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DEAR SHAREHOLDERS,
Overall, the global economy exhibited a lackluster growth
performance in 2014. Geopolitical risks, Fed policies, US and
EU sanctions on Russia, Japan’s failure to exit the recession,
and slowdown signals from the Chinese economy were the
primary causes of this poor performance.
The US economy recorded its highest growth rate since 3Q
2003, growing by 5% on a quarterly basis in 3Q 2014. In line
with the decisions made in 2013, the Fed tapered off its asset
purchase program in October 2014. Furthermore, the Fed
left the policy rate unchanged at its policy meeting held on
December 16-17, 2014, and emphasized that it will act in a
“patient” manner during the normalization of monetary policy
in accordance with the economic data.
2014 was a challenging year for the Eurozone, which
continues to grapple with multiple problems including
recession, deflation risk, and unemployment. In addition
to these macroeconomic problems, the geopolitical
crisis between Russia and Ukraine, as well as economic
sanctions imposed subsequently on Russia, had negative
repercussions for the Eurozone. Consequently, the ECB was
forced to continue its expansionary monetary policy over the
course of this period. The ECB conducted Targeted Longer-
Term Refinancing Operations (TLTRO) to support economic
activity in response to a non-accelerating inflation rate,
high unemployment, the drop in oil and energy prices, and
generally low growth rates. Furthermore, the ECB cut policy
interest rates on September 2014 to a record low of 0.05%
while lowering deposit interest rates to -0.2%. These steps
were not strong enough to increase domestic consumption, as
the risk of deflation continued to linger.
The Bank of Japan (BOJ) also maintained its expansionary
monetary policy in 2014. Contrary to positive growth
expectations, the economy contracted 1.7% in Q2 and 0.5%
in Q3, technically falling into a recession after two consecutive
quarters of negative growth. However, the latest growth data
for Q4 indicated that the Japanese economy is out of this
recession. Weak export performance and a hike in sales tax in
April, which negatively affected domestic consumption, were
the main reasons of the slowdown in the Japanese economy.
Another key influence on the performance of the global
economy is China, which unexpectedly cut interest rates
on November 21 as a precaution against slowing economic
activity in the country. This move supported the view
that concerns about the Chinese economy have persisted
throughout the year. China recorded its lowest growth rate
since 1Q 2009 with 7.3% growth in 3Q 2014. I believe this
poses a downside risk for the global economic growth outlook.
Despite unfavorable economic conditions abroad, the Turkish
economy registered a growth rate of 2.8% over the first
three quarters of 2014. The largest contribution to this growth
came from exports. To counter the impacts of the crisis in
the Eurozone, measures were taken to eliminate downward
pressure on exports while adopting the strategy of diversifying
foreign trade partners. This policy continued to have favorable
effects on the country’s current account balance. Expansion
of export channels also lowered the foreign trade deficit
substantially. As a result, the current account deficit shrunk
steadily over the course of the year.
During this period, total assets of the Turkish banking industry
reached TL 1,994 billion. The share of deposits in total
liabilities continued to decline in 2014 and stood at 52.8%
as of year-end. Non-deposit funds have gradually begun to
play a more important role in reducing the cost of funds and
in extending the average maturity of liabilities. This trend is
expected to continue in the upcoming period. The sector will
not encounter any difficulties in accessing foreign funds.
In line with these developments in the sector, VakıfBank
expanded its total assets by 16.77% YoY to TL 158.2 billion,
and continued to make substantial contributions to the Turkish
economy. In the same period, the Bank’s retail loans were
up by 7.75% annually to TL 32.9 billion, while its commercial
loans surged 27.65% to TL 71.5 billion.
Our deposits fund 57.99% of our assets, and we have
maintained this strong level thanks to our effective
strategies for increasing deposits and our extensive branch
network. Total deposits increased 12.54% YoY and reached
TL 91.8 billion. VakıfBank, which boasts a unique combination
of a rapidly expanding branch network, superior service
quality, and high customer satisfaction in the face of a fiercely
competitive landscape, will continue to broaden its deposit
base and pursue cost-oriented resource management policies
in 2015.
Our NPL ratio continued to improve throughout the year
without any asset sales or write-offs, thanks to the highest
collection performance in our corporate history and the low
level new bad loan originations. This differentiated VakıfBank
in the sector in terms of asset quality.
Thanks to our strong performance in 2014, the Bank managed
to increase its net profit by 10.58% YoY to TL 1,753 million.
With the confidence stemming from the Bank’s many unique
accomplishments, we believe that VakıfBank will sustain its
success in the upcoming period thanks to the corporate culture
present in its roots since its founding, the dedication of its
hard working employees, and the trust of its customers.
On behalf of the Bank, I would like to thank our customers,
employees, shareholders, investors and all other stakeholders
for their contribution to our achievements during 2014.
Yours sincerely,
Ramazan Gündüz
Chairman
4.2%
MARKET SHARE
VakıfBank’s market
share in credit cards
reached 4.2% as of
year-end 2014.
VAKIFBANK
ANNUAL REPORT 2014
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