VKF_FRAE_2017

PART I: INTRODUCTION 70 VakıfBank Annual Report 2017 While procuring new funding sources in different currencies at various maturities, VakıfBank also expanded its investor base with new structured finance products which it pioneers. REVIEW OF OPERATIONS IN 2017 VakıfBank broke new ground in 2017 with the first TL-denominated Covered Bond transaction in Turkey apart from those made with multinational development banks. VakıfBank procured TL 2.6 billion Covered Bond issuance with two different transactions. In addition, total amount of the long-term non-deposit TL funding reached to TL 3.2 billion with the issuances of TL-denominated Covered Bond and subordinated bond in the last three months of 2017 period. »» INVESTOR BASE CONTINUES TO EXPAND AS A RESULT OF DIVERSIFYING FUNDING STRUCTURE While reaching procuring new funding sources in different currencies at various maturities, VakıfBank also expanded its investor base with new structured finance products which it pioneers. VakıfBank continued to support to national economy and to be the strength by real economy with solid and liquid balance- sheet structure by extending the maturity of TL funding through non-deposit sources. »» THE FIRST TL-DENOMINATED COVERED BOND ISSUANCE IN TURKEY APART FROM THOSE MADE WITH MULTINATIONAL DEVELOPMENT BANKS In October 2017, VakıfBank completed the issuance of Covered Bond amounting TL 1.3 billion based on treasury transactions with 5.5 years maturity on October, 2017. The issuance completed as private placement is also the first TL-denominated Covered Bond transaction in Turkey apart from those made with multinational development banks. In December 2017, VakıfBank completed the issuance of Covered Bond with HSBC Bank PLC as an investor amounting TL 1.3 billion based on treasury transactions with 5 years maturity. Thus, in 2017, under the Mortgage Covered Bond Programme, VakıfBank completed the TL 2.6 billion equivalent bond issuance based on treasury transactions with two different transactions. »» GLOBAL MEDIUM TERM NOTES PROGRAMME (GMTN) Establishing the Global Medium Term Notes (GMTN) Programme, VakıfBank issued the first ever Euro-denominated Eurobond in Turkey apart from the sovereign. The Bank issued the first ever Basel 3-compliant Tier II subordinated notes of Turkey in international debt capital markets in 2015. VakıfBank issued Eurobond amounting USD 500 million with a maturity of 5 years under the Global Medium Term Notes (GMTN) Programme on May 30, 2017. The coupon rate and the final yield of the issuance have been set at 5.625% and 5.65%, respectively. Over 150 institutional investors from all over the world were interested the Eurobond issuance. Thus, the coupon rate has tightened by 25 bps from the initial target price. As part of its Medium Term Note Programme, the Bank performed a total of 230 private placements with 19 different banks. The transactions were carried out in different currencies (US Dollars, Euros and Swiss Francs) and maturities of three months, six months, one year and two years with a total amount of USD 4.86 billion. The Bank raised the equivalent of USD 169 million from 8 private placement deals in 2017. STRUCTURED FINANCE VakıfBank broke new ground in 2017 with the first TL-denominated Covered Bond transaction in Turkey apart from those made with multinational development banks.