İş Bank consolidated net profit according to inflation accounting was 47.9 billion TL in 2022.
The bank’s unadjusted net profit was announced as 61.5 billion TL. Accordingly, the bank achieved a return on equity of 18.5 percent.
What is inflation accounting?
Inflation accounting is a method of accounting that adjusts financial statements to reflect the effects of inflation. It is used to account for the erosion in the purchasing power of money over time due to inflation. Inflation can distort the financial statements, making it difficult to compare financial performance across different periods.
Inflation accounting involves adjusting historical costs, such as assets, liabilities, revenues, and expenses, to their equivalent values in terms of the reporting date’s purchasing power. This adjustment helps provide a more accurate representation of the financial position and performance of an entity.
There are different approaches to inflation accounting, including general price level accounting and current purchasing power accounting. General price level accounting adjusts financial statements based on changes in a price index, while current purchasing power accounting adjusts for changes in the general purchasing power of money.
The purpose of inflation accounting is to provide users of financial statements with more meaningful and comparable information by considering the impact of inflation. This is particularly important in economies where inflation rates are significant and can have a significant influence on financial reporting and decision-making.