Türkiye Garanti Bankası Anonim Şirketi And Its Affiliates Consolidated Financial Statements As at

85 Pages·2016·0.9 MB·English

Türkiye Garanti Bankası Anonim Şirketi
And Its Affiliates
Consolidated Financial Statements
As at and for the year ended
31 December 2015
With Independent Auditors’ Report Thereon

2 February 2016
This report contains the “Independent Auditors’
Review Report” comprising 2 pages and; the
"Consolidated Financial Statements and Their
Explanatory Notes” comprising 81 pages.
Türkiye Garanti Bankası Anonim Şirketi
And Its Affiliates

Table of contents

Independent Auditors’ Report
Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Deloitte.
ORTBa!)lmslz Denetim ve
Serbest Muhasebed
MaliMu¥,virlikA.~.
Maslak n01 Plaza
Eskj BOyiikdere Caddesi
Maslak Mahallesi No:'
Maslak, Sanyer 34398
Istanbul, TOrkiye
T.I :[phone]
Fax: [phone]
To the Board of Directors of WINW.deloitte.com.tr
Tiirkiye Garanti Bankasl A.S.
Mersis No: 0291001097600016
istanbul
Ticari Sidl No: 304099
INDEPENDENT AUDITOR'S REPORT
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Tlirkiye Garanti Bankasl A.S.
(the "Bank") and its consolidatcd affiliates (together the "Group"), which comprisc the consolidated
statement of linancial position as at December 31, 2015, and the consolidated statemcnt of comprchensive
income, consolidated statement of changes in equity and consolidated statement of cash tlows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
Auditor's Responsibilit)'
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor's judgment.
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
rclevant to the entity's preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified audit opinion.
Deloille refers tooneormoreofDelcitle Touche Tohmalsu Limited. aUKprivatecompany limitedbyguaranlee ("OTIl"). itsnetwork 01member firms.andtheirrelated
entities. OTTLandeachofitsmemberfirmsarelegallyseparate andindependent entities. DTTL(alsoreferred10as"Delo.tteGlobal") doesnotprovideservicestoclients.
Pleaseseewww.deloitte.com/aboutloramoredetaileddescriptionofDTTLand itsmember firms.
Member of Deloitte Touche Tohmatsu limited
Deloitte.
Basis for Qualified Opinion
Subsequent to the reversal of TL 73,000 thousands in the current period the accompanying consolidated
financial statements include a general reserve amounting to TL 342,000 thousands as of the balance sheet
date, provided by the Bank management in prior periods in line with conservatism principle considering
the circumstances which may arise from any changes inthe economy or market conditions.
Qualified Opinion
Inour opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph,
the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Group as at December 31, 2015, and its consolidated financial perforrnance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting
Standards.
DRT BAGIMSIZ DENETiM VE SERBEST MUHASEBECi MAli MUSAViRLiK A.S.
Member ofDELOITTE TOUCHE TOHMATSU LIMITED
istanbul, February 2, 2016
Türkiye Garanti Bankası AŞ And Its Affiliates
Consolidated Statement of Financial Position
At 31 December 2015
(Currency: Thousands of Turkish Lira (TL))
Restated
Notes 31 December 2015 31 December 2014
Assets
Cash and balances with central banks 4 6,802,108 6,596,475
Financial assets at fair value through profit or loss 5 660,193 1,086,670
Loans and advances to banks 6 14,378,087 10,815,218
Loans and advances to customers 7,23 175,681,692 148,081,415
Other assets 9 25,779,200 23,818,268
Investment securities 10,22,23 46,072,823 44,197,153
Investments in equity participations 11 41,216 40,896
Tangible assets, net 12 4,376,178 2,319,268
Goodwill, net 13 32,948 32,948
Deferred tax asset 20 1,013,552 925,821
Total Assets 274,837,997 237,914,132
Liabilities
Deposits from banks 14 6,960,181 7,114,771
Deposits from customers 15 149,154,274 126,292,539
Obligations under repurchase agreements and money market fundings 16 16,567,796 12,021,165
Loans and advances from banks and other institutions 17 39,959,934 38,218,041
Bonds payable 18 15,511,597 14,438,356
Subordinated liabilities 19 159,792 140,766
Current tax liability 20 376,779 450,209
Deferred tax liability 20 19,512 17,463
Other liabilities, accrued expenses and provisions 21 14,122,442 11,931,248
Total Liabilities 242,832,307 210,624,558
Equity attributable to owners of the bank
Share capital 22 5,146,371 5,146,371
Share premium 22 11,880 11,880
Unrealised gains/(losses) on available-for-sale assets 10,22 ( 283,792) 88,631
Hedging reserve 22 ( 241,097) ( 191,244)
Actuarial gain/(loss) 22 (76,718) ( 53,170)
Revaluation surplus on tangible assets 22 1,590,481 -
Translation reserve 22 696,557 367,064
Legal reserves 22 1,229,498 1,182,824
Retained earnings 22 23,705,893 20,543,485
31,779,073 27,095,841
Non-controlling interests 22 226,617 193,733
Total Equity 32,005,690 27,289,574
Total Liabilities and Equity 274,837,997 237,914,132
Commitments and Contingencies 24
The notes on pages 5 to 81 are an integral part of these consolidated financial statements.
1
Türkiye Garanti Bankası AŞ And Its Affiliates
Consolidated Statement of Comprehensive Income
For The Year Ended 31 December 2015
(Currency: Thousands of Turkish Lira (TL))
Restated
Notes 2015 2014
Statement of Income:
Interest income:-
Interest on loans 14,586,832 12,028,430
Interest on securities 3,613,195 3,821,232
Interest on lease business 397,158 354,267
Interest on deposits at banks 274,540 250,640
Others 72,311 64,924
18,944,036 16,519,493
Interest expense:-
Interest on saving, commercial and public deposits (5,655,220) (5,106,895)
Interest on borrowings, obligations under repurchase agreements and money market fundings (1,926,483) (2,008,976)
Interest on bonds payable (942,192) (851,532)
Interest on bank deposits (170,616) (184,519)
Interest on subordinated liabilities (5,776) (6,234)
Others (13,744) (11,650)
(8,714,031) (8,169,806)
Net interest income before provisions for loans and other credit risks 10,230,005 8,349,687
Provisions for loans and other credit risks, net 5,6,7,8,10, 21 (1,892,109) (1,564,155)
Net interest income after provisions for loans and other credit risks 8,337,896 6,785,532
Fee and commission income 3,653,823 3,655,937
Fee and commission expense (935,333) (803,705)
Net fee and commission income 28 2,718,490 2,852,232
Foreign exchange gains, net 880,370 1,031,033
Premium income from insurance business 454,908 402,123
Gain on sale of assets 87,156 96,331
Reversal of general reserve, net 73,000 -
Other operating income 281,581 263,123
Other operating income 1,777,015 1,792,610
Total operating Income 12,833,401 11,430,374
Salaries and wages (2,128,603) (1,851,813)
Trading losses, net 29 (1,732,842) (1,088,948)
Credit card rewards and promotion expenses (754,968) (601,296)
Employee benefits 21 (516,343) (453,218)
Depreciation and amortization 9, 12 (346,837) (307,236)
Rent expenses (340,701) (292,529)
Taxes and duties other than on income (257,942) (193,826)
Communication expenses (197,841) (181,735)
Impairment losses, net (including generel reserve, net) 9,11,12,13,21 (41,573) (154,632)
Other operating expenses 30 (1,754,422) (1,437,802)
Total operating expenses (8,072,072) (6,563,035)
Income before tax 4,761,329 4,867,339
Taxation charge 20 (953,909) (1,026,740)
Net income for the period 3,807,420 3,840,599
Other Comprehensive Income:
(items that may be reclassified subsequently to statement of income)
Foreign currency translation differences for foreign operations 22 401,340 (195,215)
Fair value reserves (available-for-sale financial assets):
Net change in fair values 22 (332,495) 642,303
Net amount transferred to income 22 (109,041) (54,416)
Cash flow hedges:
Effective portion of changes in fair value 22 (20,494) (36,127)
Net amount transferred to income 22 67,356 (488)
Net investment hedge for foreign operations 22 (96,715) 44,428
Revaluation surplus on tangible assets 1,590,627 -
(items that cannot be reclassified subsequently to statement of income)
Actuarial gain/(loss) related to employee benefits
Effect of changes in actuarial assumptions 21 (23,528) (51,857)
Change in measurement of plan liabilities arising from passage of time 21 - -
Other comprehensive income for the period, net of tax 1,477,050 348,628
Total Comprehensive Income for the Period 5,284,470 4,189,227
Net income attributable to:
Equity holders of the Bank 3,773,207 3,809,122
Non-controlling interests 34,213 31,477
3,807,420 3,840,599
Total comprehensive income attributable to:
Equity holders of the Bank 5,250,252 4,157,724
Non-controlling interests 34,218 31,503
5,284,470 4,189,227
Weighted average number of shares with a face
value of Kr 1 each 22 420 billions 420 billions
Basic and diluted earnings per share
(full TL amount per TL 1 face value each) 0.898 0.907
The notes on pages 5 to 81 are integral part of these consolidated financial statements.
2
Türkiye Garanti Bankası AŞ And Its Affiliates
Consolidated Statement of Changes in Equity
For The Year Ended 31 December 2015
(Currency: Thousands of Turkish Lira (TL))
1
Unrealised
Gains/(Losses) on Revaluation
Available-for-Sale Hedging Translation Actuarial Surplus on Non-Controlling Total
Share Capital Share Premium Assets Reserve Reserve Legal Reserves Gain/(Loss) Tangible Assets Retained Earnings Interests Equity
Balances at 31 December 2013 5 ,146,371 11,880 (494,581) ( 239,657) 5 54,878 1 ,156,024 (1,458) - 1 7,178,887 162,825 23,475,169
Restatement of retained earnings (refer to accounting policy (z)) - - - 4 0,600 - - - - 1 0,028 - 50,628
T Restated balances at 31 December 2013 5 ,146,371 11,880 (494,581) ( 199,057) 5 54,878 1 ,156,024 (1,458) - 1 7,188,915 162,825 23,525,797
3 he notes on pages 5 to 81 are an integral part of these consolidated financial statem FTDNN FENNNNRFTDNN F oooorfrieeeeeeeieessafavvrrrrttttttttsttenneeeeaa iitugficiugcddiiiittsasnnaggggheetnanaffeet ivcmmeennnniaiorrennrnoneeerr n dfddveeceec ssmsaa gtt sscx nutx nuaololbooem iiehlctrctrpp ss aunn r rllahhiaaeeaeafeeeelen noaattddianaiaggnn ddgnnrlvv a dtndaaccom m eggcaatiillhyycshss teieieaaei rrsullppettn eeasarrdedrdraoo kks s bbaasygmiiarsseeee nnffllieeaaftrreeffattsisra vvllee --nl3flolvvr ffrreeoaao1gmaoaoeessttrr allnniirr Diuu oof--icctcnosseenyneeeaaa/r c s(glelldsdoooleheehiaiionnmgs ffiaaafss ffnnrfflssseeebsoeoo ss)rrso esw rreeeef rpeerfrttnne rssoeii hlcc2ogg rmatteeea0mnnrrtssdatea 1 iacc gndnff4oavuuooes svntarrfsfrroasrree ieeffl irrealoonnrrambeerrccbeelddyypelii e gg-lttll-ooofnneefoy gg oiioorennaar-ppe-llscc see aoorrbarrleemmaaelessett neeeepii epoorrovvfonnrieerssttsssftfooliloio 5 , 1 4 6 , 3 7 1----------------- 1 1 , 8 8 0----------------- (( 631 ( 8 46 530( 8294429 ,,,,,,, 6214650 3711404 1786901----------- )))) ( 1 ( 4 93 416 ,,, 426 241 845 --------------- )) ( 3 1 1( 6335 7725 ,,,, 0534 6374 4904------ -------- )) 1 , 1 824 ( 2923 2 ,,,,, 85877 25795 42592------ ------ -) (( 55 31 ,, 17 71 02------- --------- )) ( 1 4 6- ------- --------- ) 2 0 3 (( ,, 5845(( 402624 395793 ,,,,,, 410057 820059 520029----- ------- )))) 1 9 3 ( 311 ((( ,,, 743121 3752 864 37465 555--- ------- )))) 2 7 3 (( ((( ,, 286 2 45311 ( ((( 8440263530531 ( 90226 5824791621 ( ,,,,,,,,,,,,,,, 5538513440086702 7907185911451516 4935154569175265 -- )))))))))))
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Net investment hedge for foreign operations - - - (96,715) 191,954 - - - - - 9 5,239
Net change in actuarial gain/(loss) related to employee benefits - - - - - - ( 23,548) - - 2 0 ( 23,528)
Net income for the year - - - - - - - - 3,773,207 34,213 3,807,420
Balances at 31 December 2015 5 ,146,371 11,880 (283,792) ( 241,097) 6 96,557 1 ,229,498 (76,718) 1 ,590,481 2 3,705,893 226,617 32,005,690
Türkiye Garanti Bankası AŞ And Its Affiliates
Consolidated Statement of Cash Flows
For The Year Ended 31 December 2015
(Currency: Thousands of Turkish Lira (TL))
Restated
1 January 2015- 1 January 2014-
Notes 31 December 2015 31 December 2014
Cash flows from operating activities:-
Interests and commissions received 18,524,981 16,310,575
Interests and commissions paid (9,911,052) (8,490,011)
Other operating activities, net (1,272,242) 1,422,927
Cash payments to employees and suppliers (5,595,612) (4,515,723)
1,746,075 4,727,768
(Increase)/decrease in operating assets:-
Loans and advances to banks (2,033,799) 2,285,498
Balances with central banks (510,959) (2,190,236)
Financial assets at fair value through profit or loss 423,630 (567,682)
Loans and advances to customers (24,538,726) (14,831,904)
Consumer loans (6,041,875) (3,832,392)
Other assets 1,060,819 (1,861,811)
Increase/(decrease) in operating liabilities:-
Deposits from banks (139,603) 372,242
Deposits from customers 22,823,778 13,762,898
Obligations under repurchase agreements and money market fundings 4,550,274 (3,968,948)
Other liabilities 752,276 2,875,926
Net cash outflows from operating activities before taxes and duties paid (1,908,110) (3,228,641)
Income taxes and other duties paid (1,142,397) (1,317,510)
Net cash outflows from operating activities (3,050,507) (4,546,151)
Cash flows from investing activities:-
Net increase in investment securities (1,896,229) (4,043,843)
Interest received for investment securities 3,661,472 3,015,835
Decrease in investments in equity participations - 506
Dividends received 5,399 2,066
Proceeds from sale of tangible assets 259,408 194,014
Purchase of tangible assets (895,609) (691,235)
Net cash inflows/(outflows) from investing activities 1,134,441 (1,522,657)
Cash flows from financing activities:-
Increase in loans and advances from banks and other institutions, net 2,191,417 3,677,089
Increase in bonds payable, net 1,032,154 3,530,942
Decrease in subordinated liabilities, net 18,911 (6,606)
Dividends paid (568,354) (425,185)
Net cash inflows from financing activities 2,674,128 6,776,240
Effect of exchange rate changes 994,106 501,008
Net increase in cash and cash equivalents 1,752,168 1,208,440
Cash and cash equivalents at the beginning of the period 10,004,218 8,795,778
Cash and cash equivalents at the end of the period 2 11,756,386 10,004,218
The notes on pages 5 to 81 are an integral part of these consolidated financial statements.
4
Türkiye Garanti Bankası AŞ and Its Affiliates
Notes to Consolidated Financial Statements
As of and for the Year Ended 31 December 2015
(Currency: Thousands of Turkish Lira (TL))
Overview of the Bank
Türkiye Garanti Bankası AŞ (the Bank) is a bank domiciled in Turkey. The consolidated
financial statements of the Bank as of and for the year ended 31 December 2015 comprise
the Bank, its affiliates (the Affiliates) and their interest in associates.
(a) Brief History
The foundation of the Bank was approved by the decree of the Council of Ministers
numbered 3/4010 dated 11 April 1946 and its “Articles of Association” was published in the
official gazette dated 25 April 1946. The Bank provides retail, commercial, corporate and
small and medium size enterprises (SME) banking, leasing, insurance, asset management
and factoring services through a network of 907 domestic branches, nine foreign branches,
three representative offices abroad and 64 offices. In addition to its branches, the Bank has
100% ownership in three banks each of which is located in Amsterdam, Bucharest and
Moscow. The Bank and its affiliates in total have 23,191 employees. The Bank’s head office
is located at Levent Nispetiye Mahallesi Aytar Caddesi 2 Beşiktaş 34340 Istanbul, Turkey.
(b) Ownership
As of 31 December 2015, group of companies under Banco Bilbao Vizcaya Argentaria SA
(“BBVA”) that currently owns 39.90% shares of the Bank, is named the BBVA Group (the
Group) and it is the main shareholder.
On 22 March 2011, BBVA had acquired; 78.120.000.000 shares of the Bank owned by GE
Capital Corporation at a total nominal value of TL 781,200 thousands representing 18.60%
ownership, and 26.418.840.000 shares of the Bank owned by Doğuş Holding AŞ at a total
nominal value of TL 264,188 thousands representing 6.29% ownership. BBVA, purchasing
24.89% shares of the Bank, had joint control on the Bank’s management together with group
of companies under Doğuş Holding AŞ (the Doğuş Group).
Subsequently, on 7 April 2011, BBVA had acquired 503.160.000 shares at a nominal value
of TL 5,032 thousands and increased its ownership in the Bank’s share capital to 25.01%.
Accordingly, BBVA and the Doğuş Group had mutual control on the Bank’s management.
Finally, in accordance with the terms of the agreement between BBVA and the Doğuş Group
which was previously disclosed on 19 November 2014, the sale of shares representing
14.89% of the share capital of the Bank with a face value of TL 625,380 thousands and
62.538.000.000 shares by the Doğuş Group to BBVA, has been completed on 27 July 2015.
Following the acquisition, BBVA’s stake in the Bank has reached to 39.90% and BBVA
became the main shareholder. The Bank has moved to “Foreign Deposit Banks” category
from “Private Deposit Bank” category by the Banking Regulation and Supervision Agency
(the “BRSA”).
Accordingly, as of balance sheet date, the Doğuş Group’s interest in the share capital of the
Bank is at 10%.
Significant accounting policies
(a) Statement of compliance
The Bank and its Turkish affiliates maintain their books of accounts and prepare their
statutory financial statements in Turkish Lira (TL) in accordance with the Accounting
Practice Regulations as promulgated by the BRSA; Turkish Accounting Standards
promulgated by the Public Oversight Accounting and Auditing Standards Authority; the
Turkish Commercial Code; and the Turkish Tax Legislation (collectively, Turkish GAAP);
the Bank’s foreign affiliates maintain their books of accounts and prepare their statutory
financial statements in accordance with the generally accepted accounting principles and the
related legislation applicable in the countries they operate.
The accompanying consolidated financial statements are based on the statutory records with
adjustments and reclassifications for the purpose of fair presentation in accordance with
International Financial Reporting Standards (“IFRS”). The accompanying consolidated
financial statements are authorized for issue by the directors on 2 February 2016.
5
Türkiye Garanti Bankası AŞ and Its Affiliates
Notes to Consolidated Financial Statements
As of and for the Year Ended 31 December 2015
(Currency: Thousands of Turkish Lira (TL))

Significant accounting policies (continued)
(b) Basis of preparation
The accompanying consolidated financial statements are presented in thousands of TL,
which is the Bank’s functional currency.
The financial statements are prepared on the historical cost basis as adjusted for the effects of
inflation that lasted until 31 December 2005, except that the following assets and liabilities
are stated at their fair value if reliable measures are available: derivative financial
instruments, instruments at fair value through profit or loss, available-for-sale financial
assets and tangible assets held for sale.
The accounting policies set out below have been applied consistently by the Bank and its
affiliates to all periods presented in these consolidated financial statements.
(c) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and in
any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have the most significant effect on the
amount recognized in the financial statements are in Notes 7, 9, 10, 12, 13, 17, 18, 20, 21,
23, 24, 25 and 31.
(d) Basis of consolidation
The accompanying consolidated financial statements include the accounts of the parent
company, the Bank, its affiliates and associates on the basis set out in sections below. The
financial statements of the entities included in the consolidation have been prepared as of the
date of the consolidated financial statements.
Affiliates
Affiliates are the entities controlled by the Bank. The control exists if and only if;
- when the Bank has the power over an affiliate which that power, directly or indirectly, give
rights to govern the financial and operating policies of the entity so as to obtain benefits
from its activities.
- exposure, or rights, to variable returns from its involvement with the affiliate.
- the ability to use its power over the affiliate to affect the amount of its returns.
The Bank reasses its control power over its affiliates if there is an indication that there are
changes to any of the three elements of control. The financial statements of affiliates are
included in the consolidated financial statements from the date that control commences until
the date that control ceases.
Associates
Associates are those entities in which the Bank and its affiliates have significant influence,
but not control, over the financial and operating policies. The consolidated financial
statements include the Bank and its affiliates’ share of the total recognized gains and losses
of associates on an equity accounting basis, from the date that significant influence
commences until the date that significant influence ceases. When the Bank and its affiliates
share of losses exceeds the carrying amount of the associate, the carrying amount is reduced
to nil and recognition of further losses is discontinued except to the extent that the Bank and
its affiliates has incurred obligations in respect of the associate.
6