2017 INCREASED TRADE VOLUMES HAVE LED TO RAPID AND SYNCHRONIZED GROWTH WORLDWIDE. IT WAS A YEAR WHEN THE ECONOMIES OF THE WORLD’S LEADING DEVELOPED COUNTRIES SUCCEEDED IN ADVANCING THEIR GROWTH RATES TO ABOVE THEIR LONG TERM TREND GROWTH RATES.

The year 2017 was a year when foreign trade supported global economic activity.
Increased trade volumes have led to rapid and synchronized growth worldwide. It was a year when the economies of the world’s leading developed countries succeeded in advancing their growth rates to above their long term trend growth rates.

The Chinese economy also managed to increase its growth rate for the first time since 2010. The dynamism in the global economy has precipitated an increase in prices of oil and other raw materials. Thus, global synchronized growth supported demand for consumption throughout Europe, the Middle East and Africa - all important export markets for us. Our industries, and the automotive industry in particular, became integrated into the global value chain and broke export records.

Although the Fed began to reduce the size its balance sheet, it carefully communicated the process to reduce market uncertainty. Thus, at the end of the period of around a year and a half, the Fed’s balance sheet will have a size of about USD 4 trillion.

The European Central Bank (ECB) maintained its expansionary monetary policy. The ECB has opted to extend the duration of the asset purchase program, but reduced its monthly purchases. The stance of central banks and verbal communication with the markets stimulated risk appetite. Capital flows were directed from developed countries to developing countries, and Turkey attracted more than USD 10 billion of international investment during the year.

As a result of the Fed’s interest rate hikes, there was a limited rise in dollar costs; nevertheless, a high growth performance was recorded thanks to the contribution of brisk risk appetite and Turkey’s young and dynamic population demographic. Thus, our banks did not encounter any difficulty in accessing resources in the international capital and money markets.

Both the Undersecretariat of the Treasury and the banking sector have diversified the investor reach, attracting investors from new regions, as new issuances are realized. The participants of our sector are not expected to experience any difficulty accessing foreign resources in the coming period. Regional diversification offers the opportunity for improvement in supporting cost elements.

Ziraat Bank has continued to increase its share in the growth of our economy while continuing to operate as the leading bank of our country, meeting a wide range of needs from large projects to small businesses.

In the process of strengthening global trade, the banking sector continues its efforts to bolster trade in local currency with the support of other economic and financial sector decision makers. We are establishing mechanisms that provide mutual exchange (swaps) with the central banks of the countries in our own region that are among the target markets for our exporters. Thus, the decrease in demand for foreign exchange will limit exchange rate volatility, while targeting an increase in the capacity of our entrepreneurs who are interested in foreign trade.

Thanks to a combination of supportive conditions abroad and the right economic policies implemented by the government, our country achieved a record 11.1% growth rate in the third quarter. With the “employment mobilization” program, more than 1 million citizens were provided with jobs, and the reduction in unemployment had a positive effect on the development of the country’s economy, public finance and the asset quality of the banking sector. With the Credit Guarantee Fund (CGF) program which places priority on industry and production, financing was principally provided to SMEs who could not reach financing due to collateral problems.

In a high growth environment, the banking sector financed the production of our real sector and the consumption demand of households. Our banks, managed in accordance with international standards and focused on productivity, have not compromised their asset quality and increased their capital adequacy ratios, while encouraging lending.

Thanks to its strong capital structure and qualified workforce, our sector is ensuring the sustainable financing of our country’s projected high growth trend going forward.

Ziraat Bank remains the sector’s leading bank in many areas, such as in terms of total assets, loans and equity. Our Bank has extended financing support through loans with the CGF (Credit Guarantee Fund) guarantee to SMEs, while achieving a significant increase in housing loans and maintained the financing of agriculture as an area of priority. We have continued to increase our share in the growth of our economy while continuing to operate as the leading bank of our country, meeting a wide range of needs from large projects to small businesses.

On behalf of myself and the Board of Directors, I would like to thank our employees who have contributed to the performance of Ziraat Bank in 2017 with such dedication, our customers who are deeply committed to the Ziraat brand, and all of our other stakeholders.

MUHARREM KARSLI
Chairman of the Board