AN ASSESSMENT OF 2017: STRATEGIES, DEVELOPMENTS AND TARGETS FOR THE FUTURE

TL 434 billionIN 2017, ZIRAAT BANK RECORDED 21% GROWTH AND EXPANDED ITS TOTAL ASSETS TO TL 434 BILLION.

In 2017, Ziraat Bank further advanced its position as the strongest national bank and achieved significant progress in all of its business lines.

The successful financial performance of Ziraat Bank for many years, achieved without any loss of momentum, is the result of a rigorous application of business strategies. Operating in a sector where competition is intense, the Bank has advanced its position as the most powerful national bank in 2017 and achieved significant progress in all of its business lines.

The change and transformation project, which Ziraat Bank launched in recent years, brought together comprehensive innovations in both technological infrastructure and product and service lines, and positively affected the Bank’s performance in terms of productivity, profitability and efficiency.

The change and transformation that took place provided a rapid increase in customer satisfaction and significant improvement in Bank’s cost base; the newly introduced products and services played an important role in deepening customer relations and increasing transaction volumes in the corporate, entrepreneurial and individual banking areas.

In 2017, Ziraat Bank recorded 21% growth and expanded its total assets to TL 434 billion with loans forming a 69% share in total assets. As of the year-end, the Bank provided a Return on Assets of 2% and a Return on Equity of 18.3%.

Ziraat Bank’s main objective in the coming period is to provide its millions of customers with banking products and services in a lean, safe and accurate format and to continue to support the banking sector with modern practices.

Corporate / Entrepreneurial Banking

Ziraat Bank continued to implement its credit policies in 2017 and unwaveringly maintained its commitment to supporting the real sector.

Within the framework of the vision of being a leading bank, Ziraat Bank offers high quality banking services to its customer portfolio formed of leading companies in the sectors steering the country’s economy. In 2017, the Bank continued to provide services with 20 corporate branches, with the strategy of being the sector’s “Moral Bank”.

A fast growing service provider in the corporate and entrepreneurial banking business.
Ziraat Bank recorded 25.6% YoY growth in its corporate cash loans in 2017 with a 19.2% YoY increase in non-cash loans.

The volume of cash loans extended to customers in the corporate segment reached TL 96 billion, with non-cash loans reaching TL 76 billion to total TL 172 billion, marking an increase of 20% YoY.

Foreign trade volume also improved significantly in 2017 with a foreign trade volume of USD 51 billion, up by 39% YoY.

The pioneering role of Ziraat Bank in this area, which stimulated the country’s economy and supported high value-added investment, continued in 2017.

The main activities in the corporate / entrepreneurial banking segment in 2017 were as follows:

Under the protocol signed between the Union of Chambers and Commodity Exchanges of Turkey, the Credit Guarantee Fund and Ziraat Bank, a total of TL 1.45 billion in loans were allocated to 15,000 customers within the scope of the “Room to Breathe Loans (NefesKredisi)” product which was implemented in order to provide business capital financing to members of the Chambers and Exchanges at affordable terms.
More than 53,000 customers, especially SMEs - who command an important place in the business and production life of our country - but who lack sufficient collateral, were given TL 10 billion in loans with the “Entrepreneur Value Credits” product in order to finance working capital at affordable terms.
Within the framework of the cooperation established by the Turk Eximbank and Ziraat Bank to support exports from Turkey, the Bank’s branches, subsidiaries and correspondent banks operating abroad extend loans to importers at appropriate maturities and cost. In order to support Turkish exporters, open new markets for our export products and increase our share in existing markets, the “Turk Eximbank Sourced Buyer Loan” was revised.
With the aim of developing new products from the perspective of the “Ziraat Finance Group Customer”, the “Domestic Machine Support Package” was renewed in order to increase efficiency and productivity in the domestic machinery manufacturing industry.

39%ZIRAAT BANK’S FOREIGN TRADE VOLUME REACHED USD 51 BILLION, UP BY 39% YOY.

Financing of the Agricultural Sector

Increased support for the agricultural sector with uninterrupted financing
Ziraat Bank has been the main supporter of agriculture in our country throughout history, and has transferred a significant sum of resources to the various business lines of the agricultural sector. Continuing to develop and expand the quality and modern banking services needed in this segment, the Bank also produces projects aimed at solving the sector’s structural problems and facilitating the sector’s access to finance.

Ziraat Bank has been working with the relevant institutions, organizations and agricultural institutions, in particular the Turkish Ministry of Food, Agriculture and Livestock to conduct studies to diversify credit products and develop alternative collateral components from farmers’ agricultural assets.

Aiming to meet all kinds of financing needs of small-scale farmers with fast and cost-effective solutions, Ziraat Bank also supports investment projects that will create added value in agricultural production and respond to the country’s needs.

Investments and activities aimed at increasing the agricultural mechanization level of enterprises, increasing the storage, processing, packaging and marketing capacities of agricultural enterprises, including licensed warehousing and cold storage investments, stand out among as target production areas for the Bank.

The total volume of loans extended by Ziraat Bank from its own resources to finance the agricultural sector and the fund-based credits that it mediated in had reached TL 51.9 billion by the end of 2017, with the number of customers receiving loans reaching 708,000.

TL 51.9 billion in loans extended for financing of the agricultural sector
In 2017, a total of TL 33.7 billion was extended from Ziraat Bank’s resources to 451,000 customers to finance the agricultural sector, and 69,000 new customers were added to the portfolio. The balance of these agricultural loans had reached TL 49.9 billion by the end of the year, and the number of customers with loans reached 630,000.

In terms of the breakdown, 38% of the agricultural loan portfolio consists of investment credits (TL 18.8 billion) while 62% of the loans consist of business loans (TL 31.1 billion).

On the other hand, the Bank mediated in the payment of TL 67.3 million in loans from the funds provided by various institutions to a total of 10,000 persons determined by related institutions. In this context, the amount of fund-based credit payments stood at TL 2 billion with the number of customers reaching 78,000 by the end of the year.

When evaluated as a whole, the total volume of loans extended by Ziraat Bank from its own resources to finance the agricultural sector and the fund-based credits that it mediated in had reached TL 51.9 billion by the end of 2017, with the number of customers receiving loans reaching 708,000.

451,000 customersIN 2017, A TOTAL OF TL 33.7 BILLION WAS EXTENDED FROM ZIRAAT BANK’S RESOURCES TO 451,000 CUSTOMERS TO FINANCE THE AGRICULTURAL SECTOR.

Low interest rates on agricultural loans
In line with the decree and communiqué on low interest rate loans published in 2017, credit continues to be provided with annual interest rates ranging from 0% to 8.25% for customers operating in the sector within the subsidized rates determined on the basis of production areas.

A total of 320,000 producers and companies operating in the agricultural sector received TL 22.9 billion of loans at the discounted interest rates during 2017.

Financial model contribution for agriculture-industry-producer cooperation
Within the framework of contracts entered into with 44 firms operating in a number of areas including vegetable farming, seed farming, broiler breeding, pepper and tomato cultivation and sugar beet production, the Bank’s balance of contracted production loans extended to nearly 19,000 contract producers stood at TL 141.2 million at the end of the third quarter of 2017.

Livestock loans
In 2017, Ziraat Bank extended a total of TL 11 billion in loans to 148,000 customers under various titles of animal production. As of the end of 2017, the balance of loans dispersed for animal husbandry had reached TL 15.6 billion and the number of customers with such credit had reached 205,000.

Cooperation with livestock organizations
In 2017, Ziraat Bank signed a protocol with the Manufacturers Union and Cooperatives, which gathered and marketed the milk of the enterprises owned by its members, and continued to offer solutions that facilitate access to loans for the member producers of the said Unions/Cooperatives.

In 2017, Ziraat Bank provided TL 3 billion in loans to finance the purchase of tractors to 52,000 customers, and TL 488 million in agricultural mechanization financing loans to 20,000 customers.

Agricultural mechanization loans
In order to increase the level of mechanization of agricultural enterprises and thus increase productivity and profitability, Ziraat Bank offers loans for tractors and agricultural mechanization. In 2017, TL 3 billion in loans to finance the purchase of tractors was provided to 52,000 customers and TL 488 million in agricultural mechanization financing loans was extended to 20,000 customers. As of the year-end, a total of TL 7.5 billion of tractor loans had been extended to 193,000 customers and TL 1.3 billion had been extended to 52,000 customers for mechanization loans.

Renewed tractor loan
In order to renew the old tractor park in our country, loans were extended to producers owning tractors for at least 5 years seeking to renew tractors manufactured at least 10 years ago. The loans had maturities of up to 96 months.

Small equipment credit
Ziraat Bank offers Small Equipment Credit to enable the purchase of small farming tools and equipment needed by agricultural enterprises belonging to real or legal persons, to enable them to sustain their operations efficiently and profitably. The loan, which has a maximum limit of TL 25,000, was extended to 10,000 customers in 2017, with a total of TL 165 million loans taken out.

Greenhouse loans
In 2017 a total of TL 856 million worth of greenhouse production credit was extended to more than 8,000 producers. Ziraat Bank has lent a total of TL 4.3 billion to 111,000 customers over the last 14 years, to finance activities such as greenhouse construction and modernization, as well as crop production.

In 2017 Ziraat Bank continued its efforts to increase its market share in the retail lending segment and to reach out to an even bigger customer base through every possible service channel.

Retail Banking

TL 43 billion THE BANK’S TOTAL HOUSING LOAN BALANCE AMOUNTED TO TL 43 BILLION WITH THE DISBURSEMENT OF TL 22 BILLION.

Ziraat Bank has added innovative products to its product range with its infrastructure and superstructure projects for retail banking that it has started to roll out in recent years, continuing to offer attractive opportunities to its customers while strengthening customer satisfaction with its long term and versatile relationships.

Ziraat Bank provides services for individuals through a wide distribution network covering;

branches,
ATMs,
internet and mobile banking applications,
call centers.

Cooperation with the leading institutions in the sector continued for the Life-Long Banking World program prepared for customers of the Bank and segment-based opportunities, such as Children’s Plus, Young People’s Plus, Employees’ Plus and Pensioners’ Plus at Ziraat, and the discounts and advantages specific to this program continued to be provided.

TL 51 billionAPPROXIMATELY TL 51 BILLION WAS DISBURSED BY ZIRAAT BANK THROUGH 1.6 MILLION INDIVIDUAL LOANS IN 2017.

Ziraat Bank’s projects are focused on responding rapidly to the different needs and tendencies of its customers in the field of retail banking. In this context, the following developments were realized in 2017;

In line with the protocol entered into with the KKB (Credit Registration Bureau), Findeks Packages, which allow customers to examine the financial status, credit and debit limits and credit notes of themselves and other persons they are in commercial relations with are ready to be sold through Ziraat branches.
Within the scope of the Ziraat Finance Applications project, demand account withdrawal screens have been expanded in all branches and processes that speed up the operational processes as well as maximizing transaction security have been introduced. Similarly, money transfer screens were made ergonomic in order to provide a better service to customers, while authentication and missing information checks were improved in order to ensure customer security, and rolled out in pilot branches.
The State Subsidized Dowry (Çeyiz) and the State Subsidized Housing Account products set up by the Ministry of Family and Social Policies and the Undersecretariat of Treasury continued to be offered to customers to promote saving among customers in the individual segment.
The Bank’s total housing loan balance amounted to TL 43 billion with the disbursement of TL 22 billion while the consumer loan balance amounted to TL 31 billion, by disbursing TL 28 billion.
The Bank, which has steadily expanded its number of contracted projects in line with its growth target in qualified residential projects, continued to offer loans at preferential conditions to customers wishing to purchase a home in residential projects, thanks to new partnerships established with leading construction companies in the sector.
Within the framework of the protocol signed with the Social Security Institution (SGK), 4.4 million pension customers had been paid a total of TL 1.6 billion in promotions as of the end of 2017.
Within the scope of the protocol signed with the SGK, the volume of loans extended to 8,200 individuals within the scope of the Bağ-Kur Premium Debt Loan product, which was put into practice for those who held policies and had accumulated premium debt and were able to qualify for the old-age pension by paying their premium debts, stood at TL 156 million.
Regarding fees and commissions received from banking services, fees in some service items, including monetary transfers from various channels, were revised.
With the “Live Answering” application, which was launched on 30 January 2017, an online support service was rolled out for Ziraat Bank Internet banking customers. Customers using the Live Answer application over the internet banking service are able to receive this service every day between 9AM and 6PM. This application also ensures that hearing-impaired customers can also gain access to call center services.
Confirmation of bank customers’ e-mail addresses has been improved. In addition to the branches, a confirmation e-mail is sent to customers in the process of entering and / or updating the communication e-mail to be made over internet banking, mobile banking and the Customer Contact Center, and the e-mails of the verifying customers can be recorded as “confirmed” in the system.
Cooperation with the leading institutions in the sector continued for the Life-Long Banking World program prepared for customers of the Bank and segment-based opportunities, such as Children’s Plus, Young People’s Plus, Employees’ Plus and Pensioners’ Plus at Ziraat, and the discounts and advantages specific to this program continued to be provided.

Most strategic targets in individual loan segment achieved.
Approximately TL 51 billion was disbursed by Ziraat Bank through 1.6 million individual loans in 2017.

As the automatic participation system is a long-term saving tool, the employers and hence, their employees that Ziraat Bank will bring in the system will offer significant contributions to the Ziraat Finance Group in the long term in terms of profitability, customer loyalty and the acquisition of new customers.

Expanding the scope of insurance activities.
With Law No. 6740, entitled “Law Amending the Private Pension Savings and Investment System Law”, which was published in the Official Gazette dated 25 August 2016, all public employees under the age of 45 and all private sector employees working in a workplace registered at Social Security Institution (SSI), in line with the calendar announced by the Undersecretariat of Treasury, are included in the Individual Pension Automatic Participation System.

As the automatic participation system is a long-term saving tool, the employers and hence, their employees that Ziraat Bank will bring in the system will offer significant contributions to the Ziraat Finance Group in the long term in terms of profitability, customer loyalty and the acquisition of new customers.

In this framework, a contract was signed between Ziraat Bank and a total of 764 local administrations and SEEs in the last three months of 2017. Approximately 1.5 million had been contracts following the date of the enactment of the Law as of year-end, when the number of active participants had reached 676,000 and the volume of funds had reached TL 424 million.

676,000 participantsIN THE AUTOMATIC PARTICIPATION SYSTEM, AS OF YEAR-END THE NUMBER OF ACTIVE PARTICIPANTS REACHED 676,000 AND THE VOLUME OF FUNDS REACHED TL 424 MILLION.

The “Corporate Internet Branch Screen Training” video was prepared by undertaking system improvements to digitize the process within the scope of the Automatic Participation System; in addition, the user manual was published ensuring that the following transactions regarding employees’ contracts could be carried out through the individual Internet Branch;

Opting Out,
Withdrawal,
Interruption,
Changes in Contribution Amount and
Requests for the Initial Fund Change

The Principles and Procedures of the Insurance Application, prepared in order to guide the operational process of insurance transactions at the Bank and ensure that transactions were carried out in a manner that was correct, rapid, easy and of high quality, was revised and the Individual Pension Automatic Participation System was added to the legislation. In addition, Individual Bancassurance Product Cards were renewed and the Travel Health Insurance product for Studying Abroad and the Foreign Health Insurance product were added to the cards.

State Supported Agricultural Insurances Tariffs and Instructions for 2017 were published by the TARSİM-Agricultural Insurance Pool. The training presentation concerning the new applications and pertinent changes were shared with the Bank personnel. In addition, District-Based Drought Yield Insurance was added to the Principles and Procedures of the Insurance Application Entrepreneurial Segment Bancassurance Product Cards.

In accordance with the agreement reached with Ziraat Hayat ve Emeklilik A.Ş., some diseases and treatments are excluded from the scope of insurance policy. Accordingly, the Credit Group Life Insurance Insurance-Health Declaration and Certificate Request Form has been revised as an attachment to the Insurance Application Principles and Procedures prepared by the Bank.

The extensive projects carried out by Ziraat Bank in the field of electronic service channels ensure that the products and services offered to customers are effective and of high quality, and contribute to customer satisfaction as well as the cost base of the Bank.

Electronic Service Channels

The extensive projects carried out by Ziraat Bank in the field of electronic service channels ensure that the products and services offered to customers are effective and of high quality, and contribute to customer satisfaction as well as the cost base of the Bank. The results recorded in this area in 2017 are listed below.

Credit Cards
As of the end of 2017, there were 4.8 million Ziraat Bank credit cards in circulation, with the Bank commanding a 7.5% market share in terms of the number of credit cards and a 3.6% market share in terms of turnover.

165.2 millionIN 2017, A TOTAL OF 165.2 MILLION OPERATIONS WERE PERFORMED FROM THE OPERATIONS CENTER WITH AN OVERALL CENTRALIZATION RATE OF 99%.

Bankkart
At the end of 2017, there were 28.2 million Ziraat Bank issued debit (bank) cards in circulation, and the Bank maintained its leading position in the sector with a 19.3% turnover share in direct-debit payments.

Merchant partners and POS units
At the end of 2017, Ziraat Bank commanded;

171,000 merchant partners,
112,000 POS units,
79,000 electronic cash registers,
A 3.3% market share for merchant partner turnover

Work got underway to enable foreign trade transactions to be carried out at the bank’s internet branch and for the transition to an automatic system for the preparation of draft letters of credit.

Operations Center

Ziraat Bank deploys a model focused on productivity in its business processes. In line with process improvements and centralization of branch operational processes in 2017, a large number of transactions were brought to the operations center, resulting in an increase in service quality and customer satisfaction. In 2017, a total of 165.2 million operations were performed from the Operations Center with an overall centralization rate of 99%.

The following activities were carried out by the operations center in 2017 under the scope of ensuring operational efficiency and standardization, and reducing the workload of Ziraat branches and the units of Ziraat Finance Group:

The collection procedures related to the Bank’s credit cards which were being carried out by the branches started to be performed by the Operations Center.
OGS/HGS/OTP operations started to be performed by the Operations Center.
Within the scope of the Operations Center’s services to the Ziraat Finance Group, various operations of our subsidiaries started to be performed by the Operations Center.
The replies to the relevant Directorate of Execution regarding foreclosures from the KEP system were sent through the KEP system again.
The decision payment/collection procedures pertaining to legal action lodged either by the Bank or against the Bank in consumer courts are undertaken by the Operations Center.
Collective Tax Collection transactions are realized through Bank Credit Cards.
The Operations Center started to carry out the definition of the “Signature Authority Registration” transactions through the Central Registry System of the Ministry of Customs and Trade (MERSİS).
In order to reduce the waiting times of operations in the Operations Center and ensure effective use of the idle workforce in some branches, the “Operation Center Everywhere” project was brought into operation.

TOKİREAL ESTATE TAX INFORMATION BELONGING TO CUSTOMERS WHO PURCHASED HOUSING FROM THE MASS HOUSING FUND WAS INCLUDED IN THE TOKİ ONLINE INSTALLMENT INQUIRY SYSTEM.

Credit and Foreign Trade Operations

Ziraat Bank aims to ensure that the operational process of credit and foreign trade transactions is conducted efficiently and quickly in accordance with required standards by taking into account customer satisfaction. In this process,

during the establishment and registration of the confirmation mortgage in the electronic environment, based on the objectives and targets such as;

to be the first and leading bank in the sector,
to provide standards with central processes,
to increase customer satisfaction,
to increase and maintain productivity;
and in line with the ongoing work on the e-mortgage project, which envisages the establishment of real estate mortgage facility transactions which will serve as a guarantee for the loans, and be carried out in an electronic environment established with the General Directorate of Land Registry and Cadaster, all branches had been included in the scope of the application as of 30 November, 2017.

Systematic development studies aimed at centralizing corporate loan disbursements had been completed as of 4 December 2017, and the operations related to authorized cash credit disbursements started to be carried out within the Department of Credit and Foreign Trade Operations.
Work got underway to enable foreign trade transactions to be carried out at the bank’s internet branch and for the transition to an automatic system for the preparation of draft letters of credit. The preparation of import letters of credit over the internet branch will bring Ziraat Bank into the position of being the leading bank in the sector in this regard; combined with other improvements, it will provide a significant contribution to the Bank’s image in the sector.
Import / export letters of credit, cash against documents transactions and letters of guarantee transactions of the branches operating abroad started to be carried out centrally.
Real estate tax information belonging to customers who purchased housing from the Mass Housing Fund was included in the TOKİ online installment inquiry system. Thus, TOKİ customers will be able to access information on their real estate tax debt as well as installment debt information through TOKİ online installment inquiry screen.

123% increaseIN 2017 THE VOLUME OF COLLECTION IN THE DIRECT DEBT SYSTEM INCREASED BY 123% YOY.

Special integration solutions in cash management
Acting with the principle of providing customers with special solutions in cash management products, Ziraat Bank continues to generate technological innovations and special integration solutions in line with the developments in the sector.

In this context, the Bank provided high quality and technology-oriented products and services in 2017, taking into account the special needs and demands of its customers.

The number of parent companies with which the Company entered agreement in the Direct Debt System (DBS) increased by 19% YoY. In addition, the number of dealers included in the system increased by 90% and the volume of collection increased by 123% YoY.

The derivative of the Discounted DBS, the Direct Debit System product, was also offered to customers, providing them with the opportunity to obtain financing before the billing deadline. These invoices, which are subject to trade, could be offered as a guarantee of products other than the DBS loan, thus adding another type of guarantee that can be obtained from customers.

Within the scope of the Corporate Collection System, the number of contracted institutions increased and a total of 148 million collections were realized in 2017.

In addition, the Bank continued to offer customized payments, electronic checks / notes, accounting integrations, pool accounts and cash collection services to meet the needs of its customers.

Digital Banking

Ziraat Bank increasingly integrates digital channels into the service delivery process in an effort to provide its customers with a simplified and unlimited banking experience.
Serving a large customer base spread across the country, Ziraat Bank actively reaches its customers through its digital service channels as well as its branches. The Bank continued to roll out innovative and pioneering applications to increase the usage rates and effectiveness of the digital channels in 2017.

The following projects were carried out in the fields of ATM, Internet Banking, Mobile Banking and Digital Branch Solutions in 2017:

ATM

Ziraat Bank’s new ATM Software Project, where a host of innovations will be offered to customers including personalized menus, easy and fast process flows and a virtual keyboard experience, entered operation.
As of the end of 2017, the number of Ziraat Bank ATMs had reached 7,085. Ziraat Bank serves as the bank with the highest number of ATMs in the banking sector and one of every four financial transactions that passes through all the ATMs of the sector is realized through ATMs of the Bank.
With the Ziraat Mobile application, customers are able to withdraw and deposit money from ATMs safely and quickly by simply reading the QR code sent through their smart phones.
To enable visually impaired customers of Ziraat Bank and other banks to use the ATMs, work was carried regarding voice transaction menus, which will be activated by attaching headsets to the ATM.
The flow of the “Deed Collection” transaction, carried out through Bank ATMs, was updated and steps were taken to ensure that one-time collections can be made with a single entry of information in transactions requiring multiple collections.

The number of Ziraat Bank’s digital customers increased by 50% in 2017 to 7.4 million by the end of 2017, with the number of active digital customers reaching 4.8 million.

Internet Banking and Mobile Banking

The number of Ziraat Bank’s digital customers increased by 50% in 2017 to 7.4 million by the end of 2017, with the number of active digital customers reaching 4.8 million.
87% of financial transactions at the bank are realized through digital channels, a rate which is increasing rapidly. The number of financial transactions carried out using the mobile application nearly doubled when compared to the previous year.
The Ziraat Corporate Mobile application has been rolled out for corporate customers. Customers with corporate internet banking accounts may include both main users and sub-users in the corporate mobile application.
The addition of multi-lingual support to the Ziraat Mobile application was completed, with English language services rolled out.
In order to provide customers with a more comprehensive banking experience, the set of transactions has been expanded in line with customer needs, and regular improvements are carried out by adding new features to the applications.
The “nearest Ziraat” service, which displays branches and ATMs on the Map, as well as disabled friendly branches and ATMs, was added to the mobile application.
The length and content of the Internet banking login password were updated in order to maximize customer security. As an alternative to security through SMS, Ziraat Onay - which provides security verification by combing the pairing of customers’ devices, the PIN code used for internet banking and the password for internet banking, where a secure login is provided with a single password.

87%87% OF FINANCIAL TRANSACTIONS AT ZIRAAT BANK ARE REALIZED THROUGH DIGITAL CHANNELS.

Digital Branch Solutions

In order to ensure that the documents produced during the business processes of the branches are transferred to the electronic environment by checking missing documents and signatures and to ensure customer satisfaction by speeding up the processes, infrastructure development for barcode printing and reading has been carried out.
Within the scope of work being carried out to digitize the business processes of the branches, the integration studies of automatic cash-transfer devices into the main banking software has been completed and pilot applications have been introduced in two branches.

Thanks to the business model that Ziraat Bank has been carrying out with its widespread branch network and modern customer relationship management approach, the volume of foreign currency transactions realized by its customers increased by 17% YoY in 2017.

Treasury Management and International Banking

Ziraat Bank, following a dynamic and effective treasury management policy, is an active and prominent participant of money, foreign exchange and capital markets.
In line with changing market conditions, Ziraat Bank offers its customers uninterrupted service in a wide range of products and financial solutions to meet the needs, are applied the fastest way.

Thanks to the business model that the Bank has been carrying out with its widespread branch network and modern customer relationship management approach, the volume of foreign currency transactions realized by its customers increased by 17% YoY in 2017.

Ziraat Bank administered its balance sheet with the objective of maximum benefit in the domestic and international markets in order to manage its growing balance sheet in the most efficient and profitable manner and to protect it from liquidity risk, interest rate risk and exchange rate risk. It continued to create active and passive pricing strategies within the framework of market conditions.

Securities portfolio management maintained within the framework of the Bank’s main strategy.
Ziraat Bank again maintained its position as a market maker in the government debt securities market in 2017 and played an active role in secondary markets.

Securities portfolio management is maintained within the framework of the Bank’s main strategy. The main asset management strategy is to increase the share of loans in the balance sheet, mainly those used by the real sector, and to reduce the share of securities. The Bank’s securities portfolio is managed by taking the risk-reward balance into account, thus paving the way for growth in loans, while creating a more balanced asset structure.

The Bank’s primary passive management strategy is based on expanding its deposit base as well as diversifying and deepening its non-deposit resources.

Continued issuances in the capital markets.
As in previous years, Ziraat Bank continued to issue bonds and bills in 2017 in order to create resource diversity and reach different customer groups. The Bank issued TL 11.4 billion of bonds in the domestic market against TL 9.9 billion of redemptions under the issuance ceiling of TL 20 billion.

Ziraat Bank undersigned a first in the sector by intermediating in the issuance of “Gold Bonds” and “Gold-denominated lease certificates” which were issued by the Republic of Turkey Prime Ministry Undersecretariat of the Treasury and the Undersecretariat of the Treasury Asset Leasing.

Leading the way in bringing gold investments into the economy.
Ziraat Bank’s gold deposit volume increased by 45% when compared to 2016, to reach 26 tons by the end of 2017. Accordingly, the Bank’s share in the gold deposit sector increased from 14% to 17%.

As part of its gold trading activities, Ziraat Bank managed a volume of approximately 95 tons of gold in 2017 and provided a continuous service to its customers through all channels. In addition, approximately 1.1 tons of scrap gold was collected from customers through the “golden time” campaigns and brought to the banking system.

1.1 tons of scrap goldIN 2017 ZIRAAT BANK COLLECTED APPROXIMATELY 1.1 TONS OF SCRAP GOLD FROM CUSTOMERS THROUGH THE “GOLDEN TIME” CAMPAIGNS AND BROUGHT TO THE BANKING SYSTEM.

The only bank in the sector to issue Gold-Denominated Lease Certificates.
Ziraat Bank is the only bank in the sector to be active in this area, by intermediating in the issuance of “Gold Bonds” and “Gold-Denominated Lease Certificates” which were issued for the first time by Republic of Turkey Prime Ministry Undersecretariat of the Treasury and the Undersecretariat of the Treasury Asset Leasing A.Ş. With the issuance of this investment tool, which allows citizens holding physical gold to earn a return from their gold, the Undersecretariat of the Treasury aims to bring these assets which have been kept “under the mattress” into the economy and strengthen the country’s reserves. In this context, the Bank worked with the Undersecretariat of Treasury to establish the primary and secondary market for the new investment tool in question and implemented the “Gold Bonds” and the “Gold lease certificates”.

During October 2017, the Undersecretariat of the Treasury issued “Gold Bonds” and “Gold lease certificates” following book building from individual investors through Ziraat Bank throughout Turkey. Applications were collected in 344 Ziraat branches throughout 81 provinces and 249 districts, and the value of 22 and 24 karat gold brought by customers was determined by gold refining experts, and 2 year maturity Gold bonds/Gold leasing certificates carrying a 6 monthly coupon were issued.

During the four stages of issuance, about 2.5 tons (with a monetary value of approximately TL 380 million) was collected from 13,000 customers and the scrap gold was added to the economy. Currently, these securities are kept under the control of Ziraat Bank and the price is declared with the aim of enabling customers to cash these securities in the second market.

Working to effectively promote the Turkish banking sector and the country’s economy to foreign investors.
In 2017, a total of 10 conferences were held in Middle East, Europe and America in order to monitor the global and regional economy and developments in the capital markets, and to promote the Bank, the Turkish banking sector and the Turkish economy to foreign investors in the most effective manner. In the meetings held in 2017 at the General Directorate of the Bank and conferences abroad, interviews took place with 52 international investment companies.

Continuing the diversification of Ziraat Bank’s strong funding structure.
Ziraat Bank manages the resources provided by international financial institutions in its balance sheet and provides a significant amount of external financing from international financial institutions within the framework of its wide customer base and extensive branch network. Within the context of agreements with the World Bank, the European Investment Bank and the French Development Agency, a total of USD 234 million was made available to SMEs and larger-scale customers during 2017. These resources were used to help promote the growth of customers, by increasing their production, productivity and employment, helping reduce regional development differences.

Borrowing though syndication from international markets realized for the fifth time.
Ziraat Bank’s syndication loan, which was provided in US dollar and Euro denominations in April 2016, was redeemed. The loan was renewed on 6 April 2017, with a maturity of 367 days and total amounts of USD 278 million and EUR 706.5 million, with the participation of 41 banks from 21 countries. The Bank of America Merrill Lynch International Limited and Emirates NBD worked as co-coordinators in the process.

This transaction, which was aimed at diversifying Ziraat Bank’s strong funding structure, was the fifth borrowing transaction carried out by the Bank through international syndication for the purpose of financing foreign trade.

Having diversified and strengthened its leading position in the deposit sector with funds provided by international markets, Ziraat Bank aims to actively support its customers in the financing of foreign trade by expanding and diversifying its range of financial products and services.

Renewal of the GMTN program (Global medium term notes).
The Global Medium Term Notes (GMTN) program, which is being implemented under the scope of diversifying bank resources and international capital markets through the cost-effective and long-term allocation of resources, was renewed on 14 March 2017.

In 2017, two foreign bonds were issued under the GMTN program. The maturity of a USD 600 million issuance, which was carried out on 3 May 2017, was set as 5 years, and the maturity of a USD 500 million issuance, which was carried out on 29 September 2017, was set as 6 years.

Syndication IN 2017 ZIRAAT BANK RENEWED ITS SYNDICATION LOAN WITH A MATURITY OF 367 DAYS AND TOTAL AMOUNTS OF USD 278 MILLION AND EUR 706.5 MILLION.

A steady rise in Ziraat Bank’s share in foreign trade over the years.
Ziraat Bank’s extensive network of correspondent banks, established with nearly 1,800 banks in more than 140 countries, is constantly diversifying and evolving in line with customer demands and the conjuncture and trends in the world economy. Thanks to its expanding and strengthening correspondent network, Ziraat Bank provides its customers with foreign trade opportunities in many parts of the world.

Ziraat Bank, whose share in foreign trade has risen constantly, stood as one of the leading banks in this area at the end of 2017. The Bank’s preference for foreign trade by its customers is based on strong and sustainable cooperation with correspondent banks, quality of service and high product range.

Ziraat Bank offers products such as discounted letter of credit and discounted insurance policies to meet the foreign trade financing needs of its customers and works closely with export insurance companies such as Hermes, Coface, Serv and Sace to create medium and long term country loans to its customers.

Thanks to its strong correspondent network, Ziraat Bank provides easy access to alternative sources of funding and demonstrates the ability to obtain funds from correspondent banks at affordable costs and conditions. The Bank seeks to sustain and build on this success in the coming years with new ways of financing that it will diversify.

Ziraat Bank has further strengthened its position in regions it considers to bear strategic importance to become a global bank, and continues its efforts to establish a presence in new countries.

The Turkish bank with most extensive service network on a national and global scale.
Ziraat Bank operates from 95 points in 18 countries around the world. Ziraat Bank has a wide international network of services consisting of 9 international subsidiary banks, 22 international branches in 9 countries and one representative office.
Ziraat Bank has further strengthened its position in regions it considers to bear strategic importance to become a global bank, and continues its efforts to establish a presence in new countries.

Ziraat Bank’s global service points are composed of the following:

The London Branch in the UK,
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, the Girne, Gazimağusa, Güzelyurt, Gönyeli, Akdoğan, Karaoğlanoğlu, and İskele branches,
The Pristina Branch in Kosovo,
The Bahrain Branch,
The Tehran Representative Office in Iran.

Ziraat Bank also provides banking services through its subsidiary banks in Germany, Bosnia and Herzegovina, Montenegro, Russia, Georgia, Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan.

95 points ZIRAAT BANK OPERATES IN 18 COUNTRIES THROUGH ITS INTERNATIONAL NETWORK CONSISTING OF 9 INTERNATIONAL SUBSIDIARY BANKS, 22 INTERNATIONAL BRANCHES AND ONE REPRESENTATIVE OFFICE.

International Branch Banking
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 its effectiveness in the countries where it has 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 high quality services to all customers in the regions where there are operations, principally to our country’s entrepreneurs and companies,
To create effective synergies within the framework of the “Ziraat Finance Group” approach.

“Ziraat always stands 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 takes advantage of current and potential opportunities in each geographical region where it operates and will continue to work to become the strongest and most effective bank in Turkey and the region in the coming period. The developments of 2017 in this context are summarized below:

In line with the dynamics and requirements of the London financial center, the London Branch revamped its range of products and services to enhance its effectiveness, particularly in the areas of structured financing and financing of foreign trade. The London Branch is an important financial contact point for access to international financial markets.

In the TRNC (Turkish Republic of Northern Cyprus), customer and market oriented activities have been carried out with 8 branches by expanding the product range and continuously increasing service quality. The branches in the TRNC provide corporate and retail banking products to our customers which meet our country’s standards. Thus, the Bank continued to contribute significantly to the economic development of the TRNC.

In Greece, services are provided through four branches in 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 corporate and retail segment in Sofia, Plovdiv, Kardzhali and Varna under the Bulgarian Administration. Efforts to expand ATM and internet banking services are continuing in the field of branchless banking and alternative distribution channels.

Ziraat Bank began operating in Baghdad, Iraq, where its 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 2017, 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.

Ziraat always stands with youIN LINE WITH THE SLOGAN OF “ZIRAAT IS ALWAYS WITH YOU, WHEREVER YOU ARE IN THE WORLD”, ZIRAAT BANK TAKES ADVANTAGE OF CURRENT AND POTENTIAL OPPORTUNITIES IN EACH GEOGRAPHICAL REGION WHERE IT OPERATES.

The Jeddah Branch in Saudi Arabia opened its doors in 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 was opened on 8 June 2015. The branch serves the corporate and individual customer base in the country with its extensive product range.

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

Ziraat Bank has created a progressive human resources management system that is compatible with its commitment to the principles of transparency, participation, and ethical banking.

Human Resources and Training

Ziraat Bank’s qualified human resources, which set themselves apart with their high level of education, their professional expertise and ability to do business in global markets, is the Bank’s most fundamental competitive advantage in the sector.

Key points of Ziraat Bank’s human resources

As of 31 December 2017, there were a total of 24,554 employees at Ziraat Bank.
Ziraat Bank hired 456 new staff in 2017.
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 35, with employees having completed an average of 11 years of employment in the Bank.

46.4 hoursIN 2017 AT ZIRAAT BANK A TOTAL OF 25,000 PERSONNEL WERE GIVEN AN AVERAGE OF 46.4 HOURS OF TRAINING PER STAFF MEMBER.

Supporting its employees throughout their careers with its continuous development philosophy, Ziraat Bank continuously undertakes investments in its employees, who are architects of the Bank’s corporate success, by offering pay packages that are fair and appropriate, modern working conditions and opportunities for individual development.

The Bank continues to improve its training activities each year by providing its employees with technical infrastructure in the banking field, international literature and applications, knowledgeable and visionary education. A number of training projects were implemented in 2017.

Training activities in 2017

In 2017, in line with the objectives and strategies of Ziraat Bank, the following training programs were provided;

“Development Training” to meet the training needs of the employees and/or to convey information about new products, services or legislation,
“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,
“Training of Legal Obligations” in connection with the legislation.

27.4 hoursDURING 2017, AN AVERAGE OF 13 DISTANCE LEARNING PROGRAMS WERE ASSIGNED PER USER WITH A TOTAL OF 27.4 HOURS SPENT ON DISTANCE LEARNING PER USER.

In 2017, a total of 25,000 personnel were given an average of 46.4 hours of training per staff member.

Furthermore, various distance training programs were provided in 2017. Distance learning offers the advantages of allowing education to be provided to more employees in a short period of time, at low cost, without any loss of labor and at the employee’s place of work or their home, while also enabling employees to work at their own learning speed. During the year, an average of 13 distance learning programs were assigned per user with a total of 27.4 hours spent on distance learning per user. Thanks to this application, an amount of paper equivalent to approximately 480 trees was saved in 2017.

As of the end of 2017, approximately 22,000 employees were handed Occupational Health and Safety Certificates and approximately 1,500 employees held Basic First Aid Certificates.

During the 2016-2017 academic year, 2,300 high school students and 1,900 university students were offered opportunities for vocational skills training and internship.