DURING THE YEAR, THE GLOBAL ECONOMIC OUTLOOK CAME UNDER STRAIN FROM CHALLENGES SUCH AS RISING INFLATION, TIGHTENING FINANCIAL CONDITIONS, THE CONTINUING WAR BETWEEN RUSSIA AND UKRAINE AND A RESURGENCE IN COVID-19 CASES IN CHINA.
Burhaneddin TANYERİ
Chairman of the Board
Dear stakeholders,
While we were preparing our report for publication, tragedy struck in the form of the earthquakes which occurred in the Kahramanmaraş region on 6 February 2023, deeply upsetting the agricultural community as well as our entire nation. I would like to take this opportunity to wish God’s mercy on the souls of our colleagues and citizens who lost their lives in the disaster, and to extend my condolences to their relatives and our country, and wish a speedy recovery to those who were injured.
Global economy struggles with headwinds on various fronts in 2022.
The challenges included rising inflation in many countries, tightening financial conditions, the ongoing war between Russia and Ukraine and the resurgence in Covid-19 cases in China, which continued to weigh on the global economic outlook throughout the year. As pandemic-related financial support was wound down, inflation reached its highest levels for decades, leading to a tightening in monetary policies at a global level and a decline in the households’ purchasing power. As a result, global economic activity slowed at a much steeper pace than expected.
As the Russia-Ukraine war drags on, there have been disruptions to regional supply chains while rising energy prices have piled upward pressure on input costs. Although the negative effects of the pandemic have eased in most countries, economic activity has continued to deteriorate, especially in China.
Taking these developments into account, the IMF revised its forecasts for the global economy in its update of the Global Economic Outlook Report published in January 2023. The report estimated a 3.4% rate of global growth for 2022, while projecting growth of 2.9% for 2023 and 3.1% for 2024.
The IMF estimated a 3.4% rate of global growth for 2022, while projecting growth of 2.9% for 2023 and 3.1% for 2024 in its update of the Global Economic Outlook Report published in January 2023.
The US Federal Reserve (Fed) increased the policy rate by 50 basis points to a range of 4.25%-4.50% at its December 2022 meeting. Supported by the limited improvement in inflation, the Fed was able to slow down the pace of rate hikes. Nevertheless, the Fed is expected to maintain the process of rate hikes in 2023.
Central banks in the Euro Zone and the UK also raised their policy rates by 50 basis in December. The European Central Bank (ECB) increased the policy rate from 0% in June to 2.5% at the end of the year while the Bank of England (BoE) raised its policy rate from 0.25% at the beginning of 2022 to 3.5% by the end of the year.
A number of international organizations now expect the current environment of uncertainty to continue to affect the whole world in the coming periods. In addition, these multidimensional problems may inhibit opportunities for global cooperation on issues such as sustainability, environment and combating climate change and security of supply.
The Turkish economy maintained its strong growth despite the global economic backdrop suffering from geopolitical risks and high inflation.
Despite the global economic outlook, the Turkish economy managed to perform successfully.
Despite the global economic backdrop, which had demonstrated some recovery after the pandemic before suffering from geopolitical risks and high inflation, the Turkish economy maintained its strong growth.
The outbreak of the Russia-Ukraine war towards the end of February 2022 sparked disruptions in regional supply chains, endangering the supply of raw materials and food products, given the importance of both countries as suppliers at a global level. Although soaring global raw material and energy prices pose risks for production units in Turkey, the effects of these factors on the growth performance of the Turkish economy has proven limited, with Gross Domestic Product (GDP) having increased by 5.6% at the end of 2022.
The financing opportunities provided to exporters and the tourism sector through the Credit Guarantee Fund (KGF) packages within the scope of the Turkish Economy Model, whose main purpose is to strengthen macroeconomic and financial stability, have played a decisive role in this growth performance.
The rate of CPI inflation, which had followed a higher course throughout the year, eased back to 64.27% by the end of the year thanks to the anti-inflationary measures set out in the Turkish Economy Model.
THE EUROPEAN CENTRAL BANK INCREASED THE POLICY RATE FROM 0% IN JUNE TO 2.5% AT THE END OF THE YEAR WHILE THE BANK OF ENGLAND (BOE) RAISED ITS POLICY RATE FROM 0.25% AT THE BEGINNING OF 2022 TO 3.5% BY THE END OF THE YEAR.
A successful year for the banking sector, despite a myriad of negativities
The year 2022 was marked by high profitability rates, a satisfactory Return on Equity and operational expenses being successfully kept under control in the banking sector.
The sector’s total assets increased by 55.7% when compared to the end of 2021 to reach TL 14.3 trillion, while the net profit for the period surged nearly five-fold to TL 431.6 billion, while shareholders’ equity increased by 96.9% to TL 1,406 billion.
The capital adequacy of the banking sector maintained its strong outlook in the face of risks, and the sector’s capital adequacy ratio (CAR) stood at 19% at the end of the year.
Ziraat Bank’s solid financial structure played an important role in its performance in 2022.
Ziraat Bank possesses the competence and power to implement its long-term efficient growth strategy in all market conditions. Maintaining a stable stance in 2022, our Bank continued to take decisive steps with a visionary perspective and exhibited a successful financial and operational performance.
While continuing our efforts to strengthen our value proposition to our customers, we maintained our asset quality by exceeding sector averages on many indicators, and managed to grow by reinforcing our financial strength in conditions which could be described as difficult in global and national terms.
Performing our activities in line with our strategies and targets, we expanded our Bank’s asset volume by 68.6% to TL 2,312 billion by the end of 2022. In the same period, our equity expanded by 108.5% to TL 202.5 billion while our net profit increased by 553.2% to TL 41 billion.
Ziraat Bank possesses the competence and power to implement its long-term efficient growth strategy in all market conditions.
THE PROGRESS WE ARE ACHIEVING TO REACH OUR GOALS WILL CARRY US TO A MUCH STRONGER AND MORE COMPETITIVE POSITION AND ENABLE US TO INCREASE THE TOTAL ADDED VALUE WE GENERATE.
Looking ahead, we will continue our work with a focus on evaluating business opportunities correctly and increasing our performance.
We remain determined at Ziraat Bank to continue to put our signature on the best practices of sound, reliable and transparent banking.
Despite global and regional geopolitical risks, we focus on making the most of the growth opportunities which will present themselves in the medium and long term within the scope of our strategy and business model.
The progress we are achieving to reach our goals will carry us to a much stronger and more competitive position and enable us to increase the total added value we generate. We possess the sufficient material and intellectual capital necessary to achieve this.
On behalf of myself and the Board of Directors, I would like to take this opportunity to extend my thanks and respects to all of our stakeholders who contributed to our performance in 2022.
