Esteemed stakeholders,

Continuing to pursue profitable and productive growth, increasing its contributions to the real sector year after year, developing its branch and non-branch services in order to serve its customers more effectively, and supplying financial products and services to virtually every town and city in this country, Ziraat Bank has completed yet another year with a superior performance.

Beset as it was by volatilities at home and abroad and by geopolitical developments, 2015 was a tough year indeed but Ziraat Bank nevertheless successfully achieved its targets thanks to its coherent business model and robust balance sheet. Last year our Bank’s total assets increased by 22% and reached TL 303 billion while its total lendings grew by 35% to TL 247 billion.

In line with our goal of maintaining a lending-driven asset structure, Ziraat Bank’s cash loans at end-2015 amounted to TL 187 billion, which corresponded to 62% of its total balance sheet and was five percentage points higher than the previous year’s 57%. While loans once again accounted for a bigger share of the Bank’s total assets, care was also given to focus on lending mainly to real-sector customers in 2015.

Increasing its support for all sectors, including agriculture, Ziraat Bank continued to be a bank serving a vast audience whose members range from the smallest of businesses to the biggest of firms and from farmers to pensioners. Ziraat Bank also numbers among the banks that supply financing for major investment projects being undertaken in our country.

In 2015 we also made significant progress not just in cash loans but also in non-cash credit too, the latter of which has trebled over the last three years. Ziraat Bank has succeeded in becoming the sector’s leader as measured by total credit placements. As we continue to move forward, we will remain just as committed to our lending-driven growth and customer-focused balance sheet strategy.

Even as our lending continues to grow, so too does our attention to protecting our balance sheet quality. Ziraat Bank’s 1.7% NPL ratio is substantially below the sectoral average. The fact that this ratio was achieved without selling off even a single NPL is a further indication of the excellent quality of our loan book. A comprehensive framework that embraces everything from credit-worthiness assessment and models to early warning and risk monitoring continues to be developed so as to ensure that the greatest possible care is given to protecting credit quality at our Bank.

Although deposits remain the primary source of Ziraat Bank’s funding, there has been some additional diversification into non-deposit resources as well: while deposits grew by 22% year-on in 2015, the Bank’s non-deposit sources of funding were up by 34% over the same period. A syndicated loan in which 41 banks from 19 countries had taken part was renewed upon maturity at USD 1.1 billion and thus was oversubscribed by USD 300 million. Another USD 300 million or so worth of funding was obtained through medium-term bond issues which Ziraat Bank had undertaken in order to continue tapping international capital markets. Last year the Bank continued to secure resources from international financial institutions through its bilateral agreement and post-financing channels. Ziraat Bank is the deposit-taking leader in its home market even though it does not compete with other banks for them on the basis either of term or of interest rate.

As our country’s leading bank in so many respects, Ziraat Bank is able to focus on sustainably profitable growth through improvements in productivity rather than having to compete on “scale”.

Last year Ziraat Bank opened another 112 domestic branches and one foreign branch (in Kosovo), thereby bringing the total number to 1,812. We are currently in the process of opening a second branch in Kosovo, a third in Georgia, and our first in Bahrain. We have launched a new bank in Montenegro and our second one in Azerbaijan. As a result of these and similar undertakings, Ziraat Bank now has an operational presence at 97 locations in 18 countries, which gives it a direct international service reach more extensive than that of any other bank in our country.

Ziraat Katılım Bankası, which also opened its doors last year, has further enhanced the financial service diversity of the Ziraat Finance Group. It gives me pleasure to note here that Ziraat Katılım Bankası has already achieved significant growth and success in a relatively short period of time.

We are continuing to undertake non-branch channel and operation centralization investments in order to more efficiently manage branches’ workloads and to increase branch network productivity. We have reached the point where a majority of transactions are being conducted through our Operations Center and other non-branch channels.

As our country’s leading bank in so many respects, Ziraat Bank is able to focus on sustainably profitable growth through improvements in productivity rather than having to compete on “scale”.

In 2015 Ziraat Bank booked a net profit of TL 5,162 million. We regard profitability as the most important means of supporting our equity and we advance confidently and committedly towards our goal of being a global bank whose equity structure is strong.

In closing, I thank all of our stakeholders who had contributed to our 2015 performance.

Yours sincerely,

Hüseyin AYDIN
Member of the Board and CEO