We talked about how a central bank can increase the money supply. One of the ways a central bank can provide this, is by changing its interest rates. In this part, discuss how an interest rate increase will affect your bank, based on its balance sheet and income statement for 2018. Focus on profitability and risk.
(You can find the income statement and the balance sheet of the bank for year 2018 in the attachment.)
Yapl ve Kredi BankaSI AS. Unconsolidated Financial Statements As of December 31, 2018 [Unless otherwise stated amounts are expressed in thousands of Turkish Lira ["TL"]] 1. Balance sheet (Statement of Financial Position) Currant Period (31712112018) Note (Section Liabilities Five! TL FC Total I. DEPOSITS 2.1 92.782.018 109.767.118 202549.136 ll. LOANS RECEIVED 2.3.1 271.691 37.077.647 37.349.338 ll| . MONEY MARKET FUNDS 330.175 1.215.446 1.545.621 IV. MARKETABLE SECURITIES ISSUED (Nat) 2.3.4 2.678.882 13.706.130 16.385.012 4.1 Bills 2.8.4 1.378.498 - 1.373.498 4.2 Asset backed securities 7 7 7 4.3 Bonds 1.305.384 13.706.130 15.011.514 V. FUNDS - 5.1 Borrower funds 7 7 7 5.2 Other - - - VI. FINANCIAL LIABILITIES AT FAI R VALUE THROUGH PROFIT OR LOSS 2.3.3.2 330.910 7.634.494 7.965.404 VII. DERIVATIVE FINANCIAL LIABILITIES 2.2 6.388.957 892.348 7.281.305 7.1 Derivative financial liabilities at fair value through profit or loss 5.846.062 823.837 6.669.899 7.2 Derivative nancial liabilities at fair value through other comprehensive income 542.895 68.511 61 1.406 VIII. FACTORING PAYABLES - - - IX. LEASE PAYABLES 2.5 219 219 9.1 Finance lease payables 7 228 228 9.2 Operating lease payables 2.5.2 - - - 9.3 Other 7 7 7 9.4 Deferred finance lease expenses (7) - 9 9 X. PROVI SIONS 2.6 3.000.839 306.818 3.307.657 10.1 Provision tor restructuring 7 7 7 10.2 Reserves for employee benefits 658.112 - 658.112 10.3 Insurance technical reserves (Net) - - - 10.4 Other provisions 2.6.4 2.342.727 306.818 2.649.545 XI. CURRENT TAX LIABILITIES 2.7 1.091.311 - 1.091.311 XII. DEFERRED TAX LIABILITIES - XIII. LIABILITIES RELATED TO NON-CURRENIT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) 2.8 - - - 13.1 Held for sale - - - 13.2 Related to discontinued operations 7 7 7 XIV. SUBORDI NATED DEBT 2.9 - 1359.153 13.5 57.1 53 14.1 Loans - 5. 574.724 5.574.724 14.2 Other debt instruments 7 7.982.429 7.982.429 XV. OTHER LIABILITIES 2.4 14.829.942 3.177.994 18.007 .936 XVI. SHAREHOLDERS' EQUITY 2.10 36.539.132 2.464.367 39.003.499 16.1 Paid-in capital 8.447.051 - 8.447.051 16.2 Capital reserves 1.995.493 - 1.995.493 16.2.1 Equity share premiums 556.937 7 556.937 16.2.2 Share cancellation prots - - - 16.2.3 Other capital reserves 1.438.556 - 1.438.556 16.3 Other accumulated comprehensive income that will not be reclassified in prot or loss 2.369.395 435.591 2.804.986 16.4 Other accumulated comprehensive income that will be reclassified in profit or loss (909.935) 2.028.776 1.1 18.841 16.5 Profit reserves 19.969. 702 7 19.969. 702 16.5.1 Legal reserves 869.410 7 869.410 16.5.2 Statutory reserves - - - 16.5.3 Extraordinary reserves 19.099217 7 19.099.217 16.5.4 Other profit reserves 1.075 - 1.075 16.6 Profit or loss 4.667.426 - 4.667.426 16.6.1 Prior years' prots or losses - - - 16.6.2 Current period net profit or loss 4.667.426 - 4.667.426 TOTAL LIABILITIES 158.243.857 189.799.734 348.043.591 The accompanying explanations and notes form an integral part of these financial statements. INTRCCUCTICN BANK MANAGEMENT AND CoRPoRATE BUVERNAN CE PRACTICES _ FINANCIAL INFoRMATIoN AND RISK MANAGEMENT YapI ve Kredi BankaSI A5. Unconsolidated Statement of Changes in Shareholders' Equity as of December 31, 2018 [Unless otherwise stated amounts are expressed in thousands of Turkish Lira ['TL"]] 5. Statement of changes in shareholders' equity Other Accumulated Comprehensive Income Current Period That Will Not Be Reclassified In 31/12f2018 Profit and Loss Share certificate Other CHANGES IN SHAREHOLDER'S Paid-in Share cancellation capital EQUITY capital premium profits reserves 1 2 3 I. Balance at the beginning of the period 4.347.051 543.881 - 1.340.087 1.360.019 {178.038} 1.356.685 II. Adjustment in accordance with TMS 8 - - - - - - (181.350) 2.1 Effect of adjustment - - - - - 2.2. Effect of changes in accounting policies - - - - - - (181.350) III. New balance +ll} 4.347.051 543.881 - 1.340.087 1.360.019 {178.038} 1.175.335 IV. Total comprehensive income {loss} - - - 485.503 (40.032) 2.199 V. Capital increase in cash 4.100.000 13.056 - (29.472) - - - VI. Capital increase through internal reserves - - - - - - - VII. Issued capital inflation adjustment difference - - - - - VIII. Convertible bonds - - - - - - - IX. Subordinated debt - - - - - - - x. Increase {decrease} through other changes, equity - - - 108 - - - XI. Profit distribution - - 127.833 - - 11.1. Dividends distributed - - - ' 11.2. Transfers to legal reserves - - - 127.833 - - - 11.3. Other - - - Period end balance (III+IV+......+X+XI) 8.447.051 556.937 - 1.438.556 1.845.522 (218.070) 1.177.534 1. Tangible assets revaluation reserve, 2. Accumulated gains / losses on remeasurements of defined benefit plans 3. Other Comprehensive Income of Associates and Joint Ventures Accounted for Using Equity Method that will not be Reclassified to Profit or Loss and OtherAccumulated Amounts of Other Comprehensive Income that will not be Reclassified to Profit or Loss 4. Exchange differences on translation reserve for associates and joint ventures accounted for using equity method 5. Accumulated gains (losses) due to revaluation and/ or reclassification of financial assets measured at fair value through other comprehensive income 6. Accumulated gains or (losses) on cash flow hedges and net investment hedges. The accompanying explanations and notes form an integral part of these financial statements
