VKF_FRAE_2017

PART I: INTRODUCTION 44 VakıfBank Annual Report 2017 The total assets of the Turkish banking sector increased by 19.3% over the previous year to reach TL 3 trillion 257.8 billion in 2017. THE WORLD AND TURKEY IN 2017 BANKING SECTOR »» IN 2017, CGF-BACKED LOANS CONTRIBUTED TO SECTOR GROWTH. The total assets of the Turkish banking sector increased by 19.3% over the previous year to reach TL 3 trillion 257.8 billion in 2017. The total assets to GDP ratio of the sector in the third quarter of 2017 was 103.2%. In 2017 as well, loans had played a decisive role in asset growth. The annual rate of increase in loans rose to 25%, the highest level since August 2015, before slowing somewhat towards the end of the year and closing the year at 21%. In 2017, an important factor underlying rapid loan growth was the TL 200 billion extended by the Credit Guarantee Fund to banks for supporting the real economy. CGF boosted commercial loan allocation and some of the CGF support was also used for debt restructuring. Thus, the annual rate of increase in non-performing loans in the sector slowed down and the NPL ratio fell to 2.96% at the end of 2017, from 3.24% at the end of 2016. In 2018, the annual rate of increase in lending is expected to drop to 16.9%. In 2017, an expansionary fiscal policy was in place, leading to increases in the Treasury’s domestic borrowing requirement. Higher domestic borrowing by the Treasury also resulted in an increase in the securities portfolio of banks. Thus, the annual growth rate of the securities portfolio, which was 6.6% at the end of 2016, increased to 14.3% at the end of 2017. It is expected that in 2018 the Treasury’s domestic borrowing requirement will continue, and as a result, the annual rate of increase in the securities portfolio will increase to reach 15.7%. In 2017, an important factor underlying rapid loan growth was extended by the Credit Guarantee Fund (CGF) to banks for supporting the real economy. LOANS Source: BRSA -10 10 30 50 Dec.09 Dec.10 Dec.12 Dec.11 Dec.13 Dec.14 Dec.15 Dec.16 Dec.17 Loans (Adjusted exchange rate, Y-Y, %) Loans (Y-Y, %) Assets (Y-Y, %)