Post on 16-Oct-2021
Şekerbank
Türk Anonim Şirketi and
Its Financial Subsidiaries
Consolidated Financial Statements
As of and for the Three-Month Period Ended 31 March 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 31 March 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 three-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, overdue 90 days cash and non-cash loans granted by the Parent Bank
amounting to TRL 587,908 thousand principal and TRL 87,782 thousands 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
Parent Bank had classified this portfolio as “Non-performing Loans”, non-performing loans would have
been TRL 587,908 thousands higher and expected credit loss would have been TRL 201,715 thousands
higher. On the other hand, the accompanying consolidated financial statements includes a general reserve
of total TRL 126,336 thousands of the Parent Bank for the possible effects of the negative circumstances
which may arise in economy of market conditions. As of the balance sheet date, if overdue 90 days loans
had been classified as non-performing loans with expected credit loss provisions provided and general
reserve had not been included, deferred tax asset would have been TRL 16,583 thousands higher and
current period net loss would have been TRL 58,796 thousands higher.
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 31 March 2019, and of the
results of its operations and its cash flows for the three-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
Yaman Polat
Partner
İstanbul, 17 May 2019
THE CONSOLIDATED FINANCIAL REPORT OF ŞEKERBANK T.A.Ş.
FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2019
The consolidated financial report the three-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 three-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 31 March 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
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 : malikontrol@sekerbank.com.tr
Telephone No : (212) 319 71 58
Fax No : (212) 319 71 62
INDEX
Page Number
SECTION ONE
General Information
I. 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 55
SECTION FIVE Explanations and Disclosures on Consolidated Financial Statements
I. Explanations Related to the Consolidated Assets 56
II. Explanations Related to the Consolidated Liabilities 72
III. Explanations Related to the Consolidated Off-Balance Sheet Contingencies and Commitments 83
IV. Explanations Related to the Consolidated Statement of Income 87
V. Explanations on the Risk Group of the Parent Bank 92
VI. Explanations and Notes Related to Subsequent Events 94
SECTION SIX Auditors’ Review Report
I. Explanations on the Auditors’ Review Report 94
II. Other Footnotes and Explanations Prepared by the Independent Auditors 94
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 95
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
1
SECTION ONE
GENERAL INFORMATION
I. 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 guarantees 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 -
SECTION ONE (cont’d)
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
2
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.
(**) General Manager Servet Taze has resigned from his duty as of 01 April 2019 and replaced by Erdal Erdem.
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
TRL Thousand Share (%)
Paid in Capital
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 31 MARCH 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 31 March 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 31.03.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
I. FINANCIAL ASSETS (Net) 1,655,381 3,965,244 5,620,625 2,029,685 3,106,942 5,136,627
1.1 Cash and Cash Equivalents 702,345 3,837,757 4,540,102 1,002,175 2,866,083 3,868,258
1.1.1 Cash and Balances with Central Bank (1) 447,257 3,369,754 3,817,011 930,193 2,689,044 3,619,237
1.1.2 Banks (3) 230,529 467,169 697,698 34,699 171,320 206,019
1.1.3 Money Market Placements 27,099 844 27,943 53,365 5,827 59,192
1.1.4 Expected Losses (-) (2,540) (10) (2,550) (16,082) (108) (16,190)
1.2 Financial Assets at Fair Value Through Profit and Loss (2) 280,467 9,708 290,175 297,944 9,524 307,468
1.2.1 Public Sector Debt Securities 17,994 9,708 27,702 16,048 9,524 25,572
1.2.2 Equity Securities - - - - - -
1.2.3 Other Financial Assets 262,473 - 262,473 281,896 - 281,896
1.3 Financial Assets at Fair Value Through Comprehensive Income (4) 505,092 19,305 524,397 562,381 15,301 577,682
1.3.1 Public Sector Debt Securities 497,515 - 497,515 554,804 - 554,804
1.3.2 Equity Securities 7,577 19,305 26,882 7,577 15,301 22,878
1.3.3 Other Financial Assets - - - - - -
1.4 Derivative Financial Assets (2),(11) 167,477 98,474 265,951 167,185 216,034 383,219
1.4.1
Derivative Financial Assets Measured at Fair Value Through Profit
and Loss 167,477 98,474 265,951 167,185 216,034 383,219
1.4.2
Derivative Financial Assets Measured at Fair Value Through
Comprehensive Income - - - - - -
II. FINANCIAL ASSETS AT AMORTISED COST (NET) 17,172,250 8,086,975 25,259,225 17,075,998 8,087,659 25,163,657
2.1 Loans (5) 16,381,392 6,736,913 23,118,305 15,601,077 6,807,102 22,408,179
2.2 Leasing Receivables (10) 189,105 320,599 509,704 194,366 313,846 508,212
2.3 Factoring Receivables 424,224 - 424,224 443,913 - 443,913
2.4 Financial Assets at Amortised Cost (6) 1,956,864 1,039,898 2,996,762 2,452,249 976,473 3,428,722
2.4.1 Public Sector Debt Securities 1,952,278 307,737 2,260,015 2,447,744 293,076 2,740,820
2.4.2 Other Financial Assets 4,586 732,161 736,747 4,505 683,397 687,902
2.5 Expected Losses (-) (1,779,335) (10,435) (1,789,770) (1,615,607) (9,762) (1,625,369)
III. ASSETS HELD FOR SALE AND DISCONTINUED
OPERATIONS (Net) (16) 393,289 - 393,289 320,984 - 320,984
3.1 Held for sale 393,289 - 393,289 320,984 - 320,984
3.2 Discontinued operations - - - - - -
IV. OWNERSHIP INVESTMENTS (Net) 612,829 - 612,829 612,829 - 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) 608,593 - 608,593 608,593 - 608,593
4.2.1 Unconsolidated Financial Investments in Subsidiaries - - - - - -
4.2.2 Unconsolidated Non-Financial Investments in Subsidiaries 608,593 - 608,593 608,593 - 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) 895,314 3,752 899,066 708,376 3,456 711,832
VI. INTANGIBLE ASSETS (Net) (13) 110,088 - 110,088 94,111 - 94,111
6.1 Goodwill - - - - - -
6.2 Other 110,088 - 110,088 94,111 - 94,111
VII. INVESTMENT PROPERTY (Net) (14) 61,125 - 61,125 61,125 - 61,125
VIII. CURRENT TAX ASSET 5,225 - 5,225 5,369 - 5,369
IX. DEFERRED TAX ASSET (15) 204,728 - 204,728 173,996 - 173,996
X. OTHER ASSETS (Net) (17) 453,218 314,567 767,785 492,004 192,250 684,254
TOTAL ASSETS 21,563,447 12,370,538 33,933,985 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 31.03.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
I. DEPOSITS (1) 13,271,059 11,295,787 24,566,846 12,835,889 10,104,968 22,940,857
II. FUNDS BORROWED (3) 503,218 2,696,234 3,199,452 473,392 3,126,688 3,600,080
III. MONEY MARKET BALANCES (4) 494,906 - 494,906 192,096 - 192,096
IV. MARKETABLE SECURITIES ISSUED (Net) (5) 889,970 - 889,970 1,243,684 - 1,243,684
4.1 Bills 490,646 - 490,646 516,302 - 516,302
4.2 Asset backed securities 381,727 - 381,727 701,850 - 701,850
4.3 Bonds 17,597 - 17,597 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) 6,013 71,596 77,609 30,261 91,824 122,085
7.1
Derivative Financial Liabilities Measured at Fair Value Through
Profit and Loss 6,013 71,596 77,609 30,261 91,824 122,085
7.2
Derivative Financial Liabilities Measured at Fair Value Through
Comprehensive Income - - - - - -
VIII. FACTORING PAYABLES 7,123 - 7,123 554 - 554
IX. FINANCE LEASE PAYABLES (Net) (7) 205,983 15,295 221,278 12,363 12,744 25,107
X. PROVISIONS (9) 496,120 2,323 498,443 486,646 4,236 490,882
10.1 Restructuring provisions - - - - - -
10.2 Reserve for employee benefits 95,383 569 95,952 87,508 533 88,041
10.3 Insurance technical provisions (Net) - - - - - -
10.4 Other provisions 400,737 1,754 402,491 399,138 3,703 402,841
XI. CURRENT TAX LIABILITY (10) 79,310 41 79,351 63,038 45 63,083
XII. DEFERRED TAX LIABILITY (10) 1,925 - 1,925 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) 452,175 492,305 944,480 452,571 451,050 903,621
14.1 Loans - - - - - -
14.2 Other Debt Instruments 452,175 492,305 944,480 452,571 451,050 903,621
XV. OTHER LIABILITIES (6) 316,519 270,989 587,508 505,778 422,595 928,373
XVI. SHAREHOLDERS' EQUITY (13) 2,330,903 34,191 2,365,094 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 (164,083) - (164,083) (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 (165,918) - (165,918) (165,918) - (165,918)
16.3
Other Comprehensive Income/Expense Items not to be Recycled to
Profit or Loss 68,744 - 68,744 68,744 - 68,744
16.4
Other Comprehensive Income/Expense Items to be Recycled to
Profit or Loss (12,317) 29,136 16,819 (9,167) 24,511 15,344
16.5 Profit Reserves 1,368,413 4,146 1,372,559 1,758,536 4,146 1,762,682
16.5.1 Legal Reserves 301,279 4,220 305,499 296,784 4,220 301,004
16.5.2 Status Reserves - - - - - -
16.5.3 Extraordinary Reserves 980,731 - 980,731 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 (130,922) (706) (131,628) (427,440) (766) (428,206)
16.6.1 Prior Years’ Income/ (Loss) (36,962) (1,121) (38,083) (515,982) (1,622) (517,604)
16.6.2 Current Year Income/ (Loss) (93,960) 415 (93,545) 88,542 856 89,398
16.7 Minority Shares 43,068 1,615 44,683 38,846 1,503 40,349
TOTAL LIABILITIES 19,055,224 14,878,761 33,933,985 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 31.03.2019 31.12.2018
Ref. TRL FC Total TRL FC Total
A. OFF BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III) 9,227,677 11,722,641 20,950,318 11,200,444 10,906,698 22,107,142
I. GUARANTEES AND SURETIES (1) 3,473,141 2,547,175 6,020,316 3,399,645 2,519,339 5,918,984
1.1. Letters of guarantee 3,464,554 996,658 4,461,212 3,392,210 993,034 4,385,244
1.1.1. Guarantees subject to State Tender Law 164,174 4,444 168,618 148,504 3,772 152,276
1.1.2. Guarantees given for foreign trade operations - - - - - -
1.1.3. Other letters of guarantee 3,300,380 992,214 4,292,594 3,243,706 989,262 4,232,968
1.2. Bank loans - 132,898 132,898 - 132,949 132,949
1.2.1. Import letter of acceptance - 132,898 132,898 - 132,949 132,949
1.2.2. Other bank acceptances - - - - - -
1.3. Letters of credit 1,976 266,179 268,155 1,976 260,858 262,834
1.3.1. Documentary letters of credit 1,976 266,179 268,155 1,976 260,858 262,834
1.3.2. Other letters of credit - - - - - -
1.4. Prefinancing given as guarantee - - - - - -
1.5. Endorsements - 268,066 268,066 - 174,680 174,680
1.5.1. Endorsements to the Central Bank of Turkey - 268,066 268,066 - 174,680 174,680
1.5.2. Other endorsements - - - - - -
1.6. Purchase guarantees for securities issued - - - - - -
1.7. Factoring guarantees - - - - - -
1.8. Other guarantees 6,611 883,374 889,985 5,459 957,818 963,277
1.9. Other sureties - - - - - -
II. COMMITMENTS (1) 2,821,094 547,595 3,368,689 2,587,245 86,990 2,674,235
2.1. Irrevocable commitments 2,312,362 545,426 2,857,788 2,050,562 84,759 2,135,321
2.1.1. Forward asset purchase commitments 133,851 534,109 667,960 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 1,028,268 11,317 1,039,585 976,300 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 413,204 - 413,204 341,685 - 341,685
2.1.8. Tax and fund liabilities from export commitments 10,925 - 10,925 10,032 - 10,032
2.1.9. Commitments for credit card expenditure limits 504,503 - 504,503 473,944 - 473,944
2.1.10. Commitments for promotions related with credit cards and banking activities 493 - 493 501 - 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 221,118 - 221,118 225,869 - 225,869
2.2. Revocable commitments (4) 508,732 2,169 510,901 536,683 2,231 538,914
2.2.1. Revocable loan granting commitments 508,229 - 508,229 535,704 - 535,704
2.2.2. Other revocable commitments 503 2,169 2,672 979 2,231 3,210
III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 2,933,442 8,627,871 11,561,313 5,213,554 8,300,369 13,513,923
3.1 Derivative financial instruments for hedging purposes 936,000 - 936,000 936,000 - 936,000
3.1.1 Fair value hedge 936,000 - 936,000 936,000 - 936,000
3.1.2 Cash flow hedge - - - - - -
3.1.3 Hedge of net investment in foreign operations - - - - - -
3.2 Held for trading transactions 1,997,442 8,627,871 10,625,313 4,277,554 8,300,369 12,577,923
3.2.1 Forward foreign currency buy/sell transactions 276,799 460,712 737,511 447,560 672,968 1,120,528
3.2.1.1 Forward foreign currency transactions-buy 188,297 182,613 370,910 231,148 332,755 563,903
3.2.1.2 Forward foreign currency transactions-sell 88,502 278,099 366,601 216,412 340,213 556,625
3.2.2 Swap transactions related to f.c. and interest rates 1,592,019 7,281,898 8,873,917 3,371,929 6,908,365 10,280,294
3.2.2.1 Foreign currency swap-buy 40,269 3,883,655 3,923,924 693,999 3,847,410 4,541,409
3.2.2.2 Foreign currency swap-sell 1,501,750 2,147,787 3,649,537 2,327,930 1,865,237 4,193,167
3.2.2.3 Interest rate swaps-buy 25,000 625,228 650,228 175,000 597,859 772,859
3.2.2.4 Interest rate swaps-sell 25,000 625,228 650,228 175,000 597,859 772,859
3.2.3 Foreign currency, interest rate and securities options 128,624 757,780 886,404 458,065 610,742 1,068,807
3.2.3.1 Foreign currency options-buy 27,608 416,913 444,521 234,015 289,080 523,095
3.2.3.2 Foreign currency options-sell 101,016 340,867 441,883 224,050 321,662 545,712
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 - 127,481 127,481 - 108,294 108,294
B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 444,688,050 239,481,917 684,169,967 436,117,794 224,698,837 660,816,631
IV. ITEMS HELD IN CUSTODY 4,244,245 1,751,287 5,995,532 4,261,936 1,578,609 5,840,545
4.1. Customer fund and portfolio balances - - - - - -
4.2. Investment securities held in custody 539,539 480,357 1,019,896 513,304 436,509 949,813
4.3. Checks received for collection 1,825,607 122,098 1,947,705 1,807,316 135,081 1,942,397
4.4. Commercial notes received for collection 69,716 250,943 320,659 64,174 158,429 222,603
4.5. Other assets received for collection 3,340 720,187 723,527 2,124 682,216 684,340
4.6. Assets received for public offering - - - - - -
4.7. Other items under custody 1,806,042 177,702 1,983,744 1,875,017 166,374 2,041,391
4.8. Custodians 1 - 1 1 - 1
V. PLEDGED ITEMS 435,842,456 236,371,681 672,214,137 427,323,477 221,791,699 649,115,176
5.1. Marketable securities 22,000 63 22,063 22,000 59 22,059
5.2. Guarantee notes 102,707,235 41,323,856 144,031,091 100,340,591 38,821,464 139,162,055
5.3. Commodity - - - - - -
5.4. Warranty - - - - - -
5.5. Properties 29,266,782 12,496,954 41,763,736 29,033,655 12,149,563 41,183,218
5.6. Other pledged items 302,613,552 182,477,101 485,090,653 296,771,411 170,744,419 467,515,830
5.7. Pledged items-depository 1,232,887 73,707 1,306,594 1,155,820 76,194 1,232,014
VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES 4,601,349 1,358,949 5,960,298 4,532,381 1,328,529 5,860,910
TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 453,915,727 251,204,558 705,120,285 447,318,238 235,605,535 682,923,773
The accompanying explanations and notes form an integral part of these financial statements.
8
The accompanying explanations and notes form an integral part of these financial statements.
9
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF INCOME
TRL THOUSAND
Reviewed Reviewed
INCOME STATEMENT Note CURRENT PERIOD PRIOR PERIOD
Ref. 01.01.2019 -31.03.2019 01.01.2018 -31.03.2018
I. INTEREST INCOME (1) 1,079,847 905,803
1.1 Interest on Loans 944,637 764,926 1.2 Interest Received From Reserve Deposits 14,135 8,830 1.3 Interest Received From Banks 9,714 6,589 1.4 Interest Received From Money Market Placements 1,850 17,682 1.5 Interest Received From Marketable Securities Portfolio 85,534 91,102 1.5.1 Financial Assets at Fair Value Through Profit and Loss 1,869 1,401 1.5.2 Financial Assets at Fair Value Through Comperehensive Income 24,181 7,010 1.5.3 Financial Assets at Amortised Cost 59,484 82,691 1.6 Financial Leasing Income 13,171 12,427 1.7 Other Interest Income 10,806 4,247 II. INTEREST EXPENSE (-) (2) 866,286 549,216
2.1 Interest on Deposits 636,796 388,547 2.2 Interest on Funds Borrowed 53,871 40,060 2.3 Interest on Money Market Transactions 57,090 42,287 2.4 Interest on Securities Issued 82,160 63,941
2.5 Leasing Interest Expense 10,704 957 2.6 Other Interest Expense 25,665 13,424
III. NET INTEREST/INCOME (I - II) 213,561 356,587
IV. NET FEES AND COMMISSIONS INCOME 98,433 93,181 4.1 Fees and Commissions Received 127,667 113,461 4.1.1 Non-cash Loans 19,629 18,766 4.1.2 Other 108,038 94,695 4.2 Fees and Commissions Paid 29,234 20,280 4.2.1 Non-cash Loans 506 249 4.2.2 Other 28,728 20,031 V. DIVIDEND INCOME (3) 21 -
VI. NET TRADING INCOME/LOSSES (NET) (4) 15,666 (50,014)
6.1 Trading gains/ (losses) on securities (32,922) 3,129 6.2 Gains/(loses) on derivative financial transactions 158,380 44,793 6.3 Foreign exchange gains/ (losses) (109,792) (97,936) VII. OTHER OPERATING INCOME (5) 30,409 18,933
VIII. TOTAL OPERATING PROFIT (III+IV+V+VI+VII) 358,090 418,687
IX. EXPECTED LOSSES PROVISIONS (-) (6) 183,316 87,827
X. OTHER PROVISIONS (-) (6) 2,353 46,822
XI. PERSONNEL EXPENSES (-) 133,953 103,769
XII. OTHER OPERATING EXPENSES (-) (7) 145,668 156,105
XIII. NET OPERATING INCOME/(LOSS) (VIII-IX-X-XI-XII) (107,200) 24,164
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) (107,200) 24,164
XVIII. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) 17,892 4,761
18.1 Current tax charge (12,260) (1,018) 18.2 Deferred tax charge (+) (41,743) (26,964) 18.3 Deferred tax credit (-) 71,895 32,743
XIX.
NET PROFIT/(LOSS) FROM CONTINUED
OPERATIONS(XVII±XVIII) (10) (89,308) 28,925
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) (89,308) 28,925
25.1 Group’s profit/loss (93,545) 28,931
25.2 Non-controlling interest 4,237 (6) Earnings per share (0.077) 0.025
The accompanying explanations and notes form an integral part of these financial statements.
10
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPEREHENSIVE INCOME
TRL THOUSAND
Reviewed Reviewed
CURRENT PERIOD PRIOR PERIOD
01.01.2019-31.03.2019 01.01.2018-31.03.2018
I. PROFIT/LOSS FOR THE PERIOD (89,308) 28,925
II. OTHER COMREHENSIVE INCOME 1,572 (2,506)
2.1 Other Income/Expense Items not to be Recycled to Profit or Loss - -
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 - -
2.1.5 Deferred Taxes on Other Comprehensive Income not to be Recycled to Profit or Loss - -
2.2 Other Income/Expense Items to be Recycled to Profit or Loss 1,572 (2,506)
2.2.1 Translation Differences 2,418 1,220
2.2.2 Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at
FVOCI
(1,064) (4,710)
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 218 984
III. TOTAL COMPREHENSIVE INCOME (I+II) (87,736) 26,419
The accompanying explanations and notes form an integral part of these financial statements.
11
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 - 31.03.2018
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 - - - - - - - - - - - - 28,931 28,931 (6) 28,925
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 - - - 76 - - - 1,220 (3,726) - (128) - - (2,558) (229) (2,787)
XI. Profit Distribution - - - - - - - - - - 358,200 (359,200) - (1,000) - (1,000)
11.1 Dividends Paid - - - - - - - - - - - (1,000) - (1,000) - (1,000)
11.2 Transfers to Reserves - - - - - - - - - - 358,200 (358,200) - - - -
11.3 Other - - - - - - - - - - - - - - - -
-
Balances at end of the period (III+IV…+X+XI) 1,158,000 1,834 - (165,578) 62,153 (13,199) - 11,439 2,227 - 1,761,924 (516,843) 28,931 2,330,888 35,629 2,366,517
Reviewed
CURRENT PERIOD
01.01.2019 - 31.03.2019
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 - - - - - - - - - - - - (93,545) (93,545) 4,237 (89,308)
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 - - - - - - - 2,321 (846) - - - - 1,475 97 1,572
XI. Profit Distribution - - - - - - - - - - (390,123) 390,123 - - - -
11.1 Dividends Paid - - - - - - - - - - - - - - - -
11.2 Transfers to Reserves - - - - - - - - - - (390,123) 390,123 - - - -
11.3 Other - - - - - - - - - - - - - - - -
-
Balances at end of the period (III+IV…+X+XI) 1,158,000 1,835 - (165,918) 78,122 (9,378) - 22,785 (5,966) - 1,372,559 (38,083) (93,545) 2,320,411 44,683 2,365,094
12
ŞEKERBANK T.A.Ş. CONSOLIDATED STATEMENT OF CASH FLOWS
TRL THOUSAND
Reviewed Reviewed
Note CURRENT PERIOD PRIOR PERIOD
Ref. 01.01.2019 - 31.03.2019 01.01.2018 - 31.03.2018
A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating Profit Before Changes in Operating Assets and Liabilities (434,983) (406,666)
1.1.1 Interest Received 1,331,486 735,197
1.1.2 Interest Paid (877,641) (544,733)
1.1.3 Dividend Received 21 -
1.1.4 Fees and Commissions Received 127,667 113,461
1.1.5 Other Income 247,573 13,543
1.1.6 Collections From Previously Written Off Loans 102,377 77,606
1.1.7 Payments to Personnel and Service Suppliers (134,809) (132,909)
1.1.8 Taxes Paid (5,088) (15,567)
1.1.9 Others (1,226,569) (653,264)
1.2 Changes in Operating Assets and Liabilities 819,210 (1,911,987)
1.2.1 Net (Increase) Decrease in Financial Assets at Fair Value Through Profit or Loss (7,882) (28,586)
1.2.2 Net (Increase) Decrease in Due From Banks 6,551 (395)
1.2.3 Net (Increase) Decrease in Loans (671,450) (986,670)
1.2.4 Net (Increase) Decrease in Other Assets 38,397 (347,741)
1.2.5 Net Increase (Decrease) in Bank Deposits 504,140 (1,706,327)
1.2.6 Net Increase (Decrease) in Other Deposits 1,450,459 491,433
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 (188,907) 489,283
1.2.9 Net Increase (Decrease) in Matured Payables - -
1.2.10 Net Increase (Decrease) in Other Liabilities (312,098) 177,016
I. Net Cash Provided From Banking Operations 384,227 (2,318,653)
B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net Cash Flow Provided From Investing Activities 538,401 132,502
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 (3,742) (9,055)
2.4 Sales of Tangible Assets 8,630 29,650
2.5 Purchase of Financial Assets at Fair Value Through Comprehensive Income (23,288) (513,874)
2.6 Sale of Financial Assets at Fair Value Through Comprehensive Income 27,207 767,219
2.7 Purchase of Financial Assets at Amortised Cost - (166,526)
2.8 Sale of Financial Assets at Amortised Cost 555,809 40,502
2.9 Others (26,215) (15,414)
C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net Cash Provided from Financing Activities (77,885) 121,895
3.1 Cash Obtained from Funds Borrowed and Securities Issued 383,114 479,759
3.2 Cash Used for Repayment of Funds Borrowed and Securities Issued (439,330) (354,273)
3.3 Equity Instruments Issued - -
3.4 Dividends Paid - (1,000)
3.5 Payments for Leases (21,669) (2,591)
3.6 Others - -
IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents 39,460 29,924
V. Net Increase in Cash and Cash Equivalents 884,203 (2,034,332)
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 2,928,786 1,855,136
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
13
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.
SECTION THREE (cont’d)
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
14
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 31 March 2019 the Parent
Bank translates its foreign currency transactions with the Parent Bank’s exchange rates and subsidiaries of the
Parent Bank translate 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 translating 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 translation derived from the consolidated
subsidiaries’ currency translation differences amounting to TRL 2,321 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 31 March 2019.
The transactions and balances between the consolidated financial subsidiaries and the Parent Bank are blaterally
eliminated.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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
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. For the
purpose of hedging the fair value of a portfolio of financial assets or financial liabilities, the Parent Bank may
apply the provisions of TFRS 9 or TAS 39. In this context, the Parent Bank has chosen to apply TFRS 9 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
16
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 (1,727) 3,390 1,138 (467)
Constant Maturity
Swap
Fixed interest government
bonds
Fixed interest
rate risk (31,361) 21,186 - (46,033)
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 non-
performing loans are rediscounted at the effective interest rate on the net book value and the related amount is
classified between the “Expected Loss Provisions” account and the “Interest on Loans” account in the income
statement.
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 31 MARCH 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
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 31 MARCH 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)
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 26,882 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 45,926 Thousand.
SECTION THREE (cont’d)
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
19
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 31 March 2019, the fair value of these loans is TRL 215,011 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
20
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.
Includes financial assets that have objective evidence of impairment as of the reporting date. 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 31 March 2019, the Group has no reverse repo transactions (31 December 2018 – None).
As of 31 March 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
21
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 31 March 2019, the Group has TRL 393,289 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
22
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 31 March 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
Motor 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
23
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 revised TAS 19 effective from 1 January 2013, actuarial gain/losses are recorded under equity. As
of 31 March 2019, the carrying value of employee benefit provisions is TRL 95,952 Thousand that consists of
employee termination benefit provisions amounting to TRL 85,089 Thousand and employee vacation pay
provisions amounting to TRL 10,863 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 31 MARCH 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)
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.
SECTION THREE (cont’d)
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
25
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 31 March 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 71,895 Thousand (31 March
2018 – TRL 32,743 Thousand) is stated under the tax provision line in the income statement, the deferred tax
expense of TRL 41,743 Thousand is presented in the deferred tax expense effect line in the income statement (31
March 2018 - TRL 26,964 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 31 MARCH 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
The borrowing costs related to purchase, production, or construction of qualifying assets that require significant
time to be prepared for use and sale are included in the cost of assets until the relevant assets become ready to be
used or to be sold. Financial investment income obtained by temporary placement of undisbursed investment loan
in financial investments is offset against borrowing costs qualified for capitalization.
All other borrowing costs are recorded to the statement of income in the period they are incurred.
As of 31 March 2019 outstanding issued bonds amount of the Group is TRL 490,646 Thousand (31 December
2018 – TRL 516,302 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şekerbank T.A.Ş. 08.02.2019 50,000 77 days
Şekerbank T.A.Ş. 28.02.2019 132,000 91 days
Şeker Finansal Kiralama A.Ş. 17.04.2018 15,205 350 days
Şeker Finansal Kiralama A.Ş. 07.06.2018 9,931 350 days
Şeker Finansal Kiralama A.Ş. 05.09.2018 4,591 350 days
Şeker Finansal Kiralama A.Ş. 18.01.2019 37,577 98 days
Şeker Finansal Kiralama A.Ş. 18.01.2019 37,424 119 days
Şeker Finansal Kiralama A.Ş. 21.01.2019 7,603 95 days
Şeker Finansal Kiralama A.Ş. 21.01.2019 17,398 116 days
Şeker Finansal Kiralama A.Ş. 22.02.2019 50,000 119 days
Şeker Faktoring A.Ş. 24.05.2018 25,891 364 days
Şeker Faktoring A.Ş. 07.09.2018 1,000 364 days
Şeker Faktoring A.Ş. 22.03.2019 60,000 364 days
Şeker Yatırım Menkul Değerler A.Ş. 06.03.2019 16,580 98 days
Şeker Yatırım Menkul Değerler A.Ş. 19.03.2019 9,825 73 days
As of 31 March 2019 outstanding issued marketable securities amount of the Group is TRL 17,597 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. 02.05.2017 3,772 728 days
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
27
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 31 March 2019 the Group has the Asset Covered Bonds amounting to TRL 381,727 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 58,297 Thousand of unused investment
incentives as of 31 March 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
28
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 93,908 160,008 98,634 (138,989) 213,561
Net Fees and Commission Income and Other Operating Income 32,352 65,859 11,380 19,251 128,842
Personnel Expenses (6,416) - (787) (126,750) (133,953)
Dividend Income - - - 21 21
Trading Profit/(Loss) 10,364 - (162) 5,464 15,666
Expected Loss Provisions (81,602) (97,639) (974) (3,101) (183,316)
Other Provision Expenses - - - (2,353) (2,353)
Other Operating Expenses (6,240) (27) (693) (138,708) (145,668)
Profit/(Loss) before taxes 42,366 128,201 107,398 (385,165) (107,200)
Taxation - - - - 17,892
Net Profit for the Period (89,308)
Current Period Commercial SME Retail
Treasury
/Investment Undistributed Total
Assets 7,943,326 13,232,333 1,316,044 8,911,147 2,531,135 33,933,985
Liabilities 5,128,647 2,344,651 17,093,548 5,606,417 3,760,722 33,933,985
Prior Period
Corporate SME
Retail
Other
Total
Net Interest Income 56,802 108,750 66,585 124,450 356,587
Net Fees and Commission Income and Other Operating Income 32,959 61,778 11,563 5,814 112,114
Personnel Expenses - - - (103,769) (103,769)
Dividend Income - - - - -
Trading Profit/(Loss) 4,844 - (187) (54,671) (50,014)
Expected Loss Provisions (40,387) (46,740) (571) (129) (87,827)
Other Provision Expenses - - - (46,822) (46,822)
Other Operating Expenses (8,393) (1,244) (458) (146,010) (156,105)
Profit/(Loss) before taxes 45,825 122,544 76,932 (221,137) 24,164
Taxation - - - - 4,761
Net Profit for the Period 28,925
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
29
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 1,920 Thousand payment was made in the related period.
The details of theaccounted Right-of-use of the Assets are recognized as follows by basis of the asset:
1 January 2019 31 March 2019
Right-of-use of the Assets 188,553 179,848
Right-of-use of the Vehicles 12,089 13,095
Total 200,642 192,943
Depreciation expenses related to the asset usage right recognized are as follows:
31 March 2019
Right-of-use of the Real Estates 13,118
Right-of-use of the Vehicles 1,578
Total 14,696
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
Leases (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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
30
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 12.65 % (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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
31
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 1,586,192 -
Gains recognized in equity as per TAS 70,219 -
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 35,879 -
Common Equity Tier 1 Capital Before Deductions 2,852,125 -
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 15,344 -
Improvement costs for operating leasing 68,632 -
Goodwill (net of related deferred tax liability) 110,088 -
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) 52,146 -
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 101,456 -
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 422,206 -
Total Common Equity Tier 1 Capital 2,429,919 -
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
32
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) 2,429,919 -
TIER II CAPITAL
Debt instruments and share issue premiums deemed suitable by the BRSA 928,414 -
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) 29,916 -
Tier II Capital Before Deductions 958,330 -
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 958,330 -
Total Capital (The sum of Tier I Capital and Tier II Capital) 3,388,248 -
Deductions from 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 6,912 -
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
33
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) 3,381,337 -
Total risk weighted amounts 26,726,927 -
CAPITAL ADEQUACY RATIOS
Core Capital Adequacy Ratio (%) 9.09 -
Tier 1 Capital Adequacy Ratio (%) 9.09 -
Capital Adequacy Ratio (%) 12.65
BUFFERS
Total additional Common Equity Tier 1 Capital requirement ratio (a+b+c) 2.56 -
a) Bank specific total common equity tier 1 capital ratio 2.50 -
b) Capital conservation buffer requirement 0.06 -
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 3.09 -
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) 29,916 -
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
34
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
35
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) 3,556,377 -
Deductions from 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
36
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
37
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) 150 478.4 300
Par value of instrument
(Million TRL) 150 478.4 300
Accounting
classification 346 347 346
Original date of
issuance 24.05.2018 12.06.2017 22.12.2017
Demand or time Maturity Maturity Maturity
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
38
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 and comes after deposits and all other receivables
In priority of receivables, it comes
after the debt instruments which are nonsubordinated loans
In priority of debt 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
39
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 31 MARCH 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)
I. Explanations Related to Consolidated Shareholders’ Equity (cont’d)
Information on borrowing instruments to be included in the equity calculation (cont’d):
T T-1 T-2 T-3 T-4
TOTAL CAPITAL
Common Equity Tier 1 Capital 2,429,919 2,332,214 2,234,509 2,136,804 2,429,919
Transition Process Not Applied Common Equity Tier 1 Capital (*) 2,136,804 2,136,804 2,136,804 2,136,804 2,136,804
Tier I Capital 2,429,919 2,332,214 2,234,509 2,136,804 2,429,919
Transition Process Not Applied Tier I Capital (**) 2,136,804 2,136,804 2,136,804 2,136,804 2,136,804
Total Capital 3,381,337 3,370,544 3,359,750 3,348,956 3,381,337
Transition Process Not Applied Total Capital (***) 3,348,956 3,348,956 3,348,956 3,348,956 3,348,956
TOTAL RISK WEIGHTED AMOUNTS
Total risk weighted amounts 26,726,927 26,726,927 26,726,927 26,726,927 26,726,927
CAPITAL ADEQUACY RATIOS
Common Equity Tier 1 Capital Adequacy Ratio (%) 9.09 8.73 8.36 8.00 9.09
Transition Process Not Applied Common Equity Tier 1 Capital
Adequacy Ratio (%) (****) 8.00 8.00 8.00 8.00 8.00
Tier 1 Capital Adequacy Ratio (%) 9.09 8.73 8.36 8.00 9.09
Transition Process Not Applied Tier 1 Capital Adequacy Ratio (%)
(****) 8.00 8.00 8.00 8.00 8.00
Capital Adequacy Ratio (%) 12.65 12.61 12.57 12.53 12.65
Transition Process Not Applied Capital Adequacy Ratio (%) (****) 12.53 12.53 12.53 12.53 12.53
LEVERAGE RATIO
Leverage ratio total risk amount 42,286,897 42,286,897 42,286,897 42,286,897 42,286,897
Leverage ratio 5.75 5.52 5.28 5.05 5.75
Transition Process Not Applied Leverage ratio (%) (*****) 5.05 5.05 5.05 5.05 5.05
(*) 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 31 MARCH 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
Currency risk is the possibility 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 31 March 2019, the Group’s balance sheet short position is TRL 1,329,782 Thousand (31 December 2018 –
TRL 1,649,176 Thousand short) and long position on the off balance sheet amounting to TRL 1,624,484 Thousand
(31 December 2018 - TRL 1,861,972 Thousand long), resulting in total net long position of TRL 294,702 Thousand
(31 December 2018 - TRL 212,796 Thousand total net long).
The announced current foreign exchange buying rates of the Parent Bank at 31 March 2019 and the previous five
working days in full TRL are as follows:
22.03.2019 25.03.2019 26.03.2019 27.03.2019 28.03.2019 29.03.2019
USD 5.5274 5.6458 5.4945 5.3307 5.5423 5.6284
CHF 5.5458 5.6667 5.5193 5.3489 5.5538 5.6393
GBP 7.2457 7.4321 7.2467 7.0259 7.2780 7.3354
100 JPY 4.9872 5.1152 4.9707 4.8130 5.0149 5.0704
EURO 6.2630 6.3858 6.2162 6.0091 6.2335 6.3188
The simple arithmetic averages of the major current foreign exchange buying rates of the Parent Bank for the thirty
days before 31 March 2019 are as follows:
Monthly Average
Foreign Exchange Rate
USD 5.4649
CHF 5.4495
GBP 7.1849
100 JPY 4.9039
EURO 6.1768
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 1,510,289 1,332,275 527,190 3,369,754
Banks 206,852 197,905 62,412 467,169
Financial Assets at Fair Value Through Profit and Loss 2,970 6,738 - 9,708
Money Market Placements 844 - - 844
Financial Assets at Fair Value Through Other Comprehensive Income - 19,305 - 19,305
Loans (*) 5,534,713 2,660,411 71,010 8,266,134
Subsidiaries, Associates and Entities Under Common Control - - - -
Financial Assets at Amortised Cost - 1,039,524 374 1,039,898
Derivative Financial Assets For Hedging Purposes - - -
Tangible Assets - 3,752 - 3,752
Intangible Assets - - - -
Other Assets 27,286 249,824 11,732 288,842
Total Assets 7,282,954 5,509,734 672,718 13,465,406
Liabilities
Bank Deposits 64,421 138,403 119 202,943
Foreign Currency Deposits 4,770,162 5,737,022 585,660 11,092,844
Money Market Borrowings - - - -
Funds Provided From Other Financial Institutions 526,160 2,189,705 2,583 2,718,448
Securities Issued (**) - 492,305 - 492,305
Sundry Creditors 220,393 (98,556) 132,469 254,306
Other Liabilities 23,104 10,905 333 34,342
Total Liabilities 5,604,240 8,469,784 721,164 14,795,188
Net Balance Sheet Position 1,678,714 (2,960,050) (48,446) (1,329,782)
Net Off-Balance Sheet Position (1,787,161) 3,346,048 65,597 1,624,484
Financial Derivative Assets 1,113,136 4,023,003 257,093 5,393,232
Financial Derivative Liabilities 2,900,297 676,955 191,496 3,768,748
Non-Cash Loans 1,383,187 1,158,768 5,220 2,547,175
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 1,281,615 749 2,519,339
About Currency Risk Table as of 31 March 2019;
The principal amount of currency indexed loans amounting TRL 668,173 Thousand and accruals amounting TRL 540,449 Thousand are shown under loans.
The principal amount of currency indexed funds borrowed amounting to TRL 22,116 Thousand and accruals amounting TRL 98 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 98,474 Thousand
Prepaid expenses: TRL 19,425 Thousand .Derivative Financial Liabilities Held-for-Trading: TRL 71,596 Thousand
Unearned income from installment sale of assets: TRL 4,145 Thousand, Receivables from foreign currency in equity: TRL 29,136 Thousand
Financial Derivative Asset amount includes TRL 319,132 Thousand forward asset purchase commitment and TRL 382,604 Thousand option contracts.
Financial Derivative Liabilities amount includes TRL 214,977 Thousand forward asset selling commitment and TRL 375,176 Thousand option contracts.
(**) Securities Issued includes also the issuances of subordinated debts amounting to TRL 492,305 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 31 MARCH 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
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 31 MARCH 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)
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 2.35 0.52 25.74
Financial Assets at Fair Value Through Profit and Loss 2.68 5.39 - 7.64
Money Market Placements - - - 27.30
Financial Assets at Fair Value Through Other Comprehensive Income - - - 16.48
Loans 6.66 9.35 2.80 21.29
Financial Assets at Amortised Cost - 5.05 - 4.75
Liabilities
Bank Deposits 1.04 2.57 - 25.04
Other Deposits 1.94 3.81 0.91 20.43
Money Market Borrowings - - - 24.45
Sundry Creditors 0.36 2.35 - -
Securities Issued - 6.82 - 8.27
Funds Provided From Other Financial Institutions 1.48 4.17 - 10.82
(*) 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 31 MARCH 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)
(*) The subordinated debt instruments in balance sheet also includes the TRL 944,480 Thousand bonds issued as subordinated loans.
(**) TRL 215,011 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 959,631 - - - - 2,857,380 3,817,011
Banks 563,304 10,010 - 612 - 123,772 697,698
Financial Assets at Fair Value Through Profit and Loss 24,484 10,345 25,147 2,434 9,890 2,864 75,164
Money Market Placements 27,943 - - - - - 27,943
Financial Assets at Fair Value Through Other Comprehensive Income - 64,936 3,226 429,353 19,305 7,577 524,397
Loans(**) 7,196,788 2,791,351 5,305,771 7,034,326 615,973 1,323,035 24,267,244
Financial Assets at Amortised Cost 697,279 646,146 497,306 649,572 506,459 - 2,996,762
Other Assets 478,540 22,542 50,406 153,123 4,560 818,595 1,527,766
Total Assets 9,947,969 3,545,330 5,881,856 8,269,420 1,156,187 5,133,223 33,933,985
Liabilities
Bank Deposits 528,414 - 15,533 118 - 223,444 767,509
Other Deposits 15,045,869 3,261,893 2,206,719 67,922 - 3,216,934 23,799,337
Money Market Borrowings 494,906 - - - - - 494,906
Sundry Creditors 14,269 64,361 - 2,805 - 364,341 445,776
Securities Issued (*) 629,840 945,550 259,060 - - - 1,834,450
Funds Provided From Other Financial Institutions 500,728 1,138,692 720,482 211,728 406,426 221,396 3,199,452
Other Liabilities 101,094 - 72,926 244,687 92,034 2,881,814 3,392,555
Total Liabilities 17,315,120 5,410,496 3,274,720 527,260 498,460 6,907,929 33,933,985
Balance Sheet Long Position - - 2,607,136 7,742,160 657,727 - 11,007,023
Balance Sheet Short Position (7,367,151) (1,865,166) - - - (1,774,706) (11,007,023)
Off-Balance Sheet Long Position - 58,000 10,000 450,000 625,228 - 1,143,228
Off-Balance Sheet Short Position - (30,000) (20,000) (468,000) (625,228) - (1,143,228)
Total Position (7,367,151) (1,837,166) 2,597,136 7,724,160 657,727 (1,774,706) -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 31 MARCH 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
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 31 MARCH 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)
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.
- 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.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 31 MARCH 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)
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 first quarter of 2019, the average total liquidity coverage ratio decreased compared to previous quarter’s
average. The average total liquidity coverage ratio, which was 180.2 in the previous quarter and decreased to 163.4
with the decrease in the net cash outflow level. The ratio of FX liquidity coverage on average has decreased to
244.7 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 (7.08%), balances with the central banks (74.10%) and first quality liquid borrowing instruments (18.82%).
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 31 MARCH 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):
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) 6,169,944 3,018,848
CASH OUTFLOW
2
Retail deposits and deposits from small
business customers, of which: 18,026,100 7,510,040 1,554,076 751,004
3 Stable deposits 4,970,680 - 248,534 -
4 Less stable deposits 13,055,420 7,510,040 1,305,542 751,004
5 Unsecured wholesale funding, of which: 6,280,364 3,715,350 3,942,290 2,043,040
6 Operational deposits 848,440 651,168 212,110 162,792
7 Non-operational deposits 3,771,024 2,423,608 2,069,280 1,239,674
8 Unsecured funding 1,660,900 640,574 1,660,900 640,574
9 Secured wholesale funding - -
10 Other cash outflows of which: 1,201,509 433,873 1,201,509 433,873
11
Outflows related to derivative exposures and
other collateral requirements 1,090,264 322,628 1,090,264 322,628
12 Outflows related to restructured financial instruments - - - -
13
Payment commitments and other off-balance
sheet commitments granted for debts to financial markets 111,245 111,245 111,245 111,245
14
Other revocable off-balance sheet
commitments and contractual obligations 168,740 171,780 8,437 8,589
15 Other irrevocable or conditionally revocable off-balance sheet obligations 3,999,672 625,502 714,370 86,589
16 TOTAL CASH OUTFLOWS 7,420,682 3,323,095
17 Secured receivables - - - 4,076
18 Unsecured receivables 3,552,769 1,507,972 2,487,865 1,280,781
19 Other cash inflows 1,156,284 804,394 1,156,284 804,394
20 TOTAL CASH INFLOWS 4,709,053 2,312,366 3,644,149 2,089,251
Total Adjusted
Value
21 TOTAL HQLA 6,169,944 3,018,848
22 TOTAL NET CASH OUTFLOWS 3,776,533 1,233,844
23 LIQUIDITY COVERAGE RATIO (%) 163.38 244.67
(*) 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 31 MARCH 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)
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 first three months of 2019 is presented below.
Current Period
TRL+FC FC
January 166.64 198.63
February 157.35 228.73
March 165.43 340.81
Prior Period
TRL+FC FC
October 191.52 215.98
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
53
November 154.95 229.94
December 181.25 243.57
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 1,595,104 2,221,907 - - - - - 3,817,011
Banks 123,772 563,307 10,007 - 612 - - 697,698
Financial Assets at Fair Value
Through Profit and Loss - 24,024 10,025 25,147 3,058 10,046 2,864 75,164
Money Market Placements - 27,943 - - - - - 27,943
Financial Assets at Fair Value Through Other Comprehensive
Income 7,418 1,027 3,226 2,917 490,344 19,465 - 524,397
Loans (**)(****) 224,784 2,475,800 4,104,880 3,319,433 11,349,566 1,500,599 1,292,182 24,267,244
Financial Assets at Amortised Cost - - - 163,700 1,807,283 1,025,779 - 2,996,762
Other Assets 197,135 455,105 22,594 50,470 153,006 4,560 644,896 1,527,766
Total Assets 2,148,213 5,769,113 4,150,732 3,561,667 13,803,869 2,560,449 1,939,942 33,933,985
Liabilities
Bank Deposits 223,444 528,414 - 15,533 118 - - 767,509
Other Deposits 3,216,934 15,045,560 3,261,238 2,201,103 74,499 3 - 23,799,337
Funds Provided From Other Financial
Institutions 855 451,203 572,375 513,770 615,941 1,045,308 - 3,199,452
Money Market Borrowings - 494,906 - - - - - 494,906
Securities Issued (***) - 177,665 252,454 78,124 381,727 944,480 - 1,834,450
Sundry Creditors 361,719 14,052 64,694 1,482 3,091 - 738 445,776
Other Liabilities 344,185 101,689 161,931 90,302 235,012 94,342 2,365,094 3,392,555
Total Liabilities 4,147,137 16,813,489 4,312,692 2,900,314 1,310,388 2,084,133 2,365,832 33,933,985
Liquidity Gap (1,998,924) (11,044,376) (161,960) 661,353 12,493,481 476,316 (425,890) -
Net Off-Balance Sheet Position - 35,486 (7,489) (45,660) (108,272) - - (125,935)
Derivative Financial Assets - 4,149,492 125,689 465,217 686,043 625,228 - 6,051,669
Derivative Financial Liabilities - 4,114,006 133,178 510,877 794,315 625,228 - 6,177,604
Non-Cash Loans 2,144,111 112,520 755,078 2,378,125 531,870 98,612 - 6,020,316
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 944,480 Thousand bonds issued as subordinated loans.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
54
(****) TRL 215,011 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 31 MARCH 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)
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 5.78 % (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 34,496,650
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 221,563 76,512
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 (114,847) (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 52,180 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 2,854,549 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 42,286,897 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
56
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) 33,382,828 33,435,723
2 (Assets deducted in determining Tier 1 capital) (418,260) (410,250)
3 Total on-balance sheet risks (sum of lines 1 and 2) 32,964,568 33,025,473
Derivative financial instruments and credit derivatives
4
Replacement cost associated with all derivative instruments and
credit derivatives 210,838 502,592
5 Add-on amounts for PFE associated with all derivative instruments and credit derivatives 78,122 90,884
6
Total risks of derivative financial instruments and credit derivatives
(sum of lines 4 to 5) 288,960 593,476
Securities or commodity financing transactions (SCFT)
7 Risks from SCFT assets - -
8 Risks from brokerage activities related exposures 52,180 4,380
9
Total risks related with securities or commodity financing
transactions (sum of lines 7 to 8) 52,180 4,380
Other off-balance sheet transactions
10 Gross notional amounts of off-balance sheet transactions 9,462,803 8,923,422
11 (Adjustments for conversion to credit equivalent amounts) (481,614) (484,344)
12 Total risks of off-balance sheet items (sum of lines 10 and 11) 8,981,189 8,439,078
Capital and total risks
13 Tier 1 capital 2,444,147 2,636,681
14 Total risks (sum of lines 3, 6, 9 and 12) 42,286,897 42,062,407
Leverage ratio
15 Leverage ratio 5.78 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
57
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) 23,044,816 21,508,128 1,843,585
2 Standardised approach (SA) 23,044,816 21,508,128 1,843,585
3 Internal rating-based (IRB) approach - - -
4 Counterparty credit risk 207,087 272,700 16,567
5 Standardised approach for counterparty credit risk (SA-CCR) 207,087 272,700 16,567
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 609,413 458,013 48,753
17 Standardised approach (SA) 609,413 458,013 48,753
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) 26,726,927 24,785,039 2,138,154
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
58
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 109,782 171,506 133,420 392,847
Balances with the Central Bank of Turkey 337,475 3,198,241 796,773 2,296,190
Other - 7 - 7
Total 447,257 3,369,754 930,193 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 337,475 2,300,099 796,773 1,978,035
Unrestricted time deposit - 4 - 2
Restricted time deposit - 898,138 - 318,153
Total 337,475 3,198,241 796,773 2,296,190
The reserve deposits include TRL 1,272,972 Thousand of FC unrestricted demand deposit (31 December 2018 – TRL 1,034,773 Thousand)
and TRL 335,001 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 59,143 Thousand and it includes TRL 18,477 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 4% - 20% (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 75,164 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 - 46,481 - 53,261
Swap Transactions 142,882 42,213 160,213 152,620
Futures Transactions - - - -
Options 19 9,780 106 10,153
Other - - - -
Total 142,901 98,474 160,319 216,034
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
59
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 (+) 7,796 16,239
Change in Interest Rates (*) (45,798) (15,056)
Change in Credit Risk (**) 53,759 (3,369)
Impairment Provision (628) (152)
Collections (-) (21,997) (42,466)
Net Balance 215,011 221,879
(*) 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 31 March 2019, the value of the loans amounting to TRL 215,011 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 252,703 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 230,529 467,169 34,699 171,320
Domestic 230,527 329,724 34,676 64,767
Foreign 2 137,445 23 106,553
Branches and head office abroad - - - -
Total 230,529 467,169 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: None (31 December 2018 - 171,631).
a.2. Financial assets at fair value through other comprehensive income subject to repurchase agreements:
None (31 December 2018 - None).
Net book value of unrestricted financial assets at fair value through other comprehensive income is TRL 524,397
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 541,679 563,641
Quoted on a stock exchange 541,519 563,481
Not quoted on a stock exchange 160 160
Share certificates 28,704 24,700
Quoted on a stock exchange - -
Not quoted on a stock exchange 28,704 24,700
Impairment provision(-) (45,986) (10,659)
Total 524,397 577,682
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
60
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:
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 435 7 447 11
Corporate shareholders - - - -
Individual shareholders 435 7 447 11
Indirect loans granted to shareholders 406,115 17,676 898,986 18,697
Loans granted to employees 22,234 47 21,760 46
Total 428,784 17,730 921,193 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
61
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 17,124,914 1,814,029 511,655 1,161,504
Corporation loans 106,113 - 5,706 4,913
Export loans 4,874,741 102,772 - 18,349
Import loans 9,484 807 - 879
Loans given to
financial sector 88,907 187 - -
Consumer loans 833,310 55,502 4,898 9,074
Credit cards 235,816 12,181 - -
Other 10,976,543 1,642,580 501,051 1,128,289
Specialized loans 1,932,002 221,707 - 78,073
Other receivables 593 18,277 - -
Total 19,057,509 2,054,013 511,655 1,239,577
(*) TRL 203,836 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 Provision 132,508 - 112,960 -
Significant Increase in Credit Risk - 585,885 - 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 7,074,993 380,631 183,757
Medium and Long-term loans 11,982,516 1,673,382 1,567,475
Total 19,057,509 2,054,013 1,751,232
(*) TRL 203,836 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
62
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 16,166 743,054 759,220
Housing Loans - 240,064 240,064
Car Loans 377 9,018 9,395
General Purpose Loans 15,785 468,989 484,774
Other 4 24,983 24,987
Consumer Loans –Indexed to FC - 241 241
Housing Loans - 241 241
Car Loans - - -
General Purpose Loans - - -
Other - - -
Consumer Loans-FC 5 33,420 33,425
Housing Loans - 27,006 27,006
Car Loans 5 1,132 1,137
General Purpose Loans - 5,282 5,282
Other - - -
Individual Credit Cards-TRL 150,354 - 150,354
With Installments 39,843 - 39,843
Without Installments 110,511 - 110,511
Individual Credit Cards-FC 174 - 174
With Installments - - -
Without Installments 174 - 174
Personnel Loans-TRL 686 8,786 9,472
Housing Loans - 46 46
Car Loans - 12 12
General Purpose Loans 686 7,348 8,034
Other - 1,380 1,380
Personnel Loans- Indexed to FC - - -
Housing Loans - - -
Car Loans - - -
General Purpose Loans - - -
Other - - -
Personnel Loans-FC - 1,987 1,987
Housing Loans - 1,598 1,598
Car Loans - - -
General Purpose Loans - 389 389
Other - - -
Personnel Credit Cards-TRL 6,850 - 6,850
With Installments 1,875 - 1,875
Without Installments 4,975 - 4,975
Personnel Credit Cards-FC 8 - 8
With Installments - - -
Without Installments 8 - 8
Overdraft Accounts-TRL(Real Person) (*) 95,303 3,136 98,439
Overdraft Accounts-FC (Real Person) - - -
Total 269,546 790,624 1,060,170
(*) As of 31 March 2019, overdraft accounts for real persons include TRL 4,352 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
63
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 397,316 4,925,530 5,322,846
Business Loans - 10,922 10,922
Car Loans 2,237 42,949 45,186
General Purpose Loans 378,534 4,871,659 5,250,193
Other 16,545 - 16,545
Commercial loans with installment facility - Indexed to FC - 1,021,719 1,021,719
Business Loans - 1,632 1,632
Car Loans - 34,985 34,985
General Purpose Loans - 985,102 985,102
Other - - -
Commercial loans with installment facility –FC 52,151 1,020,405 1,072,556
Business Loans - - -
Car Loans - 703 703
General Purpose Loans 9,045 1,019,702 1,028,747
Other 43,106 - 43,106
Corporate Credit Cards-TRL 90,602 - 90,602
With Installments 19,719 - 19,719
Without Installments 70,883 - 70,883
Corporate Credit Cards-FC 9 - 9
With Installments - - -
Without Installments 9 - 9
Overdraft Accounts-TRL (Legal Entity) 124,884 - 124,884
Overdraft Accounts-FC (Legal Entity) - - -
Total 664,962 6,967,654 7,632,616
f. Loans according to borrowers:
Current Period Prior Period
Public 65,970 56,303
Private 22,796,784 22,183,841
Total 22,862,754 22,240,144
(*) TRL 203,836 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 22,808,822 22,186,916
Foreign loans 53,932 53,228
Total 22,862,754 22,240,144
(*) TRL 203,836 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
64
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 25,728 40,689
Loans with doubtful collectability 146,331 125,649
Uncollectible loans 889,355 820,144
Total 1,061,414 986,482
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(*) 70,312 267,049 1,071,395
Loans which are restructured 7,231 25,002 22,192
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 (+) 114,393 36,011 15,052
Transfers from other categories of non-performing loans (+) - 124,442 83,244
Transfers to other categories of non-performing loans (-) (124,442) (83,244) -
Collections (-) (19,403) (41,121) (41,853)
Write-off (-) - - -
Sold (-) - - -
Corporate and commercial loans - - -
Retail loans - - -
Credit cards - - -
Current period end balance (*) 70,312 267,049 1,071,395
Provision (-) (*) 25,728 146,331 889,355
Net Balances on Balance Sheet 44,584 120,718 182,040
(*) TRL 11,175 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
65
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 9,825 Thousand non-performing foreign currency loans and specific provision
for these loans amounting to TRL 9,825 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) 70,312 267,049 1,071,395
Provision (-) 25,728 146,331 889,355
Loans to Real Persons and Legal Entities (Net) 44,584 120,718 182,040
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 8,538 24,751 7,488
Provisions (-) 8,538 24,751 7,488
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 Management applies provision policy for the “non-performing loans” in accordance with
the requirements of the Turkish banking regulation adopted by the BRSA.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
66
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:
None. (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 880,300 957,904
Other - -
Total 880,300 957,904
a.2. Financial assets at amortised cost subject to repurchase agreements are TRL 476,636 Thousand (31
December 2018 - TRL 131,270 Thousand).
b. Information on public sector debt investments at amortised cost:
Current Period Prior Period
Government Bonds 1,952,278 2,447,744
Treasury Bills 307,737 293,076
Other Public Sector Debt Securities - -
Total 2,260,015 2,740,820
Net book value of unrestricted financial assets at amortised cost is TRL 1,639,826 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
67
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 3,014,072 3,435,585
Quoted on a stock exchange 2,278,530 2,749,702
Not quoted on a stock exchange 735,542 685,883
Impairment Provision (-) (17,310) (6,863)
Total 2,996,762 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 64,360 215,449
Purchases during the year - 367,015
Disposals through Sales and Amortisation (368,455) (3,686)
Provision reversal / Impairment provision (-) (10,447) (3,552)
Revaluation Effect (117,418) 361,145
Total 2,996,762 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
68
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 28,142 31,195 81,041 26,000 1,580
Share Premiums - 1,208 - - - - -
Other Comprehensive
Income/Expense Items not to be
Reclassified to Profit or Loss - - 5,150 (822) - - (326)
Legal Reserves 1,910 7,822 4,793 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 (3,250) (27,434) 372 (4,845) (33,219) 9,136 (192)
Prior Years’ Profits and
Losses (2,427) (29,699) (24) (1,719) (31,701) - (228)
Current Year’s Profit ans
Losses (823) 2,265 396 (3,126) (1,518) 9,136 36
Total Core Capital 27,215 66,811 38,457 32,622 75,586 18,501 1,062
SUPPLEMENTARY
CAPITAL - - - - - - -
CAPITAL 27,215 66,811 38,457 32,622 75,586 18,501 1,062
NET AVAILABLE EQUITY 27,215 66,811 38,457 32,622 75,586 18,501 1,062
(*)Financial information is audited as of 31 March 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
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
95,138 8,598 51,727 1 - (133) 1,038 74,871 -
588,608 (588,045) 585,156 125 - (1,287) (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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
69
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 64.95
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
(*)
326,869 27,215 5,497 8,693 109 (823) (2,427) 13,555
551,216 66,811 43,251 13,422 - 2,265 (29,699) 53,054
44,468 38,457 3,752 710 - 396 (24) 19,554
248,975 32,622 20,860 7,469 1,166 (3,126) (1,719) 37,708
491,903 75,586 75,910 24,357 - (1,518) (31,701) 81,436
1,022,923 18,501 1,226 10,636 - 9,136 - 32,245
1,828 1,062 - - - 36 (228) -
(*)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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
70
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 44 15,993
Purchases 44 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 188,868 188,824
Capital Commitment - -
Share percentage at the end of the period (%) 100 100
f. Measurement of consolidated subsidiaries:
Current Period Prior Period
Measured with cost 188,868 188,824
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 37,368 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 37,368 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 31 MARCH 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)
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 560,772 559,326
Unearned Financial Profit from Leasing (-) (112,461) (112,473)
Cancelled Leasing Amounts (-) - -
Net Leasing Investment 448,311 446,853
(*) Includes TRL 61,393 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 24,576 - 6,866 -
Cashflow Hedge - - - -
Hedge of net investment risks in foreign operations - - - -
Total 24,576 - 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 31 MARCH 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 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 31 March 2019, the Group has TRL 61,125 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 - 12,292
Write off - -
Transfer - 23,075
Disposals (-) - -
Revaluation value increase/(decrease) - 25,758
Impairment Provision/Reversal - -
Closing Balance, 31 March 2019 61,125 61,125
15. Explanations on deferred tax asset:
a. As of 31 March 2019, deferred tax asset computed on the financial losses is TRL 202,803 Thousand (31
December 2018 - TRL 172,464 Thousand). Carried forward tax losses over which deferred tax asset
computed is TRL 34,684 Thousand (31 December 2018 - TRL 33,614 Thousand).
Current Period Prior Period
Tangible Assets Base Differences (15,920) (15,261)
Provisions (*) 253,276 237,215
Valuation of Financial Assets (81,435) (94,296)
Investment Incentive 7,790 6,784
Tax Deductions and Exceptions 4,408 4,408
Financial Losses 34,684 33,614
Net Deferred Tax Assets/(Liabilities) 202,803 172,464
(*) 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 31 MARCH 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)
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 30,152 (683)
Deferred Tax Classified under Equity 187 (1,987)
TFRS 9 Impact - 90,333
Deferred Tax Asset (Liability), End of the Period 202,803 172,464
Şeker Finansal Kiralama A.Ş. recognized deferred tax asset amounting to TRL 7,790 Thousand (31 December
2018 - TRL 6,784 Thousand) as of 31 March 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 81,003 157,719
Write off - -
Transfer - -
Disposals (-) (8,698) (100,420)
Revaluation value increase/(decrease) - (2,599)
Impairment Provision/Reversal - 259
Closing Balance, 31 March 2019 393,289 320,984
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 31 MARCH 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)
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 395,561 - 1,135,129 6,371,178 476,074 337,682 501,374 6,176 9,223,174
Foreign currency
deposits 1,245,598 - 1,114,408 5,806,251 555,551 501,350 1,497,297 466 10,720,921
Residents in Turkey 1,147,018 - 847,636 5,267,465 393,897 248,465 304,040 436 8,208,957
Residents abroad 98,580 - 266,772 538,786 161,654 252,885 1,193,257 30 2,511,964
Public sector deposits 65,065 - 549 13,069 34,368 974 1,032 - 115,057
Commercial deposits 1,165,365 - 291,037 1,379,553 14,644 8,032 7,324 13 2,865,968
Other institutions
deposits 39,695 - 19,262 434,673 5,251 2,816 597 - 502,294
Precious metals deposits 305,650 - - - 48,132 3,454 14,687 - 371,923
Interbank deposits 223,444 - 523,341 5,074 - 8,880 6,770 - 767,509
Central Bank of
Turkey - - - - - - - - -
Domestic Banks 833 - 520,764 - - 8,880 6,652 - 537,129
Foreign Banks 5,960 - 2,577 5,074 - - 118 - 13,729
Participation Banks 216,651 - - - - - - - 216,651
Other - - - - - - - - -
Total 3,440,378 - 3,083,726 14,009,798 1,134,020 863,188 2,029,081 6,655 24,566,846
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 deposits 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 31 MARCH 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)
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 4,755,900 5,111,823 4,483,835 1,752,827
Foreign currency saving deposits 2,404,281 1,975,908 5,477,967 739,974
Other deposits in the form of saving deposits - - - -
Branches’ deposits under foreign
authorities' insurance - - - -
Off-shore banking regions’ deposits under foreign authorities' insurance - - - -
Total 7,160,181 7,087,731 9,961,802 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 10,664 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 31 MARCH 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)
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 - 59,001 - 59,314
Swap Transactions 4,850 2,637 13,509 19,186
Futures Transactions - - - -
Options 25 9,958 160 11,441
Other - - - 1,883
Total 4,875 71,596 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 463,012 246,735 444,168 316,788
From Foreign Banks, Institutions and Funds 40,206 2,449,499 29,224 2,809,900
Total 503,218 2,696,234 473,392 3,126,688
b. Maturity analysis of borrowings:
Current Period Prior Period
TRL FC TRL FC
Short-term 470,869 207,249 443,047 281,131
Medium and long-term 32,349 2,488,985 30,345 2,845,557
Total 503,218 2,696,234 473,392 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 31 MARCH 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)
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 4,000 - 3,000 - Istanbul Stock Exchange money market takings - - - - Borsa Istanbul Debts to Money Markets 66,244 - 64,500 - Funds Provided Through Repo Transactions 424,662 - 124,596 - Total 494,906 - 192,096 -
5. Marketable Securities Issued:
As of 31 March 2019 outstanding issued bonds amount of the Group is TRL 490,646 Thousand (31 December
2018 - TRL 516,302 Thousand).
Issuer Issuance Date Issuance Amount Maturity
Şekerbank T.A.Ş. 08.02.2019 50,000 77 days
Şekerbank T.A.Ş. 28.02.2019 132,000 91 days
Şeker Finansal Kiralama A.Ş. 17.04.2018 15,205 350 days
Şeker Finansal Kiralama A.Ş. 07.06.2018 9,931 350 days
Şeker Finansal Kiralama A.Ş. 05.09.2018 4,591 350 days
Şeker Finansal Kiralama A.Ş. 18.01.2019 37,577 98 days
Şeker Finansal Kiralama A.Ş. 18.01.2019 37,424 119 days
Şeker Finansal Kiralama A.Ş. 21.01.2019 7,603 95 days
Şeker Finansal Kiralama A.Ş. 21.01.2019 17,398 116 days
Şeker Finansal Kiralama A.Ş. 22.02.2019 50,000 119 days
Şeker Faktoring A.Ş. 24.05.2018 25,891 364 days
Şeker Faktoring A.Ş. 07.09.2018 1,000 364 days
Şeker Faktoring A.Ş. 22.03.2019 60,000 364 days
Şeker Yatırım Menkul Değerler A.Ş. 06.03.2019 16,580 98 days
Şeker Yatırım Menkul Değerler A.Ş. 19.03.2019 9,825 73 days
As of 31 March 2019 outstanding issued marketable securities amount of the Group is TRL 17,597 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. 02.05.2017 3,772 728 days
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 31 MARCH 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)
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 31 March 2019 the Group has the Asset Covered Bonds amounting to TRL 381,727 Thousand (31 December
2018 - TRL 701,850 Thousand).
Current Period Prior Period
TRL FC TRL FC
Bills 490,646 - 516,302 -
Asset Backed Securities 381,727 - 701,850 -
Bonds 17,597 - 25,532 -
Total 889,970 - 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 15,557 13,128 15,521 12,741
1-4 Years 338,271 207,440 13,605 12,366
More than 4 Years 1,910 710 - -
Total 355,738 221,278 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 1,138 - 16,592 -
Cashflow Hedge - - - -
Hedge of net investment risks in foreign operations - - - -
Total 1,138 - 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 31 MARCH 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)
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 78,899 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 31 March 2019, the Group has recorded in the financial statements TRL 85,089 Thousand reserve for
employee termination benefits (31 December 2018 - TRL 79,953 Thousand).
As of 31 March 2019, the Group allocated a reserve of TRL 10,863 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 5,102 10,931
Interest Cost 3,117 8,483
Actuarial Loss/(Gain) - (4,747)
Indemnity Paid During the Term (3,083) (10,125)
Total 85,089 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 78,899 67,045
Credit Card Liquid Point Promotion Provisions 425 432
Retirement Fund Provisions 159,499 159,499
Legal Case Provisions 25,767 21,987
SDIF Premium Provision 5,152 6,984
Other Provisions 132,749 146,894
Total 402,491 402,841
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 31 MARCH 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)
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 31 March 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 31 MARCH 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)
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 had TRL 11,218 Thousand corporate tax to be paid as of 31
March 2019 (31 December 2018 - TRL 505 Thousand corporate tax to be paid).
a.2 Information on taxes payable:
Current Period Prior Period
Corporate Tax 11,218 505
Taxation on Securities 27,821 17,247
Capital Gains Tax on Property 753 610
Banking Insurance Transaction Tax (BITT) 28,891 30,925
Foreign Exchange Tax - -
Value Added Tax Payable 892 1,408
Other 8,380 11,167
Total 77,955 61,862
a.3 Information on premiums:
Current Period Prior Period
Social Security Premiums-Employee 510 430
Social Security Premiums-Employer 826 705
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 40 26
Other 1 10
Total 1,396 1,221
b. Explanations on deferred tax liabilities, if any:
As of 31 March 2019, the Group has TRL 1,925 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 31 MARCH 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)
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 452,175 492,305 452,571 451,050
Subordinated Loans - - - -
Subordinated Debt Instruments 452,175 492,305 452,571 451,050
Total 452,175 492,305 452,571 451,050
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 31 MARCH 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)
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 (14,293) 6,351 (9,167) 4,047
Foreign Exchange Difference - - - -
Total (14,293) 6,351 (9,167) 4,047
14. Information on legal reserves:
Current Period Prior Period
Legal reserves 119,512 115,016
Other legal reserves appropriated in accordance with
special legislation 185,987 185,988
Total 305,499 301,004
15. Information on extraordinary reserves:
Current Period Prior Period
Reserves appropriated by the General Assembly 976,194 1,370,812
Retained earnings 4,537 4,537
Accumulated losses - -
Foreign currency share capital exchange difference - -
Total 980,731 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 31 March 2019 TRL 44,683 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 31 MARCH 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)
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 667,960 96,164
Loan Granting Commitments 1,039,585 987,126
Payment Commitments for Cheques 413,204 341,685
Commitments for Credit Card Expenditure limits 504,503 473,944
Commitments for Promotions related with Credit Cards and Banking Transactions 493 501
Subsidiaries and Associates Capital Commitments - -
Tax and Fund Obligations for Export Commitments 10,925 10,032
Other Commitments 221,118 225,869
Total 2,857,788 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 2,633,924 2,666,086
Temporary Letter of Guarantees 284,676 190,548
Surety ships and Similar Transactions - -
Other Letter of Guarantees 1,542,612 1,528,610
Total 4,461,212 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 1,218,912 1,199,047
With maturity of 1 year or less than 1 year 738,135 746,485
With maturity of more than 1 year 480,777 452,562
Other non-cash loans 4,801,404 4,719,937
Total 6,020,316 5,918,984
Current Period Prior Period
Guarantees 889,985 963,277
Bank Loans 132,898 132,949
Letters of Credit 268,155 262,834
Endorsements 268,066 174,680
Total 1,559,104 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 31 MARCH 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)
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 7,177 0.21 25,549 1.00 5,702 0.17 25,320 1.01
Farming and raising livestock 6,518 0.19 25,549 1.00 5,067 0.15 25,320 1.01
Forestry 570 0.02 - - 547 0.02 - -
Fishery 89 - - - 88 - - -
Manufacturing 277,891 8.01 1,251,283 49.12 283,063 8.33 1,240,193 49.23
Mining 29,455 0.85 110,913 4.35 30,920 0.91 106,051 4.21
Production 234,328 6.75 983,864 38.63 237,947 7.00 995,880 39.53
Electric, gas and water 14,108 0.41 156,506 6.14 14,196 0.42 138,262 5.49
Construction 1,060,356 30.53 535,835 21.04 1,028,496 30.25 551,680 21.90
Services 2,122,455 61.11 732,265 28.75 2,077,372 61.10 699,400 27.75
Wholesale and retail trade 531,707 15.31 131,067 5.15 506,845 14.91 152,502 6.05
Hotel, food and beverage
services 13,174 0.38 5,634 0.22 12,653 0.37 11,627 0.46
Transportation and telecommunication 67,275 1.94 314,941 12.36 80,718 2.37 291,043 11.55
Financial institutions 1,226,834 35.32 161,165 6.33 1,197,165 35.21 125,730 4.99
Real estate and renting services 233,041 6.71 114,205 4.48 227,052 6.68 108,151 4.29
Self-employment services 30 - - - 30 - - -
Education services 2,737 0.08 - - 2,679 0.08 - -
Health and social services 47,657 1.37 5,253 0.21 50,230 1.48 10,347 0.41
Other 5,262 0.14 2,243 0.09 5,012 0.15 2,746 0.11
Total 3,473,141 100.00 2,547,175 100.00 3,399,645 100 2,519,339 100
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 3,165,888 811,591 210,772 163,810
Bank acceptances - 132,898 - -
Letters of credit 1,976 265,846 - -
Endorsements - 268,066 - -
Underwriting commitments - - - -
Guaranteed prefinancing credits - - - -
Other commitments and surety ships 5,351 883,374 1,260 -
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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) 9,197,376 10,923,911
Forward transactions 737,511 1,120,528
Swap transactions 7,573,461 8,734,576
Futures transactions - -
Option transactions 886,404 1,068,807
Interest related derivative transactions (II) 1,300,456 1,545,718
Forward rate transactions - -
Interest rate swap transactions 1,300,456 1,545,718
Interest option transactions - -
Futures interest transactions - -
Other trading derivative transactions (III) 127,481 108,294
A. Total trading derivative transactions (I+II+III) 10,625,313 12,577,923
Types of hedging transactions - -
Fair value hedges 936,000 936,000
Cash flow hedges - -
Net investment hedges - -
B.Total hedging related derivatives 936,000 936,000
Total Derivative Transactions (A+B) 11,561,313 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 31 MARCH 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)
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 31 March 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 188,297 88,502 558,269 1,994,750 27,608 101,016 - -
USD 41,897 75,558 3,673,320 231,449 206,995 119,641 - -
EURO 136,622 202,540 625,228 2,536,983 133,050 175,085 - -
OTHER 4,094 308 185,335 131,757 76,868 46,141 - -
Total 370,910 366,908 5,042,152 4,894,939 444,521 441,883 - -
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 31 March 2019, the Group has fair value hedge with nominal amount of TRL 936,000 Thousand (31
December 2018 - TRL 936,000 Thousand).
As of 31 March 2019, the Group has no cash flow hedges.
As of 31 March 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 31 March 2019, there are 709 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 80,929 Thousand. Provision amount
for these cases is TRL 25,767 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 510,901 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 31 MARCH 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)
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 (*) 810,147 134,490 672,064 92,862
Short Term Loans 479,268 13,786 307,242 7,439
Medium and Long Term Loans 305,855 120,696 352,813 85,422
Interest on Non-Performing Loans 25,024 8 12,009 1
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 53 113 63 108
Domestic Banks 5,785 - 4,882 1,329
Foreign Banks 73 3,690 1 206
Branches and Head Office Abroad - - - -
Total 5,911 3,803 4,946 1,643
c. Interest income from marketable securities portfolio:
Current Period Prior Period
TRL FC TRL FC
Financial Assets At Fair Value Through Profit And Loss 1,654 215 1,233 168
Financial Assets At Fair Value Through Other Comprehensive Income 24,181 - 7,010 -
Financial Assets at Amortised Cost 46,787 12,697 70,976 11,715
Total 72,622 12,912 79,219 11,883
d. Information on interest income received from associates and subsidiaries:
Current Period Prior Period
Interest Income Received From Associates And Subsidiaries - 242
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 (*) 26,915 26,956 16,355 23,705
The Central Bank of Turkey - - - -
Domestic Banks 25,483 3,298 14,408 2,064
Foreign Banks 1,432 23,658 1,947 21,641
Branches and Head Office Abroad - - - -
Other Financial Institutions - - - -
Total 26,915 26,956 16,355 23,705
(*) 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 127 60
c. Information on interest expense to marketable securities issued:
Current Period Prior Period
TRL FC TRL FC
Interest expense on securities issued 70,434 11,726 55,746 8,195
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 129 5,036 762 - - - - 5,927
Saving deposits 37 56,593 275,093 96,987 22,248 25,037 209 476,204
Public sector deposits - 35 522 703 41 44 - 1,345
Commercial deposits 8 14,042 49,499 3,704 506 307 1 68,067
Other deposits - 1,067 13,886 809 184 19 - 15,965
7 days call accounts - - - - - - - -
Precious metal deposits - - - - - - - -
Total 174 76,773 339,762 102,203 22,979 25,407 210 567,508
Foreign Currency -
Foreign currency
deposits 554 5,812 41,986 7,017 3,628 9,700 - 68,697
Bank deposits 334 39 46 - - - - 419
7 days call accounts - - - - - - - -
Precious metal
deposits 172 - - - - - - 172
Total 1,060 5,851 42,032 7,017 3,628 9,700 - 69,288
Grand Total 1,234 82,624 381,794 109,220 26,607 35,107 210 636,796
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
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 21 -
Other - -
Total 21 -
4. Information on net trading income :
Current Period Prior Period
Income 5,450,270 2,828,435
Profit on capital market operations 54 4,127
Profit on derivative financial instruments 757,601 450,678
Foreign exchange gains 4,692,615 2,373,630
Losses (-) 5,434,604 2,878,449
Losses on capital market operations 32,976 998
Losses on derivative financial instruments 599,221 405,885
Foreign exchange losses 4,802,407 2,471,566
5. Information on other operating income :
The information on the factors affecting the Group’s income including new developments, and the explanation on
nature and amount of income earned from such items :
As of 31 March 2019, TRL 30,409 Thousand (31 March 2018 - TRL 18,933 Thousand) stated under other
operating income in the statement of income includes TRL 19,952 Thousand (31 March 2018 - TRL 7,243
Thousand) prior years’ provisions reversal income and TRL 10,457 Thousand (31 March 2018 - TRL 11,690 Thousand) other operating income.
As of 31 March 2019, prior years expense and provision reversal income include TRL 224 Thousand (31 March
2018 - TRL 2,562 Thousand) reversal of credit loss provisions due to collection of cash loans, TRL 179 Thousand
(31 March 2018 - TRL 1,956 Thousand) reversals of non-cash provisions, and TRL 19,549 Thousand (31 March
2018 - TRL 2,725 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 31 MARCH 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)
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 183,316 84,956
12-Month ECL (Stage 1) 26,955 3,065
Significant Increase in Credit Risk (Stage 2) 63,172 44,650
Impaired Credits (Stage 3) 93,189 37,241
Impairment Losses on Securities 1,960 1,416
Financial Assets Measured at Fair Value through Profit or Loss 138 114
Financial Assets Measured at Fair Value through Other Comprehensive Income 1,822 1,302
Impairment Losses on Associates, Subsidiaries and Joint-ventures - -
Associates - -
Subsidiaries - -
Joint-ventures (business partnership) - -
Other (*) 393 48,277
Total 185,669 134,649
(*) Other provisions also include provisions for non-cash loans.
7. Information on other operating expenses:
Current Period Prior Period
Reserve for employee termination benefits 5,136 4,177
Bank social aid provision fund deficit provision - -
Impairment losses on fixed assets - -
Depreciation expenses of fixed assets 23,346 7,521
Impairment losses on intangible assets - -
Goodwill impairment losses - -
Depreciation expenses of intangible assets 9,771 9,104
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 63,877 92,116
Lease Expenses Related to TFRS 16 Exemptions 1,920 19,082
Maintenance expenses 6,017 5,743
Advertisement expenses 641 1,722
Other expenses (**) 55,299 65,569
Loss on sales of assets 5 558
Other (*) 43,533 42,629
Total 145,668 156,105
(*) “Other” includes TRL 8,813 Thousand premiums paid to the Saving Deposit Insurance Fund, TRL 4,062 Thousand legal case provision (31 March 2018 - TRL 8,700 Thousand premiums paid to the Saving Deposit Insurance Fund, TRL 784 Thousand legal
case provision).
(**) Other expenses include TRL 4,194 Thousand communication expenses, TRL 8,649 Thousand computer usage expenses, TRL
2,666 Thousand promotion applications related with credit cards and banking services (31 March 2018 - TRL 4,540 Thousand communication expenses, TRL 11,894 Thousand computer usage expenses, TRL 2,626 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 31 MARCH 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)
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 31 March 2019, the Bank has TRL 107,200 Thousand loss before tax (31 March 2018 - TRL 24,164
Thousand profit before tax), TRL 358,090 Thousand (31 March 2018 - TRL 356,587 Thousand) of
operating income, TRL 98,433 Thousand (31 March 2018 - TRL 93,181 Thousand) of net fees and
commissions income, TRL 185,669 Thousand of provision expenses (31 March 2018 - TRL 134,649
Thousand), TRL 30,409 Thousand (31 March 2018 - TRL 18,933 Thousand) of other operating income and
TRL 145,668 Thousand (31 March 2018 - TRL 156,105 Thousand) of other operating expense.
9. Information on tax provision for continued and discontinued operations:
As of 31 March 2019, the Group has TRL 12,260 Thousand current tax charge (31 March 2018 – TRL
1,018 Thousand current tax charge)and deferred tax benefit on temporary differences is TRL 71,895
Thousand (31 March 2018 – TRL 32,743 Thousand deferred tax benefit), deferred tax charge is TRL 41,743
Thousand(31 March 2018 – TRL 26,964 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 31 March 2019 is TRL 89,308 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 4,237 Thousand (31
March 2018 – TRL 6 Thousand).
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 101,123 84,358
Other 6,915 10,337
Total 108,038 94,695
Other Fees and commissions given Current Period Prior Period
Fees and commissions given to Banks 6,920 5,247
Fees and commissions given for Credit Cards 14,465 7,079
Other 7,343 7,705
Total 28,728 20,031
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 31 MARCH 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)
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 - - 406,115 17,676 - -
Interest and commission income - - 6,751 49 - -
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 242 18 17,843 42 - -
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 2,888 2,546 310,714 374,329 - -
Interest on deposits 127 60 6,575 2,624 - -
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 31 MARCH 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)
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 :
In the normal course of its banking activities, the Parent Bank conducted various business 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) Nature 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 406,115 1.85
Non-cash loans 17,676 0.29
Deposits 313,602 1.28
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 31 March 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 1.52%. Details of these loans are
explained in the Section V, Note V-1a.
As of 31 March 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 7,413 Thousand
(31 March 2018 - TRL 12,023 Thousand).
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 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)
VI. Explanations and notes related to subsequent events:
On 22 April 2019, The Board of Directors has decided to appoint Erdal Erdem who is Deputy General Manager
as General Manager of the Bank, provided that the approval of the Banking Regulation and Supervision Agency.
SECTION SIX
AUDITORS’ REVIEW REPORT
I. Explanations on the Auditors’ Review Report :
The consolidated financial statements for three-month period ended 31 March 2019 were reviewed by DRT
Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ (Member of Deloitte Touche Tohmatsu) and
Auditors’ Review Report dated 17 May 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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
97
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 strong growth performance attained in global economy in 2017 and in the first half of 2018 began to slow
down as of the second half of 2018, with factors that had an impact on developed economies in particular.
With respect to developed countries, while the US economy maintained a robust outlook, the global growth started
to weaken above the expectations as a result of the deteriorating confidence indices in the EU, concerns around
the Italian economy, the unclosed deal of Brexit, and the slowdown in net external demand in Asian economies.
Facing such economic outlook, the European Central Bank (ECB) stated in March that interest rates would be kept
at minimum levels at least until the end of 2019 in an attempt to rejuvenate economy. ECB also announced a new,
two-year Targeted Longer-Term Refinancing Operations (TLTRO-III) program, which will start in September
2019 and end in March 2021. As for developing countries, the growth in China –with the greatest contributions to
the global growth – slowed down because the expansionary policy steps by the Chinese government in order to
support the internal demand brought about expectations for greater fragility on the banking sector, along with the
escalating tension in the Chinese-US relations.
In the first quarter of 2019, uncertainties arising from trade wars did not only worsen producer and consumer
confidence but also impaired the outlook in financial markets. This all resulted in a restricted access to financial
sources and, unsurprisingly, a pressure on the growth for developing countries.
The overall weakness in growth pushed the growth expectations for 2019 and 2020 to be revised. The International
Monetary Fund (IMF) anticipates a 3.6% growth globally for 2018, declining to 3.3% in 2019 and attaining the
levels of 2018 – 3.6% – only in 2020, in its recent global outlook report. The Organization for Economic
Cooperation and Development (OECD) underscores the slowdown in China and Europe and the weaker global
trade as two factors that pose a risk for the global economy, while anticipating a 3.3% and 3.4% growth for 2019
and 2020, respectively.
Despite high risks in the global economy, Turkey closed 2018 with a growth of 2.6%, with precursors for a
recovery in economy thanks to the required structural transformations that were undertaken. Q1 2019 indicators
confirm our expectations for a new momentum in economy, in the aftermath of shrinkage in the fourth quarter of
2018.
The balancing period in economy helped achieve a considerable improvement in the balance of payments, and the
current deficit dropped from USD 47.3 billion to USD 20.72 billion in 2018. The moderate outlook in the balance
of payments is ongoing, supported by export figures in the first quarter of 2019.
The rising inflation caused by the disproportionate depreciation in Turkish Lira – much higher than what was
revealed by macroeconomic indicators in the second half of 2018 – started to decline thanks to economy
authorities’ determined stance focused on stability and reform and economic balancing. We firmly believe that
this determination will be maintained and reassuring steps will be taken as necessary if Turkish Lira is exposed to
unhealthy movements.
The banking sector played a defining role in keeping the wheels of economy turning. Having maintained its robust
structure, the sector continued to finance investments in the first quarter of the year.
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
98
SECTION SEVEN
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)
1. Board of Directors Chairman’s Assesments on Interim Report
Established 65 years ago in order to support agricultural industry, rural development and sustainable production,
Şekerbank has adopted the mission of responsible banking, a key theme for our sector. As required by this mission,
we have continued to support our customers during the times of economic fluctuations. In the first three months
of the year, accordingly, we have provided favorable financing facilities to SMEs and farmers in particular by
pushing our limits, and promoted the development journey of Turkey, just as we have done for 65 years.
Our Bank will keep expanding its broad customer base of farmers and SMEs, with whom it has been working for
generations, and continue unwaveringly to contribute to the Turkish economy through supporting production in
the upcoming period as well.
Kind regards,
Dr. Hasan Basri Göktan
Chairman of the Board of Directors
ŞEKERBANK T.A.Ş. AND ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD FROM 1 JANUARY TO 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
99
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,
Our total credit volume reached TRL 24.3 billion, according to our Bank’s consolidated financial results dated 31
March 2019. In the first three months of 2019, we have continued to support our economy and provide funding to
production. We extended 59% of our loans to SMEs and farmers as of the end of March.
We increased our asset size by 5% year on year and reached TRL 33.9 billion as of 31 March 2019.
The unswerving destination of broad-based savings for 65 years, our Bank has seen a 20% year on year rise in the
size of deposits, attaining TRL 24.6 billion in the first three months of 2019.
We have cemented our brand recognition as a reliable bank through standing by our customers from all parts of
Turkey in good times and in bad times for 65 years. With the aim of carrying our deep-rooted customer base to
the future, we have expanded it and adopted a route of frontal thrusts comprising various end-to-end projects. We
have attained, and will further enrich, our broad-based balance sheet structure thanks to our well-established
network of branches, which remain where they are for a half century, and our human resources competent in local
banking. In the upcoming months, we are planning to take maiden steps into a new period during which we will
undertake a series of ‘firsts’ in our sector.
While carrying out our operations, we will keep making it a top priority to promote Turkey’s development journey
and enhance our people’s welfare, and standing by our SMEs and farmers as they are the backbones of production
and employment.
Kind regards,
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 31 MARCH 2019 (Amounts expressed in thousands of Turkish Lira (TRL) unless otherwise stated.)
100
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 326,869 27,215 (823) (976) 153
Şeker Finansal Kiralama A.Ş. Turkey 551,216 66,811 2,265 737 1,528
Şekerbank International Banking Unit Ltd. TRNC 44,468 38,457 396 396 -
Şeker Yatırım Menkul
Değerler A.Ş. Turkey 248,975 32,622 (3,126) (2,695) (431)
Şeker Faktoring A.Ş. Turkey 491,903 75,586 (1,518) (1,970) 452
Şeker Finansman A.Ş. Turkey 1,022,923 18,501 9,136 11,390 (2,254)
Zahlungsdienste GmbH der Şekerbank T.A.Ş. Germany 1,828 1,062 36 36 -
4. Consolidated Financial Highlights and Ratios
Financial Highlights (TRL Thousand) 31.03.2019 31.03.2018
Assets 33,933,985 32,178,024
Loans (Net) 22,491,703 22,614,713
Securities 3,596,323 2,937,311
Equity 2,365,094 2,366,517
Deposits 24,566,846 20,486,114
Net Profit ( Loss) (89,308) 28,925
Financial Ratios 31.03.2019 31.03.2018
Capital Adequacy Ratio 12.65 12.75
Securities / Assets 10.60 9.13
Loans (Net) / Assets 66.28 70.28
Deposits / Assets 72.40 63.66
5. Financial Standing, Profitability and Solvency
Total assets of the Group reached TRL 33,933,985 Thousand, loans reached TRL 22,491,703 Thousand and total
net worth reached TRL 2,365,094 Thousand as of 31 March 2019.
Loans compose 66.28 % of the total assets as of 31 March 2019. Consolidated securities portfolio has realized as
TRL 3,596,323 Thousands as of the reporting period. The share of deposits of the Group has reached 72.40% of
the total liabilities. The Group posted TRL 213,561 Thousand as consolidated net interest income and TRL 98,433
Thousand as consolidated net fee and commission income.