Dear Stakeholders,

A year has passed since the February 6, 2023 earthquakes in Kahramanmaraş. As Türkiye, we united as a country to help people recover from this disaster. From the very first day of the earthquake, we demonstrated our national spirit of solidarity by providing material and moral support to the region. May this kind of tragedy never happen again. I wish for God’s mercy upon our citizens who lost their lives, and I extend my condolences to their families and to our country.

In 2023, high inflation, the potential for economic recession, and geopolitical risks such as the Russia-Ukraine armed conflict and Israel’s occupation of Gaza were the main topics on the global economic agenda. Subsequent to the peak in inflation in advanced and emerging economies, central banks implemented tightening steps in their monetary policies. Continuing with interest rate hikes in response to persistent and above-expected inflation throughout the year, the Federal Reserve (Fed) raised its policy interest rate by a total of 100 basis points to 5.50%, while the European Central Bank (ECB) increased its rate by 200 basis points to 4.50%. Despite high inflation rates prevailing in the first half of 2023, followed by a decline towards the year-end due to the impact of interest rates, economies did not experience the anticipated contraction. In 2023, the US economy grew by 3.2% while the Eurozone grew by 0.1%. China, which imposed the “Zero Covid” policy for an extended period, grew by 5.2% in 2023.

The Turkish economy has retained a strong outlook, despite the negative impact of February’s earthquake disaster on the budget balance, inflation, and growth. Despite the risks in global economies, the Turkish economy grew by 4.5% in 2023 owing to increased investments and the contribution of household spending to growth.

In this period, the Turkish banking sector preserved its stable and healthy balance sheet structure and continued to support the real sector and households. The asset size of the banking sector increased by 64% in 2023 compared to the previous year, exceeding TL 23.5 trillion. The capital adequacy ratio, indicating the sector’s financial strength and ability to lend, has been realized as 19.06%.

As VakıfBank, we maintained our constant support for the Turkish economy in 2023. By efficiently managing our balance sheet, we increased our asset size by 66.36% to TL 2,797 billion in this period and continued to be the second largest bank in Türkiye. We raised our performing loans, which constitute the largest share of our assets, by 60.62%. Thanks to our selective loan policy, our commercial loans grew by 61.20% to TL 1,217 billion by the end of 2023, with the financing support we provide to our customers, particularly to those involved in production, investment and exports, and thus contributing to employment in our country. Additionally, we continued to support households via our retail loans, which grew by 58.14% to TL 282 billion.

Funding-wise, total deposits continued to be our main source of funding, increasing by 73.96% annually and exceeding TL 1,962 billion. In line with our strategy of widespread and cost-effective deposit mobilization, we increased our time deposits by 76.09% and demand deposits by 66.76% compared to the previous year-end in 2023. Guiding our customers to make the best use of their savings, we launched new products and services within the framework of the measures taken by the economic administration to protect the value of the Turkish Lira.

While facilitating the lives of our customers by means of the digital products and services we offer, we continued to shape the finance sector. In 2023, we increased the collection volume of Vinov, a payment and collection ecosystem we introduced to the finance sector, by 72% compared to the previous year. With our Vinov Campus product, developed during this period, we created a fast and reliable digital school payment collection system that enables private school fees to be paid with the special Vinov limit defined for parents.

During this period, Sky Limit, one of VakıfBank’s innovative products, continued to meet our customers’ loan requirements via an online self-service banking approach, with the number of Sky Limit customers exceeding three million. Within the scope of our Bank’s digitalization vision, we launched the Sky SME service to enable businesses to perform their loan transactions, deposits, foreign trade and cash management products and services via internet and mobile banking channels. Our goal in the upcoming period is to provide our farmer customers with our digital agriculture app “Sky Agriculture.”

We continued to develop innovative products and services designed to meet the demands and needs of our customers. In 2023, we launched the Title Deed Trusted Account (TGH) product, which enables the secure transmission of the transfer price for real estate purchase/sale transactions. Thus, we both facilitated transactions between parties and eliminated the need to transport cash.

We performed improvements to Vibox, our home-safe bank application developed for children, enabling them to invest their savings in gold accounts. This allows pocket money saved in the home-safe bank to gain value in time deposit and gold accounts.

By the end of 2023, the number of our digital banking customers approached 13 million. Our multi-faceted digital assistant, ViBi, which deploys artificial intelligence and natural language processing technology to facilitate our customers’ lives, has become a financial advisor to our customers with reminders and financial analyses. ViBi reached 5.3 million customers in 2023, interacting with our customers 53 million times.

We renewed our All Account application, which we developed in the scope of our open banking services and which provides convenience to our commercial customers. The renewed features in the All Account application now serve our individual customers as well. Through enhancements implemented in our end-to-end digital platform, we provided all customers with the ability to view and transfer money from their accounts in other banks. As always, we shall strive to meet customer requirements with our innovative product services, to provide the best customer experience, and to contribute to the financial sector in the future.

During this period of unrelenting challenging conditions in the global economy, we remained committed to contributing to the Turkish economy through the resources we acquire from abroad. We secured a total of USD 6.3 billion in new funding from international markets under various structures, ensuring long-term, cost-effective financing for our operations. Amid ongoing uncertainties in the global economy, we made a rapid entry into international funding, executing a Diversified Payment Rights (DPR) securitization transaction worth USD 2 billion in the first quarter of the year. This transaction marked the largest single-securitization and funding deal executed among Turkish banks to date.

In May 2023, we renewed our sustainability-themed syndication loan amounting to USD 815 million. Also in November, our second sustainability-themed syndicated loan totaling USD 653 million, which we renewed by more than 100%, attracted the participation of 15 new banks from regions ranging from Europe to America and from China to the United Kingdom – institutions that had not participated in the previous transaction. We also reduced the cost of this loan by 75 basis points compared to the periods of May 2023 and November 2022. In doing so, we reaffirmed our Bank’s credibility, as well as the credibility of the Turkish banking sector, in international markets, ensuring continued and consistent support for the national economy.

At the beginning of September, we successfully completed the sustainable Eurobond issuance of USD 750 million with a maturity of five years. With this transaction, we became the bank bringing together the lowest cost, highest amount and longest maturity in a single transaction.

Despite the adverse effects of the February earthquake on the budget balance, inflation and growth, the Turkish economy maintained its strong outlook.

1,217 TL billion

We raised our commercial loans by 61.20% to TL 1,217 billion by the end of 2023.