VKF_FRAE_2018_uyg11

68 Section I: Introduction VakıfBank proceed to diversify its funding structure by obtaining new funding sources in different currencies and maturities while expanding its investor base with structured finance products in which VakıfBank is pioneer. In 2018, when concerns about emerging markets were on the rise, VakıfBank successfully roll overed its syndicated loan by 110%. VakıfBank also became the most active and effective Turkish bank in tapping into other international funding sources. VakıfBank remained the strength on the national economy with various long-term and cost-effective funding sources it provided, including Eurobonds, Covered Bonds, private placement, transactions carried out under the securitization programme, post-financing, and loans from multinational lending institutions. These transactions, realized despite challenging global market conditions, once again confirmed the reputation and credibility of our country and VakıfBank in the eyes of international investors. The Turkish bank most actively using the Covered Bond Programme VakıfBank remains committed to tapping alternative financing facilities in international debt capital markets. Accordingly, VakıfBank completed its operational works for Covered Bond issuance which have been in use for many years in developed markets such as Europe as a funding instrument after Covered Bonds have been allowed in Turkey with the Capital Markets Board’s Communique on the Principles Governing Covered Bonds issued in 2007. Then, the Bank established its Residential Mortgage Covered Bond Issuance Programme, amounting to EUR 3 billion, on July 29, 2015. As part of the programme, VakıfBank issued Turkey’s first ever benchmark Euro-denominated mortgage covered bond issuance amounting to EUR 500 million with 5-year maturity on May 4, 2016. The order book for the transaction exceeded EUR 3.2 billion from almost 300 investors; as a result, pricing of deal realized at MS+250, 30 basis points below the initial price of target price of MS+280. The yield and the coupon rate of the issuance were set at 2.578% and 2.375%, respectively. This coupon rate is the lowest among all issuances in Turkey, including those of the Ministry of Treasury and Finance. In October 2017, under its Covered Bond Programme, the Bank issued a covered bond amounting TL 1.3 billion based on treasury transactions a 5.5-year. The issuance through private placement was also Turkey’s first TL denominated covered bond transaction apart from those made with multinational development banks. After this successful transaction, VakıfBank issued a 5-year covered bond amounting TL 1.3 billion based on treasury transactions, with HSBC Bank PLC as the investor, in December 2017. Together with the TL 1.3 issue of October 2017, the Bank’s total issuances under its Covered Bond Programme in 2017 exceeded TL 2.6 billion. After raising over TL 2.6 billion in two separate bond issuances based on treasury transactions and intermediated by international banking institutions in October and December 2017, the Bank continued to conduct covered bond issuances in 2018. In two separate transactions in February and December 2018, the Bank successfully completed issuances amounting TL 2 billion. Thus, VakıfBank became the most active Turkish bank in covered bond issuances with a total amount of approximately TL 7.7 billion as of 2016. VakıfBank continued its support to Turkey’s economy and being the strength on the real economy with its solid and liquid balance-sheet structure by extending the average maturity of TL funding through non- deposit sources. VakıfBank is on your side with its increasingly diversified funding structure... Structured Finance VakıfBank has completed the highest Eurobond issue in the history of the Bank, amounting USD 650 million, under the Global Medium-Term Note Programme (GMTN). The order book of transaction exceeded USD 1.5 billion thanks to more than 150 investors from all over the world. REVIEW OF OPERATIONS IN 2018