VKF_FRAE_2018_uyg11

62 Section I: Introduction Even as normalization of monetary policy continued in developed economies in 2018, financial market volatility increased due to rising protectionist tendencies in international trade. Risk premiums rose in emerging markets that triggered net portfolio outflows and currency depreciation. While a limited slowdown was observed in global growth during the year, high levels of indebtedness worldwide and economic policy uncertainties persisted in the last quarter of the year. In addition, geopolitical developments and country specific risks occupied financial markets as important risk factors throughout the year. In the US, the protectionist tendencies in international trade that had started in the first months of the year persisted throughout 2018. Furthermore, official government remarks concerning the Federal Reserve Bank raised questions regarding the predictability of the country’s economic policies. The Fed continued to decrease its balance sheet and hiked interest rates four times during the year. As for Europe, although the election season is over, the UK’s exit from the EU, concerns about Italy’s high public debt, and protests in France in the last quarter of the year resulted in political uncertainty across the region. Against this backdrop, the European Central Bank (ECB) maintained its monetary policy stance and did not change its forward guidance. Economic activity in China lost momentum due to the commercial restrictions imposed on the country. Meanwhile, portfolio outflows from bond and stock markets continued in emerging market countries. During the year, in financially and macroeconomically fragile countries such as Argentina, Brazil, South Africa and Turkey, portfolio movements were generally negative. On the domestic front, while the CBRT’s tight monetary policy stance was maintained in the first quarter of 2018, moderate tightening was introduced in April to uphold price stability. In May, in response to the unsound pricing behavior and a worsening inflationary outlook in the markets, the CBRT stepped up its tight monetary policy stance. In addition, the CBRT completed the simplification process within the monetary policy operational framework; as a result, the one-week repo rate became its policy rate. All CBRT funding started to be delivered by weekly repo auctions. In early August, the financial markets displayed pricing behavior that did not correspond to economic realities and the Turkish lira started to depreciate rapidly. To ensure the smooth functioning of the markets, the CBRT took a number of financial stability measures in support of the Turkish lira and foreign currency liquidity management. The Ministry of Treasury and Finance implemented several stabilizing measures simultaneously with the CBRT. The cost-side pressures triggered by high volatility in financial markets had a negative impact on the inflation outlook. The CBRT responded Treasury Management With its customer- oriented services and newly upgraded technological infrastructure, VakıfBank increased its deposits, the most important funding source of the Turkish banking sector, to TL 179.4 billion in 2018, up 15.5% year-on-year. Total Deposits (TL Billion) 2018 179.4 2017 155.3 VakıfBank is on your side with financial solutions that address customer needs… REVIEW OF OPERATIONS IN 2018