Operating with a sense of responsibility of the assets managed, Ziraat Bank continued to contribute to our country’s economy and support all economic elements uninterruptedly in 2018.

The Bank always focuses on meeting its customers’ financial needs with appropriate value propositions. Accordingly, it designed customized products and services, made improvements in digital channels and developed service delivery processes.

Robotic Process Automation was introduced in 2018 in order to direct employees to high value added business processes and perform simple processes at low cost.

“Operation Center Everywhere Project” was launched to conduct central operation processes at optimum costs with the contribution of branches and the Operation Center.

In terms of information security and system security, investments were completed to prevent advanced new generation malware by end-to-end controls, establish network threat monitoring systems and central infrastructure for cyber security.

Efforts continued in 2018 to conduct information security and process audits with a web-based integrated system within Ziraat Finance Group. Web-based audit modules in ZiraatBank BH d.d. and Ziraat Participation Bank are anticipated to be completed in 2019.

In accordance with the New Economic Program, the process started to merge public banks with portfolio management companies. The process of acquisition of Halk Portfolio Management and Vakıf Portfolio Management and merging them under the umbrella of Ziraat Portföy will be completed by the end of January 2019.

The successful financial performance of Ziraat Bank for many years is the result of its rigorous application of business strategies.

TL 537 billionIn 2018, with an asset growth of 23.7% Ziraat Bank expanded its assets to TL 537 billion.

In 2018, with an asset growth of 23.7% the Bank expanded its assets to TL 537 billion. Share of credits in total assets was 69%. As of the year-end, the Bank provided a Return on Assets of 1.6% and a Return on Equity of 15.2%.

Operating in an industry which has an intense competition, Ziraat Bank’s main objective in the following periods is to carry further its position as the most powerful national bank and record significant progress in banking products and services it provides to its customers in all of its business lines.

Corporate / Entrepreneurial Banking

Ziraat Bank continued to provide products and services that offer credit opportunities for companies to increase their financial strength acting as an economic actor with a sense of responsibility and registered results confirming its size in the financial system.

In 2018, within the framework of the vision of being “the Leading Bank”, Ziraat Bank offered high quality banking services to its customer portfolio consisting of leading companies in their sectors creating value for the country’s economy. With its strategy of being the sector’s “Morale Bank”, the Bank continued to provide financial solutions in corporate segment including structuring/ rescheduling to harmonize operations with their cash flows and increased the number of its corporate customers to 6,200.

Cash loans provided to customers in corporate segment reached TL 145 billion in 2018, while non-cash loans reached TL 102 billion in 2018, with a total credit amount of TL 247 billion representing a 34% increase YoY.

Foreign trade volume improvement continued in 2018 to reach USD 56 billion.

In 2018, within the frame of market developments, Ziraat Bank continued and increased its efforts to provide financial sources that companies need to sustain their operations in a healthy manner with favorable market conditions through all of its credit channels. The Bank strengthened its pioneering role in its contribution to project financing for investments with high added value and which accelerate the country’s economy.

With the Bank’s Bankkart brand, significant improvements in member merchant area have been realized. In addition to that, solutions for collection, payment and direct debiting system (DBS) and activities to increase deposit volume continued at an increasing pace in 2018.

34%In 2018, loans provided to customers in corporate segment reached TL 247 billion representing a 34% increase YoY.

Guarantee support for SMEs at affordable terms

A new protocol has been signed by Ziraat Bank with the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the Credit Guarantee Fund (KGF). The protocol aims to provide working capital financing and guarantee support for SMEs who have a significant role in our country’s trade and production, particularly for those who do not have sufficient guarantees. Chamber deposits are accepted and SME Support Credits are extended within the frame of this protocol.

New portfolio limits are being defined for credits to be extended in care of the Bank with KGF guarantee supported by the Treasury and extension of the credits continue.

KOSGEB- Machinery and Equipment Credit with Interest Support

A protocol was signed between Ziraat Bank and KOSGEB to provide financial support for businesses that are registered under KOSGEB database, operating in manufacturing industry and who are not prohibited from KOSGEB supports to be used in domestic and new machinery and equipment acquisitions at affordable terms. With “KOSGEB- Machinery and Equipment Credit with Interest Support” product launched within the frame of this protocol to provide financial support with affordable terms, “KOSGEB Iğdır Central District Emergency Support Credit” and “KOSGEB Şanlıurfa Emergency Support Credit” were extended.

Construction Amnesty Credit

“Law on Restructuring of Taxes and Certain Receivables” numbered 7143 Article 16 aims to provide a solution to construction problems of the citizens by issuing Building Registration Permits for buildings which were illegitimately constructed against zoning legislation and licensing. Construction Amnesty Credit product was launched for individuals, entrepreneurs and corporate customers who wanted to benefit from the Construction Amnesty.

Continuing its financial support to agricultural sector, Ziraat Bank also develops projects to facilitate solutions for the sector’s structural problems and direct access to finance.

Financing of the Agricultural Sector

Facilitating farmers’ direct access to finance

Continuing its financial support to agricultural sector, Ziraat Bank also develops projects to facilitate solutions for the sector’s structural problems and direct access to finance. In this context, studies are underway with related institutions, establishments and organizations, particularly with the Republic of Turkey Ministry of Agriculture and Forestry.

Facilitating small business owner farmers’ direct access to finance, which is the most significant link in the agricultural value chain, is the leading activity conducted by the Bank. With this objective, projects are being generated to diversify credit products and to develop alternative guarantee elements other than farmers’ agricultural products. Among Ziraat Bank’s target production areas for the following period are investment projects which will create added value in agricultural production and respond to our country’s needs along with investments and activities to increase storage, processing, packaging and marketing capacities of agricultural businesses, particularly licensed storage and cold storage depot investments.

746 thousand customersAS OF 2018 YEAR END, THE TOTAL AMOUNT OF THE LOANS EXTENDED TO AGRICULTURAL SECTOR REACHED TL 60.7 BILLION, WHILE THE NUMBER OF CUSTOMERS RECEIVING THESE LOANS REACHED 746,000.

Credits of TL 60.7 billion provided for financing of agricultural sector

In 2018, a total of TL 35.9 billion was extended from Ziraat Bank’s sources to approximately 443,000 customers to finance the agricultural sector, and around 67,000 new customers were added to the portfolio. The balance of agricultural loans provided from Bank’s sources reached TL 58.8 billion by the end of 2018, and the number of customers with loans reached 672,000.

In terms of the breakdown, 35% of the agricultural loan portfolio consists of investment credits (TL 20.5 billion) while 65% of the loans consist of business loans (TL 38.3 billion).

Additionally, the Bank mediated in the payment of TL 54.2 million in loans from the funds provided by various institutions to a total of 9,000 people determined by related institutions. In this context, the amount of fund-based credit payments stood at TL 1.9 billion and the number of customers exceeded 74,000 by the end of the year.

As a result, the total of loans extended by Ziraat Bank from its own sources to finance the agricultural sector and the fund-based credits that it mediated in had reached TL 60.7 billion by the end of 2018, with the number of customers receiving loans reaching 746,000. In 2018, over 345,000 producers and companies received TL 27.5 billion of subsidized loans (at discounted interest rates) with annual interest rates ranging from 0% to 8.25%.

Low interest rates on agricultural loans

In line with the decree and communiqué on low interest rate loans, Ziraat customers operating in agricultural sector continue to obtain credits at subsidized rates which are defined on the basis of production areas.

In 2018, over 345,000 producers and companies received TL 27.5 billion of subsidized loans (at discounted interest rates) with annual interest rates ranging from 0% to 8.25%.

Financial model contribution for agricultural sector-producer cooperation

Within the framework of contracts entered into with 21 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 5,534 contract producers stood at TL 74.2 million by the end of 2018.

Crop production credits

In 2018, Ziraat Bank extended a total of TL 12.5 billion in loans to over 210,000 customers for vegetable production. As a result of these extensions under various topics, the balance of loans dispersed for crop production as of year-end had reached TL 17.4 billion and the number of customers with such credit had reached 280,000.

Under crop production topic, Ziraat Bank extended greenhouse credits to approximately 9,000 customers at a total amount of TL 1 billion in 2018. For the last 14 years, total credits extended to more than 105,000 customers for financing of greenhouse construction, modernization and production activities reached TL 6 billion.

Livestock loans

In 2018, Ziraat Bank extended a total of TL 14.9 billion in loans to more than 175,000 customers under various titles of animal production. As of the end of 2018, the balance of loans dispersed for animal husbandry had reached TL 22.6 billion and the number of customers with such credit had reached 254,000.

Aquaculture credits

During the same period, Ziraat Bank extended a total of TL 360.6 million in loans to more than 2,000 customers under various titles of aquaculture. As of the end of 2018, the balance of loans dispersed in this area had reached TL 480.8 million and the number of customers with such credits had reached approximately 3,000.

Agricultural mechanization loans

In order to increase the level of mechanization of agricultural enterprises, efficiency of production and profitability, Ziraat Bank offers loans for tractors and agricultural mechanization. In 2018, TL 2.46 billion in loans to finance the purchase of tractors was provided to 37,000 customers and TL 519.2 million in agricultural mechanization financing loans was extended to 20,000 customers. As of the year-end, a total of TL 8.47 billion of tractor loans had been extended to 210,000 customers and TL 1 billion had been extended to approximately 50,000 customers for mechanization loans.

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 (including 10 years). The amount of Renewed Tractor Loans which had maturities of up to 96 months reached TL 11.3 million in 2018.

In 2018, more than 11,000 customers benefited from Small Equipment Credit which is provided for the purchase of small farming tools and equipment needed by agricultural enterprises belonging to real persons or legal entities, to enable them to sustain their operations efficiently and profitably. The total amount of loans, which has a maximum limit of TL 25,000, reached TL 196.6 million.

Young Farmers Academy

Ziraat Bank Young Farmers Academy education program was launched to increase young population’s interest in farming, to teach specific topics in agricultural production and investment to those who carry the application qualifications, to raise conscious young farmers and create an awareness of agricultural entrepreneurship.

The program started with dairy farming training in Ankara on 22 October 2018 and 5 classes were opened in 2018 in Ankara, Bursa, Şanlıurfa and Adana. As of 2018 year end, there are 81 participants in the program and it is planned to be expanded throughout the country with different production topics in 2019.

Under retail banking, Ziraat Bank offered numerous products to its customers in 2018, realize cooperation with various organizations and introduced banking applications that ease its customers’ lives.

Retail Banking

Focusing on customer satisfaction as a significant component of its recent restructuring activities, Ziraat Bank is the bank of a large population of individuals from students to retirees and from housewives to farmers.

Ziraat Bank delivers services for individuals through wide distribution channels covering branches all over the country, ATMs, internet and mobile banking applications, and call centers.

TL 47.8 billionThe Bank’s total housing loan portfolio remained at TL 47.8 billion with the disbursement of TL 12.9 billion.

Credit products that touch individual customers’ lives

Continuing to increase the number of customers and credit volume in 2018, Ziraat Bank added innovative products to its product range which ease its customers’ lives, developed its existing products and expanded its credit portfolio.

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.

TL 32.1 billionConsumer loan balance amounted to TL 32.1 billion, by disbursing TL 20.9 billion

Main activities in retail credits and results taken in 2018 are summarized below:

• The Bank’s total housing loan portfolio remained at TL 47.8 billion with the disbursement of TL 12.9 billion.
• Consumer loan balance amounted to TL 32.1 billion, by disbursing TL 20.9 billion and vehicle loan balance reached TL 184 million with the disbursement of TL 129.3 million.
• Within the context of the protocol signed with Social Security Institution (SGK), between 1 March 2018 and 31 August 2018, loans were extended to 43,000 individuals with a total amount of TL 1.2 billion within the scope of Bağ-Kur Premium Debt Loan product, which was put into practice for those who had accumulated premium debt and which enables them to qualify for the old-age pension by paying their premium debts.
• Construction Amnesty Credit product was introduced as of 3 August 2018 for Retail, Entrepreneurial and Corporate segment customers who want to benefit from Construction Amnesty. Within the scope of this product, credits were extended to over 20,000 retail customers with the disbursement of TL 315.3 million.
• Campaigns were launched for those who purchased houses from projects realized until 2016/2017 year-end by the Housing Development Administration of Turkey (TOKİ) via Ziraat Bank and have outstanding payments but would like to close their accounts by making advance payments. Within the scope of 20% Discounted Closing Campaign conducted between 24 April 2018 and 18 May 2018 and 24 % Discounted Closing Campaign conducted between 21 September 2018 and 19 October 2018, credits were extended to 2,500 customers who made lump sum payments at a total amount of TL 180 million.
• Paid Military Service Credit product was introduced for real person customers who would like to benefit from the Paid Military application and credits were extended to more than 5,000 individuals at a total amount of TL 68.8 million between 23 October 2018 - 2 November 2018.
• 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 retail segment. As of 2018 year end, TL 60 million credits were extended to 22,300 individuals within the scope of Dowry Account while Housing Account reached 22,500 individuals at an amount of TL 70 million.
• Within the framework of the protocol signed with the Social Security Institution (SGK), 4.6 million pension customers had been paid a total of TL 1.74 billion in promotions as of the end of 2018.

Activities for Digital Credit which was being conducted within the scope of the Bank’s Digital Transformation were completed.

Other customer-focused activities conducted in Retail Banking segment

“Firm Subsidized 2019” application has been launched as of 17 December 2018, which offers housing credits with a firm subsidized pricing model for customers who would like to purchase new houses that are sold as complete or under construction by companies which have and active credit account with Ziraat Bank.

The objective of this application is to allow customers to make use of a monthly interest of 0.98% for housing credit and to facilitate the housing firms’ repayment of their loans to the Bank by increasing their sales and continuity of their cash flows.

Within the scope of efficient energy usage which is vital not only for the world but for Turkey as well, 3 new products were introduced under the Energy Efficiency and Renewable Energy Development, Support and Application Action Plan:

• Energy Efficiency Management Credit
• Individual Energy Efficiency Credit
• Green House Housing Credit

Activities for Digital Credit which was being conducted within the scope of the Bank’s Digital Transformation were completed. These activities aimed to allow extending this credit through internet banking and mobile banking application.

For customers who have Overdraft Deposit Accounts (KMH), limit increase offers were presented through digital channels after central evaluations by KKB and the Bank. KMH limits of approximately 305,000 customers were increased after receiving their approvals.

Breakdown of retail segments of the Bank was revised on the basis of the Bank’s targets such as the significance of fund sourcing, sustainability of being the most preferred bank of the customers in asset management, prioritizing customers with high asset value in portfolio management and providing privileged services.

Within the activities of Lifetime Banking, in addition to existing segment calculations, Generation Segment calculations have started to offer products, services, proposals and opportunities to the correct customer group with a proper marketing/sales strategy through the appropriate channel and to increase customer satisfaction to the highest level by reinforcing the strong connection between the Bank and the customer.

912 thousand participantsWithin the framework of the Auto Enrollment System the number of active participants has reached 912,000 wıth total funds of TL 1.1 bıllıon.

Comprehensive insurance activities

Within the scope of the “Law Amending the Private Pension Savings and Investment System Law” numbered 6740 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 (SGK), in line with the calendar announced by the Undersecretariat of Treasury, are being included in the Individual Pension Auto Enrollment System.

As the Auto Enrollment System is a long-term saving tool, the employers and hence, their employees that Ziraat Bank will bring in to 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, contracts were signed between Ziraat Bank and a total of 23,744 local administrations, SEEs and private companies in the last three months of 2018 and the number of active participants has reached 912,000. The Bank has reached a total of TL 1.1 billion in the system and has become the industry leader with a market share of 18%.

In line with Ziraat Finance Group’s joint operation strategy and within the scope of centralization of operational transactions; control and approval of Individual Pension Plan applications (Yakut (Ruby), Güldüren Yarınlar (Amusing Future), Çiftçime BES (Individual Pension Plan for my Farmer), etc) which were being sold through branches’ Finart screens started to be performed by the Operation Center.

System infrastructure activities were completed which enable the payment of expense share by Ziraat Sigorta ve Emeklilik and commission by the Bank in case of the withdrawal of a customer with a long-term credit life insurance policy.

“EDS- Pensioner Support Insurance” product for customers between 55-75 years of age, who receive their pension payments via Ziraat Bank, was launched in February 2018 through the branches.

Risks insured under “My Workplace Under Ziraat Guarantee” product has been offered to Ziraat Bank member merchant customers with a 30% Premium discount with the title “Member Workplace Under Ziraat Guarantee”.

A new product “Alternative Automobile Insurance (Extended- Exempt)” was introduced as an alternative to existing Advanced Automobile Insurance product in Ziraat Bank’s insurance product portfolio. This product offers a lower cost option to customers and in case of circumstances requiring a spare part change it encourages the use of a generic part to promote domestic auto part production. Within the scope of these activities, the name of “Private Automobile Extended Insurance” product has been changed as “My Auto is Under Ziraat Guarantee” to reflect the power of guarantee and satisfaction level at the time of damage with Ziraat brand.

Risks insured under “My Workplace Under Ziraat Guarantee” product has been offered to Ziraat Bank member merchant customers with a 30% Premium discount with the title “Member Workplace Under Ziraat Guarantee”.

With the launch of Bankkart, number of credit cards, income from credit cards and its prevalence has improved rapidly.

“Electronic Appliance Guarantee” has been added to “Property Insurance” product which is one of the strategic insurance products of the Bank that stands out in non-interest income, based on number of production and has a high sales capability with its unique pricing and coverage. Additionally, “Traffic Insurance-Extra Protection Package” which can be sold with Traffic Insurance has been added to the policies.

5.9 millionAs of the end of 2018, the number of Ziraat Bank credit cards was 5.9 million, with the Bank commanding a 9% market share in terms of the number of credit cards

Budget-friendly and saving Bankkart

Taking sectoral trends and Bank’s dynamics into consideration, Ziraat Bank started a comprehensive payment systems development project at the end of 2016.

The objectives of the project were defined as delivering card products with advanced technological infrastructure to a wide population, offering new product features and services which provide advantages to customers and conducting activities to make customer oriented process and infrastructure revisions at digital channels. Within the scope of this project, the bank’s new card brand, Bankkart was launched in the first quarter of 2018.

With the launch of Bankkart, number of credit cards, income from credit cards and its prevalence has improved rapidly. As of the end of 2018, the number of Ziraat Bank credit cards was 5.9 million, with the Bank commanding a 9% market share in terms of the number of credit cards and a 4.7% market share in terms of turnover. Number of bank cards was 32.3 million and the Bank has kept its industry leader position with a trade turnover market share of 21%. It is being anticipated that this improvement will continue in the medium and long term.

55-75 years“EDS- Pensioner Support Insurance” product for customers between 55-75 years of age, who receive their pension payments via Ziraat Bank, was LAUNCHED in February 2018 through the branches.

Bankkart which combines a bank card and a credit card in one plastic is a first in Turkey and it is equipped with saving and budget-friendly features. Bankkart is anticipated to meet customer expectations and to contribute to our country’s cashless society strategy.

At the fourth quarter of 2018, Ziraat Bank had 308,000 member merchants and 341,000 terminals. At the last quarter of the year, member merchant turnover has been TL 16.4 billion and turnover market share of the merchant members of the Bank has been 7.8% in December.

Operations Center

In 2018, 185 million transactions of Ziraat Bank have been handled by the Operations Center and the centralization rate has been realized as 99%.

The activities carried out in 2018 under the scope of ensuring operational efficiency and standardization, and reducing the workload of branches and the units of Ziraat Finance Group are presented below in chronological order:

99%In 2018, 185,000 transactions of Ziraat Bank have been handled by the Operations Center and the centralization rate has been realized as 99%.

• “Operations Center Everywhere Project” was completed in the first quarter of 2018 which ensures more efficiency of branch employees, establishment of full time employment (FTE) infrastructure and more efficient closed location branches by opening up Operations Center pools to specific branches. At each performance period, branches meeting specific criteria are included in the scope of the project and 150 branches were included for the first quarter of 2019.
• In order to process deed collections in a short period of time, Operations Center started to process transactions instantly with “Deed Quick Collection”.
• 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. A new transaction type “Credit Card Collection-Our Bank” has been added to Work Order Entry screen to transfer these transactions to the Center through Finart business flow.
• An application development requisition was processed to establish ZFG In-group Money Transfer Infrastructure (ODAK HUB Closed Circuit Transfer System) and studies on the system have started.
• Protesting of notes with collection branches in provinces of Metropolitan Municipality has been enabled to be done electronically through the Center (without the need to take them to notary) and all Ankara branches were included in the scope of this application.
• Ziraat Yatırım account openings which were realized intensely during the public offering of Aselsan were performed through the Operations Center.
• Control and approval transactions of application forms for Invividual Pension Plans which are sold by branches through Finart screen have started to be performed by the Operations Center.
• Ziraat Bank started to intermediate in the collections within the scope of e-collection project, such as Construction Amnesty collections, which are conducted by General Directorate of Accounting and the Bank. Since 90% of collections are realized in cash, this project generates an opportunity to gain customers and products and it allows for a significant amount of cash flow to the Bank.
• Collections for the General Directorate of Accounting were started to be performed through the new Mobile Banking application.
• Within the efforts of carrying free amounted lien transfer transactions to Operations Center, transfer transactions were enabled to be performed for notifications submitted to the Headquarters in lien transfer work type.
• “Registered Gold Transfer System” project which has been carried out by Takasbank was launched to allow customers to transfer current gold deposits at other banks to the Bank and from the Bank to other banks via a system similar to EFT.
• Applications under the Operations Center are being awarded for the last two years in a row by institutions which reward successful projects and practices at an international scale. This year, Ziraat Bank received the Gold Award at “Best Product or Service of the Year-Business Information Solution” category with “Operation Center Everywhere” project.
• Within the activities of performing transactions with robotic integration which are conducted at the Center in standard format, improvements have been completed for robotic processes and robotic integration of tax and SGK transactions was enabled as of November 2018.
• Acquisition process was completed for the application which will allow customers to send direct transaction orders to the Operation Center through internet and mobile banking and integration activities started.
• Simplification activities for screens which are defined in user groups of the Bank but have not been used for the last year have been conducted. Additionally, screens with screen names have been identified and shared with the related business units for appropriate action.
• e-notification system activities have been completed for notifications from government agencies.

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

Credit and Foreign Trade Operations

Ziraat Bank aims to ensure that the operational process of credit 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;

Cash managementZiraat bank continued its customer-oriented, effective and efficient cash management practices at full speed.

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 studies have been completed for establishing mortgage in electronic format in Bank’s favor to guarantee specific products in corporate credits such as land purchase, business acquisition and etc. where the owner of the property changes and the new owner is required to establish a mortgage in Bank’s favor or to guarantee the individual housing loans. Activities continue for the pilot implementation and expansion to all branches.

• Systematic development studies aimed at centralizing corporate loan disbursements had been completed and the operations related to authorized cash credit disbursements approved on the basis of authorization levels and foreign currency cash loans are carried out within the Credit Operations department.
• According to the protocol signed between Ziraat Bank and the Housing Development Administration of Turkey (TOKİ) on 17 May 2002, the Bank continues to conduct intermediation services for application, sales and after sales transactions for real estate under the ownership of TOKİ.
• In accordance with Law No. 7269 and 1051 for Measures to be Taken for Disasters Affecting Communal Life and Reliefs and other laws with articles related to natural disasters, victims of those disasters are identified by the Republic of Turkey Ministry of Internal Affairs Disaster and Emergency Management Authority (AFAD) and loans to disaster victims and collection of these loans are being performed based on the protocol signed between the Bank and AFAD on 17 December 2012. The Bank started to intermediate in AFAD Immediate Housing Credit product of the related authority.

Effective and efficient cash management products

Ziraat Bank aims to provide banking products and services which can compete in its sector and meet customer needs and offers opportunities for no-cost funding and cross sales. In 2018, the Bank continued its customer-oriented, effective and efficient cash management practices at full speed.

Number of parent companies with which Ziraat Bank entered into agreement in the Direct Debiting System (DBS) reached 474. In addition, the number of distributors included in the system increased by 161% and the volume of collection increased by 89% YoY.

Number of parent companies with which Ziraat Bank entered into agreement in the Direct Debiting System (DBS) reached 474. In addition, the number of distributors included in the system increased by 161% and the volume of collection increased by 89% YoY.

Number of contracted organizations which Ziraat Bank intermediate in invoice and other payments reached 635 and payments are facilitated through ATMs, Internet Banking, Mobile Banking and Automatic Payment channels in addition to branches.

With the Corporate Collection System which includes contracted institutions the Bank realized 180 million collections at a total amount of TL 233 billion in 2018. The Bank has 10 million automatic payment orders as of 2018.

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.

In 2018, within the scope of collection of Paid Military payments, 60% of all payments were realized through Ziraat Bank. In addition to that, 63% of the Construction Amnesty payments, which were extended to 2019, have been realized through Ziraat Bank in 2018.

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 were continued to be sold through Ziraat branches. In 2018, 75,000 packages were sold at an amount of TL 8.5 million.

Digital Banking

Ziraat Bank continues to invest in modern infrastructural systems to use technology intensely in its business processes.

Ziraat Bank conducts activities to integrate alternative distribution channels into product and service delivery processes at an increasing pace. As of 2018 year end, number of digital customers reached 10.5 million.

In 2018, within the scope of Brand Card Project, Bankkart Mobile and member merchant platform applications and www.bankkart.com.tr and www.bankkartpos.com.tr web sites were launched.

Within the frame of Digital Channels New Front End Project, corporate web site www.ziraatbank.com.tr, the mobile application and internet branch were launched providing easy, straight forward and user-friendly front ends and transaction flows.

As the bank with the highest number of ATMs in the industry, Ziraat Bank’s number of ATMs reached 7,155 as of 2018 year end. Additionally, 11 pilot ATMs were launched by the end of the year within the scope of the “New ATM Software” project which still continues.

“Free of Charge Joint ATM Usage” system was launched based on the protocol signed by Ziraat Bank, Halkbank, Vakıfbank, Ziraat Participation and Vakıf Participation banks on 4 April 2018. Accordingly, in addition to Cash Withdrawal, Balance Inquiry and Password transactions, Cash Deposit, Credit Card Payment, Credit Card Balance and Limit Inquiry can be performed at 15,000 ATMs of these banks within the transaction limits at no charge.

Maintaining an extensive branch network and strong deposit base, Ziraat Bank kept its goal of increasing deposits in retail segment and strengthening its core deposit and funding structure.

39% increaseIn 2018 the gold deposit size of the Bank increased by 39% YoY.

Treasury Management and International Banking

Ziraat Bank continues to be a significant and effective player of international and national money, currency and capital markets.

Financial solutions for the new market conditions

2018 has been a hectic and volatile year for national and international markets when the agenda was busy with economic and political issues. In Treasury Management and International Banking areas, Ziraat Bank proactively and rapidly revised its asset and liability management strategy parallel with the changing market conditions and managed its balance sheet to minimize liquidity, interest and currency risks. Providing financial solutions to its customers in line with the new conditions, the Bank increased its foreign currency transaction volume by 9% thanks to its business model carried out by its widespread branch network and effective customer relationship management. The Bank also provided financial solutions to its customers through derivative instruments to hedge currency and interest risks.

With the support of its wide correspondence network Ziraat Bank made use of non-deposit funding in all areas in addition to deposits. In terms of international loan and finance transactions, funding through issuance of bonds and bills continued to contribute to diversification of the Bank’s funding sources. Ziraat Bank keeps its position as a significant and effective actor at international and national money, currency and capital markets.

Stronger funding structure in deposits

Maintaining an extensive branch network and strong deposit base, Ziraat Bank kept its goal of increasing deposits in retail segment and strengthening its core deposit and funding structure. In addition to that, with the support of withholding tax regulations enacted between August and November to encourage the lengthening of deposit terms, average maturities have been extended and funding structure has been reinforced.

The only bank to intermediate in the issuance of Gold Bonds and Gold-Based Lease Certificates of the Ministry of Treasury and Finance

In addition to Turkish Lira and foreign currency deposits, gold deposits continued to increase and gold deposit size of the Bank increased by 39% YoY. As part of its customers’ gold trading activities, Ziraat Bank managed a volume of approximately 137 tons of gold in 2018 and provided a continuous service to its customers through all channels. Additionally, approximately 1.5 tons of scrap gold was collected from customers through the “golden time” campaigns and brought into the economy. Accordingly, the Bank’s share in the gold deposit sector increased from 17% to 19.5%.

Ziraat Bank continued to be the only bank to intermediate in the issuance of “Gold Bonds” and “Gold-Based Lease Certificates” which were issued for the first time in 2017 by the Ministry of Treasury and Finance to bring gold kept “under the mattresses” into the economy . At each book building period, applications were collected in branches throughout 81 provinces and the Bank intermediated in collecting scrap gold from 27,000 customers to be brought into the system. With the issuance of this investment tool, which allows customers who hold 22 and 24 karat gold to earn returns on their gold savings, physical gold which were outside the banking system has been brought into the economy.

As a pioneer in putting “Gold Bonds” and “Gold-Based Lease Certificates” into practice, Ziraat Bank will continue intermediation operations in 2019 along with other intermediary banks who participated in this process.

Foreign currency bond issuance to real persons and legal entities

In 2018, Ministry of Treasury and Finance started to issue bonds in foreign currency to real persons and legal entities, primarily focusing on individual investors. Applications were collected only through Ziraat Bank for bond and lease certificate issuances in EUR which targeted primarily investors residing abroad during 5 weeks in September and November. In December, with the intermediation of 10 banks, including Ziraat Bank, EUR and USD government bonds were issued. The Bank continues to collect applications from customers in the ongoing issuance processes.

Active role as a market maker in Government Debt Securities

In 2018, Ziraat Bank successfully maintained its position as a market maker in the government debt securities market defined by the Ministry of Treasury and Finance and played an active role in secondary markets.

The Bank continued to follow its main asset management strategy in its balance sheet and accordingly, achieved to increase the share of loans in the balance sheet and maintain the share of securities. In this context, share of securities in total assets has been 17% at the end of 2018 compared to 16% share in 2017.

Covered Bondin 2018, the first Covered Bond issuance was realized in domestic markets using the cash flows from the mortgage loans in the Bank’s portfolio as guarantee.

Covered Bond (İTMK) issuance

Another main strategy of Ziraat Bank is strengthening and diversifying the funding structure through various capital market tools. Accordingly, in 2018, the first Covered Bond issuance was realized in domestic markets using the cash flows from the mortgage loans in the Bank’s portfolio as collateral.

Asset Financing Fund, which was established by Development and Investment Bank of Turkey with the objective of issuing Asset Backed Securities, purchased the securities issued by the Bank with a 5-year maturity at an amount of TL 1 billion. Development and Investment Bank of Turkey Asset Financing Fund purchased the covered bonds of the Bank along with the bonds of other banks who issued at the same time. The Fund used them as the underlying asset to issue Asset Backed Securities at an amount of TL 3.15 billion and completed the sale of these securities to domestic corporate investors. With the issuance of the covered bonds, Ziraat Bank obtained 5-year maturity, fixed interest Turkish Lira funding.

As in previous years, Ziraat Bank continued to issue bonds and bills in 2018 to qualified investors in the domestic market in order to create funding source diversity and expand its customer base.

Security issuances for development of the capital markets

Ziraat Bank completed the implementation of Covered Bond Program which allows for providing funding from foreign markets through issuance of securities using the cash flows from the mortgage loans as a collateral. In the coming periods, development of capital markets through issuance of similar securities in domestic and foreign markets will continue to be the Bank’s strategy.

As in previous years, Ziraat Bank continued to issue bonds and bills in 2018 to qualified investors in the domestic market in order to create funding source diversity and expand its customer base. The Bank issued TL 10.2 billion of bonds in the domestic market against TL 12.6 billion of redemptions under the issuance ceiling of TL 19 billion.

Ziraat Bank’s Global Medium Term Notes (GMTN) program at an amount of USD 4 billion, which has been implemented under the scope of diversifying bank resources and providing cost-effective and long-term funding through issuances in international capital markets, was renewed in March. Within the scope of the GMTN program, external funding through private placements has continued in 2018.

USD 130 millionWithin the context of agreements with the World Bank and the European Investment Bank, more than USD 130 million was made available to SMEs and larger-scale customers during 2018.

Close relations with investors

In 2018, Ziraat Bank attended a total of 6 conferences that were held in Europe and Asia 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 Throughout the year, 150 meetings have been held with international counterparties at the Bank and conferences abroad.

Effective and efficient management of foreign finance

Ziraat Bank obtains a significant amount of external financing from international financial institutions within the framework of its wide customer base and extensive branch network and manages the funding provided by international financial institutions in its balance sheet in an effective and efficient manner. Within the context of agreements with the World Bank and the European Investment Bank, more than USD 130 million was made available to SMEs and larger-scale customers during 2018. These sources were used to help promote the growth of customers, by increasing their production, productivity and employment, helping reduce regional development differences..

SyndicationZiraat Bank’s syndication loan was renewed with a rate of 130%. The loan was provided with the participation of 44 banks from 22 countries and the total amount is USD 1.4 billion.

Borrowing though syndication for the sixth time

Ziraat Bank’s syndication loan, which was provided in US dollar and Euro denominations in April 2017, was redeemed and the loan was renewed on 4 April 2018 with a renewal rate of 130%. The loan was provided with the participation of 44 banks from 22 countries and the total amount is USD 1.4 billion that are composed of USD and EUR tranches with the maturities of 367 days and 731 days.

This transaction, which was aimed at diversifying Ziraat Bank’s strong funding structure, has been the sixth 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 numerous financial products and services.

Bilateral loan agreement with China Development Bank

In accordance with its non-deposit source diversification strategy, Ziraat Bank continued to provide funding from international organizations through bilateral loans in 2018. In this context, a three-year term loan package at an amount of USD 600 million was provided as a result of negotiations with China Development Bank. The second tranche of this loan at an amount of USD 400 million was used in February 2018.

With the objective of diversifying funding sources and creating long term alternative sources, Ziraat Bank conducts implementation activities for DPR (Diversified Payment Rights) which is a securitization program. The aim of the program is to obtain medium and long term funding based on future flow foreign currency receivables of the Bank as collateral.

Developing and consolidating correspondent bank network

Ziraat Bank’s extensive network of correspondent banks, established with in excess of 1,800 banks in more than 140 countries, is constantly diversifying and expanding in line with customer demands, the conjuncture and trends in the world economy. Thanks to its evolving and strengthening correspondent network, Ziraat Bank provides its customers with foreign trade opportunities in many parts of the world and cares about developing its relationships with domestic correspondent banks as well as foreign banks and increasing the volume of transactions.

Ziraat Bank stood as one of the leading banks in this area at the end of 2018. The basis of the Bank’s customers’ preference of Ziraat Bank for foreign trade and constantly raising its share in this area is its strong and sustainable cooperation with correspondent banks, quality of service and high product range.

As the number of customers who perform foreign trade transactions increases constantly, Ziraat Bank offers wide range of products such as discounted letter of credit and avalised/discounted bill of exchange/ promissory notes to meet the foreign trade financing needs of its customers and works closely with export credit agencies such as Hermes, Coface, Serv and Sace to provide 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 it continued to demonstrate the ability to obtain funds from correspondent banks at affordable costs and conditions. Within the scope of renewed agreements with the Export Import Bank of Korea (KEXIM) and The Export-Import Bank of the Republic of China (Taiwan Exim), the Bank provided medium and long term and low-cost financing opportunities for working capital and investment financing needs of customers that are connected with China, Taiwan and South Korea. The Bank seeks to sustain and build on this success in the coming years with new ways of financing that it will diversify.

International Branch Banking

Ziraat Bank conducts its International Branch Banking operations in the countries in which it operates with the following main objectives, in line with its international banking strategy and vision:

• 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 play a strong role and secure a high share in the financing of foreign trade between Turkey and other countries where it operates,
• To ensure sustainable profitability of branches with healthy and efficient balance sheet structure,
• To create effective synergies within the framework of the “Ziraat Finance Group” approach.

Thanks to its strong correspondent network, Ziraat Bank provides easy access to alternative sources of funding and it continued to demonstrate the ability to obtain funds from correspondent banks at affordable costs and conditions in 2018.

Far EastZiraat Bank k provided medium and long term and low-cost financing opportunities for working capital and investment financing needs of customers that are connected with China, Taiwan and South Korea.

 

“Ziraat always stands with you, wherever you are in the world.”

In line with the motto 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 2018 in this context are summarized below:

In line with the motto 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.

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 contact point for access to international financial markets.

In Greece, services are provided through three branches in Athens, Komotini (Gümülcine) and Xhanti (İskeçe). Ziraat Bank focuses on services such as corporate banking and foreign trade financing in Greece and plays an active role in developing the trade between two countries.

In Bulgaria, four branches are operating in corporate and retail segments 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.

In Kosovo, the Pristina Branch was opened on 8 June 2015. Serving the corporate and retail customer base in the country with its extensive product range, the Bank further expanded its service network with new branches opened in Prizren and Peja in 2018.

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.

BahrainZiraat Bank’s second address in the Gulf region, the Bahrain Branch plays an active role in accessing international financial markets.

In Iraq, the Bank supports the development of economic and trading activities between two countries with two branches in Baghdad and Erbil.

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 retail customers operating in the country, primarily the collateral letter needs of Turkish contractors, and intermediating in and developing Turkish-Saudi foreign trade.

Ziraat Bank’s second address in the Gulf region, the Bahrain Branch plays an active role in accessing international financial markets.