In 2016, Ziraat Bank remained involved in the financing of large and medium-sized projects that contribute to the country’s economy, reduce external dependency, offer high added value and are feasible.

Ziraat Bank, which itself serves its customers from around 400 points in Turkey, stood shoulder-to-shoulder with all segments of society with its domestic and foreign subsidiaries that make up the Ziraat Finance Group. In 2016, Ziraat REIT joined the Ziraat Finance Group and began its operations.

Within the framework of the seven basic strategic targets that it set out, Ziraat Bank focused on the growth of the country’s economy and the development of social prosperity, while being a bank which provides financial solutions to its customers from every segment through effective distribution channels, experienced personnel and strong technological infrastructure.

Ziraat Bank’s total assets amounted to TL 357.8 billion at the end of 2016, marking an increase of 18.1% YoY. Loans comprise the lion’s share of total assets with a 65% share. Ziraat Bank, always aiming for sustainable profitability and efficiency, continues to work towards enhancing its branches and improving the qualification of its employees, as well as improving the basic balance sheet sizes per branch and employee.

With a business model focused on high efficiency, Ziraat Bank will continue to meet its customers’ needs for banking services and products in all four corners of our country from the right service points in a timely manner and with favorable conditions.

65%LOANS COMPRISE THE LION’S SHARE OF TOTAL ASSETS WITH A 65% SHARE.

Corporate/Entrepreneurial Banking

Supporting Turkey’s long-term development and development process and contributing to employment and economic growth in general terms.

Within the scope of its vision of remaining the leading bank, the ethical bank and the global bank of the sector in 2016, Ziraat Bank remained involved in the financing of large and medium-sized projects that contribute to the country’s economy, reduce external dependency, offer high added value and are feasible. The Osmangazi and Yavuz Sultan Selim Bridges, projects which Ziraat Bank was involved in the financing of, were opened to traffic in 2016, while the Bayraktar and Sancaktar frigates were launched. By the end of the year, the Bank was extending support to 39 projects, with project financing reaching USD 12.3 billion.

In line with its basic goals and strategies of sustainable growth and profitability, Ziraat Bank, which diversifies the resources, products and services that it provides to its customers, maintains its leading role in the country’s economy by establishing new relationships with leading companies in every sector and strengthening existing ties.

Besides the financing of agricultural production, agricultural industry and industrial production, Ziraat Bank has increased its presence and competitive edge in providing financing the commercial sector in the recent period.

Serving corporate clients from 20 corporate branches
The corporate branches that work with the aim of managing customer portfolios in the most efficient way and increasing the number of active customers, continued to contribute to Ziraat Bank’s balance sheet and customer base with their business volumes in 2016.

Progress achieved in the financing of the real sector.
Ziraat Bank outperformed the sector rate of growth in the financing of the real sector. Cash loans disbursed to customers in the corporate segment amounted to TL 85.7 billion, an increase of 25.6% YoY, while non-cash loans stood at TL 69.5 billion, an increase of 31.5% YoY.

In 2016, the volume of foreign trade transactions, an important component in Ziraat Bank’s strategy of becoming a global player, amounted to USD 36.6 billion, an increase of 14% YoY, with corporate segment customers accounting for 80.7% of this amount. The Bank intends to maintain its strong role in financing foreign trade in 2017.

The Bank’s main focus is to ensure that Ziraat’s customers work with all members of the Ziraat Finance Group. As the synergy-based cooperation increases at the group level, the real sector’s financial needs for domestic and foreign business opportunities will be met more effectively and Ziraat Bank’s pioneering and leading position in the sector will be strengthened.

14%IN 2016, THE VOLUME OF ZIRAAT BANK’S FOREIGN TRADE TRANSACTIONS AMOUNTED TO USD 36.6 BILLION WITH AN INCREASE OF 14% YOY.

Work carried out to centralize credit operations.
Ziraat Bank carries out the necessary updating and development activities for more effective use of credit products and systematic infrastructure with the feedback received from the field. Credit operations were also included within the scope of centralization plans for operational transactions so that branches can conduct more effective sales and marketing activities. In particular, work was carried to ensure that the committed amounts of export-committed credits are calculated systematically and accurately and closed appropriately.

As the scope of the CBRT rediscount loan was expanded, the amount of the commitment was increased from USD 100,000,000 to USD 500,000,000 by the Bank and systemic work appropriate to the conditions of the credit disbursement was carried out.

Highlights of the 2016 activities in the corporate/entrepreneurial banking segment...
With the protocol signed between The Union of Chambers and Commodity Exchanges of Turkey, the Credit Guarantee Fund and Ziraat Bank to provide business capital financing at affordable terms for members of the Chamber and Exchange, the “Breath Loans (Nefes Kredisi)” product was put into practice. A total of TL 2.5 billion in loans is planned to be disbursed within the scope of the project.

The New Domestic Machinery Equipment Credit product was launched in cooperation with KOSGEB with the aim of enabling those SMEs which purchase new and domestic machinery and which operate in the manufacturing sector to access financing at affordable terms.

Protocols were signed with KOSGEB for zero interest business loans of up to TL 50,000 for customers who are qualified to be an SME and are in the entrepreneurial segment and the Zero Interest Business Loan was implemented.

While Ziraat Bank continues to support financing for the agricultural sector on one hand, it is constantly developing projects aimed at solving the structural problems of the sector and facilitating the sector’s access to finance on the other.

Financing of the Agricultural Sector

Sustainable financing models for agriculture
While Ziraat Bank continues to support financing for the agricultural sector on one hand, it is constantly developing projects aimed at solving the structural problems of the sector and facilitating the sector’s access to finance on the other. The Bank has been working with the relevant institutions, organizations and agricultural organizations, in particular the Turkish Ministry of Food, Agriculture and Livestock. In this context, the Bank is creating faster and low cost solutions to meet all of the financial needs of farmers, especially farmers who are small scale business owners, who constitute the most important ring of the agricultural value chain.

The diversification of loan products aimed at this purpose and the work within the scope of the development of alternative collateral elements from farmers’ agricultural assets is being carried out.

Pledges over Movable PropertyWITHIN THE FRAMEWORK OF THE LAW ON PLEDGES OVER MOVABLE PROPERTY IN COMMERCIAL TRANSACTIONS, SECURING THE ANIMALS WITH A PLEDGE TO BE THE GUARANTEE OF THE LOAN WITH WHICH FARMERS HAD PURCHASED THE ANIMALS PROVIDED AN IMPORTANT EXPANSION.

Within the framework of the Law on Pledges over Movable Property in Commercial Transactions, for which Ziraat Bank provided a significant contribution, securing the animals with a pledge to be the guarantee of the loan with which farmers had purchased the animals provided an important expansion. On the other hand, the creation of a register by registering mature trees and the valuation of these valuable assets as collateral (guarantee) is an important innovation in the application of the farmers’ access to finance, especially for farmers who involved in fruit horticulture and the growing of walnuts and almonds.

In the coming period, investment and activities related to strategic products such as licensed warehousing and cold storage investments, the contracted production model, increasing the level of agricultural mechanization, oilseed plants, cotton, olives and certified seed production will stand out among the target production areas for Ziraat Bank.

In this respect, it is thought that the most important factor that will guide the future of agriculture in Turkey will be the basin-based production model. The implementation of this production model will enable our country’s production pattern to become clearer, while the investment’s support and practices that depend on this model will undoubtedly be extremely important.

Ziraat Bank, which is working on its preparations in this direction, continues to provide the solutions aimed at meeting all of the financial needs of the agricultural sector with its wide range of products and services.

37% of the agricultural loan portfolio consists of investment credits (TL 15.4 billion) while 63% of the loans consist of business loans (TL 26.6 billion).

TL 42 billion loan from the Bank’s resources for the financing of the agricultural sector
By the end of 2016, a total TL 42 billion in loans had been disbursed to the agriculture sector from the Bank’s resources (not including TL 2.1 billion in the fund originated agricultural loans balance). A total of 589,282 customers had credit.

In 2016, 422,054 real and legal persons were provided with TL 27.2 billion of loans which were disbursed from the Bank’s resources and TL 7.8 billion of these loans were disbursed without an interest discount.

37% of the agricultural loan portfolio consists of investment credits (TL 15.4 billion) while 63% of the loans consist of business loans (TL 26.6 billion).

Low interest on agricultural loans
Within the scope of the decree and communiqué published on interest discounted loans and the subsidy rates determined on the basis of production areas, customers operating in the sector continued to obtain loans with annual interest rates ranging from 0% to 8.25%.

A total of 320,758 producers and companies operating in the agricultural sector received TL 19.4 billion of loans at discounted interest rates during 2016.

Contribution of financial model to agricultural industry-producer cooperation
Within the framework of contracts entered into with 37 firms operating in a number of areas including vegetable farming, seed farming, broiler breeding, pepper and tomato cultivation, sugar beet production, the Bank’s balance of contracted production loans extended to 24,315 producers stood at TL 199 million at the end of 2016.

Mediation in agricultural subsidy payments
In 2016, the Bank mediated in a total of TL 10.1 billion of support payments for 2,463,629 producers and unions. While in years gone by all customers could only obtain their support payments by joining long queues for the cash counters at the branches, now only 14% of customers draw their support payments from the branches. The remaining 86% collect their funds through alternative distribution channels, such as ATM, POS machines, the mobile branch and the internet branch.

Cooperation with animal husbandry organizations
Ziraat Bank continued to offer solutions that facilitate access to loans for producers who are members of associations/cooperatives in 2016, by signing a protocol with the Agricultural Development Cooperatives affiliated to the Cattle Breeders’ Association of Turkey and the Turkey Milk Producers Central Union and the Central Union of Animal Cooperatives.

Small Equipment Credit
A new product was offered to enable the purchase of small farming tools and equipment needed by agricultural enterprises belonging to real/legal persons, so they could sustain their operations efficiently and profitably.

Young Farmer’s Loans
The Young Farmers’ Project was implemented by the Ministry of Food, Agriculture and Livestock with the aim of supporting sustainable agriculture, promoting entrepreneurship among young farmers, raising income levels, creating alternative sources of income and supporting projects for agricultural production which will contribute to the employment of the young rural population. In accordance with this resolution, Ziraat Bank implemented the Young Farmer Loans with the aim of establishing enterprises in accordance with the economic scale and with higher income generating capacity for the young farmers who develop projects and to help meet the operating capital needs of these enterprises.

Ziraat Bank is focused on strengthening its identity, which is identical to confidence in the eyes of the customers, with its high quality, smiley face, fast, and contemporary service.

Retail Banking

Ziraat Bank views customer satisfaction as being of paramount importance for its competitiveness in contemporary banking. The Bank has achieved a significant increase in its customer satisfaction with the infrastructure and superstructure projects it has brought into practice in recent years and which envisage a significant restructuring of the product and service delivery process.

Service EverywhereZIRAAT BANK SERVES ITS RETAIL BANKING CUSTOMERS WITH 7/24 UNINTERRUPTED AND EASY TO REACH SERVICES.

Ziraat Bank aims to strengthen its relationship with customers through a high-quality service and high customer satisfaction, focusing on strengthening its identity, which is identical to confidence in the eyes of the customers, with its high quality, smiley face, fast and contemporary service.

Ziraat Bank carries out the delivery of services for individuals through a wide distribution network that consists of the following:

• branches,
• ATMs,
• internet and mobile banking applications,
• call center.

In 2016, Ziraat Bank continued to work on meeting the needs and trends of different retail banking segments, customer-focused activities, process improvements and complying with legal regulations.

In the retail banking structure, work continued on meeting the needs and trends of different retail banking segments, while customer-focused activities, process improvements and work on compliance with legal regulations also continued in 2016.

50%THE HOUSING LOAN BALANCE OF ZIRAAT BANK AMOUNTED TO TL 28.8 BILLION, SHOWING AN INCREASE OF APPROXIMATELY 50%.

Within this scope;

• Within the framework of the protocol signed with Emlak Konut GYO A.Ş. and TOKİ, approximately TL 250 million of loans were disbursed in August and September 2016.
• Within the scope of the protocol signed with the Social Security Institution, The Bağ-Kur (Social Security Organization for Artisans and Self-Employed) Premium Debt Loan product was put into practice for the insured who have accumulated premium debt and can qualify for the old-age pension by paying their premium debts.
• In order to optimize the individual loan application processes and boost sales success, work volumes and customer activities, the “Pre‑approved Consumer Loan” product was rolled out to offer a proactive credit limit to customers. This was achieved by performing collective evaluation from the Head Office aimed at those customers receiving a regular salary and a good credit record in the Bank and with other banks and those who have permission to be contacted.
• With regard to fees and commissions obtained from banking services, fees were revised including some service items which had previously been free of charge from some service channels by taking into account the increasing penetration rates in digital banking practices and channel-based costs. The Bank achieved the highest increase in non-interest income in the sector in 2016.
• The housing loan balance amounted to TL 28.8 billion, an increase of approximately 50%, by disbursing TL 14 billion in housing loans (TL 3.6 billion in funds originating from the housing loans balance was not included in the calculation). The requirement credit balance amounted to TL 26.2 billion, marking an increase of approximately 9%.
• The Bank updated the Non-Banking Value Segmentation data, which is calculated based on analysis conducted with the aim of improving portfolio quality and supporting the Bank’s revenues, by determining potential value outside the Bank. The updated information for 10.5 million customers was uploaded into the system.
• A structure was put into place which was aimed at taking instant action for the transactions/account movements of customers. This structure was determined as a result of analysis within the scope of real-time event/action management was commissioned.
• The Bank, which forms a part of the life-long banking world within the framework of a customer-focused perspective, implemented customer loyalty programs such as “Children Savings at Ziraat”, “Young People’s Savings in Ziraat”, “Employee Savings in Ziraat” and “Pensioner’s Savings in Ziraat”. The website was designed with this perspective. In this context, in addition to the advantages offered by the products and services of the Ziraat Finance Group, discounts and advantages were also provided to customers in non-financial areas within the framework of the cooperation entered into with leading companies of various sectors.
• Within the scope of Limitless Banking activities, infrastructure work on recognition for physically disabled customers and for providing support to these customers was completed and commissioned.
• A confirmation structure for e-mail addresses was put into practice to ensure that customer communication data is correct. Verification e-mails are sent to customers who carry out definition/updating of their e-mail addresses through the branches and the responses from customers who carry out the confirmation are recorded in the system as “confirmed”.
• The Dowry Account (Çeyiz Hesabı) and State Subsided Housing Account products were offered to customers. The Dowry Account (Çeyiz Hesabı) was offered to customers on 18 April 2016 and had a balance of approximately TL 15.3 million with nearly 21,000 customers as of the end of the year. The State Subsided Housing Account was offered to customers on 26 August 2016 and a total of TL 21 million in housing accounts were opened for over 6,600 customers as of the end of the year.
• In accordance with the Law on Amendment of Certain Laws for the Improvement of the Investment Environment, enacted on 9 August 2016, the cheque product was organized in order to meet all legal requirements and the Findeks membership systems, required for customers to request a Cheque with the QR code was completed.

In 2016, a total of TL 39,258,417,967 was disbursed by Ziraat Bank through 1,564,280 individual loans.

The Dowry AccountTHE DOWRY ACCOUNT HAD A BALANCE OF APPROXIMATELY TL 15.3 MILLION WITH NEARLY 21,000 CUSTOMERS AS OF THE END OF 2016.

Continued growth trend in individual loans
Ziraat Bank continued to increase its market share in the individual lending segment during 2016 and continued to reach a large individual customer base through branches and electronic service channels.

In 2016, a total of TL 39,258,417,967 was disbursed by Ziraat Bank through 1,564,280 individual loans.

• An average of TL 754,969,576 per week, through 30,082 loans,
• An average of TL 150,993,915 per day, through 6,016 loans and,
• An average TL 18,874,239 per hour, through 752 loans

was allocated throughout the year.

In 2016, a total of 430,054 applications for TL 17,083,560,758 of loans were evaluated in the Allocation Centre, including;

• An average of 8,270 applications for TL 328,530,015 of loans per week,
• An average of 1,654 applications for TL 65,706,003 of loans per day.

In 2016, a total of 117,968 individual loan products, amounting to TL 1,377,688,268 were structured to ensure that customers’ individual loans were repaid without any default by linking them to a new payment plan and/or extending their maturity.

Electronic Service Channels

Ziraat Bank conducts its efficient and high quality service through its wide branch network as well as electronic service channels. The results recorded in this area in 2016 are given below.

6.93%AS OF THE END OF 2016, THERE WERE 4 MILLION ZIRAAT BANK CREDIT CARDS IN CIRCULATION, WITH THE BANK COMMANDING A 6.93% MARKET SHARE.

Credit Cards
As of the end of 2016, there were 4 million Ziraat Bank credit cards in circulation, with the Bank commanding a 6.93% market share in terms of the number of credit cards in circulation and a 3.31% market share in terms of turnover.

Bankkart
At the end of 2016, there were 24.9 million Ziraat Bank-issued debit (bank) cards. On the other hand the Bank is the sector’s leader with a 19.83% share in direct-debit payments turnover.

TSK Bankkart
TSK Bankkart is a chip-equipped (smart) debit card issued to members of the Turkish Armed Forces. As of 31 December 2016, there were 1.2 million them were in use.

Genç Bankkart
Genç Bankkart is a chip-equipped (smart) debit card. As of 31 December 2016, there were 2.4 million them were in use.

Merchant partners and POS units
At the end of 2016, Ziraat Bank commanded;

• 148,000 merchant partners,
• 109,000 POS units,
• 58,000 electronic cash registers (used on merchant partners’ premises),
• 2.97% market share for merchant partner turnover.

In order to ensure better communication between the Center and branches, the “Punitive Measures Entry” transaction type was added to the entry request screen through Fin@rt workflow, and this software was extended to all branches.

Collective transfer/EFTTO RAPIDLY REALIZE CUSTOMER DEMANDS BY SIMPLIFYING THE COLLECTIVE TRANSFER/EFT DEFINITION PROCESS, THE OPERATIONS CENTER STARTED TO DIRECTLY CARRY OUT DEMANDS FOR COLLECTIVE TRANSFER/EFT DEFINITION.

Operations Center
Ziraat Bank carried out the operational branch segmentation project in order to reduce its operating costs. In this context, the Bank determined the waiting time, cash counter transaction and out-of-box transaction rate standards applicable to the branches. Service quality and customer satisfaction were enhanced with the standardization of service levels.

The Operations Center, which operates on the basis of increasing efficiency, achieved the following highlights;

• With the exception of rents paid for invoices/receipts, the entry of rental contracts from the Center and the automatic payment of rents on specified dates was rolled out.
• As of 19 February 2016, the project for sending out of the Safe Deposit Box Notices from the Centre was commissioned for all branches (except those in the Turkish Republic of Northern Cyprus), thus rendering the sending of Safe Deposit Box Notices by the branches redundant.
• User identification and password requests for ATM Monitoring and Debit Card Transactions started to be implemented by the Operations Center.
• Documents with an electronic signature delivered by customers to the branches were verified through the “New In-Branch Work Demand Entry” and “Work Demand Entry” screens and sent to the Operation Center.
• In order to ensure the continuity of branch transactions, in the event that branch managers are not present at the branches due to permitted reasons (such as holding a doctor’s report), the authorized personnel will be assigned as a deputy branch manager and have operational authority. This system ensures that this allocation process is performed automatically.
• Within the scope of the project to grant SLA (service-level agreement) to branches when entering requests in transactions with customers, work was completed on showing branch employees the estimated duration of customer transactions carried out in the Center at the moment of the request, through calculations performed on the basis of Branch Segment, Work Type, Priority Selection, Amount, Transaction Number and Customer Number. The pilot application was put into practice in some branches.
• To enable the branches to better track the information and documents related to punitive measures sent through different means such as e-mail and post to the Center and in the event that transactions needing precautions or measures are identified by the branches and to ensure that those transactions are sent to the Center through Fin@rt workflow, the “Punitive Measures Entry” transaction type was added to the entry request screen and this software was extended to all branches.
• In order to rapidly realize demands by simplifying the collective transfer/EFT definition process, the Operations Center started to directly carry out customer demands for collective transfer/EFT definition in the corporate/SME segment.
• In order to reduce bulk intensive operations in the branches, payment collections for Motor Vehicle Tax are performed collectively by the Center. In this scope, the “Collective MTV Definition” work type under the “Corporate Payment/Payment Collection Procedures” transaction type could be selected on the entry request screen by the branches.
• The practice where employees in the MİY/MİA task force can send work requests directly to the Operations Center were put into practice in all branches.
• The Operations Center started tracking and carrying out of expense transactions.
• The Operations Center started to carry out the definition of the “Signature Authority Registration” transactions through the Ministry of Customs and Trade’s Central Registry System (MERSİS) and the pilot application was implemented in some branches.

TOKİ Support Line“TOKİ SUPPORT LINE” (0850 281 00 00) WAS LAUNCHED IN 2016, WHERE CUSTOMERS COULD CALL DIRECTLY AND RECEIVE INFORMATION ABOUT TOKİ TRANSACTIONS.

Credit and Foreign Trade Operations

• The protocol for the e-mortgage project, where transactions for the establishment of real estate mortgages that will serve as the guarantee for credits to be carried out in an electronic environment was signed with the General Directorate of Land Registry and Cadastre and work on the software for the project got underway. With this project, Ziraat Bank aims to carve out a leading role in the sector as the first bank to carry out mortgage establishment transactions in an electronic environment, as it was for mortgage release transactions.
• The software element of the system development studies, aimed at centralizing institutional credit disbursements, was completed and the real environment tests are continuing. In this vein, the authorized cash loan disbursement procedures of the 3 selected pilot branches have been carried out centrally. All branches are set to be included in the practice by the end of 2017.
• The centralization activities of real estate mortgage collateral entry transactions in corporate loans were completed and 46 branches were included in the pilot application. The practice is planned to be rolled out in all branches in 2017.
• The structuring established for forwarding customers’ Credit Guarantee Fund bail requests after being checked centrally reached a capacity sufficient to meet the intensive demand received under the TOBB (The Union of Chambers and Commodity Exchanges of Turkey) Short-term Credit Campaign. Efforts to integrate the Credit Guarantee Fund and the Bank systems in this direction are also continuing.
• Customers could carry out TOKİ installment payments from ATMs; the “TOKİ Support Line” (0850 281 00 00) was launched in November 2016, where customers could call directly and receive information about TOKİ transactions.
• The centralized disbursement transactions of TOKİ interest-free mortgages, which the Bank mediates in, aimed at the families of fallen soldiers, those who have been disabled during the course of warfare and active duty as well as widows and orphans, started in December 2016.
• In the first stage, the testing activities and pilot branch practices got underway for the project aimed at carrying out import/export letters of credits and cash against documents transactions of branches operating abroad centrally. Letters of guarantee will also be included within the scope of the project by the end of March 2017. In this context, the London, Tbilisi, Erbil, Jeddah and Athens branches were selected as pilot branches. The foreign trade operations of all foreign branches are planned to be included in the central structure by the end of 2017.

Quality service and technological solutions in cash management
Ziraat Bank offers quality and technology-oriented products and services within the scope of cash management solutions to meet the needs of its customers.

These solutions, which increase the effectiveness and efficiency of the Bank’s customers, contribute to customer satisfaction and loyalty, while helping to reduce operating costs and supporting Ziraat Bank’s profitability.

As of the end of 2016, a total of 437 contracted institutions had their invoice and other payments mediated for in Ziraat Bank. The customers are offered ease of payment through ATMs, internet banking, mobile banking and automatic payment channels, as well as through the branches.

Within the scope of the Corporate Collection System, a total of 115.9 million collections were realized in 2016 on behalf of the contracted institutions, with a total of TL 141.5 billion collected.

In the Ziraat Bank Direct Debit System (DBS), the number of parent companies that were agreed with in 2016 amounted to 320 with an increase of 25% compared to the last year. In addition, the total volume of collections in the related period stood at TL 2.5 billion increasing by 51%.

In addition, the discounted DBS, which is a derivative product of the Direct Debit System, was commissioned. This provides those companies with a DBS contract with the opportunity of financing before the billing maturity. Within this scope, the notification of discounted electronic and physical bills to the Central Billing Registration System started to be carried out over an online connection. The companies that will use the product were given the opportunity to start the application process by selecting the invoices that they want to discount through internet banking without going to the branch.

Batch invoice statement notifications to dealers of those companies with which the DBS contract was entered into regarding the invoices within the system started to be made. In addition, notifications by SMS and e-mail started to be sent out on the morning of the payment day for maturing invoices.

When it comes to cash management services, Ziraat Bank also offers custom payments specific to customers’ needs and electronic cheque/bond collection solutions, a facility to pay private school fees, account movement integrations, online transactions over the internet, pool account and cash collection services.

The number of Ziraat Bank internet banking users increased by 54% in 2016 from 6.3 million at the end of 2015 to 9.7 million at the end of 2016.

Digital Banking
Aiming to meet the needs of different customer groups with the most appropriate products and solutions through the correct channels, Ziraat Bank boasts the largest branch network in Turkey, which intensively and effectively uses digital channels.

The work carried out in this field in 2016 is summarized below.

Customers were able to carry out individual credit and credit card applications through all Ziraat Bank’s digital channels without needing to go to a branch. As a result of the work conducted within the scope of digital banking services, the “Ziraat Tablet” application, prepared for tablets, was introduced.

As of the end of 2016, Ziraat Bank had a total of 6,869 active ATMs, marking an increase of 4.6% when compared to the previous year, while 4,657 of its ATMs offered the facility to deposit money.

The number of Ziraat Bank internet banking users increased by 54% in 2016 from 6.3 million at the end of 2015 to 9.7 million at the end of 2016. The Bank set up the system allowing Internet Banking customers to log on to the e-Government Gateway with the Internet Banking login information without the need for an e-Government password.

The number of the Bank’s customers using mobile banking increased by 104% compared to the previous year with the number of mobile banking users rising from 1.03 million in 2015 to 2.1 million in 2016.

The developments in mobile banking transactions continued with a raft of new transaction opportunities offered with the Bankkart, credit card, OGS (Automatic transit system)/HGS (Rapid transit system), credit accounts and payment instructions.

As of the end of 2016, Ziraat Bank had a total of 6,869 active ATMs, marking an increase of 4.6% when compared to the previous year, while 4,657 of its ATMs offered the facility to deposit money.

As a result of the completion and dissemination of recycled ATM operations, the number of recycled ATMs reached 1,702. A purchase tender for 1,000 new ATMs was also carried out and in this context, 200 ATMs, all offering the facility to deposit money, were put into service.

Customers were able to carry out transactions at Ziraat Bank ATMs with the TROY card.

In line with the expansion of ATM transactions, customers were able to pay individual credit and TOKİ credit installments, perform SIM card blocking removal transactions and carry out Bankkart pin transactions from ATMs.

104%THE NUMBER OF THE ZIRAAT BANK’S CUSTOMERS USING MOBILE BANKING INCREASED BY 104% COMPARED TO THE PREVIOUS YEAR WITH THE NUMBER OF MOBILE BANKING USERS RISING TO 2.1 MILLION IN 2016.

The introduction of the Turkcell Finance Application (ATM allocation program) program with the Turkcell Business Partner P1M1 Company was completed and the program started to be rolled out. The widespread implementation for uploading the updated data by Ziraat Teknoloji is expected.

A working group was established under the Banks Association of Turkey in accordance with the legislation prepared by the Ministry of Family and Social Policy. In this context, the Bank started to work on rendering ATMs suitable for use by disabled customers.

The action plan for branch openings, protocols signed with companies and institutions, locations such as airport-metro-shopping malls where the Bank does not have any presence and the new allocations to be made in line with requirements were determined and the process was begun.

The Bank plans to carry out joint work with the ATM Point company, to install ATMs in locations where there are no ATMs at presence, while the ATM network will be revised to serve at more convenient locations.

Treasury Management and International Banking

Ziraat Bank continues to manage the Bank’s TL/foreign currency liquidity and securities portfolio under its determined strategy and risk parameters. It acts as an intermediary in a significant proportion of Turkey’s international trade with its extensive correspondent cooperation opportunities and plays an active role in the financial markets.

Ziraat Bank’s Treasury Management and International Banking Business Unit conducts its activities with a dynamic and successful asset-liability management strategy in balance sheet management. The Financial Markets Department, Asset-Liabilities Management and Economic Research Department, Treasury Operations Department and the Financial Institutions Department that was organized into two separate units through the organizational change carried out in August and the Investor Relations Department all operate within the Business Unit.

Balance sheet giving priority to real sector financing
Also in 2016, Ziraat Bank carried out dynamic treasury management in parallel with the economic developments taking place in our country and in the world. The aim was to reduce the degree of market and interest risk that the balance sheet was exposed to by achieving sustainable profitability and customer focused balance sheet management. The Bank’s main asset management strategy was focused on the transformation of the balance sheet to one that places weight on real sector financing from a securities portfolio weighted balance sheet structure.

Ziraat Bank’s Financial Markets Department provides its customers with spot and forward buying and selling intermediation services for foreign exchange, precious metals, public and private sector bills and bonds, public and private sector Eurobonds. The department also performs transactions in the context of the Bank’s balance sheet management in order to manage liquidity, interest and exchange rate risks, performs liquidity management and forms assets and liabilities pricing strategies within the framework of market conditions.

Also in 2016, portfolio management was continued within the framework of Ziraat Bank’s main strategy. The share of total TL and foreign currency denominated securities in assets decreased from 21.4% at the end of 2015 to 19.3% by the end of 2016. The Bank’s basic asset management strategy was designed to increase the share of loans in the balance sheet, mainly those disbursed to the real sector and to decrease the share of securities. The Bank’s securities portfolio is managed by taking into account the risk-return balance; a more balanced asset structure is created while the volume of loans is increased in this framework.

The basic liability management strategy is configured on the diversification and deepening of non-deposit resources as well as the expansion of the deposit base. Within the framework of ensuring diversity in the resource structure and supporting the extension of the average funding period, the Bank continued to issue TL bills and bonds. In 2016, in return for TL 7.7 billion of redemption, the Bank borrowed TL 7.6 billion.

Bills and bondsZIRAAT BANK CONTINUED TO ISSUE TL BILLS AND BONDS IN 2016. THE BANK BORROWED TL 7.6 BILLION IN RETURN FOR TL 7.7 BILLION OF REDEMPTION.

Customer-focused organizational structure
In 2016, Ziraat Bank’s Financial Markets Department undertook a customer-oriented organizational restructuring in line with the Bank’s basic strategy and business model. It aimed to produce the most appropriate solutions in the treasury products marketing through customer segmentation. As a result of this new restructuring, eight units started to operate under the Head of Financial Markets Department; Trading Transactions, Investment Portfolio, Money Markets, Derivative Transactions and Precious Metals, Corporate Treasury Solutions, Retail Treasury Solutions, Resource Management Analysis and External Financing.

In addition to the management of the securities portfolio in TL and FX terms, the Investment Portfolio Unit successfully maintained the Bank’s position as a market maker in 2016, being one of the Turkish Government Debt Securities (DIBS) Primary Dealer banks as determined by the Turkish Undersecretariat to the Treasury. In addition to its activities in the primary markets, the Unit has been actively engaged in purchase and sale transactions carried out with customers, national banks and international banks. The Unit is also active in secondary markets. As a result of these activities, the Unit continued to record high transaction volume in the Istanbul Stock Exchange Borrowing Instruments Market in 2016.

In 2016, Ziraat Bank’s Financial Markets Department undertook a customer-oriented organizational restructuring in line with the Bank’s basic strategy and business model.

The Retail and Corporate Treasury Solutions Unit serves the Bank’s corporate, entrepreneurial and individual segment customers with spot and forward purchase and sale of foreign exchange, precious metals, repo, deposits and derivative transactions products. Thanks to the Bank’s widespread branch network, effective customer relationship management and a successful business model, the volume of foreign exchange transactions carried out with customers increased by 13% YoY in 2016.

13%THE VOLUME OF FOREIGN EXCHANGE TRANSACTIONS CARRIED OUT WITH CUSTOMERS INCREASED BY 13% YOY IN 2016.

The Derivative Transactions and Precious Metals Units provide derivative product services to customers in addition to performing balance sheet management transactions focused on hedging the Bank from interest rate risk. Within this scope, the unit also carries out gold banking activities in order to increase diversity in resource management and increase the effectiveness of the products, promoting savings. As a result of these activities, the volume of gold deposits approached 18 tons during 2016. The conversion of customers’ physical gold assets into the savings product through the Gold Time product added 900 kg of gold to the banking system in 2016. Moreover, gold purchase and sale transactions continued to be carried out under investment accounts.

The Monetary Markets Transactions Unit manages the Bank’s TL and foreign currency liquidity. It performs placement, borrowing, repo and money swap transactions for the purpose of balance sheet management in national and international monetary markets. These transactions were also carried out successfully in 2016 in line with the growth in Ziraat Bank’s balance sheet, within the framework of cost and yield optimization.

The Trading Operations Unit performed the exchange rate pricing pertaining to the year 2016 for customers mostly in the corporate segment, recording an increase in volumes. Having increased its share in the sector by offering purchase-sale pricing on the basis of TL and foreign currency to many national and international banks, the Unit aims to increase its trading volume and profitability in the interbank market as well as deepening its customer base next year.

As well as monitoring the Bank’s distribution and development of deposits and non-deposit resources and performing detailed cost calculations, the Resource Management Analysis Unit continues to carry out new product development activities through sector research. In this context, in 2016, dowry and housing account products were developed in order to create deposit diversity and encourage long-term savings.

Within the framework of cooperation with the International Finance Institutions (IFI) and the execution of the relations, the Foreign Finance Unit seeks external resources to be disbursed, especially to the Bank’s customers in the SME segment with the aim of diversifying the Bank’s strong funding structure. Within the framework of the projects carried out with the European Investment Bank, an agreement was entered into with the European Investment Bank for EUR 100 million in 2016, in the first tranche of the EUR 200 million in loans aimed at financing SMEs and larger customers.

Ziraat Bank’s syndication loan was renewed on 4 April 2016 with the participation of 42 banks from 19 countries with a maturity of 367 days and amounting USD 240.5 million and EUR 762 million.

EUR 200 millionAN AGREEMENT WAS SIGNED WITH EIB FOR EUR 100 MILLION IN 2016, BEING THE FIRST TRANCHE OF THE LOAN FOR EUR 200 MILLION.

Strengthening its leading position with funding obtained from international markets
Ziraat Bank’s syndication loan, which was provided in USD and Euro terms in March 2015, was redeemed. The credit was renewed on 4 April 2016 with the participation of 42 banks from 19 countries with a maturity of 367 days and a cost of Libor+0.85% and EURIBOR+0.75%, with USD 240.5 million and EUR 762 million. The coordinating bank for the transaction was the Bank of America Merrill Lynch International Limited.

This transaction, which was aimed at diversifying Ziraat Bank’s strong funding structure, was the fourth borrowing transaction obtained by the Bank by means of syndication from international markets for the purpose of financing foreign trade.

Ziraat Bank will continue to actively support its customers in the area of financing foreign trade through its expanding and diversified range of financial products and services.

Within the GMTN program, which allows issuances in different currencies and of varying maturities, in 2016, foreign resources were provided for approximately USD 103 million.

Updating of the GMTN (Global Medium Term Note) Program
The Bank’s USD 4 billion GMTN program was updated on 14 March 2016, in line with the diversification of Ziraat Bank resources, the efforts to obtain cost-effective and long-term resource from international capital markets. In this scope, the Bank issued a foreign bond (Eurobond) with a maturity of 5 years with an amount of USD 500 million on 29 April 2014. The issuance, which matures on 25 April 2021, carries a six-monthly coupon with a coupon rate of 4.75%.

Within the GMTN program, which allows issuances in different currencies and of varying maturities, in 2016, foreign resources were provided through the “private placement” issuance of approximately USD 103 million.

A service network creating value in foreign trade transactions
Ziraat Bank has a strong and respected position in the international banking field with its extensive service network established on solid foundations around the world, strong correspondence relationships established with financial institutions and banks and strong funding base.

As of the end of 2016, Ziraat Bank had correspondent relations with approximately 1,800 banks in more than 130 countries.

21%THE NUMBER OF ZIRAAT BANK CUSTOMERS WHO CARRIED OUT FOREIGN TRADE TRANSACTIONS INCREASED BY APPROXIMATELY 21% YOY.

Diversifying its wide correspondent bank network in line with customer demands and the conjuncture and trends in the world economy, Ziraat Bank offers its customers global brokerage services and tailor-made business solutions for all kinds of foreign trade transactions of.

One of the main reasons behind Ziraat Bank’s increasing popularity in foreign trade transactions is the high quality of its services and products with the strong value-added it offers, as well as a synergistic and sustainable cooperation with its correspondents.

Ziraat Bank’s share in Turkey’s foreign trade volume continued to rise steadily and the Bank maintained its place among the leading banks in this field in 2016. Despite the contraction in the country’s foreign trade, the Bank’s foreign trade volume grew by 14%. The number of Ziraat Bank customers who carried out foreign trade transactions increased by approximately 21% YoY and more than 160 country transactions were mediated in during this period.

Ziraat Bank offers products such as letter of credit discount, draft discount with a bill of guarantee to meet the needs of financing foreign trade and provides medium and long term country loans to its customers by working closely with Export Insurance Institutions such as Hermes, Coface, Serv and Sace.

Thanks to its extensive correspondent network, Ziraat Bank has been able to easily access alternative sources of funding at affordable costs and conditions during each period. The Bank aims to sustain and build on this success by adding new financing methods that will be further diversified in the years to come.

Continuing to strengthen its position abroad, Ziraat Bank ensures its presence is more effective in the regions where it sees a strategic necessity to become a global bank and maintains its efforts to exist in new countries.

The most extensive service network of any Turkish bank
Ziraat Bank operates at 99 points in 19 countries in the world. Ziraat Bank has a wide international network of services consisting of 8 international subsidiary banks, 23 international branches, 5 sub-branches and one representative office.

Continuing to strengthen its position abroad, Ziraat Bank ensures its presence is more effective in the regions where it sees a strategic necessity to become a global bank and maintains its efforts to exist in new countries.

Ziraat Bank’s global service points are composed of the following as well as 8 foreign subsidiary banks.

• The New York Branch in the US,
• The London Branch in the UK,
• The Tbilisi Branch and Batumi and Marneuli sub-branches in Georgia,
• In Bulgaria, the Sofia Branch and the Plovdiv, Kardzhali and Varna sub-branches,
• In Greece, the Athens, Komotini (Gümülcine), İskeçe and Rhodes branches,
• In Iraq, the Baghdad and Erbil branches,
• The Jeddah Branch in Saudi Arabia,
• In the Turkish Republic of Northern Cyprus, the Nicosia, Girne, Gazimağusa, Güzelyurt, Gönyeli, Akdoğan, Near East University, Karaoğlanoğlu, Karakum and İskele branches,
• The Pristina Branch in Kosovo,
• The Bahrain Branch,
• The Tehran Representative Office in Iran.

19 countries, 99 pointsZIRAAT BANK OPERATES AT 99 POINTS IN 19 COUNTRIES WITH 8 INTERNATIONAL SUBSIDIARY BANKS, 23 INTERNATIONAL BRANCHES, 5 SUB-BRANCHES AND ONE REPRESENTATIVE OFFICE.

International Branch Banking
The International Branch Banking work has been carried out with the following main objectives in line with Ziraat Bank’s international banking strategy and vision:

• to unwaveringly increase effectiveness in the countries where there are operations,
• to contribute to the development of trade and economic relations between these countries and Turkey,
• to play a strong role and secure a high share in the financing of foreign trade,
• to provide fast, modern and quality services to all customers in the geographical areas where there are operations, principally our country’s entrepreneurs and companies,
• to create effective synergies within the framework of the “Ziraat Finance Group” understanding.

Ziraat Bank aims to play an important role in the development of foreign trade between the country’s economy and countries, facilitating access to finance and strengthening economic relations.

Ziraat is always with you, wherever you are in the world.
In line with the slogan of “Ziraat is always with you, wherever you are in the world”, Ziraat Bank aims to play an important role in the development of foreign trade between the country’s economy and countries, facilitating access to finance and strengthening economic relations.

Taking advantage of the current and potential opportunities in each geographical region in which it operates, Ziraat Bank continues to work to become the strongest and most effective bank in Turkey and the region in the coming period.

In this context, the developments of the year 2016 are summarized below:

BahrainZIRAAT BANK’S BAHRAIN BRANCH BEGAN OPERATIONS ON 28 NOVEMBER 2016.

Ziraat Bank’s new point in the Gulf region, the Bahrain Branch, began operations on 28 November 2016. The aim of the branch is to contribute to the development of trade between the Gulf region and Turkey.

In line with the dynamics and requirements of the London financial center, the London Branch reshaped the range of products and services in a manner which increases its effectiveness, particularly in the areas of structured financing and the financing of foreign trade.

In the TRNC (Turkish Republic of Northern Cyprus), customer and market oriented activities have been carried out with 10 branches by expanding the product range and continuously increasing service quality. The branches in the TRNC, where all of the banking services offered in Turkey are available, continue to provide an important contribution to the economic development of the country.

In addition, technological cooperation work was initiated with the TRNC Ministry of Economy and Energy and the Small and Medium Enterprises Development Center (KOBİGEM). This cooperation is aimed at facilitating access to finance for small and medium-sized enterprises operating in the TRNC. The work is targeted to be completed in the first half of 2017.

In Greece, services are provided through four branches; Athens, Komotini (Gümülcine), İskeçe and Rhodes. Ziraat Bank aims to continuously expand the banking products and services offered to its customers in the country, from corporate loans to retail banking.

In Bulgaria, four branches are operating in Sofia, Plovdiv, Kardzhali and Varna under the Bulgarian Administration. In the field of branchless banking and alternative distribution channels, efforts to expand ATM and internet banking services are continuing.

Ziraat Bank began serving in Baghdad, Iraq, where the first branch was opened in 2008. This was followed by the Erbil Branch on 14 February 2011, which was the first branch of a Turkish bank to open in the city. In 2016, the Bank continued to mediate in the collateral letter transactions of Turkish contracting companies operating in the region and the transfer transactions of Turkish companies and Turkish workers working in Iraq.

In Georgia, the Tbilisi Branch has been operating since 2001 in line with the Bank’s main objective and strategy of increasing regional strength and growth in the near geographical area. In addition, the Batumi Sub-branch was opened in 2013. Work on opening a third branch in the country, in Marneuli, was completed and the Marneuli Branch was opened for business on 18 July, 2016.

Saudi Arabia, the Jeddah Branch opened its doors on 14 March 2011. Efforts are continuing to expand the range of products and services offered at the branch with the aim of meeting the banking needs of Turkish and Saudi corporate and individual customers operating in the country, primarily the collateral letter needs of Turkish contractors.

In Kosovo, the Pristina Branch began operation on 8 June, 2015. The branch serves the corporate and individual customer base in the country with its extensive product range.

Ziraat Bank fulfills its basic responsibility for human resources by offering accurate and fair wages, modern working conditions and individual development possibilities.

Human Resources and Training

The most important capital of Ziraat Bank is the human resources that make up the intellectual power. The Bank is focused on implementing the most contemporary practices possible in the human resources field, creating new jobs and transferring resources to training and development of human resources.

Supporting its employees through their careers with the philosophy of continuous development, Ziraat Bank fulfills its basic responsibility for human resources by offering accurate and fair wages, modern working conditions and individual development possibilities.

Ziraat Bank continued to implement its contemporary human resources management system also in 2016.

25,015AS OF 31 DECEMBER 2016, THERE WERE A TOTAL OF 25,015 EMPLOYEES AT ZIRAAT BANK.

Highlights of Ziraat Bank’s demographic structure...

• As of 31 December 2016, there were a total of 25,015 employees at Ziraat Bank.
• Ziraat Bank hired 807 new staff in 2016.
• 87% of Ziraat Bank employees graduated from higher education institutions with undergraduate degrees or diplomas, graduate degrees or doctorates.
• The average age of the Bank’s employees is 34.8, with employees having served an average of 10.5 years in the Bank.

Ziraat Bank’s e-learning programs had 226,942 participants in 2016. The e-learning saved as much paper as would have come from 342 trees in 2016.

2016 training activities

Ziraat Bank organizes continuous training programs aimed at giving staff the competencies required by the positions of human resources.

In 2016, a total of 25,015 personnel were given an average of 36.86 hours of training per staff member.

In 2016, training was provided under the main headings of:

• “First Step Training” for those who had newly joined Ziraat Bank, to help them recognize the Bank, to adapt to the corporate culture and to acquire the necessary basic knowledge and skills,
• “Development Training” to meet the training needs in line with the objectives and strategies of the Bank or to convey new product/service/legislation information,
• “Career Training” with the aim of providing the knowledge and skills required by the position that they are in charge of and preparing them for a higher position,
• “Legal Obligations Training” in connection with the legislation.

Low cost, fast and widespread E-learning
E-learning allows training to be provided to personnel without the loss of manpower at low cost and in a short period of time. It allows access to training from the workplace or the home, allowing people to train at their own learning speed, while supporting in-class training.

Ziraat Bank’s e-learning programs had 226,942 participants in 2016 with an average of 19.6 hours of e-learning provided in e-tutorials per user is 19.6 hours. The most popular courses were Treasury Management and the International Banking Promotion Exam, Basic Accounting and Basic Economics. In addition, 1,000 Branch Managers and 778 Manager Candidate Program participants completed the “Credit E-Simulation Training”.

The e-learning saved as much paper as would have come from 342 trees in 2016.

Support to train future bankers with internship opportunities
In the 2015-2016 academic year, Ziraat Bank provided vocational skills training to 1,187 high school students and 38 university students and internship opportunities to 2,853 university students.

Ziraat Bank’s Education Statistics for 2016 are given in the table below.

Number of Real Persons Participating in Training	25,015
Number of Programs	1,033
Average Training Time per Employee	36.86
Total Training Expenses/Annual (TL)	6,227,255