Albaraka Türk Katılım Bankası: Financial Statements - 31 March 2017

Transcription

1. Albaraka T ürk Katılım Bankası Anonim Şirketi Unconsolidated financial statements and related disclosures at March 31, 2017 together with limited review report (Convenience translation of the limited review report and financial statements originally issued in Turkish – see section three Note XXIII) April 28, 2017 This report contains “Limited Review Report” comprising 2 pages and; “Unconsolidated Financial Statements and Related Disclosures and Footnotes” comprising 85 pages.
2. Convenience Translation of the Limited Review Report Originally Prepared and Issued in Turkish to English (See Note XXIII in Section Three) LIMITED REVIEW REPORT ON INTERIM FINANCIAL INFORMATION To the Board of Directors of Albaraka Türk Katılım Bankası A.Ş.; Introduction We have reviewed the unconsolidated statement of financial position of Albaraka Türk Katılım Bankası A.Ş. (“the Bank”) at 31 March 2017 and the related unconsolidated income statement, unconsolidated statement of income and expense items under shareholders’ equity, unconsolidated statement of changes in shareholders’ equity, unconsolidated statement of cash flows and a summary of significant accounting policies and other explanatory notes to the unconsolidated financial statements for the threemonth-period then ended. The Bank Management is responsible for the preparation and fair presentation of interim financial statements in accordance with the “Regulation on Accounting Applications for Banks and Safeguarding of Documents” published in the Official Gazette no.26333 dated 1 November 2006, and other regulations on accounting records of Banks published by Banking Regulation and Supervision Agency and circulars and interpretations published by Banking Regulation and Supervision Authority, (together referred as “BRSA Accounting and Reporting Legislation”) and Turkish Accounting Standard 34 “Interim Financial Reporting” for those matters not regulated by BRSA Legislation. Our responsibility is to express a conclusion on these interim financial statements based on our review. Scope of Review We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, “Limited 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 performed in accordance with the 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 opinion.
3. Conclusion Based on our review , nothing has come to our attention that causes us to believe that the accompanying unconsolidated financial statements do not give a true view of the financial position of Albaraka Türk Katılım Bankası A.Ş. as of 31 March 2017 and of the results of its operations and its cash flows for the three-month-period then ended in all aspects in accordance with the BRSA Accounting and Reporting Legislation. Report on other regulatory requirements arising from legislation Based on our review, nothing has come to our attention that causes us to believe that the financial information provided in the accompanying interim annual report in Section VIII, are not consistent with the unconsolidated financial statements and disclosures in all material respects. Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of KPMG International Cooperative Alper Güvenç Partner, SMMM 28 April 2017 İstanbul, Turkey Additional paragraph for convenience translation to English: The accounting principles summarized in Note XXIII Section Three, differ from the accounting principles generally accepted in countries in which the accompanying unconsolidated financial statements are to be distributed and International Financial Reporting Standards (“IFRS”). Accordingly, the accompanying financial statements are not intended to present the financial position and results of operations in accordance with accounting principles generally accepted in such countries of users of the unconsolidated financial statements and IFRS.
4. UNCONSOLIDATED INTERIM FINANCIAL REPORT OF ALBARAKA T ÜRK KATILIM BANKASI A.Ş. AS OF AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2017 Bank’s headquarter address Bank’s phone number and facsimile Bank’s website Electronic mail contact info : Saray Mah. Dr. Adnan Büyükdeniz Cad. No:6 34768 Ümraniye / İstanbul : 00 90 216 666 01 01 – 00 90 216 666 16 00 : www.albarakaturk.com.tr : albarakaturk@albarakaturk.com.tr The unconsolidated interim financial report prepared in accordance with the Communiqué on Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks as regulated by the Banking Regulation and Supervision Agency is comprised of the following sections.         GENERAL INFORMATION ABOUT THE BANK UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK EXPLANATIONS ON THE ACCOUNTING PRINCIPLES APPLIED IN THE RELATED PERIOD INFORMATION ON FINANCIAL STRUCTURE AND RISK MANAGEMENT EXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCIAL STATEMENTS OTHER EXPLANATIONS LIMITED REVIEW REPORT INTERIM REPORT The unconsolidated financial statements and related disclosures and footnotes; presented in thousands of Turkish Lira unless otherwise indicated; have been prepared in accordance with the Communiqué on Accounting Applications of Banks and Safeguarding of Documents, Banking Regulation and Supervision Agency Regulations, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related appendices and interpretations and in compliance with the records of our Bank, have been reviewed and presented as attached. Adnan Ahmed Yusuf ABDULMALEK Melikşah UTKU Chairman of the Board of Directors General Manager Temel HAZIROĞLU Yunus AHLATCI Assistant General Manager Financial Reporting Manager Mustafa BÜYÜKABACI Hood Hashem Ahmed HASHEM Chairman of the Audit Committee Member of the Audit Committee Contact information of the personnel in charge of the addressing of questions about this financial report: Name-Surname / Title : Bora ŞİMŞEK / Financial Reporting / Vice Manager Telephone : 00 90 216 666 05 59 Facsimile : 00 90 216 666 16 11
5. Table of contents Page Section one General information I . History of the Bank including its incorporation date, initial legal status and amendments to legal status II. Shareholding structure, shareholders having direct or indirect, joint or individual control over the management and supervision of the Bank and disclosures on related changes in the current year, if any III. Explanation on the chairman and members of board of directors, members of audit committee, general manager and assistant general managers, their areas of responsibility and their shares in the Bank, if any IV. Information on the Bank’s qualified shareholders V. Summary on the Bank’s service activities and field of operations VI. Differences between the Communiqué on Preparation of Consolidated Financial Statements of Banks and Turkish Accounting Standards with respect to consolidation and short explanation about the institutions subject to full or proportional consolidation and institutions which are deducted from equity or not included in these three methods VII. The existing or potential, actual or legal obstacles on immediate transfer of equity or reimbursement of liabilities between the Bank and Its subsidiaries Section two The unconsolidated financial statements I. Balance sheet (Statement of financial position) II. Statement of off-balance sheet III. Statement of income IV. Statement of income and expense items accounted under shareholders’ equity V. Statement of changes in shareholders’ equity VI. Statement of cash flows Section three Accounting policies I. Explanations on basis of presentation II. Explanations on strategy of using financial instruments and foreign currency transactions III. Explanations on forward, option contracts and derivative instruments IV. Explanations on profit share income and expenses V. Explanations on fees, commission income and expenses VI. Explanations on financial assets VII. Explanations on impairment of financial assets VIII. Explanations on offsetting of financial instruments IX. Explanations on sale and repurchase agreements and lending of securities X. Explanations on assets held for sale and discontinued operations and liabilities related to these assets XI. Explanations on goodwill and other intangible assets XII. Explanations on tangible assets XIII. Explanations on leasing transactions XIV. Explanations on provisions and contingent liabilities XV. Explanations on liabilities regarding employee rights XVI. Explanations on taxation XVII. Additional explanations on borrowings XVIII. Explanations on issued share certificates XIX. Explanations on acceptances and availed drafts XX. Explanations on government grants XXI. Explanations on segment reporting XXII. Explanations on other matters XXIII. Additional paragraph for convenience translation 1 1 2 2 3 3 3 5 7 8 9 10 12 13 14 14 15 15 15 16 17 17 17 17 18 19 19 19 20 21 21 21 21 21 21 21
6. Section four Information on financial structure and risk management I . Explanations on the capital adequacy standard ratio II. Explanations on credit risk III. Explanations on currency risk IV. Explanations on position risk of equity securities in banking book V. Explanations on liquidity risk VI. Explanations on leverage ratio VII. Explanations on presentation of financial assets and liabilities at fair values VIII. Explanations regarding the activities carried out on behalf and account of other persons IX. Explanations on risk management X. Explanations on business segments Section five Explanations and notes on the unconsolidated financial statements I. Explanations and notes related to assets II. Explanations and notes related to liabilities III. Explanations and notes related to off-balance sheet commitments IV. Explanations and notes related to the statement of income V. Explanations and notes related to the statements of changes in shareholders’ equity VI. Explanations and notes related to the statement of cash flows VII Explanations related to the risk group of the Bank VIII. Explanations related to domestic, foreign, off-shore branches or investments and foreign representative offices IX. Explanations related to subsequent events 22 30 30 32 32 36 36 36 37 38 39 53 62 64 71 71 72 73 73 Section six Other explanations I. Other issues that have significant effect on the balance sheet or that are ambiguous and/or open to interpretation and require clarification 73 Section seven Limited review report I Explanations on limited review report II. Other notes and explanations prepared by the independent auditors 73 73 Section eight Interim report I. General Information II. Banks Financial Information and Evaluations 74 79
7. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) SECTION ONE GENERAL INFORMATION I. History of the Bank including its incorporation date, initial legal status and amendments to legal status: Albaraka Türk Katılım Bankası Anonim Şirketi (the Bank) was incorporated on November 5, 1984 with the name of Albaraka Türk Özel Finans Kurumu A.Ş., based on the decision of the Council of Ministers numbered 83/7506 and dated December 16, 1983 regarding establishments of Special Finance Houses and obtained the operating permission from the Central Bank of Turkey with the letter numbered 10912 and dated January 21, 1985. Special Finance Houses, operating in accordance with the Communiqués of Under secretariat of Treasury and the Central Bank of Turkey based on the decision of Council of Ministers numbered 83/7506, have been subjected to the provisions of the Banking Law numbered 4389 with the change of law dated December 17, 1999 and numbered 4491. Special Finance Houses have been subjected to the provisions of ‘Communiqué Related to the Incorporation and Activities of Special Finance Houses’ published in the Official Gazette dated September 20, 2001 numbered 24529 by the Banking Regulation and Supervision Agency (BRSA). ‘Communiqué Related to the Incorporation and Activities of Special Finance Houses’ has been superseded by the ‘Communiqué Related to Credit Operations of Banks ‘published in the Official Gazette dated November 1, 2006 numbered 26333 and the Bank operates in accordance with the Banking Law numbered 5411 published in the Official Gazette dated November 1, 2005 numbered 25983. The decision regarding the change in the title of the Bank, in relation with the provisions of the Banking Law numbered 5411, was agreed in the Extraordinary General Meeting dated December 21, 2005 and the title of the Bank was changed as “Albaraka Türk Katılım Bankası A.Ş.’’. The change in the title was registered in Istanbul Trade Registry on December 22, 2005 and published in the Trade Registry Gazette dated December 27, 2005, numbered 6461. The Bank’s head office is located in Istanbul and is operating through 212 (December 31, 2016: 212) local branches and 1 (December 31, 2016: 1) foreign branch and with 3.805 (December 31, 2016: 3.796) staff as of March 31, 2017. II. Shareholding structure, shareholders having direct or indirect, joint or individual control over the management and supervision of the Bank and the disclosures on related changes in the current year, if any: As of March 31, 2017, 54,06% (December 31, 2016: 54,06%) of the Bank’s shares are owned by Albaraka Banking Group located in Bahrain. 24,93% (December 31, 2016: 24,84%) of the shares are publicly traded and quoted at Borsa İstanbul. 1
8. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) III. Explanation on the chairman and members of board of directors, members of audit committee, general manager and assistant general managers, their areas of responsibility and their shares in the Bank, if any: Title Name and Surname Chairman of the Board of Directors (BOD): Adnan Ahmed Yusuf ABDULMALEK Chairman of BOD Master Members of BOD: Yalçın ÖNER Osman AKYÜZ İbrahim Fayez Humaid ALSHAMSI Hamad Abdulla A. EQAB Fahad Abdullah A. ALRAJHI Hood Hashem Ahmed HASHEM Mustafa BÜYÜKABACI (**) Dr. Khaled Abdulla Mohamed ATEEQ (**) Dr. Bekir PAKDEMİRLİ Prof. Dr. Kemal VAROL Muhammad Zarrug M. RAJAB (**) Vice Chairman of BOD Member of BOD Member of BOD Member of BOD Member of BOD Member of BOD Member of BOD Member of BOD Member of BOD Independent Member of BOD Independent Member of BOD Master Bachelor Bachelor Bachelor Bachelor Master Master Doctorate Doctorate Doctorate Bachelor General Manager: Melikşah UTKU Member of BOD / General Manager Master - Assistant General Managers: Turgut SİMİTCİOĞLU Assistant General Manager Responsible for Business Branches (GM Deputy) Assistant General Manager Responsible for Support (GM Deputy) Assistant General Manager Responsible for Legal Assistant General Manager Responsible for Credits Assistant General Manager Responsible for Risk Monitoring Assistant General Manager Responsible for Finance Assistant General Manager Responsible for Sales Assistant General Manager Responsible for Marketing Assistant General Manager Responsible for Treasury and Financial Institutions Assistant General Manager Responsible for Operations Assistant General Manager Responsible for Human Values and Administrative Affairs Assistant General Manager Responsible for Information Technologies Master - Bachelor - Bachelor - Master - Bachelor - Chairman of Audit Committee Member of Audit Committee Master Master Mehmet Ali VERÇİN Nihat BOZ Cenk DEMİRÖZ Deniz AKSU Temel HAZIROĞLU Nevzat BAYRAKTAR Hasan ALTUNDAĞ Malek Khodr TEMSAH Fatih BOZ Süleyman ÇELİK Ali TUĞLU Audit Committee: Mustafa BÜYÜKABACI (**) Hood Hashem Ahmed HASHEM Educational Degree Ownership Percentage (%) Administrative Function and Responsibility Master (*) 0,0000 0,0000 (*) 0,0000 (*) 0,0000 (*) 0,0000 (*) (*) 0,0342 Bachelor - Bachelor - Master - Master - Bachelor - Master - (*) 0,0000 (*) The share amounts of these persons are between TL 1-10 (full). (**) The relevant appointments have been in accordance with the decision taken at the General Assembly Meeting held on 23.03.2017 and Mr. Muhammad Zarrug M. RAJAB has been elected as independent Board member Chairman and members of BOD, members of audit committee, general manager and assistant general managers own 0,0342% of the Bank’s share capital (December 31, 2016: 0,0342%). IV. Information on the Bank’s qualified shareholders: The Bank’s paid in capital amounting to TL 900.000 consists of 900.000.000 number of shares with a nominal value of TL 1 (full) for each share. TL 486.523 of the paid in capital is owned by qualified shareholders who are listed below. Name / commercial name Albaraka Banking Group Share amount (nominal) Share ratio 486.523 54,06% 2 Paid shares 486.523 Unpaid shares -
9. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) V. Summary on the Bank’s service activities and field of operations: The Bank operates in accordance with the principles of interest-free banking as a participation bank. The Bank mainly collects funds through current and profit sharing accounts, and lends such funds through corporate finance support, retail finance support, profit/loss sharing investment, finance lease, financing commodity against document and joint investments. The Bank classifies current and profit sharing accounts separately from other accounts in accordance with their maturities. Profit sharing accounts are classified under six different maturity groups; up to one month, up to three months (three months included), up to six months (six months included), up to one year (one year included), one year and more than one year (with monthly, quarterly, semiannual and annual profit share payment) and accumulated participation accounts. The Bank may determine the participation rates on profit and loss of profit sharing accounts according to currency type, amount and maturity groups separately under the limitation that the participation rate on loss shall not be less than fifty percent of participation rate on profit. The Bank constitutes specific fund pools with minimum maturities of one month, to be allocated to individually predetermined projects for financing purposes. Profit sharing accounts, which are part of the funds collected for project financing purpose, are managed in accordance with their maturities and independently from other accounts and transfers from these accounts to any other maturity groups are not executed. Specific fund pools are liquidated at the end of the financing period. In addition to its ordinary banking activities, the Bank operates as an insurance agency on behalf of Bereket Sigorta, Anadolu Sigorta, Güneş Sigorta, Allianz Sigorta, Unico Sigorta, Neova Sigorta, Ankara Sigorta, Coface Sigorta, Avivasa Emeklilik ve Hayat, Generali Sigorta, as a private pension insurance agency on behalf of Anadolu Hayat Emeklilik, Avivasa Emeklilik ve Hayat and Katılım Emeklilik ve Hayat, and as a brokerage agency on behalf of Bizim Menkul Değerler A.Ş. through its branches, engages in purchase and sale of precious metals, provides intermediary services in quick money transfers, credit card and member business (P.O.S.) services. Moreover, the Bank is involved in providing non-cash loans which mainly comprise letters of guarantee, letters of credit and acceptances. Transactions which can be carried out by the Bank are not limited to the clauses listed above. If any activities other than those mentioned are considered as beneficial to the Bank, the application must be recommended by the Board of Directors, approved by the General Assembly and authorized by relevant legal authorities which then needs to be approved by the Ministry of Customs and Trade since such applications are amendments in nature to the Article of Association. The application is included in the Article of Association after all necessary approvals are obtained. VI. Differences between the Communiqué on Preparation of Consolidated Financial Statements of Banks and Turkish Accounting Standards with respect to consolidation and short explanation about the institutions subject to full or proportional consolidation and institutions which are deducted from equity or not included in these three methods: The Bank did not consolidate its associate Kredi Garanti Fonu A.Ş. through equity method considering the materiality principle and its insignificant influence over the associate, the related associate is carried at cost in the accompanying financial statements. The Bank consolidated Katılım Emeklilik ve Hayat A.Ş., an entity under common control, and Bereket Varlık Kiralama A.Ş., Albaraka Gayrimenkul Portföy Yönetimi A.Ş. the subsidiaries of the Bank, through equity method and full consolidation method, respectively. ABT Sukuk Limited and Albaraka Sukuk Limited, which are not subsidiaries of the Bank but over which the Bank has 100% controlling power, have been included in the consolidation due to the reason that these companies are “Structured Entity”. Real Estate Investment Funds "Albaraka Gayrimenkul Portföy Yönetimi A.Ş. One Tower Gayrimenkul Yatırım Fonu" and "Albaraka Gayrimenkul Portföy Yönetimi A.Ş. Batışehir Gayrimenkul Yatırım Fonu" were consolidated as well. VII. The existing or potential, actual or legal obstacles on immediate transfer of equity or reimbursement of liabilities between the bank and its subsidiaries: There is no immediate transfer of equity between the Bank and its subsidiaries. There is no existing or potential, actual or legal obstacle to the reimbursement of liabilities between the Bank and its subsidiaries. 3
10. Section Two The unconsolidated financial statements I . Balance sheet (Statement of financial position) II. Statement of off-balance sheet III. Statement of income IV. Statement of income and expense items accounted under shareholders’ equity V. Statement of changes in shareholders’ equity VI. Statement of cash flows
11. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) ASSETS I. II. 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2 2.2.3 2.2.4 III. IV. V. 5.1 5.2 5.3 VI. 6.1 6.1.1 6.1.2 6.1.3 6.2 6.3 VII. VIII. 8.1 8.2 8.2.1 8.2.2 IX. 9.1 9.2 X. 10.1 10.2 10.2.1 10.2.2 XI. 11.1 11.2 11.3 11.4 XII. 12.1 12.2 12.3 XIII. XIV. 14.1 14.2 XV. XVI. 16.1 16.2 XVII. 17.1 17.2 XVIII. CASH AND BALANCES WITH THE CENTRAL BANK FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) Trading Financial Assets Public Sector Debt Securities Equity Securities Derivative Financial Assets Held for Trading Other Marketable Securities Financial Assets at Fair Value Through Profit and Loss Public Sector Debt Securities Equity Securities Loans Other Marketable Securities BANKS MONEY MARKET PLACEMENTS FINANCIAL ASSETS-AVAILABLE FOR SALE (Net) Equity Securities Public Sector Debt Securities Other Marketable Securities LOANS AND RECEIVABLES Loans and Receivables Loans to Risk Group of The Bank Public Sector Debt Securities Other Non-performing loans Specific Provisions (-) INVESTMENTS HELD TO MATURITY (Net) INVESTMENTS IN ASSOCIATES (Net) Accounted for under Equity Method Unconsolidated Associates Financial Associates Non-Financial Associates SUBSIDIARIES (Net) Unconsolidated Financial Subsidiaries Unconsolidated Non-Financial Subsidiaries JOINT VENTURES (Net) Accounted for under Equity Method Unconsolidated Financial Joint Ventures Non-Financial Joint Ventures LEASE RECEIVABLES (Net) Finance Lease Receivables Operational Lease Receivables Other Unearned Income (-) DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES Fair Value Hedge Cash Flow Hedge Hedge of Net Investment Risks in Foreign Operations TANGIBLE ASSETS (Net) INTANGIBLE ASSETS (Net) Goodwill Other INVESTMENT PROPERTY (Net) TAX ASSET Current Tax Asset Deferred Tax Asset ASSETS HELD FOR SALE AND ASSETS OF DISCONTINUED OPERATIONS (Net) Assets Held for Sale Assets of Discontinued Operations OTHER ASSETS Reviewed CURRENT PERIOD March 31, 2017 TL FC Total Audited PRIOR PERIOD December 31, 2016 TL FC Total (1) 197.538 4.082.682 4.280.220 940.247 4.058.805 4.999.052 (2) 553.490 553.490 1.051 314 552.125 3.527 3.527 3.527 557.017 557.017 1.051 314 555.652 1.022 1.022 954 55 13 65.074 65.074 65.013 61 66.096 66.096 954 65.068 74 608.059 1.000.819 15 984.417 16.387 17.073.301 16.437.360 5.378 16.431.982 1.321.511 685.570 612.319 4.719 4.719 4.719 5.400 5.400 20.000 20.000 20.000 837.531 944.693 107.162 1.716.586 427.623 7.094 314.374 106.155 4.981.060 4.981.022 25.658 4.955.364 1.260 1.222 - 2.324.645 656.410 1.428.442 996.067 7.109 15 1.298.791 986.482 122.542 9.570 22.054.361 17.448.650 21.418.382 16.921.201 31.036 6.937 21.387.346 16.914.264 1.322.771 1.104.785 686.792 577.336 612.319 668.582 4.719 4.719 4.719 4.719 4.719 4.719 5.400 5.400 5.400 5.400 20.000 20.000 20.000 20.000 20.000 20.000 837.531 878.979 944.693 996.206 107.162 117.227 1.501.767 386.623 6.335 298.856 81.432 4.394.425 4.394.425 29.327 4.365.098 1.169 1.169 - 2.158.177 1.382.690 6.350 1.285.338 91.002 21.843.075 21.315.626 36.264 21.279.362 1.105.954 578.505 668.582 4.719 4.719 4.719 5.400 5.400 20.000 20.000 20.000 878.979 996.206 117.227 512.025 30.482 30.482 32.771 4.178 28.593 633 256 256 - 512.658 30.738 30.738 32.771 4.178 28.593 516.340 35.157 35.157 25.100 5.004 20.096 791 305 305 - 517.131 35.462 35.462 25.100 5.004 20.096 95.818 95.818 204.443 453 453 19.781 96.271 96.271 224.224 91.884 91.884 141.900 433 433 12.058 92.317 92.317 153.958 21.788.715 11.232.601 33.021.316 22.430.457 10.420.281 32.850.738 Notes (Section Five-I) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) TOTAL ASSETS The accompanying explanations and notes are an integral part of these financial statements. 5
12. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) LIABILITIES I. 1.1 1.2 II. FUNDS COLLECTED Funds from Risk Group of The Bank Other DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING III. FUNDS BORROWED IV. BORROWINGS FROM MONEY MARKETS V. SECURITIES ISSUED (Net) VI. MISCELLANEOUS PAYABLES VII. OTHER LIABILITIES VIII. LEASE PAYABLES 8.1 Finance Lease Payables 8.2 Operational Lease Payables 8.3 Other 8.4 Deferred Finance Lease Expenses ( - ) IX. DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES 9.1 Fair Value Hedge 9.2 Cash Flow Hedge 9.3 Net Foreign Investment Hedge X. PROVISIONS 10.1 General Provisions 10.2 Restructuring Reserves 10.3 Reserve for Employee Benefits 10.4 Insurance Technical Reserves (Net) 10.5 Other Provisions XI. TAX LIABILITY 11.1 Current Tax Liability 11.2 Deferred Tax Liability XII. LIABILITIES FOR ASSETS HELD FOR SALE AND ASSETS OF DISCONTINUED OPERATIONS (Net) 12.1 Assets Held for Sale 12.2 Assets of Discontinued Operations XIII. SUBORDINATED LOANS XIV. SHAREHOLDERS' EQUITY 14.1 Paid-In Capital 14.2 Capital Reserves 14.2.1 Share Premium 14.2.2 Share Cancellation Profits 14.2.3 Marketable Securities Valuation Reserve 14.2.4 Revaluation Reserve on Tangible Assets 14.2.5 Revaluation Reserve on Intangible Assets 14.2.6 Investment Property Revaluation Reserve 14.2.7 Bonus Shares From Associates, Subsidiaries and Jointly Controlled Entities 14.2.8 Hedging Funds (Effective Portion) 14.2.9 Accumulated Valuation Differences on Assets Held For Sale and Assets of Discontinued Operations 14.2.10 Other Capital Reserves 14.3 Profit Reserves 14.3.1 Legal Reserves 14.3.2 Status Reserves 14.3.3 Extraordinary Reserves 14.3.4 Other Profit Reserves 14.4 Profit or Loss 14.4.1 Prior Years Profit / (Loss) 14.4.2 Current Year Profit / (Loss) 14.5 Minority Shares Notes (Section Five-II) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) TOTAL LIABILITIES Reviewed CURRENT PERIOD March 31, 2017 TL FC Total TL FC Total 12.523.063 11.144.743 23.667.806 107.207 709.615 816.822 12.415.856 10.435.128 22.850.984 Audited PRIOR PERIOD December 31, 2016 TL FC Total TL FC Total 12.557.143 10.597.991 23.155.134 18.908 467.738 486.646 12.538.235 10.130.253 22.668.488 293 196.371 831.186 - 1.242 4.084.800 63.878 - 1.535 4.281.171 895.064 - 88 181.593 492.784 634.215 - 4.242.602 68.144 - 88 4.424.195 492.784 702.359 - 207.174 105.141 47.821 54.212 45.013 45.013 - 44.237 23.098 21.139 3.427 3.427 - 251.411 128.239 47.821 75.351 48.440 48.440 - 191.485 110.416 43.260 37.809 48.484 48.484 - 42.364 25.847 16.517 3.315 3.315 - 233.849 136.263 43.260 54.326 51.799 51.799 - 2.283.356 900.000 228.927 (5.405) 217.614 - 1.598.144 (5.611) (5.611) (5.611) - 1.598.144 2.277.745 900.000 223.316 (11.016) 217.614 - 2.288.359 900.000 220.642 210 211.642 - 1.510.937 (8.766) (8.766) (8.766) - 1.510.937 2.279.593 900.000 211.876 (8.556) 211.642 - - - - - - - 16.718 1.113.454 116.532 996.922 40.975 5.182 35.793 - - 16.718 1.113.454 116.532 996.922 40.975 5.182 35.793 - 8.790 946.157 101.765 844.392 221.560 3.951 217.609 - - 8.790 946.157 101.765 844.392 221.560 3.951 217.609 - 16.086.456 16.934.860 33.021.316 16.394.151 16.456.587 32.850.738 The accompanying explanations and notes are an integral part of these financial statements. 6
13. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) STATEMENT OF OFF-BALANCE SHEET Reviewed CURRENT PERIOD March 31, 2017 Notes (Section Five-III) TL A. I. 1.1. 1.1.1. 1.1.2. 1.1.3. 1.2. 1.2.1. 1.2.2. 1.3. 1.3.1. 1.3.2. 1.4. 1.5. 1.5.1. 1.5.2. 1.6. 1.7. II. 2.1. 2.1.1. 2.1.2. 2.1.3. 2.1.4. 2.1.5. 2.1.6. 2.1.7. 2.1.8. 2.1.9. 2.1.10 2.1.11 2.1.12 2.2. 2.2.1. 2.2.2. III. 3.1. 3.1.1. 3.1.2. 3.1.3. 3.2. 3.2.1 3.2.1.1 3.2.1.2 3.2.2. 3.3. B. IV. 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. 4.8. V. 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. VI. OFF BALANCE SHEET COMMITMENTS (I+II+III) GUARANTEES AND SURETIES Letters of Guarantees Guarantees Subject to State Tender Law Guarantees Given for Foreign Trade Operations Other Letters of Guarantee Bank Loans Import Letter of Acceptances Other Bank Acceptances Letter of Credits Documentary Letter of Credits Other Letter of Credits Prefinancing Given as Guarantee Endorsements Endorsements to the Central Bank of Turkey Other Endorsements Other Guarantees Other Collaterals COMMITMENTS Irrevocable Commitments Asset Purchase and Sale Commitments Share Capital Commitment to Associates and Subsidiaries Loan Granting Commitments Securities Underwriting Commitments Commitments for Reserve Deposit Requirements Payment Commitment for Cheques Tax And Fund Liabilities from Export Commitments Commitments for Credit Card Expenditure Limits Commitments for Promotions Related with Credit Cards and Banking Activities Receivables From Short Sale Commitments of Marketable Securities Payables for Short Sale Commitments of Marketable Securities Other Irrevocable Commitments Revocable Commitments Revocable Loan Granting Commitments Other Revocable Commitments DERIVATIVE FINANCIAL INSTRUMENTS Derivative Financial Instruments for Hedging Purposes Fair Value Hedge Cash Flow Hedge Hedge of Net Investment in Foreign Operations Held for Trading Transactions Forward Foreign Currency Buy/Sell Transactions Forward Foreign Currency Transactions-Buy Forward Foreign Currency Transactions-Sell Other Forward Buy/Sell Transactions Other CUSTODY AND PLEDGED ITEMS (IV+V+VI) ITEMS HELD IN CUSTODY Assets Under Management Investment Securities Held in Custody Cheques Received for Collection Commercial Notes Received for Collection Other Assets Received for Collection Assets Received for Public Offering Other Items Under Custody Custodians PLEDGED ITEMS Marketable Securities Guarantee Notes Commodity Warranty Properties Other Pledged Items Pledged Items-Depository ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) (1) (1) (2) Audited PRIOR PERIOD December 31, 2016 FC Total TL FC Total 5.280.270 3.909.258 3.895.970 386.831 2.046 3.507.093 1.172 1.172 12.116 1.360.635 1.360.635 59.663 5.195.633 4.504.967 3.697.265 33.812 781.454 2.881.999 12.292 12.292 713.314 713.314 76.235 5.861 100.003 100.003 100.003 10.475.903 8.414.225 7.593.235 420.643 783.500 6.389.092 12.292 12.292 714.486 714.486 76.235 17.977 1.460.638 1.460.638 159.666 5.229.816 4.003.878 3.992.017 380.805 5.911 3.605.301 2.073 2.073 150 9.638 1.221.782 1.221.782 4.020 5.721.490 4.697.315 3.817.794 33.037 875.341 2.909.416 20.711 20.711 750.606 750.606 101.422 6.782 9.379 9.379 9.379 10.951.306 8.701.193 7.809.811 413.842 881.252 6.514.717 20.711 20.711 752.679 752.679 101.572 16.420 1.231.161 1.231.161 13.399 107.353 635.015 3.321 499.894 - 107.353 635.015 3.321 499.894 111.042 588.983 3.029 475.270 - 111.042 588.983 3.029 475.270 493 - 493 963 - 963 - - - - - - 54.896 10.377 10.377 10.377 5.190 5.187 51.110.731 1.626.912 72 1.237.741 358.048 103 999 29.949 49.483.819 4.590.517 1.340.061 1.953.974 39.261.584 2.083.360 254.323 590.663 590.663 590.663 294.673 295.990 7.068.979 1.232.939 123.212 40.842 135.241 933.644 5.836.040 1.813.208 175.397 744.388 1.725.416 1.373.748 3.883 54.896 601.040 601.040 601.040 299.863 301.177 58.179.710 2.859.851 72 1.360.953 398.890 103 136.240 963.593 55.319.859 6.403.725 1.515.458 2.698.362 40.987.000 3.457.108 258.206 38.475 4.156 4.156 4.156 2.078 2.078 46.841.565 1.598.038 72 1.214.349 351.020 103 2.534 29.960 45.243.527 2.553.972 1.461.797 1.873.977 37.530.439 1.571.336 252.006 1.014.796 1.014.796 1.014.796 539.810 474.986 7.544.333 1.363.315 110.011 31.674 153.793 1.067.837 6.181.018 1.690.418 180.826 956.778 1.668.064 1.681.591 3.341 38.475 1.018.952 1.018.952 1.018.952 541.888 477.064 54.385.898 2.961.353 72 1.324.360 382.694 103 156.327 1.097.797 51.424.545 4.244.390 1.642.623 2.830.755 39.198.503 3.252.927 255.347 - - - - - - 56.391.001 12.264.612 68.655.613 52.071.381 13.265.823 65.337.204 The accompanying explanations and notes are an integral part of these financial statements. 7
14. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF INCOME AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) Notes (Section Five-IV) INCOME AND EXPENSE ITEMS I. 1.1 1.2 1.3 1.4 1.5 1.5.1 1.5.2 1.5.3 1.5.4 1.6 1.7 II. 2.1 2.2 2.3 2.4 2.5 III. IV. 4.1 4.1.1 4.1.2 4.2 4.2.1 4.2.2 V. VI. 6.1 6.2. 6.3 VII. VIII. IX. X. XI. XII. XIII. XIV. XV. XVI. 16.1 16.2 XVII. XVIII. 18.1 18.2 18.3 XIX. 19.1 19.2 19.3 XX. XXI. 21.1 21.2 XXII. XXIII. 23.1 23.2 PROFIT SHARE INCOME Profit Share on Loans Income Received from Reserve Deposits Income Received from Banks Income Received from Money Market Placements Income Received from Marketable Securities Portfolio Held-For-Trading Financial Assets Financial Assets at Fair Value Through Profit and Loss Available-For-Sale Financial Assets Investments Held to Maturity Finance Lease Income Other Profit Share Income PROFIT SHARE EXPENSE Expense on Profit Sharing Accounts Profit Share Expense on Funds Borrowed Profit Share Expense on Money Market Borrowings Profit Share Expense on Securities Issued Other Profit Share Expense NET PROFIT SHARE INCOME (I – II) NET FEES AND COMMISSIONS INCOME/EXPENSES Fees and Commissions Received Non-Cash Loans Other Fees and Commissions Paid Non-Cash Loans Other DIVIDEND INCOME TRADING INCOME/LOSS(net) Capital Market Transaction Income / (Loss) Profit / (Loss) from Derivative Financial Instruments Foreign Exchange Income / (Loss) OTHER OPERATING INCOME TOTAL OPERATING INCOME (III+IV+V+VI+VII) PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) OTHER OPERATING EXPENSES (-) NET OPERATING INCOME/(LOSS) (VIII-IX-X) EXCESS AMOUNT RECORDED AS GAIN AFTER MERGER PROFIT / (LOSS) ON EQUITY METHOD PROFIT / (LOSS) ON NET MONETARY POSITION PROFIT / (LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES (XI+…+XIV) TAX PROVISION FOR CONTINUED OPERATIONS (±) Provision for Current Taxes Provision for Deferred Taxes NET INCOME / (LOSS) FROM CONTINUED OPERATIONS (XV±XVI) INCOME FROM DISCONTINUED OPERATIONS Income from Assets Held For Sale Income from Sale Of Associates, Subsidiaries And Jointly Controlled Entities (Joint Vent.) Income from Other Discontinued Operations LOSS FROM DISCONTINUED OPERATIONS (-) Loss from Assets Held for Sale Loss on Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Vent.) Loss from Other Discontinued Operations PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XVIII-XIX) TAX PROVISION FOR DISCONTINUED OPERATIONS (±) Provision for Current Taxes Provision for Deferred Taxes NET PROFIT / LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) NET PROFIT / LOSS (XVII+XXII) Group’s Profit/Loss Minority shares (-) Earnings Per Share (Full TL) (1) (2) (12) (12) (3) (4) (5) (6) (7) (8) (9) (10) (10) (11) Reviewed CURRENT PERIOD January 1March 31, 2017 Reviewed PRIOR PERIOD January 1March 31, 2016 632.748 555.074 5.607 566 50.692 32.501 18.191 19.780 1.029 314.364 228.273 75.957 1.541 8.593 318.384 37.798 53.274 27.333 25.941 15.476 46 15.430 (7.147) 4.225 (2.511) (8.861) 29.434 378.469 138.029 194.220 46.220 46.220 10.427 8.762 1.665 35.793 35.793 35.793 0,040 564.024 502.492 5.903 37.355 20.036 17.319 17.929 345 286.425 217.401 54.284 13.975 765 277.599 32.354 46.345 22.779 23.566 13.991 67 13.924 22.768 16 (20.738) 43.490 33.532 366.253 73.626 207.139 85.488 85.488 22.413 23.928 (1.515) 63.075 63.075 63.075 0,070 The accompanying explanations and notes are an integral part of these financial statements. 8
15. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF INCOME&EXPENSE ITEMS ACCOUNTED UNDER SHAREHOLDERS’ EQUITY AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED UNDER SHAREHOLDERS’ EQUITY I. 11.4 ADDITIONS TO MARKETABLE SECURITIES VALUATION DIFFERENCES FROM AVAILABLE FOR SALE FINANCIAL ASSETS TANGIBLE ASSETS REVALUATION DIFFERENCES INTANGIBLE ASSETS REVALUATION DIFFERENCES FOREIGN EXCHANGE DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR CASH FLOW HEDGE PURPOSES (EFFECTIVE PORTION OF FAIR VALUE DIFFERENCES) PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGE OF NET INVESTMENT IN FOREIGN OPERATIONS (EFFECTIVE PORTION OF FAIR VALUE DIFFERENCES) THE EFFECT OF CORRECTIONS OF ERRORS AND CHANGES IN ACCOUNTING POLICIES OTHER PROFIT LOSS ITEMS ACCOUNTED UNDER EQUITY IN ACCORDANCE WITH TAS DEFERRED TAX ON VALUATION DIFFERENCES TOTAL NET PROFIT/LOSS ACCOUNTED UNDER EQUITY (I+II+…+IX) PROFIT/LOSS Net change in Fair Value of Marketable Securities (Recycled To Profit/Loss) Part of Derivatives Designated for Cash Flow Hedge Purposes reclassified and presented in Income Statement Part of Hedge of Net Investments in Foreign Operations reclassified and presented in Income Statement Other XII. TOTAL PROFIT/LOSS ACCOUNTED FOR THE PERIOD (X±XI) II. III. IV. V. VI. VII. VIII. IX. X. XI. 11.1 11.2 11.3 Reviewed Reviewed CURRENT PRIOR PERIOD PERIOD January 1January 1March 31, 2017 March 31, 2016 (3.075) - 2.048 - 5.024 (2.368) - - - - - - 615 2.564 35.793 - (410) (730) 63.075 - - - 35.793 63.075 38.357 62.345 The accompanying explanations and notes are an integral part of these financial statements. 9
16. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED CHANGES IN SHAREHOLDERS’ EQUITY AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) CHANGES IN SHAREHOLDERS’ EQUITY (Reviewed) Notes (Section Five-V) Paid-in Capital Effect of Inflation Accounting on Capital Share Premium Share Certificate Cancellation Profits Legal Status Reserves Reserves Extraordinary Reserves Other Reserves(*) Current Period Net Income / (Loss) Prior Years Net Income / (Loss) Marketable Securities Valuation Reserve Tangible and Intangible Assets Revaluation Reserve Bonus Shares from Hedging Investments Reserves Accumulated Valuation Differences on Assets Held For Sale and Disc.op. Total Equity PRIOR PERIOD January 1- March 31, 2016 I. Beginning balance II. III. IV. 4.1 4.2 V. VI. VII. VIII. IX. X. XI. XII. 12.1 12.2 XIII. XIV. XV. XVI. XVII. XVIII. 18.1 18.2 18.3 (*) Changes In Period Increase/Decrease Related to Merger Marketable Securities Valuation Differences Hedging Funds (Effective Portion) Cash-Flow Hedge Hedge Of Net Investment in Foreign Operations Tangible Assets Revaluation Differences Intangible Assets Revaluation Differences Bonus Shares Obtained from Associates,Subsidiaries and Jointly Controlled Operations Foreign Exchange Differences Changes Related to the Disposal Of Assets Changes Related to the Reclassification of Assets The Effect of Change in Associate’s Equity Capital Increase Cash Internal Sources Share Issue Premium Share Cancellation Profits Inflation Adjustment to Paid-in Capital Other Period Net Income/(Loss) Profit Distribution Dividends Distributed Transfers To Reserves Other Closing Balance (I+II+III+…+XVI+XVII+XVIII) (V) 900.000 - - - 84.774 - 611.757 1.127 302.863 3.610 10.691 189.092 - - - 2.103.914 - - - - - - - - - - 1.638 - - - - - 1.638 - - - - - - - - - - - - - - - - - - - - - - - - (2.368) - - - - - - - - (2.368) - 900.000 - - - (2.822) 15.863 15.863 97.815 - (3.450) 240.210 240.210 848.517 3.696 2.455 63.075 (302.863) (302.863) 63.075 1.066 (3.610) (50.400) (256.073) 302.863 1.066 12.329 (1.066) 188.026 - - - (2.576) 63.075 (50.400) (50.400) 2.113.283 As per Repurchase Programme accepted at the General Assembly on March 25, 2015 repurchased shares amount to TL 2.576 between January 18, 2016 and January 26, 2016 represented under other reserves. The accompanying explanations and notes are an integral part of these financial statements. 10
17. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED CHANGES IN SHAREHOLDERS’ EQUITY AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) CHANGES IN SHAREHOLDERS’ EQUITY (Reviewed) Effect of Inflation Accounting on Capital Share Certificate Cancellation Profits Current Period Net Income / (Loss) Prior Years Net Income / (Loss) Marketable Securities Valuation Reserve Tangible and Intangible Assets Revaluation Reserve Bonus Shares from Investments Accumulated Valuation Differences on Assets Held For Sale and Disc.op. Notes (Section Five-V) Paid-in Capital (V) 900.000 - - - 101.765 - 844.392 8.790 217.609 3.951 (8.556) 211.642 - - - 2.279.593 - - - - - - - - - - (2.460) - - - - - (2.460) - - - - - - - - 5.024 - - - - - - - - 5.024 - 900.000 - - - 3.887 10.880 10.880 116.532 - (3.887) 156.417 156.417 996.922 (3.887) 6.791 6.791 16.718 35.793 (217.609) (217.609) 35.793 1.231 (43.521) (174.088) 217.609 5.182 (11.016) 5.972 217.614 - - - 3.316 35.793 (43.521) (43.521) 2.277.745 Share Premium Legal Reserves Status Reserves Extraordinary Reserves Other Reserves(*) Hedging Reserves Total Equity CURRENT PERIOD January 1- March 31, 2017 I. Beginning balance II. III. IV. 4.1 4.2 V. VI. VII. VIII. IX. X. XI. XII. 12.1 12.2 XIII. XIV. XV. XVI. XVII XVIII 18.1 18.2 18.3 (*) Changes In Period Increase/Decrease Related to Merger Marketable Securities Valuation Differences Hedging Funds (Effective Portion) Cash-Flow Hedge Hedge Of Net Investment in Foreign Operations Tangible Assets Revaluation Differences Intangible Assets Revaluation Differences Bonus Shares Obtained from Associates, Subsidiaries and Jointly Controlled Operations Foreign Exchange Differences Changes Related to the Disposal Of Assets Changes Related to the Reclassification of Assets The Effect of Change in Associate’s Equity Capital Increase Cash Internal Sources Share Issue Premium Share Cancellation Profits Inflation Adjustment to Paid-in Capital Other Period Net Income/(Loss) Profit Distribution Dividends Distributed Transfers To Reserves Other Closing Balance (I+II+III+…+XVI+XVII+XVIII) As per Repurchase Programme accepted at the General Assembly on March 25, 2015 repurchased shares amount to TL 3.887 between March 13, 2017 and March 22, 2017 represented under other reserves and legal reserve has been allocated for the related amount as per Turkish Commercial Code article 612. The accompanying explanations and notes are an integral part of these financial statements. 11
18. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) Notes (Section Five-VI) STATEMENT OF CASH FLOWS Reviewed CURRENT PERIOD January 1March 31, 2017 Reviewed PRIOR PERIOD January 1March 31, 2016 240.858 155.666 A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating Profit Before Changes In Operating Assets And Liabilities 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 1.1.7 1.1.8 1.1.9 Profit Share Income Received Profit Share Expense Paid Dividend Received Fees and Commissions Received Other Income Collections from Previously Written Off Loans Payments to Personnel and Service Suppliers Taxes Paid Others 609.636 (195.761) 25.943 15.887 66.655 (105.600) (13.959) (161.943) 466.223 (199.550) 46.345 13.128 33.932 (112.167) (27.491) (64.754) 1.2 Changes In Operating Assets And Liabilities (769.637) (851.360) 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 1.2.7 1.2.8 1.2.9 1.2.10 Net (Increase) Decrease in Available For Sale Financial Assets Net (Increase) Decrease in Financial Assets at Fair Value Through Profit or Loss Net (Increase) Decrease in Due From Banks and Other Financial Institutions Net (Increase) Decrease in Loans Net (Increase) Decrease in Other Assets Net Increase (Decrease) in Funds Collected From Banks Net Increase (Decrease) in Other Funds Collected Net Increase (Decrease) in Funds Borrowed Net Increase (Decrease) in Payables Net Increase (Decrease) in Other Liabilities (490.921) 1.017.743 (425.303) (77.611) (102.661) 763.905 (1.454.789) 21.130 138.362 (535.747) 13.553 (220.894) (389.462) 121.698 I. Net Cash Flow From Banking Operations (528.779) (695.694) B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash flow from investing activities 142.076 (110.618) - - (29.938) 7.720 (282.676) 372.516 (132.000) 206.454 - (6.175) 4.725 (406.008) 262.400 34.440 - 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Cash Paid for Acquisition of Jointly Controlled Operations, Associates and Subsidiaries Cash Obtained from Sale of Jointly Controlled Operations, Associates and Subsidiaries Fixed Assets Purchases Fixed Assets Sales Cash Paid for Purchase of Financial Assets Available for Sale Cash Obtained from Sale of Financial Assets Available for Sale Cash Paid for Purchase of Investment Securities Cash Obtained from Sale of Investment Securities Other C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net Cash Flow From Financing Activities (215.051) (87.049) 3.1 3.2 3.3 3.4 3.5 3.6 Cash Obtained from Funds Borrowed and Securities Issued Cash Used for Repayment of Funds Borrowed and Securities Issued Issued Capital Instruments Dividends Paid Payments for Finance Leases Other 656.571 (871.622) - 572.900 (659.949) - IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents (29.385) (86.759) V. Net (Decrease) Increase in Cash and Cash Equivalents (631.139) (980.120) VI. Cash and Cash Equivalents at the Beginning of the Period 3.464.483 3.808.054 VII. Cash and Cash Equivalents at the End of the Period 2.833.344 2.827.934 2.1 The accompanying explanations and notes are an integral part of these financial statements. 12
19. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) SECTION THREE ACCOUNTING POLICIES I. Explanations on basis of presentation: a. The preparation of the financial statements and related notes and explanations in accordance with the Turkish Accounting Standards and Regulation on the Principles and Procedures Regarding Banks’ Accounting Application and Safeguarding of Documents: The unconsolidated financial statements are prepared within the scope of the “Regulation on Accounting Applications for Banks and Safeguarding of Documents” related with Banking Act numbered 5411 published in the Official Gazette numbered 26333 dated 1 November 2006 and in accordance with the regulations, communiqués, interpretations and legislations related to accounting and financial reporting principles published by the Banking Regulation and Supervision Agency (“BRSA”), and in case where a specific regulation is not prepared by BRSA, “Turkish Accounting Standards” (“TAS”) and “Turkish Financial Reporting Standards” (“TFRS”) and related appendices and interpretations put into effect by Public Oversight Accounting and Auditing Standards Authority (“POA”) (all are referred as BRSA Accounting and Reporting Legislation). The format and content of the publicly announced unconsolidated financial statements and notes to these statements have been prepared in accordance with the “Communiqué on Publicly Announced Financial Statements, Explanations and Notes to These Financial Statements”, published in Official Gazette numbered 28337, dated 28 June 2012, and amendments to this Communiqué. The Bank maintains its books in Turkish Lira in accordance with the Banking Act, Turkish Commercial Code and Turkish Tax Legislation. The unconsolidated financial statements have been prepared in TL, under the historical cost convention except for the financial assets, liabilities and revalued real estates carried at fair value. b. Accounting policies and valuation principles applied in the preparation of unconsolidated financial statements: The accounting policies and valuation principles applied in the preparation of unconsolidated financial statements, are determined and applied in accordance with regulations, communiqués, explanations and circulars on accounting and financial reporting principles published by the BRSA, and in case where there is no special regulation made by the BRSA, in accordance with principles in the context of TAS and TFRS, and are consistent with the accounting policies applied in the annual financial statements of the year ended 31 December 2016. The aforementioned accounting policies and valuation principles are explained in Notes II to XXII below. TAS/TFRS changes which are effective from January 1, 2017 do not have a significant effect on the Bank’s accounting policies, financial position or performance. As of the date of financial statements, TAS/TFRS changes which are announced but not yet effective, except TFRS 9 financial instruments and TFRS 16 Leases, do not have a significant effect on the Bank’s accounting policies, financial position or performance. New IFRS 16 Leases Standard has been published by IASB on January 13, 2016. IFRS 16 replaces the current dual accounting model presenting the financial leases on balance sheet and not representing operational leases on balance sheet. Instead, a singular accounting model will be represented similar to current financial leasing accounting model based on balance sheet. For lessors, the accounting will remain the same as to the current accounting practices. This change will be effective for the periods after January 1, 2019. Early adoption is allowed for the entities which are already applying “TFRS 15 Revenue from contracts with customers “. The Bank evaluates the impacts of the standard on financial position and performance. “Communiqué related to Changes in Communiqué on Financial Statements and Related Disclosures and Footnotes to be announced to Public by Banks” published in the Official Gazette dated January 23, 2011 and numbered 27824 has set out the financial statement formats for the banks which selected to early adopt TFRS 9 (In accordance with the Communiqué related to Changes in Communiqué on TFRS 9 “Financial Instruments” published in the Official Gazette dated April 7, 2015 numbered 29319 , the effective date of the mentioned Communiqué has been changed as December 31, 2014 which is planned to be applied after 31 December 2017) “Financial Instruments” before January 1, 2018. Since the Bank has not chosen to early adopt TFRS 9, the accompanying financial statements have been prepared in accordance with the financial statements in the appendix of “Communiqué on Financial Statements and Related Disclosures and Footnotes to be announced to Public by Banks” published in the Official Gazette dated June 28, 2012 and numbered 28337. The preparation of the unconsolidated financial statements according to BRSA Reporting and Accounting Legislation requires the Bank’s management to make estimates and assumptions related to assets and liabilities in the balance sheet and contingent issues as of the balance sheet date. Such estimates and assumptions include the fair value calculations of the financial instruments, provisions for the lawsuits, deferred tax assets and liabilities, impairment of the financial assets and revaluation of immovables and reviewed periodically and when adjustments are considered necessary they are reflected in the financial statements. The assumptions and estimates used are explained in the related notes. 13
20. ALBARAKA T ÜRK KATILIM BANKASI A.Ş. NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2017 (Thousand of Turkish Lira (TL) unless otherwise stated) I. Explanations on basis of presentation (continued): c. Restatement of the financial statements according to the current purchasing power of money: Accompanying financial statements are subjected to TAS 29 “Financial Reporting in Hyperinflationary Economies” until December 31, 2004 and with regard to this the BRSA explained with its decision numbered 1623 and dated April 21, 2005 and its circular dated April 28, 2005 that the conditions for applying inflation accounting was no longer applicable and accordingly inflation accounting has not been applied in the accompanying financial statements starting from January 1, 2005. II. Explanations on strategy of using financial instruments and foreign currency transactions: The Bank creates its strategies on financial instruments considering its sources of financing. The main financing sources consist of current and profit sharing accounts. Other than current and profit sharing accounts, the Bank’s most important funding sources are its equity and borrowings from foreign financial institutions. The Bank sustains its liquidity to cover matured liabilities by holding adequate level of cash and cash equivalents. The Bank’s transactions in foreign currencies are accounted in accordance with the TAS 21 “Accounting Standard on the Effect of Changes in Foreign Currency Rates”, and converted with the exchange rate ruling at the transaction date into Turkish Lira. Foreign currency assets and liabilities have been translated into Turkish Lira at the rate of exchange rates ruling at the balance sheet date announced by the Bank. Gains or losses arising from foreign currency transactions and translation of foreign currency assets and liabilities are reflected in the income statement as foreign exchange gain or loss. The portion of risk belonging to the profit sharing accounts for foreign currency performing loans which were funded from these accounts is evaluated at current foreign exchange rates. Since the Bank provides full specific provision (except foreign branch) for the Bank’s portion of risk of foreign currency non-performing loans and receivables funded from profit sharing accounts and for the risk of foreign currency non-performing loans and receivables funded by equity, such loans and receivables are translated to Turkish Lira at the current exchange rates instead of exchange rates prevailing at the date of transfer of the balances to non-performing portfolio. Such implementation does not have a positive or negative impact on trading income/loss of the Bank. The foreign currency exchange differences resulting from the translation of debt securities issued and monetary financial assets into Turkish Lira are included in the income statement. The balance sheet items of the foreign branch of the Bank included in the financial statements are translated into Turkish lira at the exchange rate ruling at the balance sheet date announced by the Bank. Income statement items are translated into Turkish lira by exchange rate ruling at the transaction date and all exchange differences arising from translation are accounted in other capital reserves under equity according to TAS 21. Precious metals (gold) accounted under assets and liabilities which do not have fixed maturity are translated into Turkish lira by using the buying rate of gold at the balance sheet date announced by the Bank and resulting evaluation differences are reflected as foreign exchange gain or loss. There are no foreign currency differences capitalized by the Bank. III. Explanations on forward, option contracts and derivative instruments: The derivative financial instruments of the Bank, generally, consist of forward foreign currency, forward security and swap agreements. Derivative transactions portfolio may change as per market conditions in related terms. The Bank records the spot foreign currency transactions in asset purchase and sale commitments. The Bank’s derivative transactions, even though they provide effective economic hedges under the Bank’s risk management policy, do not qualify for hedge accounting under the specific rules in “Turkish Accounting Standard for Financial Instruments: Recognition and Measurement (“TAS 39”)” and are therefore treated as “financial instruments at fair value through profit or loss” and the related gain or loss is associated with income statement. The liabilities and receivables arising from the derivative transactions are recorded as off-balance sheet items at their contract values. The derivative transactions are initially recognized at fair value and presented in the financial statements at fair values recalculated in the subsequent reporting periods. 14