Türkiye Garanti Bankası A.Ş., announced its financial statements dated September 30, 2019. Based on the consolidated financials, the Bank’s net income in the first nine month of the year recorded as TL 4 billion 998 million 460 thousand. Asset size realized at TL 411 billion 161 million 696 thousand and the Bank’s contribution to the economy through cash and non-cash loans was TL 302 billion 634 million 414 thousand. Actively managing the funding base, deposits continued to be the main funding source; 63% of assets are funded via deposits. Deposit base reached to TL 257 billion 842 million 200 thousand with 5% growth in the first 9 month of the year. Preserving the strong capital stance, Bank’s capital adequacy ratio was realized at 18.07%. The Bank delivered an ROAE (Return on Average Equity) of 13.5% and an ROAA (Return on Average Assets) of 1.6%.
Commenting on the topic, Garanti BBVA CEO Recep Baştuğ stated that: “Third quarter of the year was a period that we observed the beginning of the recovery in loan demand, as a consequence of the significant improvement in inflation and its respective reflection on drop in interest rates. Going forward, the increase in loan demand will be even more visible. Committed to managing our balance sheet with sustainable growth strategy, we have further strengthened our capital base. With this confidence, we will continue to support the real economy by meeting the increasing demand. With our knowledge, experience and strong presence in the real sector, we will maintain our leadership amongst private banks in Turkish Lira lending.
Emphasizing that the principles of honesty, accountability and transparency are an integral part of Garanti BBVA culture and the assurance of its sustainable existence, Baştuğ said: “This year, we are once again entitled to be included in the Dow Jones Sustainability Index, which evaluates the sustainability performance of corporate firms worldwide. We are the only Turkish company to be included in the index for five consecutive years. Recognizing that our impact and the value we create is not limited to banking, we will keep working with our focus on sustainable development to create continuous value for our stakeholders.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated June 30, 2019. Based on the consolidated financials, the Bank’s net income in the first half of the year recorded as TL 3 billion 668 million 768 thousand. Asset size realized at TL 422 billion 284 million 856 thousand and the Bank’s contribution to the economy through cash and non-cash loans was TL 316 billion 120 million 722 thousand. Actively managing the funding base, deposits continued to be the main funding source with 62% share in the total funding base. Deposit base reached to TL 260 billion 60 million 882 thousand with 6% growth in the first half of the year. Preserving the strong capital stance, Bank’s capital adequacy ratio was realized at 16.4%. The Bank delivered an ROAE (Return on Average Equity) of 15.3% and an ROAA (Return on Average Assets) of 1.8%.
Commenting on the topic, Garanti BBVA CEO Fuat Erbil stated that: “During the second quarter of 2019, a period of elections and continued elevated risk perception, we managed our balance sheet successfully while maintaining the sound asset quality, safe liquidity level and strong capital structure. In this period, thanks to the success of our foreign borrowing program and our pioneering role in international banking, due to the foreign banks' high interest in the syndicated loan, we received a much higher demand than our target of 600 million USD. On the other hand, with the trust of our customers, we increased our customer demand deposit market share to 13.2%. The number of customers who prefer Garanti BBVA reached 17 million. The number of digital customers reached nearly 8 million with the innovative steps we have taken. For over 9 years we contributed to the Turkish economy with the BBVA Group. Now, as Garanti BBVA, with our human-oriented and digitalization-based vision, we will continue to support the economy, society and bring the age of opportunities to everyone.”
Emphasizing Garanti BBVA’s contribution to Turkey’s sustainable growth, Erbil said: “ We play a pioneer and leading role in financing projects that are add value to our economy. In the same period, Garanti BBVA named as the Best Project Finance House, Best Structured Finance House and Best Syndicated Loan House in CEE Region (Central and Eastern Europe) by EMEA Finance for the fourth consecutive year. In times of high volatility, we maintain our firm stance and place importance in meeting all needs of our customers. In such periods where access to finance is crucial, we continue to support our female entrepreneurs to grow their businesses in a sustainable manner. Within the framework of the protocol we signed with IFC, we offered TL 390 million of financing to the use of women entrepreneurs. We will continue to work to add long-term sustainable value to all our stakeholders.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated March 31, 2019. Based on the consolidated financials, Garanti BBVA’s net income in the first three months recorded as TL 1 billion 757 million 409 thousand. Garanti BBVA’s asset size reached TL 423 billion 321 million 867 thousand and Turkish Lira loans were the main driver of the asset growth. Given the support of Credit Guaranteed Fund, performing cash loans grew by 6% in the first three months and the Bank’s contribution to the economy through cash and non-cash loans reached TL 323 billion 221 million 232 thousand. Actively managing the funding base, deposits continued to be the main funding source with 62% share in the total funding base. Garanti BBVA’s deposit base reached to TL 262 billion 790 million 687 thousand with 7% growth in the quarter. Preserving the strong capital stance, Bank’s capital adequacy ratio was realized at 15.5%. The Bank delivered an ROAE (Return on Average Equity) of 15.6% and an ROAA (Return on Average Assets) of 1.8%.
Commenting on the topic, Garanti BBVA CEO Fuat Erbil stated that: “Despite challenging market conditions, we made a strong start to 2019 with continued support to the economy. Given the confidence in our high capital adequacy ratio, our contribution to the economy exceeded TL 323 billion. While growing faster than the sector in TL loans, we sustained our leadership in consumer loans. In the first three months of 2019, we grew our TL business banking loans by 13%. On funding front, we have diversified our resources and extended the maturities. Within the framework of the international borrowing program, we have secured a financing in the total amount of USD 150 million with a maturity of 5 years. Thereby solidifying our leading position in the sector, we have reaffirmed foreign investors’ confidence in Garanti BBVA and their long-term interest in Turkey.”
Expressing his appreciation for Garanti BBVA’s recognitions on the international platforms, Erbil said: “With our customer-oriented approach, wide range of solution oriented products meeting the special needs and with a team of banking experts, our bank was the winner of “Best Private Banking Award” in Turkey per survey conducted by Euromoney, one of the world’s leading magazines. On the other hand, as Garanti BBVA, we continue to be the solution partner of our customers in foreign trade. With the solutions we offer to our customers and value we have created for them, we are very pleased to be recognized as “Turkey’s Best Trade Finance Bank” by an important international platform like Global Finance. After another year of successful work within the entire value chain contributing to our human resources, customers and the community, this year again we were entitled to be included in the Bloomberg Gender Equality Index as the only company from Turkey. It is highly valuable to reach such achievements in a fast moving period, both domestically and globally. I would like to thank all my colleagues, all of our stakeholders who trust and support us.”
2018 has been quite an active year for our economy and our sector. We have registered strong growth rates in the first half of the year; however, in the second half, we have witnessed the slowdown in the economy and increasing tendency toward rebalancing due to both internal and external developments. Meanwhile, in this period, risk factors such as liquidity, capital and asset quality were among the key issues under spotlight for the sector.
With respect to the sector’s liquidity, we are going through a critical period in loan to deposit ratio. Deposits that outperformed the loan growth in 2018, positively affected the sector’s loan to deposit ratio. Since the beginning of the year, loan to deposit ratio improved by 7bps in the sector, whereas improvement in the ratio was 14bps at Garanti BBVA. While maintaining our leadership position in consumer loans and credit cards, our deposit-driven and balanced approach continued on the funding side.
This year some concerns have also surfaced regarding the sector’s international borrowings, a non-deposit funding source. Nonetheless, the sector has proven its resilience once again, and many players in the sector, including us, were able to renew their external debts with high rollover ratios. Within the framework of the borrowing program, we provided more than USD 1.3 billion in funding from overseas markets in the last quarter. This was the longest and the highest amount of borrowing of the last quarter of 2018. I would also like to underline our decreased dependency on external borrowing compared to the previous years. Turkey has completed a substantial portion of the large-scale public investments. In this context, Turkish banks have less need for long-term foreign currency funding as project finance investments cut pace versus earlier years. In this sense, I am not anticipating a negative scenario for the year ahead in raising external funds.
The effect of decelerated economic activity on asset quality became visible to a certain extent. The sector’s NPL ratio went up to 4% from 3%. Increase in new NPLs largely stemmed from big-ticket corporate loans. In 2019, consumer loans will also put some pressure on asset quality due to anticipated rise in unemployment that will be driven by the cooling economy. However, household indebtedness in Turkey is quite low; actually, it is much lower than that in Eurozone and in developing countries. Therefore, we are in a position to manage these risks.
Capital was another topic that was on the agenda during the reporting period. Capital adequacy ratio of the sector sustains its controlled level as the exchange rate stabilized at a certain level. Our 2018 year-end consolidated capital adequacy ratio of 16.5%, is comfortably above the minimum required level of 12%.
Another key driver that differentiates the Turkish banking sector besides its robust financial structure is digitalization. Our digitally savvy young population enables us to offer a much more efficient and productive banking service through the digital platforms. We realize that mobile banking penetration rate in our country has reached 40%, which puts us ahead of many major European countries including France and Germany. With this awareness, as Garanti BBVA, we have been investing in digital transformation for many years. Today, our digital penetration ratio among active customers is 67%.
We have pioneered a new era with our innovative service model designed in the light of digitalization, which enables a one-stop delivery of all services to our customers in the most convenient and fastest manner. During 2018, we have completed the transformation of our entire branch network within the frame of our new service model. With this new model, we have increased the efficiency of our sales force, decreased the waiting times in branches, and improved customer experience.
Supporting responsible and sustainable development is among our strategic priorities at Garanti BBVA. We develop our products and services in this manner, and manage our customers’ environmental and social risks as well. We support the participation of women in the workforce, and we are striving for the formation of an inclusive economy where all individuals have equal access to opportunities. We have taken on a pioneering role once again in our sector in the area of sustainable finance with a green loan we have extended in July, which is the first of its kind in Turkey and fifth in the world. Taking place among the 28 banks from five continents representing consolidated total assets of USD 17 trillion, we have been invited by the United Nations Environment Programme Finance Initiative (UNEP FI) to define the new shape of banking to better align with the society’s goals. The new Principles on Responsible Banking will allow every bank to credibly showcase their desire and concrete actions to contribute to our society and our planet. As Garanti BBVA, we are proud to be part of this historic movement. Being the only bank from Turkey included in a total of eight different sustainability indices including the Dow Jones SustainabilityTM Emerging Markets Index, we are aspiring to act as a role model for all our stakeholders in this area.
2019 AND BEYOND…
In the year, which was characterized by highly volatile exchange rates, we were in closer and stronger coordination with the economy administration than we have ever been before. We have seen the benefits of this both for our sector and our economy. Yet, the impact of the fluctuations on the real economy will be gradual. Although the rebalancing witnessed from the second half of 2018 will continue for a while in the beginning of 2019, we are expecting recovery to start as of the second quarter. As inflation adopts a normalization trend particularly after the second half of 2019, interest rates will come down and loan growth will gain pace.
Downward trend in inflation has started. While there might be limited upside effects in the first quarter of 2019, we are expecting the decline in inflation to become visible in the second half of the year and to end the year at 16% levels with the lagging effects of the decelerated growth coupled with the appreciation of the Turkish lira.
In this period where rebalancing become evident, being in close relationship with our customers, identifying their problems in advance, and developing solutions jointly are critical both for the financial well-being of our customers, and for the management of our Bank’s asset quality. Recognizing his fact, we keep standing by our retail and commercial customers by providing resources when necessary and even through restructuring if it is needed. We will continue to do so.
As Garanti BBVA, we are shaping our strategy within the frame of our medium-long term investment plans, and not on shortterm targets. Regardless of macroeconomic developments, we will keep pioneering the transformation in the sector with our investments targeted at our business model and customers that make up the base of our strategy. We will continue to simplify and enhance our processes and operations by evaluating them from the viewpoint of our customers.
While 2018 and 2019 are relatively tough years, we are looking at the future with confidence by taking strength from fundamentally strong banking sector, our capital generative growth strategy, advanced risk management systems and our organizational agility in capturing opportunities. Being one of Turkey’s leading institutions, we act with the awareness of our responsibilities on the development of our national economy and contribution to the society. We continue to act with this awareness in our operations.
We will keep working with all our strength in order to create value for all our stakeholders who trust and support us.
ALİ FUAT ERBİL
President & CEO
Garanti BBVA’s contribution to economy amounted to TL 311 billion
Türkiye Garanti Bankası A.Ş., announced its financial statements dated December 31, 2018. Based on the consolidated financials, Garanti BBVA’s asset size amounted to TL 399 billion 153 million 601 thousand and its contribution to the economy through performing cash and non-cash loans amounted to TL 311 billion 176 million 277 thousand. The Bank delivered an ROAE (Return on Average Equity) of 15.0% and ROAA (Return on Average Assets) of 1.7%.
Commenting on the topic, Garanti BBVA's CEO Fuat Erbil stated that: “2018 was a moving year for both our economy and the sector. While preserving our strong balance sheet structure with our proactive management, competent human resource and prudent risk policies, we continued to contribute to the economy. Given confidence in our high capital adequacy ratio, our contribution to the economy added up to TL 311 billion. We ended the year with market share gains amongst private banks in all the TL lending products. While maintaining our leading position in retail loans and credit cards, our deposit-oriented and balanced approach continued on the funding side. Since the beginning of the year, we improved our loan to deposit ratio by 14 percentage points. Within the framework of the borrowing program, we provided financing exceeding USD 1.3 billion from overseas markets in the last quarter. This was the longest and the highest amount of borrowing of the last quarter of 2018. While we take pride in our contribution to the country’s economy, we will continue to support the market with the funding we have raised.”
Expressing the pride for the recognitions of Garanti BBVA’s efforts by international authorities, Erbil said; “Garanti BBVA was recognized as “Turkey’s Best Digital Bank” and Garanti BBVA Mobile was recognized as “Turkey’s Best Mobile Application” by World Finance Magazine for its innovative projects on customer experience and its digital transformation. In 2018, we have completed the transformation of all of our branches within the framework of the new branch and service model. With this new model, we aim to increase the efficiency of our field structure and offer faster solutions to our customers and provide a better quality of experience. In addition to our branches, we continue with our efforts to further integrate our digital channels to the new technologies. Regardless of the macro developments, we will continue to pioneer the transformation in the sector with our customers who are the basis of our strategy and with the investments in our business model. I would like to thank all my colleagues, all of our stakeholders who trust and support us.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated September 30, 2018. Based on the consolidated financials, Garanti BBVA’s asset size reached TL 456 billion 328 million, its contribution to the economy through cash and non-cash loans increased to TL 354 billion 745 million 437 thousand. The Bank delivered an ROAE (Return on Average Equity) of 17.5% and ROAA (Return on Average Assets) of 2.0%.
Commenting on the topic, Garanti BBVA’s CEO Fuat Erbil stated that: ‘We finished the third quarter of 2018 with a solid balance sheet, well above the required level robust capital and liquidity via successful management of the challenging market conditions. In light of our sustainable development priority, our contribution to the economy reached TL 355 billion. With all of our stakeholders’ trust in our bank, our customer, human and operational excellence centricity, we overcame the challenges as one big team. The number of customers who prefer Garanti BBVA exceeded 16 million. We increased our customer deposit market share to 11.9% with the trust of our customers. We pioneered a new era with our innovative service model capturing benefits of digitalization, where customers receive all kinds of services from a single point in the fastest and easiest way. We continue our work for an inclusive economy where all individuals equally benefit from the opportunities, support active participation of women in economic life and contribute to the development of Turkey's entrepreneurial ecosystem.’
Mentioning that Garanti BBVA was recognized "Best Retail Bank in Turkey" by World Finance Magazine and "Best Retail Bank in Europe" by European CEO Magazine for its innovative projects and solutions on customer experience, digital transformation in its branches, as well as its instant e-commerce loan, Erbil said: ‘the international recognitions for our innovative projects on digital transformation and customer experience motivate us to excel and provide our customers with an excellent end-to-end banking experience. In the report published by Forrester Research, our mobile application Garanti BBVA Cep was named “Europe's Best Mobile Banking Application” in the category of user experience and #2 in total evaluation after BBVA. Furthermore, Global Finance named Garanti BBVA “Best Consumer Digital Bank in Turkey” and “Best Consumer Digital Bank in Mobile Banking in Western Europe”. On behalf of Garanti BBVA and Turkey, we are proud of these achievements. I would like to thank all my colleagues and our stakeholders, who trust and support us.’
Türkiye Garanti Bankası A.Ş., announced its financial statements dated June 30, 2018. Based on the consolidated financials, in the first half of 2018, Garanti BBVA’s asset size reached TL 384 billion 878 million, its contribution to the economy through cash and non-cash loans increased to TL 319 billion 244 million 923 thousand. The Bank delivered an ROAE (Return on Average Equity) of 18.1% and ROAA (Return on Average Assets) of 2.1%.
Commenting on the topic, Garanti BBVA’s CEO Fuat Erbil stated that: “ In the first half of the year, we could further strengthen our solid balance sheet with our stakeholders’ trust in us. Through the confidence granted by our high capital adequacy ratio, our contribution to the economy increased to TL 319 billion. We successfully rolled over our syndicated loan in the second quarter and underlined Garanti BBVA’s power in creating sustainable funding. Adding an innovative product to our foreign funding in June, we issued Turkey’s first social bond for women entrepreneurs with IFC. In July, we extended Turkey’s first green loan and once again continued to lead the sector in the area of sustainable finance.”
Adding that Garanti BBVA was the only bank from Turkey among 26 leading banks around the world to prepare global banking principles for sustainable development, Erbil said; “Supporting responsible and sustainable development is one of the strategic priorities of Garanti BBVA. We shape our products and services within this context and also manage our customers' environmental and social risks. We support women's participation in the workforce and we work to create an inclusive economy in which all individuals benefit equally from opportunities. With our focus on customer experience and digitalization, we started a new era in banking and transformed more than 600 branches where our customers receive all kinds of services from a single point of contact in the fastest and easiest way”.
Indicating that, it was an honor to see Garanti BBVA rewarded for its success, Erbil said: “We ranked among the best of Central and Eastern Europe. We were named ‘Best Bank for Sustainable Finance’ by Euromoney, ‘Best Project Finance House’ and ‘Best Structured Finance House’ by EMEA Finance. In Institutional Investor’s Emerging EMEA survey that covers 473 companies, we were recognized among ‘Most Honored’ institutions as the only banking executive team from Turkey. I would like to thank all my colleagues and our stakeholders, who trust and support us.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated March 31, 2018. Based on the consolidated financials, in the 3 months period of 2018, Garanti BBVA’s asset size reached TL 359 billion 882 million, its contribution to the economy through loans and non-cash lending reached to TL 298 billion 250 million 713 thousand. The Bank delivered an ROAE (Return on Average Equity) of 18.3% and ROAA (Return on Average Assets) of 2.2%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated that: “Despite the challenging market conditions, we made a strong start to 2018 by continuing to support the economy. While growing faster than the sector in TL loans, we sustained our leadership in consumer loans. In the first three months of 2018, we grew our TL loans and TL deposits by 4%, and gained market share with our customers confidence in us. We work with our sustainable development focus and continue to be the solution partner of our customers, while maintaining our asset quality with effective risk management, stable and cautious policies and strong capital. Leading the transformation of the banking sector, we provide speed and convenience to our customers with all the innovative steps we take in digital banking and aim to deliver an excellent customer experience.”
Stating that, Garanti BBVA is appreciated in many areas with its customer-oriented approach by international finance authorities, Erbil said: “Our bank was chosen the ‘Best Trade Finance Bank in Turkey’ for the 8th consecutive year by Global Finance, one of the world’s leading business magazines. In addition, with our efforts to create solutions for our customers' needs we received the ‘Best Cash Management in Turkey’ award for the 3rd consecutive year. Garanti BBVA is chosen ‘Turkey's Best Digital Bank’ by World Finance at the 'Digital Banking Awards 2017'. Our mobile app, Garanti BBVA Cep was awarded ‘Turkey's Best Mobile Banking Application’. Garanti BBVA has been awarded the Silver Stevie Award for its new "OnSite Banking" application, by focusing on making customers’ life easier at each step and by successfully applying its digitalization strategy from business processes to all its products and branch service model.
With our innovative business model; we will continue to keep our customers at the center of our business to understand and meet all corporate, commercial, SME and retail needs. We believe that creating sustainable value is only possible in this way, and we are progressing on our path with solid steps. I thank all of our stakeholders for the confidence they have in us.”
We are pleased to present our first integrated report. This report integrates information from the annual Sustainability Report we used to publish in addition to our Annual Report. The Report was prepared in accordance with the GRI G4 Sustainability Reporting Guidelines of the GRI to core option, covering the 12-month period ended 31 December 2017. It also constitutes a summary of Garanti BBVA's progress in 2017 on its commitment to implement the ten principles of the United Nations Global Compact (UNGC) in our business activities.
With this integrated report, we provide a concise overview of both our financial and non-financial performance, showing the value that Garanti BBVA creates for all its stakeholders, the economy and the society. We believe that integrated reporting serves to even better reflect Garanti BBVA's efforts in value creation. This first integrated report is only the start of integrating our financial and nonfinancial information and we will continue to take further steps to become more integrated.
POSITIVE GROWTH MOMENTUM IN GLOBAL ECONOMIES
The year 2017 ended very positively as global economies gained strength above and beyond the initial expectations in the beginning of the year. While the pick-up in economic activity seems to be relatively stronger in advanced countries, emerging markets also grew faster in 2017 relative to the previous year.
The Turkish economy, backed by timely incentives, showed solid progress in growth. Supportive economic policies including the Credit Guarantee Fund (CGF) scheme increased confidence in the economy and hence, lifted the growth notably. We expect GDP growth to reach 7% at year-end 2017, compared to 3.2% in 2016. However, this robust domestic demand repressed inflation. Together with the currency depreciation, headline inflation rose to 11.9% in 2017. As a response to inflationary pressure and volatility in currency, the Central Bank of Turkey (CBRT) maintained its tight stance and average funding cost increased by around 450 bps in 2017.
Despite the rise in interest rates, revitalization in economic activity and active balance sheet management supported fundamentals of the banking sector and the sector delivered better results than expected.
HIGH QUALITY EARNINGS PERFORMANCE, ONCE AGAIN, UNDERPINNED BY DYNAMIC ASSETLIABILITY MANAGEMENT
As Garanti BBVA, we successfully completed the year with our sustained focus in excellent customer experience, sound solvency ratios and efficiency. The year was highlighted with the CGF scheme, which boosted business banking loan growth and helped asset quality. In supporting SMEs and businesses, the engine of our economy, we were the first mover in providing CGF loans with our agile sales team and quick system integration. Accordingly, we grew by 28% in TL business banking loans. In consumer loans, albeit fierce competition in the sector, we further strengthened our leadership position among private peers. Amid the growing economy, as I mentioned previously, CBRT kept its tight stance to cope with inflationary pressures which, in turn, pressured deposit costs in the market. In this environment, in order to manage cost and duration mismatch, we focused on growing SME & retail deposits and, as a result, enhanced our deposit base further with 16% growth in TL deposits. Moreover, in order to take advantage of the opportunities in the global market environment, we continued to tap international markets to raise alternative funding sources for cost and duration mismatch management. Accordingly, we successfully renewed our syndications, and for the first time we issued Basel III Compliant Subordinated Notes in the amount of USD 750 million and with 10 year tenure. Receiving a record demand of USD 4 billion, our Basel III Compliant Tier II issuance became the lowest costing transaction of a bank in Turkey, while also generating the largest order book ever. With the International Finance Corporation (IFC), we signed an unprecedented agreement based on mortgages that would support 'Green Mortgage' projects, for the first time in Turkey. These transactions are solid sign of the credibility established by Garanti BBVA before the international capital markets. Garanti BBVA will continue to be among the leading institutions of the Turkish financial sector with its sustainable growth strategy, innovative services, and ongoing investments in human capital.
We strive to create value for our customers, employees and all our stakeholders. We qualified for the FTSE4Good Emerging Markets Index with our performance in environmental, social and governance areas. We became the first and the only company from Turkey to be listed in the Bloomberg Financial Services Gender Equality Index with our HR practices and the support we provide to women for their increased role in business life and higher contribution to the economy. We became the only financial institution worldwide to be included in the 2017 CDP Water A List.
Disclosing climate change strategies using the CDP platform, we also retained our score in the climate change program and we were listed among CDP Turkey Leaders. We became the only company from Turkey qualified to be included in the Dow Jones Sustainability Emerging Markets Index for three consecutive years.
ANOTHER YEAR OF CLEAR BEAT
We are delighted to share that we delivered outstanding results in every aspect. While maintaining our leadership position among private banks in consumer lending, we significantly grew our TL business banking loans. As of today, the loans we have provided under the Credit Guarantee Fund surpassed TL 18 billion. Driven by the growth in TL business banking loans, we recorded 20% growth in TL loans, surpassing the projected 15% growth at the beginning of the year. While growing, we continued to make effective use of our capital. Our capital adequacy ratio increased to 16.8% in 2017 from 14.7% in 2016. Strong capital ratios are the result of high quality earnings. We have been constantly increasing our ROAE since 2015, which reached 16.6% as of yearend 2017, beating our initial expectations of 15.5-16%. In line with our strategic focus on efficiency, we improved our cost-to-income ratio by 4 pp vs. our 1.5 pp estimate. This high core banking profitability enabled us to strengthen our capital.
We work together and alongside our Retail, SME, Commercial and Corporate customers to find the best solutions for all their needs. There is nothing coincidental about the fact that we have ranked #1 in the net promoter score among peers for two consecutive years. As a pioneer in digital transformation for over 20 years, today we reached a point where we bring the banking service to our customers’ locations and serve Turkey’s largest digital customer base with close to 6 million active customers.
In our actions, we are guided by the principles of trust, integrit y, accountability and transparency toward all our stakeholders. Our efforts in supporting financial literacy, health and inclusion resulted in touching the lives of 809,397 customers that started using savings products. Renewable energy makes up more than 60% of our electricity generation loan portfolio; in fact, we command 30.2% market share in Turkey’s installed wind power capacity as of year-end 2017. We transform savings into sustainable investments by offering sustainability products & credit lines and TL 9.3 billion lending based on impact investment principles. Our efforts to support the financing of renewable energy led to avoid GHG emissions of 5.4 million tCO2 e from hydro, solar and wind power plants that we participated in financing. The scope three footprint of our energy production portfolio has been zero in new project finance commitments.
Our engagement activities with our stakeholders led to 8 policies and position papers that contribute to Sustainable Development Goals (SDGs), while our community investment programs addressed three different social challenges with a Social Return on Investment value of more than two.
As our most valuable asset is human, we continued to invest in our employees fo cusing on their development, s atis fac tion a nd well-b eing. We provided 36 hours of training per employee in 2017. We embrace a fair and transparent management policy based on performance, focused on equal opportunities, diversity and internal promotion. As a result, we outperformed the sector with our employee engagement score of 65%.
This year, we expect global macro drop to be supportive given recoveries in investment, manufacturing and trade. Going forward, global GDP growth figures and the steps advanced economies will take with respect to their monetary normalization processes will be of great importance for the external financing conditions of other economies.
In Turkey, we expect CBRT to maintain its tight stance in the absence of significant improvement in inflation. This suggests a positive real rate, which might favor the country throughout the year given upbeat sentiment globally. Nevertheless, this flow may support our current account deficit and inflation.
At Garanti BBVA, as always, we will sustain our uninterrupted support to the economy while optimizing capital allocation and prioritizing risk-return balance. Following the robust lending growth linked to CGF-loans, we envisage a normalized TL loan growth. Deposits will be the main source of funding, yet we will continue to tap international funding when market conditions are favorable. We are not expecting any difficulty in reaching international funding sources.
Our new branch service model represents a new era in the Turkish banking sector. Going forward, we will continue to focus on this transformation to increase digital penetration in customers as well as in processes, thus to further enhance customer experience and loyalty.
Given our capital generative growth strategy, advanced risk management systems and organizational agility in capturing new opportunities, we are looking at the future with confidence. We act with the awareness of the impact of each and every action we take, and with the responsibility of being an institution that shapes the future and leads the sector. With our competent human resources and extensive branch network in every city of Turkey, we keep working to offer excellence in customer experience, ensure responsible and sustainable development, operational efficiency and employee happiness.
I am grateful to all our stakeholders who trust and support us.
ALİ FUAT ERBİL President & CEO
Türkiye Garanti Bankası A.Ş., announced its financial statements dated September 30, 2017. Based on the unconsolidated financials, in the 9 months period of 2017, the Bank posted an unconsolidated net income of TL 4 billion 644 million 851 thousand. While Garanti BBVA’s asset size reached TL 311 billion 42 million 321 thousand, its contribution to the economy through cash and non-cash lending increased to TL 254 billion 616 million 658 thousand. The Bank delivered an ROAE (Return on Average Equity) of 17.4% and ROAA (Return on Average Assets) of 2.2%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated that: “Garanti BBVA acts with the awareness of the impact by each and every action it takes, and with the responsibility of being an institution that shapes the future and leads the sector. Combining its approach to unconditional customer satisfaction with its solid capital structure and efficiency-focus, Garanti BBVA, completed the first nine months of the year successfully. While preserving its solid financial structure through effective balance sheet management, Garanti BBVA uninterruptedly sustained its contribution to the economy.”
Touching upon the significance of being responsible bankers aware of the risks and opportunities, Erbil said: “As the only company from Turkey, and as one of the 100 companies around the world, we have announced our support to the recommendations of Task Force on Climate-related Financial Disclosures (TCFD) formed by Financial Stability Board (FSB) under G-20. Furthermore, as a signatory of UN Global Compact, we have pioneered the formation and signed the “Declaration of Sustainable Finance”. Moreover during this period, we have signed an agreement with European Bank for Reconstruction and Development (EBRD) with a 5 year maturity for €75 million financing, equivalent to approximately TL300 million that aims to expand the utilization of “Green Mortgage” loans and protect future generations through “Green Buildings”. We strive to create value for our customers, employees and all our stakeholders. We became the only company from Turkey qualified to be included in the Dow Jones Sustainability Emerging Markets Index for 3 consecutive years. Teachers Academy Foundation (ÖRAV), founded by Garanti BBVA, is granted Special Consultative Status by UN Economic and Social Council (ECOSOC). I am thankful to my valuable colleagues who carry Garanti BBVA to the leadership position in the banking sector and are the pioneers of transformation on international platforms.
Türkiye Garanti Bankası A.Ş., announced its financial statements dated June 30, 2017. With an asset size of TL 335 billion 942 million 185 thousand, Garanti BBVA’s contribution to the economy through cash and non-cash lending reached TL 272 billion 980 million 362 thousand, based on the consolidated financials. The Bank posted a net income of TL 3 billion 100 million 273 thousand in the first six months of 2017. The Bank delivered an ROAE (Return on Average Equity) of 18.1% and an ROAA (Return on Average Assets) of 2.1%.
Commenting on the financial results, Garanti BBVA's CEO Fuat Erbil said: “In the first half of 2017, while further strengthening our solid balance sheet with the confidence of all our stakeholders, we helped revitalize the economy. We successfully renewed our € 1.25 billion syndicated loan; and for the first time in international capital markets we issued Basel III Compliant Subordinated Notes in the amount of US$ 750 million and 10 year tenure. Receiving a record breaking demand of US$ 4 billion, our Basel III Compliant Tier II issuance became the lowest costing transaction of a bank in Turkey, while also generating the largest order book ever. With IFC, we signed an unprecedented agreement based on mortgages that would support 'Green Mortgage' projects, for the first time in Turkey. The loans we have extended under the Credit Guarantee Fund surpassed TL15 billion. Supporting social and economic development of women for over 10 years, the financing we provided to women exceeded TL3.2 billion.
Expressing the pride in contributing to the sustainable future of Turkey on behalf of Garanti BBVA, Erbil said; “EMEA Finance named Garanti BBVA the Best Project Finance House in CEE (Central and Eastern Europe) region. We lead in the financing of projects contributing to the sustainability of the Turkish economy and offer innovative solutions. We work together and alongside our Retail, SME, Commercial and Corporate customers to find the best solutions for all their needs, and take part in their lives in an uninterrupted and long lasting manner. At every point of contact; physical locations across Turkey and leading on digital platforms; through all channels we bring our services to our customer’s location and work to create the best experience possible. I am grateful for all our stakeholders who trust and support us.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated 31 March 2017. Based on the consolidated financials, in the first three months of 2017, the Bank posted a consolidated net income of TL 1 billion 536 million 636 thousand. While Garanti BBVA’s asset size reached TL 328 billion 691 million 782 thousand, its contribution to the economy through cash and non-cash lending exceeded TL 269 billion 255 million 793 thousand. The Bank’s ROAE (Return on Average Equity) improved to 18.9% and an ROAA (Return on Average Assets) to 2.1%.
Commenting on the financial results, Garanti BBVA's CEO Fuat Erbil said: “We made a solid start to 2017 with a remarkable core banking performance. While maintaining our leadership in consumer lending, we grew our TL business banking loans by 14% in the first three months of 2017. As of today, the loans we have provided under the Credit Guarantee Fund surpassed 10 billion liras. We continue to support the economy with our strong capital and diversified funding resources. The US$ 500 million 6 year tenure Eurobond we issued in March is an important indicator of confidence in Garanti BBVA and in Turkey during a turbulent period in the global financial markets. With over 19 thousand employees and the expansive branch network in every city of Turkey, we continue to be alongside our customers. As a pioneer in digital transformation for over 20 years, today we reached a point where we bring the banking service to our customer’s location. In addition to the capability of quick transaction processing without branch visits, we cater to our customers the privilege of private expert consultations on subjects requiring specialist knowledge. The digitalization journey we started with BonusFlas in payment systems, continues with Garanti BBVA Isler (Garanti for Merchants) web platform for SMEs. Furthermore, we commenced the period of financing for digitalization in agriculture.”
Expressing the pride for the recognitions of Garanti BBVA’s efforts by international authorities, Erbil said; “We were chosen ‘Best Investment Bank in Turkey’ by Global Finance for the financing we provided to projects. We qualified for the FTSE4GOOD Emerging Index with our performance in environmental, social and governance areas. We became the first and only company from Turkey to be listed in the Bloomberg Financial Services Gender Equality Index, with our HR practices and the support we provide to women for their increased role in business life and higher contribution to the economy. We continue to work relentlessly to add sustainable value to all our stakeholders.”
2016 was defined by the prevailing uncertainties in global economies and had a busy agenda due to political developments. The UK referendum on leaving the European Union and the US presidential elections were the key events affecting the global markets and emerging economies including Turkey.
Despite increasing volatility in the global economy as well as unexpected events and challenging conditions in Turkey, Turkish economy and banking sector overcame the difficulties and sustained their solid position on the back of strong fundamentals.
As Garanti BBVA, we have successfully completed this rough year with our solid balance sheet structure, leading capital, asset quality and liquidity indicators. We have outperformed our targets in many areas. However, for us, the most critical achievement this year was to sustain our uninterrupted support to the economy. We continued to stand by our retail customers whenever they need us and preserved our position as Turkey’s leading consumer bank. TL corporate loans remained as a strategic focus for us. With the help of close relationships we have established with our SME customers, we kept working not just as their bank, but also as their business partners. As a consequence of all these factors, in 2016 we surpassed TL 256 billion in total cash and non-cash loans with an 11.8% market share.
As always, we are building our growth strategy on prioritizing risk-return balance. Our NPL ratio was registered as 2.8%, thus maintaining a level below the sector’s average. We are ending the year as the strongest bank in the sector in terms of solvency ratios. We are in a position to support consistent growth with our solid capital base.
On the funding side, deposits continued to be the main funding source. We increased our TL customer deposit base by 17% in line with the sector. More importantly, we have achieved 22% growth in our demand deposit base, which indicates our stance as the preferred bank of customers. Demand deposits currently make up nearly one fourth of our deposits. Besides deposits, we have actively tapped alternative funding sources while managing our costs. We have become the first bank in the sector to roll over the syndicated loan facility by 100% in the second half of the year, with the participation of 34 banks from 15 countries, and proved our success in international markets once again.
In line with our strategic priorities, we consistently worked also in 2016 to further improve the customers’ experience and to be alongside our customers in all financial decisions they make. We constantly develop and transform ourselves initiatives to ensure that our customers can benefit the most from the opportunities digital era has to offer. In addition to making all our existing products available also on digital channels, we are introducing products and services specifically designed for digital channels to guarantee an excellent customer experience. As a result of our visionary investments, today we manage Turkey’s largest digital customer base with close to 5 million digital customers,. There is nothing coincidental about the fact that one out of every four transactions handled via digital channels in Turkey goes through “Garanti BBVA”.
In addition to our support to the economy, we continued to be involved in projects that add real value to the society and the environment.
The total amount of financing we have provided for renewable energy investments surpassed USD 4.5 billion by the end of 2016. On the wind energy financing, we are by far the leader with 32% market share in Turkey’s installed wind power capacity. On the other hand, we are actively supporting the efforts against climate change through our products designed to encourage efficient use of water.
We succeeded to be listed in CDP Global A-list, the top group in the CDP rankings among companies disclosing their climate change strategies using the CDP platform. Being the first company in Turkey to be named in the list for two consecutive years, we have also taken our place among “2016 CDP Climate Leaders”. Once again in 2016, we were the only company from Turkey qualified to be included in the Dow Jones Sustainability Emerging Markets Index. In addition to all these, we have authored another important achievement and we have been included in the FTSE4GOOD Emerging Index that made its debut in 2016.
In 2016, we have celebrated the 10th anniversary of our initiatives focused on woman entrepreneurship, which were unprecedented at the time of their inception. We keep standing by the women entrepreneurs in our country with the Women Entrepreneurs Meetings, co-organized with KAGIDER (Women Entrepreneurs Association of Turkey) since 2008, Women Entrepreneurs Executive School held in collaboration with BUYEM (Boğaziçi University Lifelong Learning Center), as well as Turkey’s Woman Entrepreneur Competition organized in cooperation with the Ekonomist magazine and KAGIDER.
In addition to numerous practices and initiatives we have developed to empower women socially and economically, our projects in human resources, and studies carried out with the customers and the society for gender equality made us the first and only company from Turkey to qualify for the Bloomberg Financial Services Gender-Equality Index.
In June 2016, we have launched Garanti BBVA Partners Entrepreneurship Base to help flourish the entrepreneurial ecosystem in Turkey. To date, the program received nearly 1,500 applications from entrepreneurs, and so far, we have added 14 projects in Garanti BBVA Partners portfolio and accelerated them.
As Garanti BBVA, we are driven by the strategy of creating permanent value for the community and real benefit for our stakeholders in all corporate social responsibility projects we carry out. Within this context, education has long been at the top of the topics of utmost importance for us.
Aiming to support the professional and personal development of our teachers and contributing to the implementation of an education system that encourages thinking, inquiring and researching; ÖRAV, the Teachers’ Academy Foundation we have set up in 2008, offered training to almost 140 thousand teachers assigned all over Turkey in the eight years since its inception. Through these teachers, ÖRAV lit the way for 8 million students and supported their development.
Through “Math-Science Learning with Fun”, a collaborative project with the Educational Volunteers of Turkey (TEGV), we are targeting to build core math and science knowledge and skills of nearly 100,000 primary school students over the course of 3.5 years, and thus contribute to raising generations with scientific thinking and problem solving skills.
In 2016, under the roof of SALT, our gift to Turkey’s cultural and intellectual life, 75 exhibitions were hosted at SALT Galata and SALT Ulus, which altogether attracted 1.8 million art lovers. On the other hand, we hosted over 30 thousand music enthusiasts in 50 concerts organized in 2016 within the framework of our “Garanti BBVA Jazz Green” sponsorship that has been ongoing for 19 years with the motive of sharing jazz music with large audiences.
Sports and basketball continued to be another field that we proudly support. We have been the main sponsor of the Turkish National Women’s Basketball Team and the Turkish National Men’s Basketball Team for 16 years. A total of 55 thousand students received basketball training in 81 centers at the 12 Giant Men Basketball Schools that we have been supporting since 2002. In 2016, more than 4,500 junior athletes trained in these schools.
Being a leading institution in Turkey, we acknowledge our responsibilities with respect to the economic advancement of our country and our contributions to the community, and we continue to act by this awareness. In the year ahead, we will continue offering the best experience to our customers by placing them at the focus of all our activities, creating the highest value for all our stakeholders, and investing for happier Garanti BBVA customers and employees.
Ali Fuat ErbilPresident & CEO
Based on the consolidated financials, in the 9 months period of 2016, the Bank posted a consolidated net income of TL 3 billion 940 million 66 thousand. With the asset size of TL 295 billion 130 million 196 thousand, Garanti BBVA’s contribution to the economy through cash and non-cash lending reached TL 239 billion 259 million 462 thousand. The Bank delivered an ROAE (Return on Average Equity) of 16.1% and an ROAA (Return on Average Assets) of 1.8%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil said: “In the third quarter of 2016, despite the extraordinary situation our country went through and the tough conditions, as Garanti BBVA, we continued to use our strength for the country’s progress and future. Thanks to our solid and well-diversified balance sheet structure, with our leading indicators in the areas of not only capital and liquidity, but also in risk management and asset quality, we have successfully overcome this challenging period. Growing above the sector across all areas, we continued to support the economy through our cash and non-cash loans that exceeded TL 239 billion. We continued to gain market share in mortgage, general purpose and auto loans, and further strengthened our leading position in consumer loans. While we create solutions for our SME, Commercial and Corporate banking customers, we will continue to support Turkey’s sustainable growth and back energy and infrastructure projects.”
Pointing out Garanti BBVA’s performance being appreciated by international financial authorities, Erbil said: “Garanti BBVA was once again selected the Best Retail Bank of Turkey by World Finance Magazine as the most supportive private bank for consumers in Turkey. With our continuous investments in the area of digital banking for the past 20 years, we are proud to be the ground breaker and leader in the sector. Within the scope of the Digitalization Index research conducted by one of the world's leading management consulting firms, Accenture, we were selected Turkey's Most Digital Company. Thanks to the 20 thousand people who lift Garanti BBVA up with their success in several areas, we once again became the only company from Turkey to qualify for the Dow Jones Sustainability Index. As a company that integrated sustainability into its culture, we will continue to work relentlessly to add value to all our stakeholders that believe in us and support us.”
Based on the consolidated financials, in the first half of 2016, the Bank posted a consolidated net income of TL 2 billion 605 million 286 thousand. With the asset size of TL 287 billion 247 million 695 thousand, Garanti BBVA’s contribution to the economy through cash and non-cash lending reached TL 235 billion 119 million 598 thousand. The Bank delivered an ROAE (Return on Average Equity) of 16.0% and an ROAA (Return on Average Assets) of 1.8%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated: “We successfully completed the first half of 2016 in creating value for all our stakeholders. While increasing our support to the economy via our lending activities, with the trust of our customers we grew our deposits above sector. Since the beginning of the year, Garanti BBVA has been the choice of 500 thousand new customers. We greet over 150 thousand customers each day at our branches serving in every city of Turkey. In shaping the balance sheet through sustainable growth strategy, Garanti BBVA continued to strengthen its capital base, and set even higher efficiency and excellence targets for its internationally certified operations. We strive to place ourselves in our customers lives and continue to reflect the innovative and human centric culture of Garanti BBVA in our products and services consistently through each and every channel. Having the highest number of digital banking customer base in Turkey, Garanti BBVA ensures its1.3 million customers to perform banking transactions with ease every day, solely through digital channels. The Video Chat Loan service we started offering in April carries human touch to digital platforms, and allows access to information and experts anywhere as if you are at a branch. Increasing customer satisfaction and loyalty constitutes the base of our business model.”
Touching upon Garanti BBVA’s efforts in the area of women entrepreneurship surpassing its 10th year, Erbil said: “We maintain our uninterrupted support to pave the way of women entrepreneurs. With numerous projects materialized, we assume the leadership position of ‘Women’s Banking’ activities today. Simultaneously we organize support programs for early stage entrepreneurs and SMEs of all sizes and from all sectors to access necessary resources, connect with their customers and open to global markets. To support entrepreneurial ecosystem and innovation, Garanti BBVA established an entrepreneurship base as part of Garanti BBVA Partners platform, which will be used as an office space, hosting entrepreneurs with valuable ideas from all sectors. With our entrepreneurship accelerator program Garanti BBVA Partners, we continue to work swiftly in order to make significant contributions to the entrepreneurship ecosystem. I would like to thank my colleagues who lead the sector and carry Garanti BBVA forward in every field, and our stakeholders who trust us.”
Commenting on the recent developments in our country, Erbil said: “We believe that our country will come out stronger from all that was encountered with more powerful democracy and economy. During all these extraordinary days, there was no adverse impact on the sector and on Garanti BBVA. Being aware of the responsibility held in this critical period, as Garanti BBVA, we will continue to support our economy.
Based on the consolidated financials, in the first quarter of 2016, the Bank posted a consolidated net income of TL 1 billion 57 million 133 thousand. Garanti BBVA’s asset size reached TL 290 billion 53 million 633 thousand, while its contribution to the economy through cash and non-cash lending totaled TL 228 billion 500 million 283 thousand. The Bank delivered an ROAE (Return on Average Equity) of 14.8% and an ROAA (Return on Average Assets) of 1.6%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated that: “We had a robust start into 2016. Our assets reached above TL 290 billion level driven by lending growth. Our diversified funding mix, high capital adequacy and core capital ratios are the results of our successful balance sheet management. While strengthening position in retail loans in the sector, we maintained our solid asset quality. In this period, we continued to offer innovative products and services to our customers who has always been at the core of our operations, to make their lives easier and add value. We are very pleased with the interest our BonusFlash application attracted that reached 1.5 million users. Our customers keep our ambition always alive to continue to offer further differentiating services ”
Indicating that Garanti BBVA is recognized in many aspects by international finance authorities for its customer-oriented approach, Erbil said: “ Our Bank has been recognized as the “Best Trade Finance Bank in Turkey” for six consecutive years by Global Finance, one of the leading finance magazines in the world. With our efforts in introducing solutions to our customers’ needs and creating value for them as their solution partner, we broke the ground in many areas. We were also honored with the “Best Cash Management in Turkey” award. Our innovative business model will enable us to continue to keep our customer focus and deliver to the satisfaction of the needs of corporate and commercial, SME and retail customers. We believe sustainable value creation is only possible through this way and we take firm steps forward. I hereby thank all of our stakeholders for their confidence in us.”
Albeit the optimism in the beginning of the year, 2015 has been a challenging year of continued uncertainties. Global markets had to deal with a burdensome agenda that covered the Fed’s rate hike decision, growing turmoil in Syria, growth pressure on developed economies, decelerated growth in China and the downtrend in oil prices. Turkey, on the other hand, lived a year of two elections and exchange rates peaked due to global turbulence.
Turkish banking sector was not at all immune to this heavy agenda. While the sector is growing at lower rates compared to the past, it is struggling to preserve its profitability levels amid newly imposed regulations. Suppressed consumer loan & credit card revenues due to the regulatory changes as well as the increased costs for the sector stemming from fee rebates caused the Turkish banking sector to post the lowest profitability levels of the last decade.
In spite of the challenging circumstances of 2015, as Garanti BBVA, we continued to deliver the highest profitability rates among private banks in the sector, capitalizing on our dynamic business model, technology and scale advantage. While maintaining our commercial-loan driven growth, we strengthened our leadership position in consumer loans in the sector. We have built our growth strategy on prioritizing riskreturn balance and we have been successful. Today, we are the sector’s strongest private bank in terms of common equity Tier-1 ratio and this strength puts us in a position to support consistent growth.
On the funding side, while maintaining our focus on customer deposits, we continued to successfully tap international funding sources. In a year of fierce competition in TL deposits that reflected on prices, our demand deposit base expanded 20%. Demand deposits currently correspond to nearly one fourth of our TL deposits. We are proud to be the preferred bank of customers.
Sound cost control and expense management became increasingly critical due to suppressed profitability in the recent years. The world is changing and technology is advancing. In turn, we need to adapt our business models according to the new developments and we need to work more efficiently. To this end, we keep investing in people and in efficient delivery channels. With nearly 20 thousand employees, we are offering uninterrupted banking experience through our omni-channels to almost 14 million Garanti BBVA customers. Our digital customers currently constitute 48% of our customer portfolio. Our Internet banking has 51% and mobile banking has 29% share in noncash financial transactions. In the period ahead, we will witness digitalization gaining speed and digital channels taking a more prominent role in increasing operational efficiency. At Garanti BBVA, our purpose goes beyond creating economic value; we aim to contribute to the environment and the society by partaking in voluntary social initiatives that increase value. The year 2015 is marked by intensified global efforts in the areas of sustainable development and climate change. In our Climate Change Action Plan released October 2015, we are concentrating our support and efforts under the four main headings; carbon pricing and prioritizing renewable energy investments, reducing deforestation, managing water risks through climate change adaptation, and establishing green office standards. In addition, we became the first Turkish bank to sign the Caring for Climate (C4C) initiative encouraging private sector action against climate change, and the Business Leadership Criteria on Carbon Pricing. Both are led by UN Global Compact. The total amount of financing we have provided for renewable energy investments topped USD 4 billion by the end of 2015. We preserved our 35% market share in Turkey’s installed wind power capacity. Meanwhile our new loan product designed to encourage efficient irrigation systems in the agricultural industry is taking our support to climate change mitigation to a whole new level. Our approach to the adaptation of climate instability impacts on water cycle, was presented in the UN components’ report entitled “The Business Case for Responsible Corporate Adaptation: Strengthening Private Sector and Community Resilience”. We are the only Turkish company and one of the 2 banks in the world presented in the report. Garanti BBVA Anatolian Meetings, at which we offer guidance to the SMEs and share sector and province oriented solutions, entered its 13th year in 2015. Visiting 3 cities in 2015, Muş, Kocaeli and Uşak, we have held 100 meetings in 68 provinces to date. We have reached out to 6,662 women through Women Entrepreneurs Meetings co-organized with the Women Entrepreneurs Association of Turkey (KAGİDER) since 2008; with the objective of supporting participation of women in economy and empowering women entrepreneurs in developing economies such as Turkey.
Being a bank attaching great importance to corporate responsibility initiatives, we have launched a new project in 2015 as part of our commitment to create permanent value in the field of education. Collaborating with the Educational Volunteers of Turkey (TEGV), we began sponsoring the educational program “Math and Science Learning with Fun”. We aim to equip primary education students in grades two through eight with basic math and science knowledge and skills, thereby helping raise generations with scientific thinking and problem solving skills, embracing a positive attitude towards science. We are planning to reach approximately 100 thousand children in the course of 3.5 years with this program, which will be offered at TEGV locations in 37 provinces across Turkey. In 2015, 19 exhibitions showcased at SALT Galata, SALT Beyoğlu and SALT Ulus under the roof of SALT, our gift to Turkey’s cultural and intellectual life, attracted 509 thousand art lovers.
On the other hand, we hosted almost 41 thousand music enthusiasts in 79 concerts organized in 2015 within the frame of our “Garanti BBVA Jazz Green” sponsorship that has been ongoing for 18 years with the motive of sharing jazz music with large audiences.
Basketball is another field we are proud to support and sponsor. We have been the main sponsor of the Turkish National Women’s Basketball Team and the Turkish National Men’s Basketball Team for 15 years. A total of 55 thousand students received basketball training in 81 centers at the 12 Giant Men Basketball Schools that we have been supporting since 2002. Our efforts to contribute to the social life of individuals with disabilities continued with our support to wheelchair basketball. Based on our “Disabled-Friendly Banking” notion, we rendered Garanti BBVA Internet Banking and Mobile Banking accessible to visually impaired customers with the use of software that can read out screen content. The project “İşe Katıl Hayata Atıl” (Join the Workforce Join Life), which we have launched under the patronage of the Ministry of Family and Social Policies in a bid to help people with disabilities gain professional skills and to create employment opportunities for them, continued and further expanded in 2015. In the past years, open communication and cooperation with our stakeholders has been a major contributor in improving our sustainable banking vision, by keeping it dynamic. On the back of all these endeavors, Garanti BBVA became the only Turkish company to qualify for the Dow Jones Sustainability Index, one of the world’s most prestigious sustainability indices, in 2015. This offers further evidence that we have embedded sustainability throughout the entirety of our banking operations. I am more than happy to be sharing these facts with you, all of which demonstrate the communication we have established with our stakeholders on the principles of accuracy, transparency, fairness, accountability and responsibility, and the value we attach to the society.
I am honored and delighted to have taken over CEO post as of September 2015. Over the years, we established a deep-rooted corporate culture and a solid strategy. Our strategy has been tested many times over the last 15 to 20 years and proved its success. Based on our dynamic and innovative business model, our strategy plays an important role in differentiating Garanti BBVA. We share the same approach and priorities as BBVA, which has become our major shareholder with the agreement dated July 2015: human-centered organization, customer-centric approach, technology-focus and efficiency-focus. I believe that the shared culture, values and goals with BBVA will further contribute to our value creation.
Our wish, as always, is to earn the appreciation of all our stakeholders.
Based on the consolidated financial statements, in 2015, Garanti BBVA’s asset size reached TL 279 billion 647 million 178 thousand while its contribution to the economy through cash and non-cash lending totaled TL 220 billion 687 million 905 thousand. In 2015, the Bank posted a consolidated net income of TL 3 billion 615 million 114 thousand. The Bank delivered an ROAE (Return on Average Equity) of 12.8% and an ROAA (Return on Average Assets) of 1.4%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated that: “Despite the tough market conditions in 2015 we successfully managed our balance sheet, our assets reached TL 280 billion and the share of loans within assets climbed above 60%. In lending, business loans led the growth, while we strengthened our leadership in the sector in retail, mortgage and auto loans. We maintained our sound asset quality with our proactive and effective risk management approach. With 14 million customers’ trust in Garanti BBVA, deposits grew parallel to loans. Regardless of uncertainties in foreign markets, the 100% renewal of our syndicated loan in November, reflects the confidence in Garanti BBVA and the sustainability of our foreign funding generation capacity. The capital base strengthened with our internal resources provides long-term ground for sustainable growth. We are the strongest commercial bank in terms of core capital adequacy ratio. Indicating that Garanti BBVA’s value creation is not just limited to financial performance, Erbil said: “We are growing together with all our stakeholders. Taking steps for a sustainable future, we proudly supported various projects this year. Female entrepreneurship is a crucial responsibility for the social and economic development of SMEs and Turkey, in this context we continued our uninterrupted support through our Garanti BBVA Partners program. We are the first bank to become members of UN Women Business Hub and WeConnect International. Garanti BBVA became the one and only Turkish bank to declare its “Climate Change Action Plan”. We supported the transition to a low-carbon economy by offering a special product for unlicensed solar power projects under 1 MW. Having qualified for the A-list of the CDP Climate Change Program, Garanti BBVA is the only company to be included in the CDP Global Leaders Report from Turkey, and earned the “CDP 2015 Turkey Climate Performance Leader” award. With the support and cooperation of Garanti BBVA, CDP Turkey Water Program was established. Furthermore in 2015, Garanti BBVA became the only Turkish company to qualify for the Dow Jones Sustainability Emerging Markets Index, one of the most respectable sustainability indices in the world.”
Based on the consolidated financial statements, in the first nine months of 2015, Garanti BBVA’s asset size reached TL 293 billion 253 million 206 thousand while its contribution to the economy through cash and non-cash lending totaled TL 223 billion 250 million 816 thousand. In the first nine months of 2015, the Bank posted a consolidated net income of TL 2 billion 716 million 338 thousand. The Bank delivered an ROAE (Return on Average Equity) of 13.7% and an ROAA (Return on Average Assets) of 1.4%.
Commenting on the financial results, Garanti BBVA CEO Fuat Erbil stated that: “During the third quarter of 2015, a period of continued volatility and elevated risk perception, Garanti BBVA sustained its strong performance via maintaining its solid balance sheet structure. Garanti BBVA’s contribution to economy continued to outperform sector average in both commercial and retail loans, and the total amount exceeded TL 223 billion. On deposits, reflecting the confidence customers hold in us, as well as our customer emphasis in the core of all of our processes, resulted in a 12% market share. Our main purpose is to provide the best customer experience at all levels of service. That is only possible through listening to our customers carefully, accurately identifying their needs and providing living services. With this purpose, we are 20 thousand strong prioritizing customer satisfaction.”
Indicating that Garanti BBVA’s most valuable asset is human, Erbil said: “Garanti BBVA’ shuman-centric management and banking approach establish the foundation of our corporate culture as we believe sustainable growth is only possible through investing in human capital. Garanti BBVA is the first Turkish company to be recognized by “Investors In People”(IIP), the only international standard in the world to certify the quality of companies’ HR practices. This year Garanti BBVA proved that its success is sustainable, maintaining its IIP Gold standard. I hereby thank to all of my colleagues. We will continue to pursue our mission to create value for our employees, customers, shareholders and all of our stakeholders.”
Based on the consolidated financial statements, in the first half of 2015, Garanti BBVA’sasset size reached TL 265 billion 198 million 140 thousand while its contribution to the economy through cash and non-cash lending totaled TL 203 billion 299 million 285 thousand. In the first half of 2015, the Bank posted a consolidated net income of TL 2 billion 64 million 902 thousand. The Bank delivered an ROAE (Return on Average Equity) of 16.1% and an ROAA (Return on Average Assets) of 1.7%.
Commenting on the financial results, Garanti BBVA CEO Ergun Özen stated that: “During the second quarter of 2015, a period of elections and continued elevated risk perception, Garanti BBVA sustained its solid performance maintaining its sound asset quality, safe liquidity level and strong capital base through successful balance sheet management. Given our success in generating international borrowings and our leadership in the international banking arena, our syndicated loan transaction in April attracted a demand of over EUR 1.5 billion. We closed the transaction successfully raising the amount to EUR 1.25 billion while reducing the cost and lengthening the maturity to 367 days.”
Indicating that Garanti BBVA is continuing on its persistent growth path with its sustainability and customer satisfaction focused business model, Özen said: “As we maintain our leadership in mortgage loans by gaining further market share, we strengthened our sector leader position in consumer loans with 14% market share . Uninterrupted long-term investments in distribution channels as well as the integration of technology into all our business processes have enabled us to take part in our customers’ financial and social networks and become a holistic solution partner. The number of our digital customers, who utilize our internet and mobile banking platforms for their transactions, have exceeded 3.5 million. Enabling more than 500 types of transaction on our internet branch, we are the only bank offering this scale of diversified set of transactions. Our mobile phone branch application which has a significant share in serving the growth of the mobile banking market since 2012, is today used by 2 million mobile banking customers. At Garanti BBVA, more than 90% of all the non-cash financial transactions go through the digital channels. Whether a Garanti BBVA customer or not, we serve everyone 24/7 through a network of ATMs at more than 4,200 locations that operate like small branches enabling over 200 types of transactions. As Garanti BBVA, placing human-centricity at the core of our operations, our greatest aim is to contribute to sustainable economic growth and create value for all our stakeholders.”
Based on the consolidated financial statements, in the first quarter of 2015, Garanti BBVA’s asset size reached TL 259 billion 774 million 539 thousand. Garanti BBVA’s total deposits increased to TL 141 billion 89 million 569 thousand, while its contribution to the economy through cash and non-cash lending totaled TL 196 billion 174 million 724 thousand. In the first quarter of 2015, the Bank posted a consolidated net income of TL 953 million 419 thousand. The Bank delivered an ROAE (Return on Average Equity) of 15.3% and an ROAA (Return on Average Assets) of 1.6%.
Commenting on the financial results, Garanti BBVA CEO Ergun Özen stated that: “Despite the high market volatility in the first quarter, Garanti BBVA continued to stand by its customers, while maintaining its strong capital base and sound asset quality, through successful balance sheet management utilizing risk parameters in line with international standards and outperforming the sector with an 8% lending growth since the end of 2014. More than 19 thousand Garanti BBVA employees think on behalf of and create for all stakeholders as they closely monitor and analyze needs through an extensive distribution network of more than 1000 branches present in every city of Turkey, more than 4000 ATMs, customer contacts in Alo Garanti BBVA that exceed 68 million per annum and social platforms. Stating that Garanti BBVA continues its relentless support for the Turkish economy, Özen said: “We strive to contribute to the sustainability of SMEs as we support their digital transformation, and create solutions that facilitate their businesses and create cost efficiency. We offer tailored products in a one stop shop fashion for entrepreneurial SMEs that enable them to make all their banking transactions in most favorable terms. Being the first private bank that started addressing women entrepreneurs as a separate customer segment in 2006, we want to facilitate the inclusion of more women in work life.” Commenting on Turkey’s future financial health, it is imperative to encourage consumer savings, Özen said: “As Garanti BBVA, we developed a simple approach to savings demonstrating our customers upfront how easy it is to save. We will continue on our mission to encourage our customers to save, through offering products and services that make life easier for them.”
2014 has been a year of slower-than-anticipated economic recovery for Europe and emerging countries, and of uncertainties for the global economy. Although exposed to a double shock at the onset of 2014 with the US Federal Reserve’s tapering and domestic political uncertainties, the Turkish economy outperformed expectations owing to its flexible structure. The Central Bank of the Republic of Turkey’s sharp interest rate hike in January made in an attempt to restrain loss of value in Turkish Lira and the macro-prudential measures adopted were restrictive on domestic demand; still, a moderate growth performance was captured during the year, driven by external demand. While moderate domestic demand curbed imports, current account deficit showed a meaningful improvement thanks to export performance. Inflation remained above expectations throughout the year as a result of the pressure on exchange rate due to the expectedly imminent interest rate increase by the Fed, and the high food prices resulting from drought. Nevertheless, the significant decline in oil prices in the last quarter of the year positively affected inflation and current account deficit.
Macro-prudential measures and regulations implemented to take consumption and current account deficit under control manifested their effects on loan growth and profitability of the Turkish banking sector throughout the year.
The credit expansion of the sector slowed down from 32% in 2013 to 18%, anchoring at a healthy and sustainable level in the long term. The composition of growth changed along with the deceleration in loan growth. The most pronounced loss of pace occurred in consumer loans and credit cards, in parallel with the measures introduced. The key driver of growth in 2014 was TL business banking loans that went up by 27%. The impact of the slowdown in economy and of the regulations was most evident in increasing non-performing loans in credit cards. Although total NPL ratio increased partially to 2.75%, the sector maintained its solid asset quality. Funding costs that were higher than last year, decelerated loan growth and regulatory arrangements put pressure on the sector’s profitability, and led to a contraction of approximately 20 points in the net interest margin.
At Garanti BBVA, with our sustainable growth focus and our customers placed at the heart of our products and services, we targeted to offer a banking experience embedded into our customers’ lives throughout this challenging period. We kept listening to our customers through our branch network present in every city of Turkey and our easily accessible digital banking channels, and offering solutions for their financial needs. We sustained our solid performance through 2014 on the back of successful balance sheet management, sound asset quality, comfortable liquidity and a strong capital base.
In loans, we have attained our targets in keeping with our projections thanks to the disciplined growth strategies pursued. We have achieved 16% expansion on a consolidated basis in Turkish lira loans that we had set as our particular focal point. In foreign currency loans, the expansion fell short of our projection due to postponement of certain investments planned for 2014 to later years because of global and local developments; overall, our total loans amounted to TL 143 billion. While our lending broadened, we preserved our stronger than sector asset quality. Our NPL ratio stood at 2.41% according to nonconsolidated financial results comparable to those of the sector.
With respect to our credit expansion, our high performance in TL business banking loans gained the foreground, which grew by 28% on an annual basis. Although our growth in consumer loans slowed down in line with the sector, we retained our leadership. In mortgage loans, we increased our market share and preserved our leader position despite decreased housing sales and intense competition. As we took 11.2% share from the general purpose loans market, we reinforced our leadership in auto loans by reaching a solid share of 21.9%. While we sustained our leading position in project finance loans in 2014, we took part as the lead arranger in the financing of major infrastructure and energy projects that will support Turkey’s growth.
On the funding side, we attained a growth in customer deposits that matched our credit expansion. Based on the confidence our customers hold in us, our TL demand deposits outgrew the sector. As we preserved our solid deposit base, we continued to successfully tap overseas funding resources. Thanks to the high credibility Garanti BBVA enjoys in the global markets, we have renewed our syndicated loans attracting a record level of demand. We have executed securitization transactions in the total amount of USD 1,050,000,000 and two Eurobond transactions worth EUR 500 million and USD 750 million, respectively. Securing a 6-year loan of TL 218 million and a 5-year loan of TL 69 million from the European Investment Bank (EIB) for refinancing the SMEs, we remained unique, being the only bank out of Turkey to borrow in Turkish Lira from the EIB. Furthermore, we created overseas funds worth USD 1.26 billion in 2014 under the Medium Term Note (MTN) borrowing program, which allows bond issuances in different currencies and maturities. In addition to our issuances in various currencies besides US dollar and Euro under the MTN program, we have been the one and only bank out of Turkey to make an issuance in Japanese yen under the MTN in the reporting period.
With respect to profitability, in 2014, we have felt the implications of more limited credit expansion and regulatory arrangements. Yet, we were able to increase our net interest margin over year-end 2013 thanks to our efficient and timely balance sheet management.
Through these rough times, we continued to make effective use of our capital at Garanti BBVA in line with our dynamic business model that puts sustainable growth and profitability in its focus. We preserved our strong position in terms of capital structure with our capital adequacy ratio of 14%. The ratio of our common equity tier I capital to total shareholders’ equity at 93% remained to be the highest in the sector. Thus, we have once again demonstrated the quality of our shareholders’ equity and our adherence to sustainable growth strategy.
At the same time, we kept enriching the economic value we created in 2014 with the added value we contributed to the environment and the community through both sustainable products and services offered and voluntary initiatives we are involved in. The new Sustainability Policy and Strategy that sets the framework of our efforts in this vein was approved by the Board of Directors and launched.
One of our key focuses for improving our environmental performance in 2014 was the fight against climate change. ISO14001 certified Environmental Management System that now covers 605 points of service and the Green Office Diploma we have been granted by WWF Turkey served as further encouragement to expand our efforts across our entire value chain. We participated in the Climate Summit held in New York in September 2014 and pledged to fight against climate change in six different areas that cover our suppliers and customers as well. For its efforts in this field, Garanti BBVA was named “CDP 2014 Turkey Climate Disclosure Leader” by the CDP, to which the Bank made its fifth submission on its GHG emissions and climate change strategy.
The strong financing support given to renewable energy investments endorsed our adherence to our Environmental and Social Lending Policies and our support to transition to low-carbon economy. Total financing made available to wind energy investments amounted to USD 2 billion by the end of 2014. While our new product aimed at SMEs for unlicensed solar energy investments leveraged our support to renewable energy to a whole new level, these approaches adopted in our lending operations earned us the Sustainability Award for Environmental and Social Performance from the European Bank for Reconstruction and Development (EBRD).
Garanti BBVA Anatolian Meetings, which serve as a platform for our continued guidance to the SMEs and for sharing suggested solutions on the basis of sectors and provinces, went on in 2014. In 97 meetings organized in 67 provinces to date including the seven cities visited in 2014, we got together with more than 30,000 SMEs.
Loans provided to women entrepreneurs, who we consider as a special customer segment in our SME Banking platform, amounted to TL 2.1 billion as at year-end 2014.
The Women Entrepreneurs Executive School, the free-ofcharge training program launched in 2012 in collaboration with Boğaziçi University Lifelong Learning Center (BÜYEM) for taking our support beyond lending, produced new graduates. Organized in the cities of Adana, Diyarbakır, Eskişehir and Kayseri throughout the year, the project will continue also in 2015.
Co-organized with the Women Entrepreneurs Association of Turkey (KAGİDER), the Women Entrepreneurs Gatherings went on in five cities in 2014, namely İstanbul, Sivas, Diyarbakır, Niğde and Aydın. Turkey’s Women Entrepreneurs Competition we have initiated in cooperation with the Ekonomist magazine and KAGİDER, on the other hand, was held for the eighth time. Becoming the first Turkish bank to sign the Women’s Empowerment Principles launched by the United Nations, we have broadened the scope of our support to women in 2014.
The Young Entrepreneurs Gatherings co-organized with The Union of Chambers and Commodity Exchanges of Turkey (TOBB) continued in 2014. On the other hand, we have supported the Entrepreneurship Foundation established in April 2014 to help university students in our country discover the entrepreneurial spirit, and we have become the sponsor of the BUBA (BUMED Business Angels) platform led by BUMED (Boğaziçi University Alumni Association).
“Disabled-Friendly Banking” initiatives launched in 2011, whereby our services are adapted for access by individuals with disabilities, remained a significant component of our sustainable banking vision. Furthermore, we have introduced the project “İşe Katıl Hayata Atıl” (Join the Workforce Join Life) in 2014 under the patronage of the Ministry of Family and Social Policies. Through this initiative intended for increasing the employment of people with disabilities, we are aiming to help people with disabilities become independent individuals who take responsibility of their own lives.
Our efforts to support the social life of individuals with disabilities include our continued support to the Wheelchair Basketball Leagues. Within this scope, we extended support to the “Dr. Trawinski International Wheelchair Basketball Tournament”, at the end of which The Turkish Men’s National Wheelchair Team claimed the championship title.
As always, we kept our women on our minds and we sponsored the Garanti BBVA Wheelchair Basketball 1st National Women’s Championship that took place in Gaziantep from 25 to 27 June 2014. Having been the scene to the contention of four teams of women athletes, the tournament was organized for the first time in Turkey and drew great attention.
In the thirteenth year of our support to basketball, the Turkish National Women’s Basketball Team dubbed the Pixies of Basketball made us proud by claiming the fourth spot in the FIBA World Championship for Women organized in Turkey from 27 September to 5 October 2014.
In 2014, we have once again lived the thrill of sponsoring “Garanti BBVA Jazz Green” that has been leading the growing popularity of jazz music in Turkey for 17 years. The support Garanti BBVA extends to culture and art continued with 19 exhibitions showcased at SALT Ulus, SALT Galata and SALT Beyoğlu and attracted 377,496 art lovers.
Our open communication and cooperation with our stakeholders in recent years has been key in keeping our sustainable banking vision dynamic and constantly improving it. In a bid to perpetuate this improvement, we have authored another first in terms of transparency in the Turkish banking sector and published the Sustainability Report according to the GRI’s new G4 Guidelines. All these efforts laid the groundwork of our inclusion in the Borsa İstanbul Sustainability Index in 2014.
In 2014, Garanti BBVA qualified to be included in the Borsa İstanbul Corporate Governance Index with a score of 9.14 awarded by JCR Eurasia Rating based on the agency’s corporate governance rating that indicated distinctive compliance with the CMB Corporate Governance Principles. I am happy to share these developments that endorse the stakeholder communication built on the principles of accuracy, transparency, equitability, accountability and responsibility, as well as the human-oriented systems developed, advanced risk management concept, and the value we give to the society.
As it already signaled, the Fed might begin increasing the interest rates in 2015, in case of sustained strong recovery in the US during the year, and this poses a threat over the risk perception toward emerging countries including Turkey. However, we believe that a continued globally weak growth performance may push the Fed to opt for a more prudent and gradual increase of interest rates. Stabilization of the decreased oil prices at a level that will not turn into a global crisis, especially to one in Russia, would be a positive development for the Turkish economy in the coming year.
With a relatively positive point of view, we are projecting that the Turkish economy will gain momentum compared to 2014 and grow over 3.5% in 2015. In addition to the contribution of public investments, we are anticipating the growth composition to change in favor of domestic demand. We are expecting the year-end inflation rate to remain well below the 2014 figure due to the reduced exchange rate effect and normalized food prices, backed also by the declined oil prices. The ratio of current account deficit to national income, on the other hand, might fall below 5% as a result of lower oil prices.
In the banking sector, we are envisaging partially higher growth rates in lending and funding departments in line with the acceleration of economic growth in 2015. In the loans composition, TL commercial loans will gain the foreground once again. In the year ahead, we will continue to feel the effects of regulatory arrangements upon growth and profitability. Yet, we believe that the measures adopted by the economy administration will enable the balance sheet management to be established upon a progressively healthier and more sustainable structure.
At Garanti BBVA, we will keep working toward creating constantly increasing value in our fields of activity for our customers, our stakeholders, our country and the national economy. When designing our strategies, our goal is to lead innovation, duly respond to needs, address all segments, and maintain sustainable growth.