2014 SUSTAINABILITY REPORT
Customers
In order to create a truly customer-focused business culture it is just as necessary to effectively manage information and include customers in business processes as it is to do the right thing in the right way. This approach makes it possible to analyze customers’ wishes, satisfaction levels, and willingness to recommend the bank to others while also pointing to the organizational changes that are needed to achieve this.
Similarly, companies that have truly internalized a customer-focused business culture are also more likely to have customers who are happily satisfied as well as employees who are highly motivated. This convergence is an important part of making and keeping a business enterprise sustainable.
Customers are ultimately one of the reasons for Ziraat Bank’s existence and that is also why they occupy such a crucial place in the corporate structure that the bank has been building since 1863. Recognizing the centrality of customer-focused banking, Ziraat Bank has been standing by its customers and supporting them during even the most trying times for over a century and a half.
Initiated and comprehensively carried out at Ziraat Bank in order to provide customers with the right value at the right time and in the right way, the Change & Transformation Project has already brought about significant improvements in the effectiveness and productivity of the Bank’s:
The story of Ziraat Bank’s success in this endeavor was reported to the extensive readership of Harvard Business Review Türkiye in an article that appeared in the October 2014 issue of that magazine.
Ziraat Bank supplies banking and financial products and services through the Turkish banking industry’s biggest and most extensive branch network consisting of 1,682 service points as well as a variety of alternative delivery channels. Besides giving its customers convenient access to its offerings, Ziraat Bank also enjoys a position as a preferred business partner owing to its ability to come up with fast and efficient solutions to customers’ technology needs.
Addressing all three customer segments -corporate, entrepreneurial, and retail- Ziraat Bank has the ability to go on increasing the value it creates year after year thanks both to its deep-rooted knowledge and experience and to its extensive portfolio of domestic and international subsidiaries.
19%Seeking to further strengthen the solid and sustainable relationships that it has with its existing customers, Ziraat Bank improved and expanded its contacts and dealings with them in every channel. Some of the innovations introduced as a result of the optimization of the Bank’s branch and non-branch channels during 2014 are summarized below:
In 2014 Ziraat Bank once again continued to improve its existing creditworthiness-assessment modules and lending processes in order to increase its credit-placement competencies. In line with the Bank’s strategy of focusing on Branch Banking, a new assessment module designed specifically for small businesses was added to existing assessment modules and went into use in October of the year.
Ziraat Bank’s goal is to formulate a “Ziraat Finance Group Quality Policy” in order to support its ongoing development, to systematically quantify process performance, to improve processes consistently with strategic priorities and budget targets, and to deliver the same levels of quality and service not just within the Bank but in all of its subsidiaries too.
| In 2014 Ziraat Bank’s lending grew faster than the sector average while its support for the real economy also grew stronger. |
In 2014 Ziraat Bank registered a rate of growth in its lending that was above the sector’s average. The Bank’s total assets increased by 19% and reached TL 247.6 billion in value as of year-end. Total lendings accounted for a 57% share of total assets in a year in which cash loans and non-cash credit increased by rates of 28% and 36% respectively. With Ziraat Bank bolstering its operational and financial infrastructure and deploying both in order to contribute to the Turkish economy, the 28% expansion in cash loans brought the total to TL 142 billion while total non-cash credit reached TL 183 billion in value. |
Ziraat Bank engages in efforts to ensure that its corporate identity is used in accordance with Bank-specified standards so that its brand image is correctly perceived among customers, that its corporate identity is properly integrated into all appropriate environments, and that any misapprehensions of the Ziraat brand and identity are avoided. As part of this effort, all branches were visited and checked for their compliance with the Bank’s Visual Identity standards.
Seeking to satisfy customers’ wishes and expectations in the best way possible and to maximize customer satisfaction on every platform where it has a presence, Ziraat Bank also makes active use of social media channels as one way of achieving this. As of end-2014, the 581,151 “Likes” received by the bank’s Facebook page made it one of the most active of those owned by members of its sector while its Twitter page had 51,600 followers. Ziraat Bank’s participation in these and similar platforms continues to strengthen the Bank’s social media presence day by day.
Brief details about Ziraat Bank’s social media presence are provided below.
As of 22 December 2014 |
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|
|
|
|
|
|
Bank |
Ziraat Sanat |
|
|
Account opened on |
13.09.2012 |
10.11.2010 |
23.05.2011 |
01.10.2012 |
05.11.2013 |
Likes (Facebook), Followers (Twitter), Total views (YouTube), Total hits (Google Plus) |
581,151 |
51,600 |
2,007 |
684,214 |
120,255 |
Total Shares |
560 |
1,093 |
236 |
31 |
508 |
SMEs are the most dynamic elements of the Turkish economy and account for substantial shares of the country’s total employment (78%), added value creation (55%), investment (50%), and exports (59%).
The Small-Business Model allows loan applications to be responded to more quickly.
In 2014 Ziraat Bank continued to engage in activities and to work on projects aimed at accelerating and simplifying lending processes while also making its risk management functions more effective. In line with this the Bank launched a new Small-Business Model (KİM) which ensures that the creditworthiness of individual and groups of startup-segment small-business customers is assessed and quantified:
This model is structured so as to make it possible for loan applications to be evaluated and finalized quickly.
Ziraat Bank’s goals with this model are to increase the ability of microbusinesses in particular to create and sustain employment by strengthening their operational capabilities and in this way to have a strong and positive social impact.
The design and development of special products and services for startup microbusinesses gained momentum in 2014.
The businesses collectively referred to as “small- and medium-sized enterprises” (SME) form the backbone of the Turkish economy and account for substantial shares of the country’s total employment (78%), added value creation (55%), investment (50%), and exports (59%). What’s more, SMEs are widely recognized as the most dynamic elements of the national economy.
In the last quarter of 2014, Ziraat Bank decided to expand its focus on this segment in parallel with the increasingly greater importance of SMEs in the global and Turkish economies. The immediate outcome of this decision was the creation of a Startup Microbusiness Marketing department at the Bank, the aim of which is to take a fully professional approach in the startup-business and small-business banking lines.
By means of analytical customer relationship management, Ziraat Bank models customer data to determine not just what particular mixes of products and services should be offered to which customers but also when and through what channels these offerings should take place. Similarly, customers’ financial market product and service needs are also analyzed and the results of these analyses are used to generate cross-sale opportunities through Ziraat subsidiaries.
Ziraat Bank has reached the final stage in its proliferation of the product and service packages that it puts together for different sectors. It will begin offering these packages to the appropriate customer groups in 2015.
In 2014 Ziraat Bank introduced its “Pharmacy Services Package” for pharmacist customers. In addition to profession/trade-specific packages like this, the Bank also offers such customers a range of credit products capable of addressing their particular needs such as loans to buy places of business and vehicles and to pay commercial vehicle registration fees. Work has begun on a “Services Without Barriers” package of products and services designed to help people with physical disabilities to run their own businesses. It is planned to introduce this product in 2015.
Ziraat Bank provided TL 13.8 million worth of financing support to Akçakale and Ceylanpınar townships to activate the economy.
New procedures are being introduced to make it easier for startups and SMEs to make use of credit.
The majority of the assets owned by those engaged in production activities in Turkey consist of movable properties (chattels), which the country’s banks are often reluctant to accept as collateral. Moreover the legal framework governing chattels is fragmented and inconsistent and is subject to several independent and incompatible registration systems. All of this makes chattel-based lending problematic in Turkey.
In recognition of this, Ziraat Bank is taking part in a project, which is being coordinated by the Treasury Undersecretariat, to prepare the draft of a comprehensive Secured Transactions Act that will make it easier for SMEs and producers to borrow against their movable assets.
Examples of Ziraat Bank’s activities in this area in 2014 are presented below.
Support for KOSGEB members suffering from hardship
Ziraat Bank signed a “Working Capital Loan Support” protocol with the Small and Medium Enterprises Development Organization (KOSGEB) to provide credit support to the organization’s members in Manisa province’s Soma and Kırkağaç townships, where economic activity was hampered by a coal mine disaster, and also to those in Şanlıurfa province’s Akçakale and Ceylanpınar townships, which have suffered greatly from the violence in Syria just over the border.
Under this agreement, Ziraat Bank provided TL 13.8 million worth of KOSGEB financing support to small businesses in the four townships.
Under the heading of its international collaborations, in 2014 Ziraat Bank continued to steadily expand the total volume of resources that it makes available to the real sector for use in domestic and international business projects.
In 2014 Ziraat Bank continued to tap international financial institutions for resources that it could use to provide financing support to small, medium, and larger-sized businesses.
USD 300 millionCompliance with environmental laws and regulations; restricted lists
Although the credit agreements that Ziraat Bank enters with international financial institutions contains specific provisions pertaining to environmental and social impact, general compliance with current environmental laws and regulations is a requirement of them all. Such agreements may also contain lists of businesses that are exposed to particular environmental risks and/or are not to be financed.
As a requirement of lending agreements entered into with international financial institutions, SME customers that receive financing through Ziraat Bank must sign an addendum to their main loan agreement in which they specifically commit themselves to abide by the particular environmental and social terms stipulated by the prime lender.
During the reporting period, representatives of the international financial institutions with which Ziraat Bank collaborates conducted inspections at the Bank and at borrowers’ places of business to check for compliance with such terms.
Information about the credit agreements that Ziraat Bank has entered into with international financial institutions and the borrowers these agreements apply to is summarized below.World Bank credit for SMEs and larger-sized enterprises
Owing to their flexible repayment terms and periods of grace and to their ability to serve as long-term investment financing and operating capital, World Bank credit ranks among the value-creating financial solution and support options that Ziraat Bank offers. In 2014 the Bank continued to supply its customers with World Bank-sourced loans.
In May 2013 Ziraat Bank signed a USD 67 million credit agreement with the World Bank under which Ziraat Bank undertook to finance the energy-efficiency investments of SMEs and larger-sized enterprises. As per this agreement, in 2014 Ziraat Bank began lending to its customers resources in the form of a grant received from the Global Energy Fund. As also required by the agreement, Ziraat Bank is working with a consultancy to provide such customers with the technical support that they need to carry out their energy efficiency projects.
In August 2013 Ziraat Bank signed an “Enhancing SME Access to Finance Project” agreement with the World Bank. Under this project Ziraat Bank received USD 300 million worth of funding to be supplied to SMEs both through leasing companies and through banks licensed to provide leasing products and services.
These resources were supplied to leasing companies during 2014. While encouraging SMEs to support their growth plans through leasing-financed investments, this program had the additional benefit of giving the Turkish leasing industry access to medium- and long-term funding as well.
EIB credit financing for SMEs and larger-sized enterprises
In 2012 Ziraat Bank and the European Investment Bank (EIB) signed an agreement to supply a total of EUR 100 million in financing to SMEs. The last of these EIB resources were lent out in 2014 not only to finance projects that supported SMEs’ growth by increasing their output, productivity, and job-creation capabilities but also to provide SMEs with operating capital and investment financing needed to undertake investments in Turkey capable of reducing interregional disparities in development levels.
Such was the success of this program that EIB authorized granting Ziraat Bank a second round of funding in the amount of EUR 200 million. An agreement covering the first EUR 100 million tranche of this was signed in September 2013, after which Ziraat Bank began lending it out to SMEs and larger-sized enterprises. Disbursements of the first tranche were completed in 2014. An agreement covering the second EUR 100 million tranche was signed in July of the same year and the process of lending it out to SMEs and larger-sized enterprises to meet their investment financing and operating capital needs began immediately thereafter.
The first IPARD credit to be granted to a bank in Turkey
In the wake of these successfully undertaken projects, Ziraat Bank began exploring ways in which to expand the scope of its collaboration with EIB into other areas as well. One outcome of this was the signing, in September 2014, of a 14-year Instrument For Pre-Accession Assistance In Rural Development (IPARD) agreement to provide EUR 100 million worth of credit to finance rural development projects in Turkey.
This line of credit, which is to be used to fund projects that have been approved by the Turkish Agricultural and Rural Development Support Agency (TKDK), is not only the first IPARD agreement that EIB has entered into with a bank in Turkey but is also the longest-term agreement which EIB has entered into with any Turkish bank. These resources are to be lent out to microbusinesses as well as to SMEs and larger-sized enterprises in order to help overcome the difficulties that rural areas have when accessing financing.
EIB-guaranteed “My First Business/My First Bank” and “Young Entrepreneur” loans
The goal of this project is to support young entrepreneurs and to enhance SMEs’ access to funding by enabling them to finance their activities without the need for obtaining additional guarantees. The project got under way with an initial TL 300 million line of credit supported by EIB guarantees. This amount was increased first to TL 1.3 billion and then again to TL 2.1 billion under annex agreements signed in 2013 and 2014. The entire project, which was intended to support tradesmen and artisans as well as new firms in need of collateral and startup capital, was wound up as of end-2014.
Saudi Export Program (SEP)
In 2013 Ziraat Bank secured a USD 50 million line of credit from the Saudi Export Program to finance the importation of goods of Saudi Arabian origin into Turkey. Disbursements, which began the same year, continued successfully in 2014 as well. Under this program, customers who import a wide range of goods other than petroleum from that country are provided with low-cost financing on terms of up to three years to pay for them.
Ziraat Bank-KfW collaboration in priority-development regions
In June 2014 Ziraat Bank signed a 10-year agreement with the German Development Bank (KfW) to supply EUR 150 million in financing to SMEs that are located in rural areas or are part of the agricultural value-creation chain. Under this project credit is now being provided to micro-, small-, and medium-segment customers whose businesses are based in “priority-development regions” or in a few other localities that are stipulated in the agreement. The goals of this KfW project are to help reduce interregional disparities in development levels and to provide medium- and long-term financing support to firms involved in the agricultural value-creation chain.
AFD support for SMEs that process animal-source foods
In December 2014 Ziraat Bank signed a twelve-year agreement with the French Development Agency (AFD) to supply a total of EUR 100 million in financing to agricultural-sector SMEs that process animal-source foods.
Under the terms of this agreement, whose aim is to ensure that end-consumers have access to safe and wholesome food, loans are to be provided to SMEs engaged in the non-primary (ie other than animal husbandry) aspects of animal-source food production in order to finance modernization projects that will bring them into compliance with EU hygiene and environment standards and with the requirements of Turkish law governing veterinary services, plant health, food, and feed (Statute 5996).
Ziraat Bank continues to collaborate with international financial institutions in an ongoing effort to expand its product lineup in ways that will give its customers a financial competitive advantage.Joint Ziraat Bank-CEB support to improve employment conditions among microbusinesses and SMEs
In December 2014 a seven-year agreement was signed with the Council of Europe Development Bank (CEB) to provide a total of EUR 50 million in credit through Ziraat Finansal Kiralama AŞ, Ziraat Bank’s leasing subsidiary. The main goals of this project are to help micro-, small-, and medium-sized enterprises create new jobs and to improve their ability to protect existing ones. Other goals include creating a positive social impact and supporting the leasing industry.
Ziraat Bank continues to collaborate with international financial institutions in an ongoing effort to expand its product lineup in ways that will give its customers a financial competitive advantage.
Ziraat Bank expects to be making the following credit packages available to its customers in 2015.
Disbursement status of lines of credit provided by international financial agencies
(As of 31 December 2014)
Agency |
Total Disbursed |
# SME |
World Bank |
USD 567 million |
182 |
European Investment Bank |
EUR 300 million |
332 |
European Investment Fund |
TL 1.3 billion (non-cash) |
29,487 |
German Development Bank |
EUR 150 million |
882 |
Originally founded in 1863 to support agricultural endeavors, in the 151 years since then Ziraat Bank has:
As Turkey’s leading supplier of credit and loans for agricultural endeavors, Ziraat Bank seeks firstly to be a customer’s primary and proactive bank in all aspects of agricultural production up to and including the final consumer in order to strengthen both individual producers and agroindustry and help both become internationally competitive and secondly to contribute to the growth and development of agroindustry by simultaneously supporting all links in the agricultural value-creation chain.
Strengthening Turkey’s agricultural sector and helping it to become internationally competitive
Continuing to provide financing support in parallel with national agriculture policy for the creation and modernization of agricultural enterprises that are equipped with new technologies and are big enough to benefit from economies of scale, Ziraat Bank seeks to increase the share of high-added-value products in total production through agricultural finance resource diversification. To this end, the Bank will continue to diversify its financial product offerings, to revise existing ones in line with requirements, and to be the first address that agricultural-sector customers have recourse to when they are in need of financing.
Total agricultural-sector financing credit reached TL 27.8 billion in value in 2014.
Supporting all aspects of agricultural endeavors from production to consumption through its agricultural banking activities, Ziraat Bank constantly both its resources and its financing.
As of end-2014:
Başakkart continues to reduce the burden of financing production processes.
Başakkart, the principal bankcard and financing tool that Ziraat Bank provides to its agricultural-sector customers, helps reduce the burden of financing agricultural production processes by making it easier for producers to get credit.
With Başakkart, agricultural enterprises have the ability to finance their production processes by purchasing such inputs as fuel, seed, fertilizer, pesticides, feed, and veterinary services on interestfree terms of up to five months. During 2014, 219,000 customers charged TL 3.2 billion worth of their aggregate TL 4.2 billion agricultural credit limit using Başakkart at Ziraat Bank.
A new-generation Başakkart issued in 2014 and the ability of agricultural-sector customers to obtain cards immediately just by walking into a Ziraat Bank branch made it possible for them to take care of their banking business faster and more conveniently.
A financial model that contributes to agroindustry-producer collaboration
In 2014 Ziraat Bank signed protocol agreements with eighteen firms that are purveyors of seed and other supplies to producers of sugar beets, farmed trout, and poultry.
Under these protocols, the aggregate credit limit of which amounts to TL 131 million, the Bank extends operating and investment credit to about 16,200 of the firms’ contractual customers.
Expansion of the interest-free livestock credit program
In August 2010 Ziraat Bank began offering its customers interest-free livestock credit in order to meet the financing needs both of new livestock enterprises and of modernization and capacity-expansion projects to be undertaken by existing livestock breeding and feedlot operations.
In 2014 the Bank disbursed cash loans amounting to TL 831 million to 48,897 customers under this program. Since the introduction of the interest-free livestock credit program in 2010, Ziraat Bank has supplied TL 7.9 billion worth of such funding to 298,198 customers.
607,197Sustainable animal husbandry in Turkey
In support of animal husbandry in Turkey, Ziraat Bank develops projects that will:
One example of Ziraat Bank’s efforts in this direction is a project that the Bank is working on with the agriculture ministry to develop acceptable forms of collateral other than real estate properties that will make it easier for farmers to obtain credit. Under this project, the animal lien registry’s technological infrastructure is being upgraded and integrated with those of the government’s TÜRKVET (veterinary information) and KKKS (sheep and goat registry) systems.
Since 2004, TL 5,877 million worth of fixed-rate tractor financing loans have been extended.
In 2014 Ziraat Bank extended fixed-rate tractor financing loans amounting to TL 1,583 million to 35,749 customers. Since this credit product was originally launched in 2004, TL 5,877 million worth of such loans have been extended to 169,686 of the Bank’s customers.
TL 2.5 billion worth of credit for commercial greenhouse enterprises in eleven years
In 2014 Ziraat Bank extended TL 440 million worth of commercial greenhouse financing loans to 6,138 customers. Over the last eleven years, 89,697 customers have received a total of TL 2.5 billion in credit and loans to finance their greenhouse construction, modernization, and production operations.
Pressurized irrigation system credit from Ziraat Bank
In 2014 Ziraat Bank extended a total of TL 215 million worth of loans to finance the modern pressurized irrigation system projects of 6,238 of its customers. Through its involvement in these projects, which have so far brought about the installation of modern pressurized irrigation systems on about 540,000 decares of land, Ziraat Bank helps expand the amount of arable land in Turkey.
Broad-based Ziraat Bank payment systems at the service of agriculture
In 2014 Ziraat Bank once again served as the main conduit for government payments to farmers:
Single-digit interest rates on agricultural credit and loans
In 2013 Ziraat Bank reduced the rates of interest that it charged on agricultural credit to 8% in the case of loans with maturities of a year or less, to 10% in the case of loans with one to four-year maturities, and to 11% in the case of loans with maturities of more than four years. This meant that the effective interest rates on loans to customers qualifying for crop and other subsidies governed by Council of Ministers decrees were in the 0% to 8.25% range.
In 2014 Ziraat Bank extended TL 13.2 billion worth of reduced-rate loans to 289,579 individual and corporate customers.
Ziraat Bank also offers reduced-rate loans to agricultural enterprises to finance projects with such aims as protecting, conserving, and developing natural resources; making production operations more environmentally sustainable; improving food crop quality and engaging in organic farming and computer-controlled greenhouse cultivation; and complying with good agricultural practices. Reduced-rate loans are also provided to customers investing in projects aimed at deriving energy from renewable sources such as solar and biomass.
Ziraat Bank continued to interact with its agricultural-sector stakeholders on different platforms in a variety of ways.
In 2014 Ziraat Bank once again took part in sector-oriented activities while also supporting activities aimed at increasing individuals’ financial awareness and literacy.
Ziraat Bank - Agricultural Sector Key Indicators
(End of 2014)
 |
 |
 |
 |
|
Number of livestock-financing loan customers since 2010 |
Number of tractor-financing loan customers since 2004 |
Number of greenhouse-financing loan customers in the last 11 years |
Number of agricultural loan customers borrowing against their Başakkart cards in 2014 |
282,198 |
169,686 |
89,697 |
219,000 |
Ziraat Sigorta single-handedly accounted for 45% of TARSİM’s total premium production.
The number of agricultural insurance policies issued through TARSİM, Turkey’s national agricultural insurance pool, increased by 22% in 2014 while total premium production was up by 30% year-on and reached TL 683,535,994.
Ziraat Sigorta is a wholly-owned Ziraat Bank subsidiary through which the Bank works in order to help its agricultural sector customers protect themselves against risk. In 2014 this company easily defended its undisputed standing as the leading supplier of agricultural risk insurance in Turkey. A 36% year-on rise in Ziraat Sigorta’s crop insurance premium production contributed significantly to sector’s performance in 2014.
Ziraat Sigorta single-handedly accounted for 45% of TARSİM’s total premium production.
Turkey's total agricultural insurance premium production and change ratio in policies issued in 2014
| Premiums Sectoral Share | Net Premiums (TL) | Net Policies Issued | |||
| Sector | Ziraat Sigorta | Sector | Ziraat Sigorta | ||
| End 2013 | End 2014 | Change (2013-2014) | Change (2013-2014) | Change (2013-2014) | Change (2013-2014) |
| 45% | 45% | 30% | 30% | 22% | 15% |
Supplying its customers with value-creating financial solutions that are both right for their needs and compatible with its own customer-focused business model, Ziraat Bank carries out its project finance activities so as to simultaneously:
In all of the financing projects Ziraat Bank was involved during 2014, as much attention was given to environmental and social-impact issues as it was to national economic benefit.
Projects to recycle wastepaper, highway construction projects intended to achieve economies of fuel and time in transportation, renewable energy projects, projects to prevent electrical power grid fraud and theft, and projects to create local jobs by exploiting new production opportunities are among the projects to which such consideration was given.
Ziraat Bank gives importance to environmental and social risk assessment in project finance.
In the conduct of project finance, Ziraat Bank has environmental and social impact assessments carried out and it draws up specifically-termed lending agreements as particular circumstances may require.
The international financial institutions with which Ziraat Bank frequently collaborates are especially scrupulous about the projects that the Bank finances being in compliance with national laws and regulations and with international norms pertaining to environmental issues. They do not approve projects with the potential to cause substantial environmental harm unless the projects have been duly licensed and are adequately financed.
Similarly when working on projects in which international financial institutions are involved, Ziraat Bank requires and oversees the conduct of an environmental impact study as part of its creditworthiness assessment. Projects whose environmental risks are deemed to be unacceptably high are rejected and not financed.
When considering a project finance application, Ziraat Bank requires the investors and/or customers to submit either an approved environmental impact assessment (EIA) report or else an official ruling that such a report is not necessary. The Bank also demands that all of the licenses and permissions required by a project be obtained from the authorities concerned and be submitted to it for its own inspection. In situations where this documentation is not forthcoming, the absence is noted in the Bank’s reports and the point is stressed that this lack must be taken into account when making any decision to lend.
During 2014 Ziraat Bank appointed environmental consultants to oversee, monitor, and report on eight active projects.
IFC performance standards and the Equator Principles
Whenever Ziraat Bank is involved in the financing of a project being undertaken by a consortium of which the International Finance Corporation (IFC) or European Bank for Reconstruction and Development (EBRD) are members, the project documentation includes investors’ pledges to abide by IFC performance standards and the Equator Principles as may be applicable.
In such cases, compliance with these additional criteria is monitored and reported on by technical and/or environmental consultants.
During 2014 there were no reported instances of any contraventions of such criteria.
Ziraat Bank is increasing its financing support for renewable energy projects.
Turkey’s existing energy resources are insufficient to meet demand and this significantly increases the country’s dependence on energy imports. Furthermore the present intensive use of fossil fuels results in environmentally harmful emissions besides being expensive and subject to rapid resource depletion. For these and other reasons therefore increasingly greater attention is being given to renewable energy resources and to the technologies needed to exploit them. In line with such considerations, Ziraat Bank provides financing support to renewable energy projects such as hydroelectric power plants, wind power plants, and solar power plants not only for their environmental benefits but also to reduce imported energy dependency and to support sustainable economic growth through the use of locally-available resources. The Bank is currently working on the development of financing packages capable of addressing the needs of small-scale undertakings in this business line.
In order to finance energy efficiency investments and projects, Ziraat Bank has received a World Bank line of credit from which it extends loans to customers on terms of up to eight years, during the first two of which principal need not be repaid.
In 2014 Ziraat Bank supplied credit financing to hydroelectric, thermal, wind, and geothermal power plant projects. Particular attention was given to the financing of solar power plant and wind power plant projects.
The environmental, social, and economic benefits which were achieved in 2014 through the active energy projects being financed by Ziraat Bank are summarized below.
Two of the projects being financed by Ziraat Bank were deemed to be exposed to potentially unacceptable levels of environmental risk. In one instance, a suit that was lodged against the project’s favorable EIA report resulted in the report’s suspension on the grounds that its terms were not being complied with, whereupon the Bank’s lending to the project was also suspended. An environmental consultant is to be appointed to conduct a review and assessment of the project’s environmental risks and then report to the members of the financing consortium on whether or not the project’s non-compliance with environmental laws and regulations has been rectified.
In the other instance, the favorable EIA report of a project being financed by Ziraat Bank was cancelled but a new (and also favorable) report was obtained the same year. An environmental consultant has been appointed to monitor and report on the situation. The Bank is keeping a close watch on these reports in order to determine both whether or not the project owners are fulfilling their environmental commitments and whether or not the project is in compliance with environmental laws and regulations.
These two projects together account for 9% and 1% shares of the Bank’s overall loan portfolio as measured by lending limits and risk exposure respectively. No bank-financed project was deemed to be in breach of its lending agreement terms in 2014.
The criteria that Ziraat Bank makes use of when determining a project’s environmental and social risks within the framework of its borrower assessment methodology (system) are summarized below.
When evaluating agricultural projects, points are given for the inclusion of “Good Agricultural Practices” and for adherence to “Organic Farming” criteria and practices. The inclusion of such practices impacts favorably on a customer’s risk score.
In the case of manufacturing firms and the compliance of their production facilities, the absence of installations such as ecological purification, flue filtration, and similar systems in sectors where such equipment is deemed to be necessary or whose use is legally mandated results in “negative” points that reduce the project’s overall score.
In both agricultural and manufacturing sector projects, attention is given to such criteria as the environmental impact of production/manufacturing processes, whether or not such processes have been properly set up so as to be sustainable, and the appropriateness of the location selected for the project. Both before and after financing is provided, projects’ compliance with stipulated criteria is described in investment monitoring reports. Instances of non-compliance are referred to appropriate Bank units so that action may be taken as required.
The results of onsite inspections are readily accessible to appropriate personnel via the Bank’s internal system. Whenever a customer or project is deemed to be in breach of their terms as a result of an inspection, this fact is made known and bank personnel are able to monitor the progress of the issue. This approach ensures that projects’ environmental auditing processes are conducted fairly and transparently throughout Ziraat Bank.
Attention is also given to social impact in project finance.
While the credit agreements that Ziraat Bank has entered into with international financial institutions contain no specific provisions pertaining to human rights, agreements with the World Bank do stipulate that projects and sub-projects in whose financing that institution is involved must not result in the involuntary relocation of local communities. In other words compulsory purchases of land for these projects are prohibited under these agreements.
Further strengthening our environmental and social risk management mechanisms
In 2015 Ziraat Bank plans to provide SMEs with food safety and quality consultancy services to improve their internal capacity to deal with such issues. Through such projects, the Bank will be seeking to engage with its SME customers in order to increase both their awareness of good agricultural practices and their ability to comply with them.
Another of Ziraat Bank’s priorities in 2015 will be to undertake projects that will strengthen both its own environmental and social risk management mechanisms and those of its customers as well. The Bank plans to engage an outside firm to act as a consultant on matters related to the formulation of a comprehensive Ziraat Bank corporate responsibility and social responsibility policy so that the environmental and social risks inherent in its portfolio may be managed more consistently and effectively.
In its capacity as a state-owned financial institution, Ziraat Bank seeks to interact with other public agencies and organizations in a coherent and effective manner.
Ziraat Bank is the primary conduit through which public-sector disbursements and receipts flow in Turkey. Every year the Bank handles tens of millions of payments on behalf of many different public agencies and organizations while also serving as the main channel for disbursements made in line with government social policy.
In 2014, Ziraat Bank focused attention on increasing the number of branches actively involved in the provision of these services while also supplying increasingly more financial products and services to firms that serve the public sector.
In 2014 Ziraat Bank successfully handled:
• Agricultural Support Payments
• Home-ownership Assistance Payments
• Employee Savings Incentive Payments
• Payment/Collection Protocol Transfers
These activities are discussed briefly below.
Ziraat Bank continues to handle
agricultural support payments in 2014
and processed transactions amounting
to TL 8,617 million.Agricultural Support Payments
Ziraat Bank continues to handle agricultural support payments as mandated by laws, decrees, and communiques. In 2014 the Bank processed 4,413,082 such transactions amounting to TL 8,617 million in aggregate.
Home-ownership Assistance Payments
Ziraat Bank processes payments for Emlak Konut GYO (EGYO), a recently-privatized real estate investment trust that focuses mainly on the construction, management, and sale of affordable housing, under agreements which the Bank has entered into with that company. The Bank makes payments to beneficiaries as instructed by EGYO. In 2014 Ziraat Bank handled TL 6.6 million worth of such payments for 28,429 beneficiaries.
Employee Savings Incentive Payments
Ziraat Bank handles Employee Savings Incentive Program payments on behalf of the Treasury in accordance with principles and procedures set forth in applicable laws and regulations. In 2014 the Bank paid a total of TL 148.9 thousand to 199 beneficiaries under its agreement with the Treasury.
Social Security Benefits
Ziraat Bank is the primary channel through which pensions and other social security entitlements are paid under agreements that the Bank has entered into with various public agencies and organizations. In 2014 the Bank processed 54,974,079 social security transfers worth a total of TL 62.8 billion, 790,503 income/monthly transfers worth a total of EUR 318 million, and 6,57,160 other transfers worth a total of TL 4.1 billion.
At end-2014, the number of bank customers registered to use the Ziraat Bank’s “New Generation Internet Branch” reached 3.8 million with 40.7% increase.As of end-2014, the number of Ziraat Bank’s retail (non-corporate) customers topped 30.4 million.
Ziraat Bank is continuing, with no loss of momentum, projects aimed at delivering service that makes a difference in all branch and non-branch channels through a process of channel optimization that is in line with its projects to supply its customers with effective banking service in every possible way.
In 2014 the Bank made intensive use of alternative delivery channels in order to appeal and reach out to a numerically greater customer audience.
The performance highlights achieved as a result of services supplied through the Bank’s electronic delivery channels in 2014 are presented below.
Credit Cards: As of end-2014 Ziraat Bank had issued 3,133,588 credit cards. These gave the Bank a 2.99% share of the Turkish banking industry’s credit card turnover last year.
Bank Cards: As of end-2014, Ziraat Bank had issued 23,377,408 bank (ie debit) cards. These helped sustain the Bank’s leadership with a 17.54% share of the sector’s debit card payments turnover.
TSK Smart Card Project: Under the e-wallet project being conducted for the Turkish Armed Forces (TSK), the total number of military units in which the system is installed has reached 415. This project’s card issuances as of end-2014 consisted of:
Youth Debit Card and Campus Card: As of end-2014 there were 1,333,434 Youth Debit Card (Genç Bankkart) and 214,908 Campus Card (Kampüs Kart) issuances. The number of customers making active use of these cards’ “Kazandıran” (loyalty points) feature was 429,693.
Merchant Partners & POS: As of end-2014, Ziraat Bank was working with 113,026 merchant partners at whose premises 123,291 POS units were installed. Merchant partner turnover last year amounted to TL 11.3 billion.
The number of Ziraat Bank customers signed up for online banking reached 3.8 million in 2014.
In 2013 Ziraat Bank launched its “New Generation Internet Branch”, having redesigned its existing branch to make it faster and easier for customers to use and also to make it more functional. At end-2014, the number of Bank customers registered to use the branch reached 3.8 million, which was 40.7% higher than the number of registered users in 2013.
In the twelve months to end-2013, a total of 35 million financial transactions were performed by the Bank’s online branch’s users. In 2014 this number increased by 37.1% and reached 48 million as of year-end. The total value of performed transactions increased by 18.2% year-on and reached TL 107.5 billion.
Ziraat Bank continues to introduce innovative new practices and processes to the Turkish banking industry.
One of Ziraat Bank’s unwavering objectives is to keep its customers supplied with banking products and services in formats that are intelligible and practical. In 2014 the Bank continued to introduce innovative new practices and processes to the Turkish banking industry.
Pensioner loyalty program
A loyalty program called “Retirement Plus at Ziraat” has been designed for retirees who receive their monthly pension payments through Ziraat Bank. The Bank has entered into agreements not only with its own subsidiaries (Ziraat Life & Pension, Ziraat Insurance, and Ziraat Securities) but also with independent firms that are active in such businesses as travel, tourism, and the like under which the Bank’s pensioner customers qualify for a variety of discounts.
Addressing the needs of disabled customers
Ziraat Bank designs product and service formats to make them more convenient for disabled customers to use.
In 2014 Ziraat Bank began making changes in the design and layout of pilot branches in order to make them more convenient for disabled customers to use and to bring the branches into compliance with mandatory criteria concerning the accessibility rights of the physically handicapped that were introduced in 2013.
Twenty-nine branches are taking part in this pilot program, which involves the design and integration into Ziraat Bank branch concepts of the following:
Nine ATM units specially designed so that they can be used by people suffering from orthopedic difficulties have also been installed in some locations in Ankara and İstanbul. Ziraat Bank’s online branch has also been designed to be usable by visually impaired customers.
Ziraat Bank will continue its efforts to make it easier for the disabled customers to avail themselves of branch, ATM, and online banking services in the future as well. The Bank’s near-term objectives include extending the scope of changes introduced in pilot projects to encompass all branches. ATM units will also be altered and equipped with features that allow the units to be used by the visually impaired as well as by those with orthopedic difficulties. Work is currently in progress on the development of spoken menus that will start being added to ATM units for the benefit of the visually impaired in 2015. The goal is to have at least one ATM usable by the disabled customers in every city at the outset.
Another plan involves introducing a chat channel by the end of 2016 in order to enable hearing-impaired customers to benefit from call center services. Work is also being carried out on making changes in Ziraat Bank’s mobile banking apps so as to better accommodate disabled customers’ needs.
Service network growth: An eco-friendly point of view
As of end-2014 the number of Ziraat Bank domestic branches was 1,682. When expanding the reach of its service network, Ziraat Bank is also mindful of the environmental impact of its efforts to make itself more accessible to its customers. For example the number of vehicles allocated for branches’ use is minimized so as to help reduce their carbon footprints.
With the introduction of the Bank’s New Auditing Model in 2014, it is now possible for an increasingly greater number of the Bank’s branches to be audited from headquarters. Considering that Ziraat Bank has branches based even in some of Turkey’s remotest locations, this practice generates substantial savings in terms of time, cost, and resource use.
In the medium term, Ziraat Bank’s goal is to increase the size of its branch network to 2,000 so as to give its customers convenient, quick, and top-quality access to its financial products and services in every locality.
The degree to which a society is financially literate is tremendously important to its ability to construct a sustainable future for itself. For individuals, financial literacy means having access to the information they need in order to make decisions about financial issues that are vital to their future wellbeing.
As Turkey’s pioneering and leading financial services provider, Ziraat Bank regards contributing to financial literacy by providing consumers with truthful, impartial, comparable, and up-to-date information about financial services through every possible channel and supporting financial literacy through educational activities as being among its fundamental corporate responsibilities.
Some of Ziraat Bank’s efforts in this direction are summarized below.Financial literacy education and training
During 2014 Ziraat Bank engaged in a variety of education and training activities aimed at informing consumers about financial product concepts and use and at making them aware of the various alternatives from which they were able to choose. Information about these activities and programs is briefly summarized below.
E-learning for children and teenagers
The issue of thriftiness, which is becoming increasingly more important throughout the world nowadays, is a matter of crucial importance for Ziraat Bank.
Ziraat Bank organizes educational activities for youngsters that help make them aware of the importance of thriftiness and saving in ways that are both entertaining and informative.
“Ziraat Bank Information Islands” is a series of themed e-learning modules that teach young people about such things as the relationship between money and banks, how banks function, how to use borrowing and credit cards wisely, and how to use resources like money, electricity, and water economically.
The modules in this program consist of:
E-learning for farmers and other customers
In keeping with its mission of supporting agriculture and agricultural endeavors, Ziraat Bank organizes and conducts educational programs for its farmer customers.
One of these programs deals with modern irrigation methods and focuses on such matters as proper irrigation techniques, how to use water resources efficiently, and how to maximize crop yields and quality.
Another Ziraat Bank program designed for farmers is concerned with agricultural insurance. This program focuses on the importance of insurance by making participants aware of the risks they face and how insurance can help them deal with the losses that such risks can lead to.
“How Does Credit Card System Work?” is an informative and instructive program designed for Ziraat Bank customers that focuses on the importance both of credit cards as an essential part of everyday life nowadays and of using them knowledgeably.
Ziraat Bank recently reviewed and revised its customer e-learning materials for children, teenagers, and farmers in order to bring the materials up to date in light of recent developments. These revised materials will go into use in 2015.
Recognizing ethical marketing communication as an indispensable form of competition, Ziraat Bank’s foremost concern is to provide its audiences with information that is truthful, impartial, and up-to-date in the conduct of its marketing and advertising activities.In today’s world, advertising, promotion, other marketing tools, and social media have become crucially important as communication channels between service providers and consumers. As a form of communication, marketing helps increase efficiency and maximize social benefit in both national and international markets.
Ziraat Bank recognizes ethical advertising as an indispensable form of market communication and competition. In the conduct of its marketing and advertising activities, Ziraat Bank’s foremost concern is to provide its audiences with information that is truthful, impartial, and up-to-date.
Ziraat Bank:
In line with these principles, Ziraat Bank ensures that all aspects of the preparation and production -including photography, texts, slogans, music, visual design, and imagery- of all advertising materials that are needed and to be used to promote the Bank itself, or members of the Ziraat Finance Group, or each and every one of their products or services is properly coordinated with advertising agencies.
Recognizing that sponsorships are a highly effectual public relations method, Ziraat Bank makes use of them both to serve the best interests of society and to contribute to the enhancement of its own brand image. For more detailed information about Ziraat Bank’s sponsorship activities in 2014, please see this link.
During the reporting period, there were no instances of any Ziraat Bank advertisements or of any Ziraat Bank publicity or sponsorship activities being in contravention either of mandatory marketing communication regulations or of its own voluntarily-adhered to rules.
