1. Risk Management in Banking 1www.bseducation.net

2. Risk? www.bseducation.net2 Risk Uncertainty Loss

3. Finacial Statements of a Bank 1. Balace Sheet 2. Statement of Income 3. Cash Flow Statement 4.Retained Rearnings Statement (as of 31.12.2014) ( for the year ending 31.12.2014) ( for the year ending 31.12.2014) ( for the year ending 31.12.2014) www.bseducation.net3

4. 4 Balance Sheet of a Bank

5. Interest Earning Assets Interest Bearing Liabilities www.bseducation.net5

6. Share Holders Equity 1. Share Capital 2. Retained Earnings 3. Revaluation Surplus 4. Emission Premium 5. Legal Reserves 6. Net Income for the year www.bseducation.net6

7. 7

8. 8 Income Statement

9. www.bseducation.net9 Non Interest Income

10. B/S & I/S Relationship www.bseducation.net10

11. ALM bsenver@superonline.com11 Balance Sheet Income Statement Assets Liabilities Loans Treasury Bills Interest Income Interest Expences Net Interest Income Deposits Borrowings I nterest Earning Assests I nterest Bearing Liabilities Non- Interest Earning Assests Non-Interest Bearing Liabilities Share HoldShare ers’ Equity Total Assets Total Liabilities+SHEQ = Share Holders Equity

12. Sources of Banking Risks www.bseducation.net12

13. www.bseducation.net13 On Balance Sheet Risks

14. www.bseducation.net14 Off Balance Sheet Risks

15. Major Off Balance Sheet Risks of Turkish Banks Letter of Guarantees (Teminat Mektupları) Letter of Credits (Akreditifler) Guarantees Given for Foreign Transactions (Harici Garantiler) Cross Currency Swaps (Opsiyonlar- Currency Opsiyonları) Forward Transactions (Forward İşlemler) Interest Rate Swaps (Faiz Swapları)

16. CAMELS O www.bseducation.net16

17. www.bseducation.net17

18. www.bseducation.net18

19. www.bseducation.net19 1.1 unexpected withdrawal of deposits before maturity date 1.2 unexpected non renewal of deposits at maturity date 2.1 unexpected non payment of loan principle or interest amounts at due dates 2.2 unexpected early payment of loans before maturity date 3. Unexpected indemnification of Contingent Liabilities & Commitments like Letter of Gurantes or Letter of Credits

20. Market Risks www.bseducation.net20

21. Interest Risks www.bseducation.net21

22. Position Risks in Banks www.bseducation.net22

23. Operations Risks Internal Fraud External Fraud Practices: - Employment - Client - Products - Business Damage to Assets Business Disruption System Failures Execution Delivery Process Management

24. Operating Risks for non financial institutions www.bseducation.net24

25. BANKING RISKS BECOMING COMPLEX www.bseducation.net25