VKF_FRAE_2018_uyg11

24 Section I: Introduction Esteemed shareholders, We left behind a challenging year and high volatility with regard to both Turkey and developing countries. The most important agenda item for financial markets in developed economies was rising protectionist tendencies in international trade. Mutual tariff hikes in foreign trade aggravated concerns about global trade and global economic growth. On the other hand, the US economy expanded 3.4% in the third quarter fueled by expansive fiscal policies. In light of positive macroeconomic results, the Fed raised interest rates four times in 2018 and continued to normalize its monetary policy. Similarly, European Central Bank (ECB), which also has been normalizing its monetary policy, end quantitative easing in December 2018. However, uncertainties related to the Brexit process and political turmoil in certain EU countries have stoked concerns about the Euro zone economy. China’s economy was similarly adversely affected by the foreign trade spat with the USA and the global slowdown. In the third quarter of the year, economic growth of China came at 6.6.% -the slowest pace in 28 years. In 2018, Turkey’s economy, despite being subjected to all manner of adversity and speculation-based attacks, maintained its strong foundation thanks to 16 years of uninterrupted political stability. During the first three quarters of the year, the Turkish economy recorded growth rate, respectively, 7.2%, 5.3% and 1.6%. One of the most important events of 2018 was the joint presidential and parliamentary elections held on June 24. As a result of the elections, which were marked by high voter participation and political maturity, Turkey transitioned to the presidential government system. The economic fluctuations of the second half of 2018 were rapidly taken under control owing to the effective coordination offered by this new system. Under the coordination of the Ministry of Treasury and Finance, all relevant agencies, primarily CBRT and the BRSA, adopted the necessary stabilization measures immediately. In September, our Minister of Treasury and Finance, Mr. Berat ALBAYRAK announced the New Economy Program, which focused on economic stabilization, fiscal discipline, value added production and exports. Immediately afterwards, the total anti-inflation program was implemented. As a result of these various measures, economic stability was restored as expected in the New Economy Program. The US Dollar exchange rate fell back to as low as TL 5.20, and volatility subsided. The CPI index, after peaking at 25.24% in October declined to 20.30% as of year-end 2018. During this challenging year, the Turkish banking sector remained the driving force of the national economy. MESSAGE FROM THE GENERAL MANAGER VakıfBank is on your side with the vision of being the Leading Bank of Strong Turkey... 22% Growth Rate in Total Assets