Dear stakeholders,

THE GLOBAL RATE OF INFLATION EXCEEDED 5% IN 2021 DUE TO THE ABUNDANCE OF LIQUIDITY AS A RESULT OF FINANCIAL INCENTIVES, SUPPLY SHORTAGES AND SHOCKS BROUGHT ABOUT BY INTERRUPTIONS TO SUPPLY CHAINS.

THE GLOBAL ECONOMY AND THE NEW NORMAL

The Covid-19 pandemic and its effects have completely dominated the agenda in the last couple of years, with masks, social distancing and hygiene becoming the codes of our lives. It has been a time where the spotlight has been on testing, vaccines, new variants, restrictions on travel and social life. On the other hand, we have had to adapt to new ways of life and working, such as shopping online, working from home and online meetings.

The conditions presented by the new normal have also deeply impacted the global economy. Governments have implemented grant and loan programs of a scale unprecedented in recent history to support the macroeconomic cycle and the households in order to overcome the harm brought about by the pandemic.

Although the measures taken provided some relaxation in the short term, they could not prevent the bottlenecks in supply chains and in logistic networks, the rise in energy prices or the imbalances between supply and demand. The global rate of inflation exceeded 5% in 2021 due to the abundance of liquidity as a result of financial incentives, supply shortages and shocks brought about by interruptions to supply chains.

Inflation reached a 39-year high in the USA and a 24-year high in the Eurozone. Similar records were set elsewhere in the world. Inflation exceeded the targets set in developed economies after many years of low inflation. The rise in inflation may prompt steps to be taken towards tighter stance monetary policy.

ALTHOUGH THE MEASURES TAKEN PROVIDED SOME RELAXATION IN THE SHORT TERM, THEY COULD NOT PREVENT THE BOTTLENECKS IN SUPPLY CHAINS AND IN LOGISTIC NETWORKS, THE RISE IN ENERGY PRICES OR THE IMBALANCES BETWEEN SUPPLY AND DEMAND.

A STRONG RECOVERY IN THE TURKISH ECONOMY
Policies aimed at keeping the effects of the pandemic on the economic cycle limited and supporting economic growth and employment were implemented decisively in Turkey, an approach which allowed Turkey to be one of a select few countries to have posted growth in 2020 and to go on to record a growth rate of over 10% in 2021. Exports provided the biggest contribution to growth in 2021 while also keeping the current account balance at a benign level.

The Turkish Economy Model implemented in Turkey in 2021 was aimed at preparing our country’s production structure and workforce for new global trends while contributing to long-term sustainable development. This process envisages a transparent and mutual communication-based approach, which covers all the contributors of the economy, will be displayed. Thus, the Turkish economy will reach its growth targets.

As a country which has integrated into the global economy, and which is highly resilient in the face of external shocks, Turkey is taking important steps towards becoming a regional production hub in the coming period. Our country is located on a strategic crossroads between the Eastern and Western economies, on a conjunction of global logistic networks. Turkey will take its place among the important players in the global markets in the new normal.

The banking sector maintained its trend of healthy growth in 2021, as well.

OUR SECTOR DEMONSTRATES ITS POWER ONCE AGAIN
The banking sector maintained its trend of healthy growth in 2021, providing the resources and financial services that public and private sector players needed to achieve uninterrupted sustainable growth. In this period, we observed the improvement in interest margins reflected positively to the profitability of the banking sector. Digital banking remained the number one development area for all participants in the sector.

Digital channels will be one of the building blocks and key growth areas of banking in future.

A CRITICAL THRESHOLD REACHED IN THE SUSTAINABILITY JOURNEY
According to scientists, the increasing incidence of hurricanes, drought and forest fires is associated with global warming and climate change. These events were observed all over the world in 2021, with natural disasters causing large scale damage. Similar disasters also occurred in our country, resulting in loss of life and property. Even while we were still reeling from the floods which ravaged our Western Black Sea region, a wave of fires laid waste to our forests. These forests are located on our Mediterranean coastline and are home to an extraordinarily diverse ecosystem. Another issue which threatens our country is drought.

Evaluating the situation within this context, one positive development during the year for our country was the ratification of the Paris Climate Agreement by the Turkish Grand National Assembly in October 2021.

The agreement has become binding in our country, marking an important threshold in the transition to a low carbon economy.

Climate change is closely related to the future of humanity. It is our belief that under the leadership of our government, the participants of the public and private sector will contribute to finding a solution to this global problem and will also carry Turkey’s name to the position it deserves in the league of combating the climate crisis.

Although we all have a long and difficult journey ahead of us with many hurdles yet to overcome, we can take solace from knowing we possess the necessary knowledge, competence, skills and technology to reach a solution. Where global and collective intentions to take action gain strength, we may have the chance to prevent the negative consequences of the climate crisis.

Global warming and climate change are closely related to our sector. Tackling global warming and climate change closely concerns our products, our decision-making approaches and our business practices, including project and development financing. Our banks will have important duties and responsibilities in our country’s transition to a low carbon economy and, subsequently, the transition to net zero.

Remaining tightly committed to an ethical, rightful and responsible banking approach, Ziraat Bank continues to enhance the value proposition it offers its stakeholders.

COMPLETING ITS 158TH YEAR, ZIRAAT BANK IS VERY MUCH FOCUSED ON THE FUTURE.
Celebrating its 158th year of operation in 2021, our Bank resolutely maintains its support in mobilizing the development of our country by using all its capital elements at the right scale.

Remaining tightly committed to an ethical, rightful and responsible banking approach, Ziraat Bank continues to enhance the value proposition it offers its stakeholders.

With our identity as the bank with the most extensive physical access in Turkey, we deliver our wide range of products, services and solutions range to tens of millions of customers with an approach that will ensure financial inclusion. By focusing on our people, our companies and their urgent needs during the pandemic, we delivered them with the financial support set out by our government.
As one of the primary stakeholders in the economy, we protected our customers during the challenging and volatile market conditions of the 2020-2021 period, through the effective use of all kinds of financial instruments. Our digital channels form a substantial part of our product and service delivery. Thus, our digital channels have allowed us to reach a much wider audience with remote access during the pandemic, while also allowing us to offer financial inclusion.

As our country’s largest bank and financial services group, we have initiatives to contribute to a sustainable future and transition to a low carbon economy in the short, medium and long term. We are focusing on providing sustainable financial solutions which will set an example for good banking practices. We are also determined to unwaveringly maintain our efforts to perfect the products and services which we offer to our commercial banking customers from all four corners of the country.

Our goal is to continue to produce in cooperation with all our stakeholders in building a future where our people are happy and prosperous, and where our natural environment and water are clean. Having set out on this journey 158 years ago, our big family which consists of the members of Ziraat Bank has the greatest faith that we will overcome the difficulties with determination and hard work and is always eager to achieve ever greater success.

I would like to thank our management team and human resources for their strong performance in 2021 personally and on behalf of our Board of Directors.

Burhaneddin TANYERİ
Chairman of the Board of Directors