Financial Position A&T Finansal Kiralama A.Ş. Annual Report 2024 76 77 (Amounts expressed Turkish lira (“TL”) unless otherwise indicated.) (Amounts expressed Turkish lira (“TL”) unless otherwise indicated.) A&T FİNANSAL KİRALAMA A.Ş. A&T FİNANSAL KİRALAMA A.Ş. NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2024 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2024 A&T FİNANSAL KİRAL MA A. Ş. NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2024 (Amounts expressed Turkish lira (“TL”) unless otherwise indicated.) 17 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.3 Summary of significant accounting policies (Continued) Loss Given Default (LGD): If a loan default occurs, it represents the economic loss incurred on the loan. It is expressed as a percentage. LGD summarizes all cash flows from customers subsequent to default. It covers all costs and collections that occur during the collection cycle, including collections from collaterals. It also includes the “time value of money” calculated by means of deducting costs and additional losses from the present value of collections. Exposure at Default (EAD): For cash loans, it corresponds to the amount of loan granted as at the reporting date. The maximum period for which the credit losses are determined is the contractual life of a financial instrument unless there is the legal right to call it earlier. Stage 1: 12-month expected credit loss represents the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date and calculated as the portion of lifetime expected credit losses. 12-month expected credit loss is calculated based on a probability of default realized within 12 months after the reporting date. Such expected 12-month probability of default is applied on an expected exposure at default, multiplied with loss given default rate, and discounted with the original effective interest rate. Stage 2: When there is a significant increase in credit risk since origination, lifetime expected credit losses is calculated. Including multiple scenario usage, probability of default and loss given default rates are estimated through the life of the instrument. Estimated cash shortfalls are discounted by using the original effective interest rate. Stage 3: Lifetime expected credit losses are recognized for the impaired lease receivables. The method is similar to Stage 2 Assets. In the following two conditions, it is considered to be a default on the related lease receivables; 1.Objective Default Definition: Although the definition of default in practice for financial institutions is based on the criterion that the debt is overdue more than 90 days, the Company is taking into account the payment behavior of its customers and the characteristics of the loans and has used 150 days as valid. If the debt is delayed for 150 days, it is not considered as default, and the default starts on the 151th day. Subjective Default Definition: It means that the debt will not be paid. If the borrower is judged unable to fulfill its debts on the loan, the borrower should be considered in default, regardless of whether there is a balance in delay or the number of days of delay. Forward looking macroeconomic information Forward-looking macroeconomic information is included in credit risk parameters in the evaluation of the significant increase in credit risk and calculation of expected credit loss. A&T FİNANSAL KİRAL MA A. Ş. NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2024 (Amounts expressed Turkish lira (“TL”) unless otherwise indicated.) 18 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.3 Summary of significant accounting policies (Continued) Significant increase in credit risk In the criteria applied for the debts classified at the first stage; future payment issues are not expected, and the credit worthiness of the borrower has not weakened. According to TFRS 9, the debts are include twelve-month credit impairment debts implementation is classified at first stage. In the criteria applied for the debts classified at the second stage; adverse event in debt payment or cash flows of borrowers are observed or estimated, problems arise in principal and / or interest payments in accordance with the terms of the debts agreement, and the credit risk of the borrower is significantly increased. - Loans overdue more than 30 days, - Restructuring status, - Loans classified as watch list, - Negative intelligence and official blacklist records. According to TFRS 9, debts classified as Stage 2 are subject to the implementation of the expected lifetime loan loss allowance. Low credit risk TFRS 9, the credit risk on a financial instrument is considered as low if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. It is not considered financial instruments to have low credit risk when they are regarded as having a low risk of loss simply because of the value of collateral and the financial instrument without that collateral would not be considered low credit risk. Financial instruments are also not considered to have low credit risk simply because they have a lower risk of default than the other financial instruments or relative to the credit risk of the jurisdiction within which it is operated. If it is determined that a financial instrument has a low credit risk as at the reporting date, it is assumed that the credit risk on the financial instrument has not increased significantly following its first recognition in the financial statements. Financial instruments Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
RkJQdWJsaXNoZXIy MzMzNjEw