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.


 
 

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Yapı ve Kredi Bankası A.Ş. 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) I. DEPOSITS II. LOANS RECEIVED III. MONEY MARKET FUNDS IV. 4.1 4.2 4.3 V. 5.1 5.2 VI. VII. 7.1 7.2 VIII. IX. 9.1 9.2 9.3 9.4 X. 10.1 10.2 10.3 10.4 XI. XII. XIII. Liabilities 13.1 13.2 XIV. 14.1 14.2 MARKETABLE SECURITIES ISSUED (Net) Bills Asset backed securities Bonds FUNDS Borrower funds Other FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS DERIVATIVE FINANCIAL LIABILITIES Derivative financial liabilities at fair value through profit or loss Derivative financial liabilities at fair value through other comprehensive income FACTORING PAYABLES LEASE PAYABLES Finance lease payables Operating lease payables Other Deferred finance lease expenses (-) PROVISIONS Provision for restructuring Reserves for employee benefits Insurance technical reserves (Net) Other provisions CURRENT TAX LIABILITIES DEFERRED TAX LIABILITIES LIABILITIES RELATED TO NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) Held for sale Related to discontinued operations. SUBORDINATED DEBT Loans Other debt instruments OTHER LIABILITIES XV. XVI. SHAREHOLDERS' EQUITY 16.1 Paid-in capital 16.2 Capital reserves 16.2.1 Equity share premiums 16.2.2 Share cancellation profits 16.2.3 Other capital reserves 16.3 Other accumulated comprehensive income that will not be reclassified in profit or loss 16.4 Other accumulated comprehensive income that will be reclassified in profit or loss 16.5 Profit reserves 16.5.1 Legal reserves 16.5.2 Statutory reserves 16.5.3 Extraordinary reserves 16.5.4 16.6 16.6.1 Prior years' profits or losses 16.6.2 Current period net profit or loss TOTAL LIABILITIES Other profit reserves Profit or loss Note (Section Five) 2.1 2.3.1 2.3.4 2.3.4 2.3.3.2 2.2 2.5 2.5.2 2.6 2.6.4 2.7 2.8 2.9 2.4 2.10 Current Period (31/12/2018) TL 92.782.018 109.767.118 271.691 37.077.647 330.175 1.215.446 2.678.882 13.706.130 1.373.498 1.305.384 330.910 6.388.957 5.846.062 542.895 3.000.839 658.112 2.342.727 1,091,311 1.438.556 2.369.395 (909.935) 19.969.702 869.410 19.099.217 1.075 4.667.426 FC 4.667.426 The accompanying explanations and notes form an integral part of these financial statements. 13.706.130 7.634.494 892.348 823.837 68.511 219 228 9 306.818 306.818 Total 435.591 2.028.776 202.549.136 37.349.338 1.545.621 16.385.012 1.373.498 15.011.514 7.965.404 7.281.305 6.669.899 611.406 13.557.153 13.557.153 5.574.724 5.574,724 7.982.429 7.982.429 14.829.942 3.177.994 18.007.936 36.539.132 2.464.367 39.003.499 8.447.051 1.995.493 556.937 219 228 9 3.307.657 658.112 2.649.545 1.091.311 8.447.051 1.995.493 556.937 1.438.556 2.804.986 1.118.841 19.969.702 869.410 19.099.217 1.075 4.667.426 4.667.426 158.243.857 189.799.734 348.043.591 Yapı ve Kredi Bankası A.Ş. 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) I. DEPOSITS II. LOANS RECEIVED III. MONEY MARKET FUNDS IV. 4.1 4.2 4.3 V. 5.1 5.2 VI. VII. 7.1 7.2 VIII. IX. 9.1 9.2 9.3 9.4 X. 10.1 10.2 10.3 10.4 XI. XII. XIII. Liabilities 13.1 13.2 XIV. 14.1 14.2 MARKETABLE SECURITIES ISSUED (Net) Bills Asset backed securities Bonds FUNDS Borrower funds Other FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS DERIVATIVE FINANCIAL LIABILITIES Derivative financial liabilities at fair value through profit or loss Derivative financial liabilities at fair value through other comprehensive income FACTORING PAYABLES LEASE PAYABLES Finance lease payables Operating lease payables Other Deferred finance lease expenses (-) PROVISIONS Provision for restructuring Reserves for employee benefits Insurance technical reserves (Net) Other provisions CURRENT TAX LIABILITIES DEFERRED TAX LIABILITIES LIABILITIES RELATED TO NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) Held for sale Related to discontinued operations. SUBORDINATED DEBT Loans Other debt instruments OTHER LIABILITIES XV. XVI. SHAREHOLDERS' EQUITY 16.1 Paid-in capital 16.2 Capital reserves 16.2.1 Equity share premiums 16.2.2 Share cancellation profits 16.2.3 Other capital reserves 16.3 Other accumulated comprehensive income that will not be reclassified in profit or loss 16.4 Other accumulated comprehensive income that will be reclassified in profit or loss 16.5 Profit reserves 16.5.1 Legal reserves 16.5.2 Statutory reserves 16.5.3 Extraordinary reserves 16.5.4 16.6 16.6.1 Prior years' profits or losses 16.6.2 Current period net profit or loss TOTAL LIABILITIES Other profit reserves Profit or loss Note (Section Five) 2.1 2.3.1 2.3.4 2.3.4 2.3.3.2 2.2 2.5 2.5.2 2.6 2.6.4 2.7 2.8 2.9 2.4 2.10 Current Period (31/12/2018) TL 92.782.018 109.767.118 271.691 37.077.647 330.175 1.215.446 2.678.882 13.706.130 1.373.498 1.305.384 330.910 6.388.957 5.846.062 542.895 3.000.839 658.112 2.342.727 1,091,311 1.438.556 2.369.395 (909.935) 19.969.702 869.410 19.099.217 1.075 4.667.426 FC 4.667.426 The accompanying explanations and notes form an integral part of these financial statements. 13.706.130 7.634.494 892.348 823.837 68.511 219 228 9 306.818 306.818 Total 435.591 2.028.776 202.549.136 37.349.338 1.545.621 16.385.012 1.373.498 15.011.514 7.965.404 7.281.305 6.669.899 611.406 13.557.153 13.557.153 5.574.724 5.574,724 7.982.429 7.982.429 14.829.942 3.177.994 18.007.936 36.539.132 2.464.367 39.003.499 8.447.051 1.995.493 556.937 219 228 9 3.307.657 658.112 2.649.545 1.091.311 8.447.051 1.995.493 556.937 1.438.556 2.804.986 1.118.841 19.969.702 869.410 19.099.217 1.075 4.667.426 4.667.426 158.243.857 189.799.734 348.043.591

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An increase in interest rates will have a direct impact on the bottom line of the bank as higher r... View the full answer