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ARAP TÜRK BANKASI A.Ş.
NOTES TO UNCONSOLIDATED FINANCIAL
STATEMENTS AT 31 DECEMBER 2013
( Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated. )
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL
STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE NOTE I OF SECTION THREE
Exposed currency risk
The possible increases or decreases in the shareholders’ equity and the profit/loss as per an assumption of devaluation/appreciation
by 10% of TL against currencies mentioned below as of 31 December 2013 and 31 December 2012 are presented in the below
table. The other variables, especially the interest rates, are assumed to be fixed in this analysis.
Assuming 10% devaluation of TL;
31 December 2013
31 December 2012
Income
Statement
Shareholders’
Equity (*)
Income
Statement
Shareholders’
Equity
US Dollar
(235)
(235)
12
12
Euro
139
139
14
14
Other Currencies
(19)
(19)
2
2
Total
(115)
(115)
28
28
(*) The effect on shareholders’ equity also includes the effect on the profit/loss.
Assuming 10% appreciation of TL;
31 December 2013
31 December 2012
Income
Statement
Shareholders’
Equity (*)
Income
Statement
Shareholders’
Equity
US Dollar
235
235
(12)
(12)
Euro
(139)
(139)
(14)
(14)
Other Currencies
19
19
(2)
(2)
Total
115
115
(28)
(28)
(*) The effect on shareholders’ equity also includes the effect on the profit/loss.
VI. INFORMATION ON INTEREST RATE RISK
Interest rate sensitivity of the assets, liabilities and off-balance sheet items
Within the context of the market risk management of the Risk Management Department, the Bank’s interest rate risk is calculated
and analyzed taking different dimensions of the issue in consideration. The interest rate risk is measured according to market risk
calculated using the standard method and is included in the capital adequacy ratio. To test the effect of the interest rate fluctuations on
the Bank monthly based stress test analysis are done.
In addition, by classifying the changes in risk factors different scenario analysis are done based on different interest rate expectations.
The sensitivity of assets, liabilities and off-balance sheets against interest rate are measured by an analysis on a monthly basis.
The expected effects of the fluctuations of market interest rates on the Bank’s financial position and cash flows, the
expectations for interest income, and the limits the board of directors has established on daily interest rates
The Board of Directors has determined limits for the amount exposed to market risk/ shareholder’s equity, to be maximum%45 for the
early warning limit, %50 for limit maximum, and maximum%55 for limit exception in order to follow interest rate risk, exchange rate
risk and equity price risk.
The precautions taken for the interest rate risk the Bank was exposed to during the current year and their expected effects
on net income and shareholders’ equity in the future periods
Although the increase in interest rates have a limited negative effect on the Bank’s financial position the Bank’s Equity structure is able
to confront the negative effects of possible fluctuations in the interest rates.