amortised costs:
Current Period Prior Period
Debt Securities 3,046,567 3,435,585
Quoted on a stock exchange 2,299,213 2,749,702
Not quoted on a stock exchange 747,354 685,883
Impairment Provision (-) (10,594) (6,863)
Total 3,035,973 3,428,722
d. Movement of financial assets at amortised costs:
Current Period Prior Period
Beginning Balance 3,428,722 1,355,739
TFRS 9 Impact - 1,136,612
Foreign Exchange Differences in Monetary Assets 87,678 215,449
Purchases during the year 4,236 367,015
Disposals through Sales and Amortisation (372,726) (3,686)
Provision reversal / Impairment provision (-) (3,731) (3,552)
Revaluation Effect (108,206) 361,145
Total 3,035,973 3,428,722
7. Information on unconsolidated associates (Net):
a) Information on associates:
Seltur Turistik İşletmeler Yatırım A.Ş. is not consolidated since the Bank does not have control power
and it is not a financial entity.
Description Address (City/ Country)
Bank’s Share
Percentage-If Different
Voting Percentage (%)
Bank’s Risk Group Share
Percentage (%)
Seltur Turistik İşletmeler Yatırım A.Ş.(*) Muğla/Turkey 11.32 11.43
(*) Unaudited financial information of the associate as of 31 December 2018 is stated below.
Total
Asset
Shareholders’
Equity Tangible Assets
Interest
Income
Income from
Marketable Securities
Portfolio
Current
Period
Profit/Loss
Prior Period
Profit/Loss Fair Value
43,903 35,154 36,791 214 - 2,657 (39,341) 296,942
b) Information on consolidated associates: None.
c) Information on associates: There is no consolidated associate.
d) Measurement of associates: Measured with cost amounts.
e) Sectoral information and the related carrying amounts on consolidated associates: None.
f) Associates quoted to stock exchange: None.
g) Information on associates which are sold in the current period: None.
h) Information on associates purchased in the current period: None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
80
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
8. Information on subsidiaries (Net):
a. Information related to consolidated equity components of subsidiaries (*):
The Parent Bank does not have any capital requirements arising from subsidiaries that are included in
the consolidated capital adequacy standard ratio. The capital information of the significant subsidiaries
is presented in the following table.
Şekerbank
Kıbrıs
Ltd.
Şeker
Finansal
Kiralama
A.Ş.
Şekerbank
International
Banking
Unit Ltd.
Şeker
Yatırım
Menkul
Değerler A.Ş.
Şeker
Faktoring
A.Ş.
Şeker
Finansman
A.Ş.
Zahlungsdienste
GmbH Der
Şekerbank T.A.Ş.
CORE CAPITAL
Paid in Capital 28,554 66,808 28,776 31,195 81,041 26,000 1,638
Share Premiums - 1,208 - - - - -
Other Comprehensive
Income/Expense Items not to be
Reclassified to Profit or Loss - - 5,374 (369) - - (348)
Legal Reserves 1,910 7,822 6,036 2,308 2,059 614 -
Extraordinary Reserves 1 10,021 - 4,991 4,913 (17,208) -
Other Comprehensive
Income/Expense Items to be
Reclassified to Profit or Loss - 12,730 - (205) 7,891 (41) -
Other capital reserves - (4,344) - - 12,901 - -
Other Income Reserves - - - - - - -
Profit/Loss (2,953) (29,592) (596) (5,943) (50,443) (7,253) (226)
Prior Years’ Profits and
Losses (2,427) (29,699) (1,266) (1,719) (31,701) - (227)
Current Year’s Profit ans
Losses (526) 107 670 (4,224) (18,742) (7,253) 1
Total Core Capital 27,512 64,653 39,590 31,977 58,362 2,112 1,064
TIER II CAPITAL - - - - - - -
CAPITAL 27,512 64,653 39,590 31,977 58,362 2,112 1,064
NET AVAILABLE EQUITY 27,512 64,653 39,590 31,977 58,362 2,112 1,064
(*)Financial information is audited as of 30 June 2019.
b. Information on the unconsolidated subsidiaries:
Description Address (City/
Country)
The Parent Bank’s
Share Percentage-If
Different Voting
Percentage (%)
The Parent
Bank’s Risk
Group Share
Percentage (%)
Sekar Oto Filo Yönetim Hizmetleri ve Ticaret A.Ş. Istanbul/Turkey - 99
Şeker Proje Geliştirme ve Gayrimenkul Yatırım A.Ş Istanbul/Turkey 100 100
(*)The unaudited financial information of the related subsidiaries as of 30 June2019 is presented below.
Total
Assets
Shareholders’
Equity
Tangible
Assets
Interest
Income
Income from
Marketable
Securities
Portfolio
Current Period
Profit/Loss
Prior Period
Profit/Loss
Fair
Value
Amount
of Equity
Needed
99,424 10,106 51,524 8 - (584) 1,038 74,871 -
592,080 591,391 508,974 229 - 2,059 (14,159) - -
Şeker Proje Geliştirme ve Gayrimenkul Yatırım A.Ş. has not been included for the consolidataion as it is not a
financial subsidiary and it is accounted with the cost method.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
81
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
8. Information on subsidiaries (Net) (cont’d):
c. Information on the consolidated subsidiaries:
Description Address (City/
Country)
Bank’s Share Percentage-If
Different Voting Percentage
(%)
Bank’s Risk Group
Share Percentage
(%)
Şekerbank Kıbrıs Ltd. Nicosia/TRNC 97.93 97.93
Şeker Finansal Kiralama A.Ş. Istanbul/ Turkey 54.13 65.70
Şekerbank International Banking Unit Ltd. Nicosia/TRNC 95.79 95.79
Şeker Yatırım Menkul Değerler A.Ş. Istanbul/ Turkey 99.04 100.00
Şeker Faktoring A.Ş. Istanbul/ Turkey 99.99 100.00
Şeker Finansman A.Ş. Istanbul/ Turkey 62.31 62.31
Zahlungsdienste GmbH Der Şekerbank T.A.Ş. Cologne/Germany 100.00 100.00
“Zahlungsdienste GMBH Der Şekerbank T.A.Ş.” (Zahlungsdienste)’s payment services activities as a
financial services branch in order to comply with the Payment Services Supervision Act (ZAG) have been
stopped and liquidation procedures are in progress.
d. Information on the consolidated subsidiaries with the order as presented in the table above:
Total Assets Shareholders’
Equity
Tangible
Assets
Interest
Income
Income from
Marketable Securities
Portfolio
Current Period
Profit/Loss
Prior Period
Profit/Loss
Fair Value
(*)
323,450 27,512 5,454 17,320 791 (526) (2,427) 13,555
545,973 64,653 43,086 27,570 - 107 (29,699) 53,054
45,795 39,590 3,640 1,536 - 670 (1,266) 19,554
187,255 31,977 20,761 14,617 1,164 (4,224) (1,719) 37,708
527,195 58,362 81,413 45,182 - (18,742) (31,701) 81,436
926,740 2,112 1,116 34,099 - (7,253) - 32,245
1,856 1,064 - - - 1 (227) -
(*)Fair values of the related subsidiaries are stated as of 31 December 2018.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
82
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
8. Information on subsidiaries (Net) (cont’d):
e. Movement of consolidated subsidiaries:
Current Period Prior Period
Balance at the beginning of the period 188,824 172,831
Movement during the period 1,261 15,993
Purchases 1,261 16,474
Bonus shares obtained - -
Share in the current year income - -
Sales - -
Revaluation increase - -
Provision reversal / Provision of Impairment (-) - (481)
Balance at the end of the period 190,085 188,824
Capital Commitment - -
Share percentage at the end of the period (%) 100 100
f. Measurement of consolidated subsidiaries:
Current Period Prior Period
Measured with cost 190,085 188,824
Measured with fair value - -
Measured with equity method - -
g. Sectoral information and the related carrying amounts on consolidated subsidiaries:
Subsidiaries Current Period Prior Period
Banks 20,077 20,077
Insurance Companies - -
Factoring Companies 81,427 81,427
Leasing Companies 38,585 37,324
Finance Companies 16,658 16,658
Other Financial Subsidiaries 33,338 33,338
h. Subsidiaries Quoted to Stock Exchange:
Current Period Prior Period
Quoted to Domestic Stock Exchange 38,585 37,324
Quoted to Foreign Stock Exchange - -
i. Information on Subsidiaries which are sold in the Current Period: None.
j. Information on Subsidiaries Purchased in the Current Period: None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
83
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
9. Information on entities under common control: None (31 December 2018 – None).
10. Information on finance lease receivables (Net):
Current Period Prior Period
Gross Leasing Investment 555,360 559,326
Unearned Financial Profit from Leasing (-) (109,518) (112,473)
Cancelled Leasing Amounts (-) - -
Net Leasing Investment 445,842 446,853
(*) Includes TRL 63,658 Thousand non-performing loans shown under Leasing Receivables on balance sheet (31 December2018 – 61,359).
11. Information on derivative financial assets for hedging purposes:
Derivative financial assets for hedging purposes are classified in the financial statement Derivative
Financial Assets at Fair Value Through Profit and Loss.
Derıvative Financial Assets For Hedging Purposes Current Period Prior Period
TRL FC TRL FC
Fair Value Hedge 5,212 - 6,866 -
Cashflow Hedge - - - -
Hedge of net investment risks in foreign operations - - - -
Total 5,212 - 6,866 -
12. Information on tangible assets:
a. If impairment amount on individual asset recorded or reversed in the current period is material for the
overall financial statements:
a.1. Events and conditions for recording or reversing impairment: None.
a.2. Amount of recorded or reversed impairment in the financial statements: None. (31 December 2018
- TRL 18,612 Thousand)
b. The impairment provision set or cancelled in the current period according to the asset groups not
individually significant but materially effecting the overall financial statements, and the reason and
conditions for this: None.
c. Pledges, mortgages and other restrictions on the tangible fixed assets, expenses arising from the
construction for tangible fixed assets, commitments given for the purchases of tangible fixed assets:
None.
13. Information on intangible assets:
The useful lives of the intangible fixed assets, which are amortized with straight-line amortization
method, are averagely 5 years.
a. Disclosures for book value, description and remaining depreciation time for a specific intangible fixed
asset that is material to the financial statements: None.
b. Disclosure for intangible fixed assets acquired through government grants and accounted for at fair value
at initial recognition: None.
c. The method of subsequent measurement for intangible fixed assets that are acquired through government
incentives and recorded at fair value at the initial recognition: None.
d. The book value of intangible fixed assets that are pledged or restricted for use: None.
e. Amount of purchase commitments for intangible fixed assets: None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
84
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Assets (cont’d)
13. Information on intangible assets (cont’d):
f. Amount of total research and development expenses recorded in statement of income within the period if
any: None.
g. Information on goodwill: None.
h. Movements on goodwill in the current period: None.
i. Information on revalued intangible assets according to their types: None.
14. Information on investment property:
As of 30 June 2019, the Group has TRL 65,337 Thousand of investment property. (31 December 2018- TRL
61,125 Thousand)
Investment Properties Current Period Prior Period
Cost
Opening Balance, 1 January 2019 61,125 -
Additions 4,212 12,292
Write off - -
Transfer - 23,075
Disposals (-) - -
Revaluation value increase/(decrease) - 25,758
Impairment Provision/Reversal - -
Closing Balance, 30 June 2019 65,337 61,125
15. Explanations on deferred tax asset:
a. As of 30 June 2019, deferred tax asset computed on the financial losses is TRL 239,941 Thousand.
Carried forward tax losses over which deferred tax asset computed is TRL 36,277 Thousand (31
December 2018 - Deferred tax asset computed on the financial losses is TRL 172,464 Thousand., carried
forward tax losses over which deferred tax asset computed is TRL 33,614 Thousand).
Current Period Prior Period
Tangible Assets Base Differences (15,956) (15,261)
Provisions (*) 248,120 237,215
Valuation of Financial Assets (41,656) (94,296)
Investment Incentive 8,755 6,784
Tax Deductions and Exceptions 4,401 4,408
Financial Losses 36,277 33,614
Net Deferred Tax Assets/(Liabilities) 239,941 172,464
(*) Provisions include employee benefit liabilities, credit card bonuses provisions, legal case provisions, employee termination benefit
provisions, retirement fund provision, SDIF premium provision, expected credit loss provisions and other provisions.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
85
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
I. Explanations Related to the Consolidated Assets (cont’d)
15. Explanations on deferred tax asset (cont’d):
b. Temporary differences over which deferred tax asset is not computed and recorded in the balance sheet in
prior periods: None (31 December 2018 – None).
c. Allowance for deferred tax and deferred tax assets from reversal of allowance: None (31 December 2018
– None).
d. Movement of deferred tax asset/(liability):
Deferred tax assets and liabilities for the current and previous periods are as follows:
Current Period Prior Period
Deferred Tax (Net), Beginning of the Period 172,464 84,801
Current Period (Expense)/Income 68,599 (683)
Deferred Tax Classified under Equity (1,122) (1,987)
TFRS 9 Impact - 90,333
Deferred Tax Asset (Liability), End of the Period 239,941 172,464
Şeker Finansal Kiralama A.Ş. recognized deferred tax asset amounting to TRL 8,755 Thousand (31 December
2018 - TRL 6,784 Thousand) as of 30 June 2019 financial statements assuming that it will take advantage of the
unused investment incentive in the subsequent periods.
16. Information on assets held for sale and discontinued operations:
Current Period Prior Period
Cost
Opening Balance, 1 January 2019 320,984 266,025
Additions 218,105 157,719
Write off - -
Transfer - -
Disposals (-) (29,047) (100,420)
Revaluation value increase/(decrease) - (2,599)
Impairment Provision/Reversal - 259
Closing Balance, 30 June 2019 510,042 320,984
17. Information on other assets:
Other assets do not exceed 10 % of the total balance sheet (excluding off balance sheet commitments).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
86
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities
1. Information on Maturity Structure Of Deposits
a) Information on maturity structure of deposits:
Current Period
Demand
7 Day Call
Accounts
Up to 1
Month
1-3
Month
3-6
Month
6 Month - 1
Year
1 Year
and Over
Accumulated
Deposits
Total
Saving deposits 365,846 - 749,023 7,302,838 232,333 74,419 514,357 7,082 9,245,898
Foreign currency
deposits 1,341,279 - 624,928 5,888,540 927,522 398,709 1,526,704 495 10,708,177
Residents in Turkey 1,224,017 - 563,858 5,222,443 787,463 186,872 318,061 466 8,303,180
Residents abroad 117,262 - 61,070 666,097 140,059 211,837 1,208,643 29 2,404,997
Public sector deposits 58,054 - 477 14,080 25,858 1,013 1,073 - 100,555
Commercial deposits 550,758 - 614,927 1,212,969 25,258 1,862 6,728 14 2,412,516
Other institutions
deposits 40,605 - 21,504 520,310 91,379 1,903 529 - 676,230
Precious metals deposit 316,223 - - - 46,215 3,697 16,539 - 382,674
Interbank deposits 145,135 - 134,754 42,543 86,526 9,456 7,191 - 425,605
Central Bank of
Turkey - - - - - - - - -
Domestic Banks 811 - 134,095 2,075 86,526 9,456 7,073 - 240,036
Foreign Banks 5,968 - 659 40,468 - - 118 - 47,213
Participation Banks 138,356 - - - - - - - 138,356
Other - - - - - - - - -
Total 2,817,900 - 2,145,613 14,981,280 1,435,091 491,059 2,073,121 7,591 23,951,655
Prior Period
Demand
7 Day Call
Accounts
Up to 1
Month
1-3
Month
3-6
Month
6 Month - 1
Year
1 Year
and Over
Accumulated
Deposits
Total
Saving deposits 356,638 - 1,073,162 4,123,806 3,459,931 401,567 490,684 5,394 9,911,182
Foreign currency
deposits 1,155,303 - 388,206 4,521,926 1,415,426 505,156 1,433,973 391 9,420,381
Residents in Turkey 1,063,701 - 347,251 4,021,564 1,095,800 244,807 284,183 364 7,057,670
Residents abroad 91,602 - 40,955 500,362 319,626 260,349 1,149,790 27 2,362,711
Public sector deposits 79,143 - 1,796 9,481 21,080 941 992 - 113,433
Commercial deposits 771,126 - 443,895 917,236 127,087 11,915 7,013 11 2,278,283
Other institutions
deposits 43,153 - 24,169 227,185 53,035 3,371 515 - 351,428
Precious metals deposit 246,275 - - - 37,725 3,031 13,363 - 300,394
Interbank deposits 189,527 - 255,602 95,838 - 8,348 16,441 - 565,756
Central Bank of
Turkey - - - - - - - - -
Domestic Banks 4,273 - 149,590 (3,545) - 8,348 6,258 - 164,924
Foreign Banks (1,191) - 106,012 99,383 - - 10,183 - 214,387
Participation Banks 186,445 - - - - - - - 186,445
Other - - - - - - - - -
Total 2,841,165 - 2,186,830 9,895,472 5,114,284 934,329 1,962,981 5,796 22,940,857
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
87
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
1. Information on Maturity Structure Of Deposits
b) Information on saving deposits under the guarantee of saving deposit insurance and exceeding the
limit of saving deposit insurance:
Saving Deposits
Under the guarantee
of insurance (*)
Exceeding the limit
of insurance
Under the guarantee
of insurance (*)
Exceeding the limit
of insurance
Current Period Prior Period Current Period Prior Period
Saving deposits 4,735,151 5,111,823 4,526,425 1,752,827
Foreign currency saving deposits 2,515,837 1,975,908 5,804,174 739,974
Other deposits in the form of saving deposits - - - -
Branches’ deposits under foreign
authorities' insurance - - - -
Off-shore banking regions’ deposits under
foreign authorities' insurance - - - -
Total 7,250,988 7,087,731 10,330,599 2,492,801
(*) According to the BRSA’s circular no 1584 dated 23 February 2005, accruals are included in the saving deposit amounts.
c) Information on the saving deposits of the Parent Bank with head office abroad, if the saving
deposits in the branches of the bank located in Turkey are under the guarantee of saving deposit
insurance in that country abroad:
Headquarter of the Parent Bank is in Turkey and the Parent Bank is under the coverage of saving deposit
insurance.
d) Saving deposits not guaranteed by insurance:
Deposit of real persons not under the guarantee of saving deposit insurance:
Current Period Prior Period
Deposits and other accounts in branches abroad - -
Deposits and other accounts of ultimate shareholders and
their Mother, Father, Spouse, Dependent Children - -
Deposits and other accounts of chairman and members of
the Board of Directors and their Mother, Father, Spouse,
Dependent Children 10,993 9,347
Deposits and other accounts obtained through illegal acts
defined in the 282nd Article of the 5237 numbered Turkish
Criminal Code dated 26 September 2004. - -
Saving deposits in banks established in Turkey
exclusively for off shore banking activities - -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
88
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
2. Information on derivative financial liabilities:
Negative differences table related to derivative financial liabilities held-for-trading:
Derivative financial liabilities held-for-trading are classified in the financial statement as Derivative
Financial liabilities at Fair Value Through Profit and Loss.
Liabilities due to held for trading derivatives Current Period Prior Period
TRL FC TRL FC
Forward Transactions 27 56,074 - 59,314
Swap Transactions 10,984 25,727 13,509 19,186
Futures Transactions - - - -
Options 92 7,816 160 11,441
Other - 1 - 1,883
Total 11,103 89,618 13,669 91,824
3. Information on banks and other financial institutions:
a. Information on banks and other financial institutions:
Current Period Prior Period
TRL FC TRL FC
Loans from Central Bank of Turkey - - - -
From Domestic Banks and Institutions 482,028 280,831 444,168 316,788
From Foreign Banks, Institutions and Funds 21,910 1,787,365 29,224 2,809,900
Total 503,938 2,068,196 473,392 3,126,688
b. Maturity analysis of borrowings:
Current Period Prior Period
TRL FC TRL FC
Short-term 480,083 234,273 443,047 281,131
Medium and long-term 23,855 1,833,923 30,345 2,845,557
Total 503,938 2,068,196 473,392 3,126,688
Due to the loan used from the Overseas Private Investment Corporation “OPIC”, Şeker Finansman A.Ş.’ shares,
one of the subsidiaries of the Parent Bank, have been pledged to the OPIC according to the “share pledge and
share lien” agreement between the OPIC and the Company which is valid for current debt relationship and
recorded to share ledger.
c. Additional explanation related to the concentrations of the Group’s major liabilities:
Within the scope of normal banking activities, the Group’s funding sources are deposits, funds
borrowed, marketable securities issued and money market balances. The Group’s deposit structure
shows a balanced distribution in TRL and FC terms. The funds borrowed mainly consist of foreign
currency denominated syndicated loans, in TRL denominated funds provided from repurchase
agreement transactions and marketable securities denominated in TRL and foreign currency.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
89
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
4. Information on Money market borrowings:
Current Period Prior Period
TRL FC TRL FC
Interbank money market takings - - 3,000 - Istanbul Stock Exchange money market takings 150,288 - - - Borsa Istanbul Debts to Money Markets 52,115 - 64,500 - Funds Provided Through Repo Transactions 348,753 - 124,596 - Total 551,156 - 192,096 -
5. Marketable Securities Issued:
As of 30 June 2019 outstanding issued bonds amount of the Group is TRL 515,662 Thousand (31 December
2018 - TRL 516,302 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şekerbank T.A.Ş. 18.04.2019 48,500 77 days
Şekerbank T.A.Ş. 30.05.2019 60,000 70 days
Şekerbank T.A.Ş. 27.06.2019 100,000 98 days
Şeker Finansal Kiralama A.Ş. 05.09.2018 4,591 350 days
Şeker Finansal Kiralama A.Ş. 23.05.2019 30,750 64 days
Şeker Finansal Kiralama A.Ş. 26.04.2019 55,000 70 days
Şeker Finansal Kiralama A.Ş. 17.05.2019 42,500 82 days
Şeker Finansal Kiralama A.Ş. 21.06.2019 60,000 77 days
Şeker Faktoring A.Ş. 07.09.2018 1,000 364 days
Şeker Faktoring A.Ş. 22.03.2019 60,000 119 days
Şeker Faktoring A.Ş. 30.04.2019 40,000 72 days
Şeker Faktoring A.Ş. 09.05.2019 6,554 84 days
Şeker Faktoring A.Ş. 31.05.2019 20,326 70 days
Şeker Yatırım Menkul Değerler A.Ş. 23.05.2019 4,443 69 days
Şeker Yatırım Menkul Değerler A.Ş. 12.06.2019 18,711 70 days
As of 30 June 2019 outstanding issued marketable securities amount of the Group is TRL 15,134 Thousand and
details are shown the table below (31 December 2018 - TRL 25,532 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şeker Finansal Kiralama A.Ş. 27.07.2018 2,895 420 days
Şeker Faktoring A.Ş. 05.07.2018 12,500 538 days
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
90
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
5. Marketable Securities Issued (cont’d):
The Parent Bank issued Asset Covered Bond amounting to TRL 1,500,000 Thousand and details are shown in
the table below. Among the institutions and organizations investing up to this time are International Finance
Corporation (IFC), Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), UniCredit
Bank AG, European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD),
KfW Bankengruppe and qualified institutional investors. The transactions were conducted in line with the related
Capital Market Board regulation and the Parent Bank’s SME loans were used as collateral.
Issue Date Series Investors Amount
Remaining Principal
Amount Currency Maturity
25 November 2016 2016-1 IFC 180,000 180,000 TRL 13.09.2021
19 December 2017 2017-1 FMO 192,000 192,000 TRL 22.12.2020
As of 30 June 2019 the Group has the Asset Covered Bonds amounting to TRL 380,319 Thousand (31
December 2018 - TRL 701,850 Thousand).
Current Period Prior Period
TRL FC TRL FC
Bills 515,662 - 516,302 -
Asset Backed Securities 380,319 - 701,850 -
Bonds 15,134 - 25,532 -
Total 911,115 - 1,243,684 -
6. Other liabilities which exceed 10 % of the balance sheet total (excluding off-balance
sheet commitments) and the breakdown of these which constitute at least 20 % of grand
total :
Other liabilities do not exceed 10 % of the balance sheet total.
7. Explanations on lease obligations (Net):
Current Period Prior Period
Gross Net Gross Net
Less than 1 Year 16,215 13,756 15,521 12,741
1-4 Years 329,731 203,723 13,605 12,366
More than 4 Years 2,057 718 - -
Total 348,003 218,197 29,126 25,107
8. Information on derivative financial liabilities for hedging purposes:
Derıvative Financial Assets For Hedging
Purposes
Current Period Prior Period
TRL FC TRL FC
Fair Value Hedge 15,608 - 16,592 -
Cashflow Hedge - - - -
Hedge of net investment risks in foreign
operations - - - -
Total 15,608 - 16,592 -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
91
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
9. Information on provisions:
a) Foreign exchange losses on the foreign currency indexed loans and finance lease receivables: None.
b) The specific provisions provided for unindemnified non-cash loans or expected loss provisions of non-cash
loans amount to TRL 81,760 Thousand (31 December 2018 - TRL 67,045 Thousand).
c) Information on employee termination benefits and unused vacation accrual:
The Group has calculated reserve for employee termination benefits by using actuarial valuations as set out in
the TAS 19 and reflected this in the financial statements.
Main actuarial assumptions used for calculation of employment termination benefit are as follows:
- Discount rate for the current period is 16%, inflation rate is 11.30%.
- TRL 5,434.42 (full TRL) of maximum wage amount which was in effect was taken as maximum
amount for the calculation.
- It was assumed that maximum wage would be increased in inflation rate for every consecutive year.
- CSO 1980 table was used for mortality averages of females and males.
As of 30 June 2019, the Group has recorded in the financial statements TRL 90,007 Thousand reserve for
employee termination benefits (31 December 2018 - TRL 79,953 Thousand).
As of 30 June 2019, the Group allocated a reserve of TRL 12,367 Thousand for the unused vacations, which is
classified under reserve for employee benefits provisions in the financial statements (31 December 2018 - TRL
8,088 Thousand).
c.1) Movement of employee termination benefits:
Current Period Prior Period
As of 1 January 79,953 75,411
Cost Service 9,494 10,931
Interest Cost 6,233 8,483
Actuarial Loss/(Gain) - (4,747)
Indemnity Paid During the Term (5,673) (10,125)
Total 90,007 79,953
d) Information on other provisions:
d.1) Provisions for possible losses: None.
d.2) The breakdown of the of provisions:
Current Period Prior Period
Unindemnified Non-Cash Loans 81,760 67,045
Credit Card Liquid Point Promotion Provisions 451 432
Retirement Fund Provisions 159,499 159,499
SDIF Premium Provision 3,861 6,984
Other Provisions 216,172 168,881
Total 461,743 402,841
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
92
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
9. Information on provisions (cont’d):
e) Liabilities on pension rights:
e.1) Liabilities for pension funds established in accordance with “Social Security Institution”:
Şekerbank T.A.Ş. Pension Fund, of which most of the Parent Bank’s employees are members, is established in
accordance with the provisional Article 20 of the Social Security Act No: 506. As per the provisional article No:
23 of the Banking Law No: 5411, the Bank pension funds, which were established within the framework of
Social Security Institution Law, should be transferred to the Social Security Institution within 3 years after the
issuance of the related law. Methods and principles related to the transfer have been determined as per the
Cabinet decision no: 2006/11345 made on 30 November 2006. However, the related article of the act has been
cancelled upon the President’s application filed on 2 November 2005 by the Supreme Court’s order no:
E.2005/39, K.2007/33 issued on 22 March 2007, which was published in the Official Gazette No: 26479 on 31
March 2007 and the execution of the decision was ceased as of the issuance date of the order.
Following the issuance of the justified order in relation to the annulment of the provisional Article 23 of the
Banking Law by the Constitutional Court in the Official Gazette No: 26731 on 15 December 2007, TBMM
started to work on establishing new legal regulations, the Law No: 5754 “Amendments to the Social Security
and General Health Insurance Act Including Certain Laws and Decrees”, which was published in the Official
Gazette No: 26870 on 8 May 2008 has become effective following the approval of the General Assembly of the
TBMM. The new law decrees that the contributors of the bank pension funds, the ones who receive salaries or
income from these funds and their rightful beneficiaries will be transferred to the Social Security Institution and
will be subject to this Law within 3 years after the release date of the related article, without any need for further
operation, and that the three-year transfer period can be prolonged for maximum 2 years by the Cabinet decision.
However, related transfer period has been prolonged for 2 years by the Cabinet decision dated 14 March 2011,
which was published in the Official Gazette dated 9 April 2011 and numbered 27900.
In addition, by the Law numbered 6283 “Emendating Social Security and General Health Insurance Act”, which
was published in the Official Gazette dated 8 March 2012 and numbered 28227, this period of 2 years has been
raised to 4 years. Further the transfer period has been prolonged for one more year by the Cabinet decision dated
08 April 2013, which was published in the Official Gazette, dated 3 May 2013 and numbered 28636. The
prolongation for another one year has been taken by the Cabinet on 24 February 2014, and has been published in
the Official Gazette dated 30 April 2014 and numbered 28987. The Council of Ministers has been lastly
authorized to determine the transfer date in accordance with the last amendment in the first paragraph of the 20th
provisional article of Law No.5510 implemented by the Law No. 6645 on Amendment of the “Occupational
Health and Safety Law and Other Laws and Decree Laws” published in the Official Gazette dated 23 April 2015
and numbered 29335. transferred to the President with the delegated legislation No.703 which was published in
the repetitive Official Gazette No. 30473 dated 9 July 2018.
The above mentioned law also includes the following:
Through a commission constituted by the attendance of one representative separately from the Social
Security Institution, the Presidency Ministry of Treasury and Finance, State Planning Organization,
Banking Regulation and Supervision Agency, Savings Deposit Insurance Fund, one from each pension
fund, and one representative from the organization employing pension fund contributors, related to the
transferred persons, the cash value of the liabilities of the pension fund as of the transfer date will be
calculated by considering their income and expenses in terms of the lines of insurance within the
context of the related Law, and technical interest rate of 9.80% will be used in the actuarial calculation
of the value in cash
And that after the transfer of the pension fund contributors, the ones who receive salaries or income
from these funds and their rightful beneficiaries to the Social Security Institution, these persons’
uncovered social rights and payments, despite being included in the trust indenture that they are subject
to, will be continued to be covered by the pension funds and the employers of pension fund
contributors.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
93
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
9. Information on provisions (cont’d):
e) Liabilities on pension rights (cont’d):
e.1) Liabilities for pension funds established in accordance with “Social Security Institution” (cont’d):
On the other hand, the application made on 19 June 2008 by the Republican People’s Party to the Constitutional
Court for the annulment and motion for stay of some articles, including the first paragraph of the provisional
article 20 of the Law, which covers provisions on transfers, was rejected in accordance with the decision taken at
the meeting of the afore-mentioned court on 30 March 2011.
The technical financial statements of the Pension Fund are reviewed by an actuary registered audit company in
accordance with the Article 21 of the Insurance Law numbered 5684 and the requirements of the “Actuary
Regulations” issued based on the Article 38. There was TRL 159,499 Thousand actuarial deficit (31 December
2018 - TRL 159,499 Thousand actuarial deficit) in the actuary report which was prepared using a technical
interest rate of 9.80 % in accordance with the basis set out in the Council of Ministers published on 15 December
2006 and no 26377. As of 30 June 2019, TRL 159,499 Thousand provision (31 December 2018 - TRL 159,499
Thousand).
The actuarial audit described above, which has been carried out in accordance with the related law, measures the
present value of the liability as of 31 December 2018, in other words, the estimated payment amount to be made
to the Social Security Institution by the Parent Bank is measured by the actuary audit. In actuarial calculations,
CSO 1980 mortality table, 9.80% technical interest rate and 34.50% premium rate were taken into account.
Present values of bonuses and salaries payments taking into account the health expenditures in the scope of
Social Security Institution are shown in the following table in as of 31 December 2018.
31.12.2018
Reserve of Probable Retirement Pensions (153,436)
Reserve of Probable Widow and Orphant (133,359)
Reserve of Liability Items (1,028,626)
Reserve for Salary Portions to be Given to Social
Insurance Institution for those who leave the Pension
Fund (254,790)
Health and Funeral Expenses Reserve (152,739)
Assets (*) 315,700
Cash Value of the Premiums of the Active Members 1,123,687
Reserve of Common Members’ Salary Proportion
Receivables from other social insurance institutions. 124,064
Actual and Technical Surplus / (Deficit) Amount (159,499)
(*) The Pension Fund records the assets by their fair value and these fair values were considered for the actuarial work.
Assets of the Pension Fund consist of following items:
31.12.2018
Banks and Other Financial Investments 238,816
Associates 125,757
Immovable 4,103
Other (52,976)
Total 315,700
e.2. Liabilities resulting from all kinds of pension funds, foundations etc., which provide post-retirement
benefits for the employees: See footnote, f.1 II/9 of Section Five.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
94
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
10. Explanations on taxes payable (cont’d):
a. Information on current tax liability:
a.1. Information on tax provision: Group does not have corporate tax to be paid as of 30 June 2019 (31
December 2018 - TRL 505 Thousand corporate tax to be paid).
a.2 Information on taxes payable:
Current Period Prior Period
Corporate Tax - 505
Taxation on Securities 28,338 17,247
Capital Gains Tax on Property 704 610
Banking Insurance Transaction Tax (BITT) 22,978 30,925
Foreign Exchange Tax 539 -
Value Added Tax Payable 974 1,408
Other 8,165 11,167
Total 61,698 61,862
a.3 Information on premiums:
Current Period Prior Period
Social Security Premiums-Employee 509 430
Social Security Premiums-Employer 829 705
Bank Social Aid Pension Fund Premiums-
Employee - 3
Bank Social Aid Pension Fund Premiums-
Employer - 4
Pension Fund Membership Fees and
Provisions-Employee - 16
Pension Fund Membership Fees and
Provisions-Employer - 23
Unemployment insurance-Employee 19 4
Unemployment insurance-Employer 39 26
Other 39 10
Total 1,435 1,221
b. Explanations on deferred tax liabilities, if any:
As of 30 June 2019, the Group has TRL 67 Thousand deferred tax liability (31 December 2018 - TRL
1,532 Thousand deferred tax liability) as mentioned in the Section V. Note I.15
11. Information on liabilities regarding assets held for sale and discontinued operations: None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
95
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
12. Explanations on the maturity, interest rate and the number of subordinated debt
instruments the Parent Bank had, institution that is the creditor of the debt instrument,
and conversion option, if any:
Information on subordinated borrowing instruments is included in the footnote 4.1. Information on
borrowing instruments to be included in the equity calculation.
Current Period Prior Period
TRL FC TRL FC
Borrowing Instruments Included in Additional Tier I Capital
Calculation - - - -
Subordinated Loans - - - -
Subordinated Debt Instruments - - - -
Borrowing Instruments Included in Tier II Calculation 452,399 491,548 452,571 451,050
Subordinated Loans - - - -
Subordinated Debt Instruments 452,399 491,548 452,571 451,050
Total 452,399 491,548 452,571 451,050
13. Information on Shareholders’ Equity:
a) Presentation of Paid-in capital:
Current Period Prior Period
Common stock (*) 1,158,000 1,158,000
Preferred stock - -
(*) Nominal Capital
b) Paid-in capital amount, explanation as to whether the registered share capital system is applicable at the
Parent Bank and if so amount of registered share capital ceiling:
Share capital system is applied in the Bank.
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 capital reserves: None.
e) Capital commitments in the last fiscal year and at the end of the following period, the general purpose of
these commitments and projected resources required to meet these commitments: None.
f) Indicators of the Parent Bank’s income, profitability and liquidity for the previous periods and possible
effects of these future assumptions on the Parent Bank’s equity due to the uncertainty of these indicators:
Retained and current year income, profitability and liquidity of the Parent Bank are closely monitored,
reported by the Financial Control, Reporting, Budget and Performance Management Department to the Board
of Directors and Asset and Liability Committee of the Parent Bank. This department prognoses the effects of
interest, currency and maturity fluctuations with static and dynamic scenario analysis. Net asset value, which
is defined as the difference of fair values of assets and liabilities, is measured. Prognoses are made for the
Parent Bank’s future interest income via simulations of net interest income and scenario analysis.
g) Information on preferred shares: None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
96
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
II. Explanations Related to the Consolidated Liabilities (cont’d)
13. Information on Shareholders’ Equity (cont’d) :
h) Information on marketable securities value increase fund:
Current Period Prior Period
TRL FC TRL FC
From Subsidiaries, Associations and Entities Under
Common Control - - - -
Valuation Difference (11,179) 8,129 (9,167) 4,047
Foreign Exchange Difference - - - -
Total (11,179) 8,129 (9,167) 4,047
14. Information on legal reserves:
Current Period Prior Period
Legal reserves 119,460 115,016
Other legal reserves appropriated in accordance with
special legislation 187,230 185,988
Total 306,690 301,004
15. Information on extraordinary reserves:
Current Period Prior Period
Reserves appropriated by the General Assembly 976,225 1,370,812
Retained earnings 4,537 4,537
Accumulated losses - -
Foreign currency share capital exchange difference - -
Total 980,762 1,375,349
16. Other Information on Shareholders’ Equity:
Şeker Finansal Kiralama A.Ş., did not make a purchase of shares via Şeker Yatırım Menkul Değerler A.Ş.
in the current period and 4,297 shares in total were bought back.
17. Information on Minority Shares :
As of 30 June 2019 TRL 37,316 Thousand minority shares shown in the accompanying financial
statements (31 December 2018 - TRL 40,349 Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
97
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and
Commitments
1. Information on off-balance sheet liabilities:
a. Nature and amount of irrevocable loan commitments:
Current Period Prior Period
Forward Asset Purchase Commitments 2,975,142 96,164
Loan Granting Commitments 1,052,349 987,126
Payment Commitments for Cheques 411,091 341,685
Commitments for Credit Card Expenditure limits 513,128 473,944
Commitments for Promotions related with Credit Cards and Banking Transactions 525 501
Subsidiaries and Associates Capital Commitments - -
Tax and Fund Obligations for Export Commitments 10,776 10,032
Other Commitments 191,837 225,869
Total 5,154,848 2,135,321
b. Possible losses and commitments related to off-balance sheet items including items listed below:
The Group, within the context of banking 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 guarantee and other letters of credits:
b.2. Guarantees, surety ships, and similar transactions:
Current Period Prior Period
Definite Letter of Guarantees 2,652,127 2,666,086
Temporary Letter of Guarantees 264,727 190,548
Surety ships and Similar Transactions - -
Other Letter of Guarantees 1,162,260 1,528,610
Total 4,079,114 4,385,244
c. Information on non-cash loans:
c.1. Total amount of non-cash loans:
Current Period Prior Period
Letters of Guarantees issued for cash loans 819,609 1,199,047
With maturity of 1 year or less than 1 year 472,616 746,485
With maturity of more than 1 year 346,993 452,562
Other non-cash loans 4,653,143 4,719,937
Total 5,472,752 5,918,984
Current Period Prior Period
Guarantees 651,741 963,277
Bank Loans 131,798 132,949
Letters of Credit 205,777 262,834
Endorsements 404,322 174,680
Total 1,393,638 1,533,740
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
98
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and
Commitments (cont’d)
1. Information on off-balance sheet liabilities (cont’d):
c.2. Information on sectoral risk breakdown of non-cash loans:
Current Period Prior Period
TRL (%) FC (%) TRL (%) FC (%)
Agricultural 6,063 0.19 26,412 1.16 5,702 0.17 25,320 1.01
Farming and raising livestock 5,350 0.17 26,412 1.16 5,067 0.15 25,320 1.01
Forestry 624 0.02 - - 547 0.02 - -
Fishery 89 - - - 88 - - -
Manufacturing 277,821 8.67 1,135,176 50.00 283,063 8.33 1,240,193 49.23
Mining 27,700 0.86 121,295 5.34 30,920 0.91 106,051 4.21
Production 232,476 7.26 910,554 40.11 237,947 7.00 995,880 39.53
Electric, gas and water 17,645 0.55 103,327 4.55 14,196 0.42 138,262 5.49
Construction 1,038,004 32.41 472,924 20.83 1,028,496 30.25 551,680 21.90
Services 1,875,235 58.55 633,352 27.90 2,077,372 61.10 699,400 27.75
Wholesale and retail trade 552,281 17.24 129,815 5.72 506,845 14.91 152,502 6.05
Hotel, food and beverage
services 13,184 0.41 5,762 0.25 12,653 0.37 11,627 0.46
Transportation and
telecommunication 66,510 2.08 317,979 14.01 80,718 2.37 291,043 11.55
Financial institutions 967,680 30.22 60,629 2.67 1,197,165 35.21 125,730 4.99
Real estate and renting services 218,503 6.82 113,766 5.01 227,052 6.68 108,151 4.29
Self-employment services 30 - - - 30 - - -
Education services 2,807 0.09 - - 2,679 0.08 - -
Health and social services 54,240 1.69 5,401 0.24 50,230 1.48 10,347 0.41
Other 5,451 0.18 2,314 0.11 5,012 0.15 2,746 0.11
Total 3,202,574 100.00 2,270,178 100.00 3,399,645 100.00 2,519,339 100.00
c.3. Information on I st and II nd Group non-cash loans:
Non-cash loans I. Group II. Group
TRL FC TRL FC
Letters of guarantee 2,898,539 709,272 191,319 153,541
Bank acceptances - 131,798 - -
Letters of credit 1,216 203,355 - 866
Endorsements - 404,322 - -
Underwriting commitments - - - -
Guaranteed prefinancing credits - - - -
Other commitments and surety ships 4,364 645,696 1,681 -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
99
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and
Commitments (cont’d)
2. Information related to derivative financial instruments:
Current Period Prior Period
Types of trading transactions
Foreign currency related derivative transactions (I) 11,824,352 10,923,911
Forward transactions 814,122 1,120,528
Swap transactions 9,660,724 8,734,576
Futures transactions - -
Option transactions 1,349,506 1,068,807
Interest related derivative transactions (II) 1,316,348 1,545,718
Forward rate transactions - -
Interest rate swap transactions 1,316,348 1,545,718
Interest option transactions - -
Futures interest transactions - -
Other trading derivative transactions (III) 150,611 108,294
A. Total trading derivative transactions (I+II+III) 13,291,311 12,577,923
Types of hedging transactions - -
Fair value hedges 930,000 936,000
Cash flow hedges - -
Net investment hedges - -
B.Total hedging related derivatives 930,000 936,000
Total Derivative Transactions (A+B) 14,221,311 13,513,923
Related to agreements of forward transactions and options; the information based on the type of forward and
options transactions are disclosed separately, specified with related amounts, type of agreement, purpose of
transaction, nature of risk, strategy of risk management, hedging relationship, possible effects on the Bank’s
financial position, timing of cash flows, reasons of unrealized transactions which previously projected to be
realized, income and expenses that could not be linked to statement of income in the current period because of
the agreements:
The Group’s derivative instruments mainly consist of foreign currency swaps, interest swaps, option and forward
buy/sell transactions. Fair values of foreign currency forward and swap transactions are determined by
comparing the Parent Bank’s period end foreign exchange rates and current market foreign exchange rates to the
balance sheet date. The resulting gain or loss is reflected in the income statement. In calculation of fair values of
the interest swap contracts, interest amounts to be paid or received upon the fixed interest rate in the contract and
interest amounts to be received or paid upon the floating interest rates in the contracts have been recalculated and
discounted in accordance to valid interest rates in the current market and the differences have been reflected to
the current term income statement. Discounted values calculated using the interest rates between the transaction
date and repricing date are used in determination of the fair values of interest rate swaps. While some derivative
transactions provide economic hedging, these transactions are subject to hedge accounting. The purpose of hedge
accounting; is to present the effect of the risk management activities using appropriate financial instruments to
manage certain risks that may affect profit or loss in the financial statements. For the purpose of hedging the fair
value of a portfolio of financial assets or financial liabilities, the Group may apply the provisions of TFRS 9 or
TAS 39. In this context, the Group has chosen to apply TFRS 9 for hedge accounting.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
100
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and
Commitments (cont’d)
2. Information related to derivative financial instruments (cont’d):
As of 30 June 2019, breakdown of the Group’s foreign currency forward and swap transactions based on
currencies are disclosed below in their TRL equivalents:
Forward
Buy
Forward Sell
Swap Buy
Swap Sell Option
Buy
Option Sell
Futures
Buy
Futures
Sell
Current Period
TRL 132,168 80,012 486,637 3,569,362 77,860 146,129 - -
USD 23,968 161,680 4,613,080 314,840 356,435 182,498 - -
EURO 243,971 172,323 648,174 1,950,118 153,795 304,189 - -
OTHER - 150 313,442 161,880 80,082 48,518 - -
Total 400,107 414,165 6,061,333 5,996,200 668,172 681,334 - -
Prior Period
TRL 220,477 208,108 1,361,999 2,970,930 234,015 224,050 - -
USD 178,439 145,008 3,117,322 824,528 264,011 299,591 - -
EURO 157,275 202,726 1,101,494 1,632,941 25,069 22,071 - -
OTHER 7,712 783 201,453 113,921 - - - -
Total 563,903 556,625 5,782,268 5,542,320 523,095 545,712 - -
As of 30 June 2019, the Group has fair value hedge with nominal amount of TRL 930,000 Thousand (31
December 2018 - TRL 936,000 Thousand).
As of 30 June 2019, the Group has no cash flow hedges.
As of 30 June 2019, the Group has no hedge of net investment in foreign operations.
3. Credit derivatives and risk exposures on credit derivatives: None.
4. Explanations on contingent liabilities and assets:
As of 30 June 2019, there are 851 continuing legal cases against the Group based on information received from
the Law Departments of the Group. The total amount of these cases is TRL 77,571 Thousand. Provision amount
for these cases is TRL 27,986 Thousand (31 December 2018 - 616 continuing legal cases against the Group
based on information received from the Law Departments of the Group. The total amount of these cases is TRL
76,228 Thousand. Provision amount for these cases is TRL 21,987 Thousand).
The Group has no contingent assets.
Explanations on revocable commitments: In the current period, the Group’s revocable commitments amount to
TRL 505,549 Thousand (31 December 2018 - TRL 538,914Thousand).
5. Custodian and intermediary services:
The Group provides buying and selling securities transacions, custody, brokerage and management on behalf of
customers.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
101
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
IV. Explanations Related to the Consolidated Statement of Income
1. Information on interest income:
a. Information on interest income on loans:
Current Period Prior Period
TRL FC TRL FC
Interest on Loans (*) 1,658,274 265,404 1,384,392 214,746
Short Term Loans 972,547 27,434 653,813 16,678
Medium and Long Term Loans 624,408 237,955 704,050 198,060
Interest on Non-Performing Loans 61,319 15 26,529 8
Premiums received from Resource Utilization Support Fund - - - -
(*) Includes fees and commissions obtained from cash loans.
b. Information on interest received from banks:
Current Period Prior Period
TRL FC TRL FC
The Central Bank of Turkey 80 140 132 140
Domestic Banks 11,875 2,743 6,597 4,223
Foreign Banks 123 6,201 - 604
Branches and Head Office Abroad - - - -
Total 12,078 9,084 6,729 4,967
c. Interest income from marketable securities portfolio:
Current Period Prior Period
TRL FC TRL FC
Financial Assets At Fair Value Through Profit And Loss 3,655 406 2,207 315
Financial Assets At Fair Value Through Other Comprehensive
Income 45,157 - 10,905 -
Financial Assets at Amortised Cost 100,655 26,332 141,925 21,802
Total 149,467 26,738 155,037 22,117
d. Information on interest income received from associates and subsidiaries: None. (30 June 2018 -
None)
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
102
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
IV. Explanations Related to the Consolidated Statement of Income (cont’d)
2. Information on interest expense:
a. Information on interest expense on funds borrowed:
Current Period Prior Period
TRL FC TRL FC
Banks (*) 53,648 51,774 33,968 53,985
The Central Bank of Turkey - - - -
Domestic Banks 50,644 8,843 29,644 5,144
Foreign Banks 3,004 42,931 4,324 48,841
Branches and Head Office Abroad - - - -
Other Financial Institutions - - - -
Total 53,648 51,774 33,968 53,985
(*) Includes fees and commission expenses of cash loans.
b. Information on interest expense to associates and subsidiaries:
Current Period Prior Period
Interest Expense to Associates and Subsidiaries 233 105
c. Information on interest expense to marketable securities issued:
Current Period Prior Period
TRL FC TRL FC
Interest expense on securities issued 135,733 24,263 122,030 19,080
d. Distribution of interest expense on deposits based on maturity of deposits:
Current Period
Demand
Deposits
Time Deposits
Up to 1
Month
Up to 3
Months
Up to 6
Months
Up to 1
Year
More than
1 Year
Accumulated
Deposits
Total
TRL
Bank deposits 226 15,177 2,860 - - - - 18,263
Saving deposits 97 95,785 634,238 109,381 29,777 51,116 442 920,836
Public sector deposits - 79 1,259 1,645 80 88 - 3,151
Commercial deposits 21 34,457 120,235 4,513 666 619 1 160,512
Other deposits 2 2,256 43,508 1,423 216 36 - 47,441
7 days call accounts - - - - - - - -
Precious metal stock - - - - - - - -
Total 346 147,754 802,100 116,962 30,739 51,859 443 1,150,203
Foreign Currency -
Foreign currency
deposits 619 10,787 81,791 10,351 6,433 19,882 - 129,863
Bank deposits 2,079 43 57 - - - - 2,179
7 days call accounts - - - - - - - -
Precious metal stock 361 - - - - - - 361
Total 3,059 10,830 81,848 10,351 6,433 19,882 - 132,403
Grand Total 3,405 158,584 883,948 127,313 37,172 71,741 443 1,282,606
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
103
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
IV. Explanations Related to the Consolidated Statement of Income (cont’d)
3. Information on dividend income :
Current Period Prior Period
Financial assets at fair value through profit and loss - -
Financial assets at fair value through other comprehensive income 2,426 -
Other 1,267 1,230
Total 3,693 1,230
4. Information on net trading income :
Current Period Prior Period
Income 10,419,960 9,919,968
Profit on capital market operations 17,574 4,980
Profit on derivative financial instruments 1,451,429 1,660,939
Foreign exchange gains 8,950,957 8,254,049
Losses (-) 10,465,690 10,001,703
Losses on capital market operations 2,566 1,762
Losses on derivative financial instruments 1,458,483 1,211,581
Foreign exchange losses 9,004,641 8,788,360
5. Information on other operating income :
The information about the factors significantly affecting income of the Group and also information including the
explanation of the aspect of increasing levels:
As of 30 June 2019, TRL 62,543 Thousand (30 June 2018 - TRL 41,379 Thousand) stated under other operating
income in the statement of income includes TRL 44,232 Thousand (30 June 2018 - TRL 21,106 Thousand) prior
years’ provisions reversal income and TRL 18,311 Thousand (30 June 2018 - TRL 20,273 Thousand) other
operating income.
As of 30 June 2019, prior years expense and provision reversal income include TRL 18,008 Thousand (30 June
2018 - TRL 10,518 Thousand) reversal of credit loss provisions due to collection of cash loans, TRL 268
Thousand (30 June 2018 - TRL 2,545 Thousand) reversals of non-cash provisions, TRL 343 Thousand of
securities impairment provision reversal and TRL 25,613 Thousand (30 June 2018 - TRL 8,043 Thousand)
reversal of legal case provision and other provisions.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
104
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
IV. Explanations Related to the Consolidated Statement of Income (cont’d)
6. Provision expenses of banks for loans and other receivables:
Current Period Prior Period
Expected Credit Losses Provisions 402,852 163,247
12-Month ECL (Stage 1) 24,902 3,112
Significant Increase in Credit Risk (Stage 2) 2,723 82,995
Impaired Credits (Stage 3) 375,227 77,140
Impairment Losses on Securities 60 396
Financial Assets Measured at Fair Value through Profit or Loss 60 166
Financial Assets Measured at Fair Value through Other Comprehensive Income - 230
Impairment Losses on Associates, Subsidiaries and Joint-ventures - -
Associates - -
Subsidiaries - -
Joint-ventures (business partnership) - -
Other (*) 54,678 122,805
Total 457,590 286,448
(*) Other provisions also include provisions for non-cash loans.
7. Information on other operating expenses:
Current Period Prior Period
Reserve for employee termination benefits 10,054 8,218
Bank social aid provision fund deficit provision - -
Impairment losses on fixed assets - -
Depreciation expenses of fixed assets 46,823 14,958
Impairment losses on intangible assets - -
Goodwill impairment losses - -
Depreciation expenses of intangible assets 19,797 18,189
Impairment for investments accounted for under equity method - -
Impairment losses on assets held for resale - -
Depreciation expenses of assets held for resale - -
Impairment losses on assets held for sale - -
Other operating expenses 147,779 186,774
Lease Expenses Related to TFRS 16 Exemptions 3,815 37,844
Maintenance expenses 17,311 10,419
Advertisement expenses 1,967 5,026
Other expenses (**) 124,686 133,485
Loss on sales of assets 18 481
Other (*) 84,965 76,725
Total 309,436 305,345
(*) “Other” includes TRL 18,526 Thousand premiums paid to the Saving Deposit Insurance Fund, TRL 6,818 Thousand legal case
provision (30 June 2018 - TRL 17,695 Thousand premiums paid to the Saving Deposit Insurance Fund, TRL 2,915 Thousand legal
case provision).
(**) Other expenses include TRL 9,513 Thousand communication expenses, TRL 19,503 Thousand computer usage expenses, TRL
6,017 Thousand promotion applications related with credit cards and banking services (30 June 2018 - TRL 10,566 Thousand
communication expenses, TRL 22,472 Thousand computer usage expenses, TRL 5,154 Thousand promotion applications related
with credit cards and banking services).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
105
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
IV. Explanations Related to the Consolidated Statement of Income (cont’d)
8. Information on profit/ loss from continued and discontinued operations before taxes:
As of 30 June 2019, the Bank has TRL 348,871 Thousand loss before tax (30 June 2018 - TRL 79,932
Thousand profit before tax), TRL 690,339 Thousand (30 June 2018 - TRL 892,758 Thousand) of total
operatıng profıt, TRL 191,502 Thousand (30 June 2018 - TRL 177,480 Thousand) of net fees and
commissions income, TRL 402,852 Thousand of expected losses provision (30 June 2018 - TRL 163,247
Thousand), TRL 54,738 Thousand of other provisions (30 June 2018 - TRL 123,201 Thousand), TRL
62,543 Thousand (30 June 2018 - TRL 41,379 Thousand) of other operating income and TRL 309,436
Bin TL Thousand (30 June 2018 - TRL 305,345 Thousand) of other operating expense.
9. Information on tax provision for continued and discontinued operations:
As of 30 June 2019, the Group has TRL 164 Thousand current tax charge (30 June 2018 – TRL 19,490
Thousand current tax charge)and deferred tax benefit on temporary differences is TRL 73,610 Thousand
(30 June 2018 – TRL 87,901 Thousand deferred tax benefit), deferred tax charge is TRL 5,011
Thousand(30 June 2018 – TRL 77,634 Thousand deferred tax charge).
10. Information on net profit/ loss from continued and discontinued operations:
The net loss of the Group for the period ended 30 June 2019 is TRL 280,436 Thousand.
11. The explanations on net profit/loss for the period :
a) The nature and amount of certain income and expense items from ordinary operations is disclosed if the
disclosure for nature, amount and repetition rate of such items is required for the complete understanding of
the Group's performance for the period : None.
b) Effect of changes in accounting estimates on statement of income for the current and, if any, for subsequent
periods : None.
c) Profit or loss attributable to minority shares: Loss attributable to minority shares is TRL 2,682 Thousand (30
June 2018 – TRL 5,514 Thousand profit).
d) If the other items in the statement of income exceed 10 % of the statement of income total, accounts
amounting to at least 20 % of these items are shown below :
Other Fees and commissions received Current Period Prior Period
Banking Services Income 195,064 167,759
Other 13,991 18,579
Total 209,055 186,338
Other Fees and commissions given Current Period Prior Period
Fees and commissions given to Banks 14,351 11,264
Fees and commissions given for Credit Cards 28,260 15,180
Other 13,134 19,176
Total 55,745 45,620
e) Nature and amount of changes in accounting estimates, which have a material effect on current period or
expected to have a material effect on subsequent periods : None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
106
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
V. Explanations on the Risk Group of the Parent Bank
1. Volume of related party transactions, income and expense amounts involved and outstanding loan
and deposit balances:
a. Current Period:
Related Parties
Associates, Subsidiaries and Joint-
Ventures
Direct and Indirect
Shareholders of the Bank
Other Components in Risk
Group
Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans
Balance at beginning of period - - 898,986 18,697 - -
Balance at end of period - - 420,972 19,048 - -
Interest and commission income - - 13,101 101 - -
b. Prior Period:
Related Parties Subsidiaries and Associates
Direct and Indirect
Shareholders of the Bank
Other Entities Included
in the Risk Group
Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans
Balance at beginning of period - 11,754 575,004 16,912 - -
Balance at end of period - - 898,986 18,697 - -
Interest and commission income -
38 46,103 86 - -
c.1. Information on related party deposits balances:
Related parties
Associates, Subsidiaries and Joint-
Ventures
Direct and Indirect
Shareholders of the Bank
Other Components in Risk
Group
Deposits
Current
Period
Prior
Period
Current
Period
Prior
Period
Current
Period
Prior
Period
Balance at beginning of period 2,546 3,020 374,329 92,515 - -
Balance at end of period 1,536 2,546 259,002 374,329 - -
Interest on deposits 233 105 10,897 6,755 - -
c.2. Information on forward and option agreements and other similar agreements made with related parties:
None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
107
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
V. Explanations on the Risk Group of the Parent Bank (cont’d)
2. Disclosures for related parties:
a) The relations of the Parent Bank with the entities controlled by the Parent Bank and its related parties,
regardless of whether there are any transactions or not :
The Parent Bank conducts various banking transactions with related parties at commercial terms and at rates
which approximate market rates. Any transaction among the Group subsidiaries and/or related parties are
executed on arm-lengths conditions.
b) Besides the structure of the transactions amount and ratio to the total volume of transactions, amount of
major items and ratio to all items, pricing policies and other factors :
Amount Shares %
Cash loans 420,972 1.94
Non-cash loans 19,048 0.35
Deposits 260,538 1.09
These transactions are priced in accordance with the general pricing policies of the Parent Bank and are in line
with market rates .
c) In cases separate disclosure is not necessary, in order to present the total impact on the financial statements,
total of similar items : Explained in b.
d) Transactions accounted under the equity method : None.
e) Disclosures related to purchase and sale of real estate and other assets, services given/received, agency
contracts, leasing contracts, transferring information as a result of research and development, license
contracts, financing (including supports in the form of loans, capital in cash and capital in kind), guarantees,
and management contracts :
The Parent Bank enters into lease agreements with Şeker Finansal Kiralama A.Ş. As of 30 June 2019 there is
no leasing obligations related to those agreements (31 December 2018 - None). Additionally, the Parent Bank
provides agency services for Şeker Yatırım Menkul Değerler A.Ş., Şeker Faktoring A.Ş. and Şeker
Finansman A.Ş. through its branches.
Within the limits of the Banking Law, the Group renders cash and non-cash loans to its related parties and the
ratio of these loans to the Group’s total cash and non-cash loan portfolio is 1. 62%. Details of these loans are
explained in the Section V, Note V-1a.
As of 30 June 2019 the Group has no purchases and sale of real estate and other assets, transfer of
information as a result of research and development, and management contracts with the related parties.
f) Benefits provided to the top management of the Group during current period amount to TRL 17,130
Thousand (30 June 2018 - TRL 18,885 Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
108
SECTION FIVE (cont’d)
EXPLANATIONS AND DISCLOSURES ON FINANCIAL STATEMENTS (cont’d)
VI. Explanations and notes related to subsequent events:
The Parent Bank’s application for issuance of structured debt instruments to be issued to qualified investors by
not offering to the public, at once or multiple times in different types and maturities, up to TRL 500.000.000
Thousand was approved at the Capital Markets Board’s meeting dated 11 July 2019 and numbered 40/904.
On 3 July 2019 The International Credit Rating Agency Fitch Ratings, confirmed Şekerbank TAŞ's Short-Term
Local and Foreign Currency Rating as “B” and Support Note as “5”, revised its Long-Term Local and Foreign
Currency Rating as “B-”, its Financial Capacity Rating to “b-”and its Long Term National Credit Rating to “BB
+ (tur)”and confirmed its Outlook as “negative”. Fitch Rating updated its Subordinated Debt Instrument Rating
as “CCC +”.
SECTION SIX
AUDITORS’ REVIEW REPORT
I. Explanations on the Auditors’ Review Report :
The consolidated financial statements for six-month period ended 30 June 2019 were reviewed by DRT
Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ (Member of Deloitte Touche Tohmatsu) and
Auditors’ Review Report dated 9 August 2019 is presented in the introduction of this report.
II. Other Footnotes and Explanations Prepared by Independent Auditors :
None.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
109
SECTION SEVEN
INFORMATION ON INTERIM ACTIVITY REPORT
I. Interim Period Reports Included the Board of Directors Chairman and General Manager’s
Assessments of the Bank for the Interim Activities
1. Board of Directors Chairman’s Assesments on Interim Report
Esteemed Shareholders,
The weak growth in developing countries’ economies starting from the second half of 2018 continued in the
second quarter of 2019. Negotiations in the making between the US and China, the two greatest economies of
the world, ongoing problems in the economies of Eurozone, and Brexit that remains still far from following a
foreseeable plan all create pressure on global growth.
The recent global economic outlook report released by the International Monetary Fund (IMF) revised the
global growth anticipations as 3.2% and 3.5% for 2019 and 2020 respectively, which reaffirms the overall
weakening in growth. It is now more probable for the central banks of developed countries to take steps
towards an expansionary monetary policy for the first time after the global crisis, triggered by weakened global
economic activity and more evident downside risks regarding inflation. Although this supports the demand and
risk appetite for the financial assets of developing countries and stimulates their capital markets, the core
reason behind the slowdown in global growth is countries’ eroding growth performance, causing concerns
around the global economy to linger.
The shrinkage of the Turkish economy slowed down in the first quarter of 2019, as we anticipated, and stood
for 2.6%. Positive developments were observed thanks to the steps taken under the leadership of public
authorities within the framework of the economic balancing process. Despite there are risks that still face
global economy, precursor data show that incremental recovery is ongoing, with the impact of rapidly taken
steps and thanks to the strong support of export of goods and travel revenues, in particular.
Having always stood by the real sector when under the relative effect of a fragile growth environment in
economic activity, the banking sector will continue to extend unwavering support to it, backed by the
reassuring steps taken in the field of long-term and sustainable financing for the production capacity of our
country.
The support our Bank extends to those who produce in good and bad times is the common denominator of its
determined efforts of over 65 years to further contribute to Turkey’s sustainable and inclusive growth.
Propelled by our tradition of responsible banking, we extend funding to artisans, small producers, farmer
families and women entrepreneurs in rural areas. Being well aware that this support has the power to transform
not only our customers’ lives but also entire society, we will continue to support the Turkish economy while
increasing our efficiency and developing pioneering practices in our sector through the “Transformation
Program” we are undergoing now.
Respectfully yours,
Dr. Hasan Basri Göktan
Chairman of the Board of Directors, Executive Board Member
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
110
SECTION SEVEN (cont’d)
INFORMATION ON INTERIM ACTIVITY REPORT (cont’d)
I. Interim Period Reports Included the Board of Directors Chairman and General Manager’s
Assessments of the Bank for the Interim Activities (cont’d)
2. General Manager’s Assesments on Interim Report
Esteemed Stakeholders,
In the first six months of 2019, we have continued to support our economy and provide funding to production,
with a total credit volume of TL 27.2 billion - TL 21.7 billion in cash - and an asset size of TL 32.6 billion,
according to our Bank’s consolidated financial results dated 30 June 2019. In parallel with our mission of
supporting production dating back to the day we were established, and being powered by our long-standing
branch network with a strong presence in Anatolia, the loans we extended to our SMEs and farmers stood for
60% of our total loans -- a two-fold rate of the sector’s average.
On the other hand, we have further reinforced our well-established and community-based deposit structure,
hence reaching TL 24 billion in the size of deposits in the first half of 2019 which corresponded to a 11% YoY
increase for our Bank, the unchanging destination of savings for the past 66 years.
We are now undergoing a “Transformation Program” to strengthen our competitive edge, unlock our potential,
and renew our entire infrastructure. Thus, we proceed with a route to growth that is more efficient, community-
based and fit for our Bank’s strategy, while preserving our mission of “Community Banking”.
Within this scope, we will carry on our responsible banking activities embedded in our establishment, by
outreaching owners of small savings and extending compelling finance opportunities to those people who have
been producing and working with us for the past few generations. This is also how we will support our country’s
journey of development.
Respectfully yours,
Erdal Erdem
General Manager
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 30 JUNE 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
111
SECTION SEVEN (cont’d)
INFORMATION ON INTERIM ACTIVITY REPORT (cont’d)
I. Interim Period Reports Included the Board of Directors Chairman and General Manager’s
Assessments of the Bank for the Interim Activities (cont’d)
3. Şekerbank by Numbers
The subsidiaries financial statements, which are consolidated within the framework of the reporting package, are
as follows.
Subsidiaries
(TRL Thousand)
Country
(Foundation/Operating)
Total Assets Equity Net Income
Income
Before Tax
TaxProvision
Şekerbank (Kıbrıs) Ltd. TRNC 323,450 27,512 (526) (573) 47
Şeker Finansal Kiralama A.Ş. Turkey 545,973 64,653 107 (2,388) 2,495
Şekerbank International
Banking Unit Ltd. TRNC 45,795 39,590 670 681 (11)
Şeker Yatırım Menkul
Değerler A.Ş. Turkey 187,255 31,977 (4,224) (5,778) 1,554
Şeker Faktoring A.Ş. Turkey 527,195 58,362 (18,742) (19,870) 1,128
Şeker Finansman A.Ş. Turkey 926,740 2,112 (7,253) (9,621) 2,368
Zahlungsdienste GmbH
der Şekerbank T.A.Ş. Germany 1,856 1,064 1 4 (3)
4. Consolidated Financial Highlights and Ratios
Financial Highlights (TRL Thousand) 30.06.2019 31.12.2018
Assets 32,606,536 32,964,784
Loans (Net) 21,704,544 21,114,071
Securities 3,709,144 4,091,993
Equity 2,179,657 2,452,830
Deposits 23,951,655 22,940,857
Net Profit ( Loss) (280,436) 88,747
Financial Ratios 30.06.2019 31.12.2018
Capital Adequacy Ratio 12.51 14.33
Securities / Assets 11.38 12.41
Loans (Net) / Assets 66.57 65.05
Deposits / Assets 73.46 69.59
5. Significant Developments within the Period
Total assets of the Group reached TRL 32,606,536 Thousand, net loans reached TRL 21,704,544 Thousand and
total net worth reached TRL 2,179,657 Thousand as of 30 June 2019.
Loans compose 66.57 % of the total assets as of 30 June 2019. Consolidated securities portfolio has realized as
TRL 3,709,144 Thousands as of the reporting period. The share of deposits of the Group has reached 73.46% of
the total liabilities. The Group posted TRL 478,331 Thousand as consolidated net interest income and TRL
191,502 Thousand as consolidated net fee and commission income.