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during this period and determined its policy
rate as 0.25% during the November meeting.
As a result, although growth data pointed
to a slight recovery, the Euro zone economy
remains fragile.
Turkey’s economy grew 3% in the first
quarter, 4.5% in the second quarter, 4.4%
in the third quarter of 2013. As a result, the
country achieved an annual economic growth
rate of 4.0% in the first nine months of the
year. The rapid growth of private sector
investment spending in the third quarter of
2013 with a rate of 5.3% provided a positive
contribution to overall growth of the economy.
Both the instability of capital flows in the
second half of the year and the depreciation
of developing country currencies led to an
upward movement of the inflation outlook.
In 2013, food prices and exchange rate
developments had significant effects on
inflation in Turkey. While a moderate change
in commodity prices, for products such as oil
and the recovery of the economy contributed
positively to inflation in the first half of the
year, annual inflation increased due to the rise
in unprocessed food prices. Added to that, the
effect of exchange rate developments during
the last quarter of the year, brought 2013
year-end inflation to 7.40%.
From the third quarter of 2012, with
increased global risk appetite, the recovery of
inflation and the economy’s entrance into a
rebalancing process, the CBT started gradual
interest rate cuts until May 2013. After that
time and in line with the developments
in financial markets, the CBT changed its
monetary policy stance and began applying
monetary tightening using both interest and
primary tools.
In 2013, the banking sector continued to
contribute to the positive performance of the
Turkish economy with its robust structure.
The banking sector continued to grow in
2013; total assets of the sector increased
by 26.39% over 2012 and amounted to TL
1,732.4 billion. A major part of the sector’s
asset growth was fueled through loans; the
sector’s loan volume increased 31.79% from
TL 794.8 billion in 2012 to TL 1,047.4 billion as
of December 2013. In addition to the increase
in the volume of loans, the NPL ratio declined.
The sector’s securities portfolio, which had
a negative annual growth rate in the first
half of 2013, began to rise on an annual
basis beginning in July with a 6.2% increase
in December 2013; amounting to TL 286.7
billion.
Deposits, as the main funding source of
the banking sector, increased 22.47%
over 2012 and reached TL 945.8 billion by
year’s end-2013. The sector’s deposits are
concentrated on the short term. As a result of
the differentiation of withholding tax rates by
deposits’ terms at the beginning of 2013 to
endorse extension of maturities, the maturity
structure of the sector started to change.
However, more than 50% of total deposits are
still comprised of one to three month term
deposits.
Dear Shareholders,
With signals given by the Fed in May 2013
for a reduction in its bond purchase program,
financial markets, especially in developing
countries had a turbulent second half of the
year.
The growth of the US economy was well
above expectations in the third quarter of
2013. The unemployment rate, a decisive
input in terms of US monetary policy, started
to decline at the beginning of 2013; by
December, it was 6.7%, the lowest level since
2009. With a promise of positive growth at its
December meeting, the Fed announced that it
would reduce its monthly US$ 85 billion asset
purchase program by US$ 10 billion per month
beginning in January 2013. Consequently,
a period of relatively low US dollar liquidity
started on a global scale. The budget dispute
in the United States raised concerns in the
financial markets regarding the debt-ceiling
limit.
Despite a moderate recovery, the Euro zone
continued to have many structural problems.
The unemployment rate in the Euro zone
rose to 12.1% by November, up from 11.9%
at year-end 2012. The Euro zone Purchasing
Managers Index (PMI), after declining to
46.7 in April, had a stable upward trend
and reached 51.1 by September, signaling
a modest recovery in the second half of
the year. However, the inflation rate, an
important indicator for ECB’s policies, has
continued to remain at a low level. The ECB
continued to apply a loose monetary policy
Summary Report of the Board of Directors
MUCH
MORE TO
ACCOMPLISH
Increasing the financial support
and the resources it provides to
the economy, VakıfBank raised the
number branch nework from 744
to 859; and increased its regional
offices from 16 to 22 in 2013 to be
closer to its customers as part of the
“Being Compassionate” concept.
Aiming to have a total of 1,000
branches by 2015, VakıfBank has
employed more than 1,000 new
recruits annually to reach a total
number of 14,943 employees in 2013.
M
I