Garanti’s contribution to economy amounted to TL 311 billion
Türkiye Garanti Bankası A.Ş., announced its financial statements dated December 31, 2018. Based on the consolidated financials, Garanti’s asset size amounted to TL 399 billion 153 million 601 thousand and its contribution to the economy through performing cash and non-cash loans amounted to TL 311 billion 176 million 277 thousand. The Bank delivered an ROAE (Return on Average Equity) of 15.0% and ROAA (Return on Average Assets) of 1.7%.
Commenting on the topic, Garanti Bank’s CEO Fuat Erbil stated that: “2018 was a moving year for both our economy and the sector. While preserving our strong balance sheet structure with our proactive management, competent human resource and prudent risk policies, we continued to contribute to the economy. Given confidence in our high capital adequacy ratio, our contribution to the economy added up to TL 311 billion. We ended the year with market share gains amongst private banks in all the TL lending products. While maintaining our leading position in retail loans and credit cards, our deposit-oriented and balanced approach continued on the funding side. Since the beginning of the year, we improved our loan to deposit ratio by 14 percentage points. Within the framework of the borrowing program, we provided financing exceeding USD 1.3 billion from overseas markets in the last quarter. This was the longest and the highest amount of borrowing of the last quarter of 2018. While we take pride in our contribution to the country’s economy, we will continue to support the market with the funding we have raised.”
Expressing the pride for the recognitions of Garanti’s efforts by international authorities, Erbil said; “Garanti was recognized as “Turkey’s Best Digital Bank” and Garanti Mobile was recognized as “Turkey’s Best Mobile Application” by World Finance Magazine for its innovative projects on customer experience and its digital transformation. In 2018, we have completed the transformation of all of our branches within the framework of the new branch and service model. With this new model, we aim to increase the efficiency of our field structure and offer faster solutions to our customers and provide a better quality of experience. In addition to our branches, we continue with our efforts to further integrate our digital channels to the new technologies. Regardless of the macro developments, we will continue to pioneer the transformation in the sector with our customers who are the basis of our strategy and with the investments in our business model. I would like to thank all my colleagues, all of our stakeholders who trust and support us.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated September 30, 2018. Based on the consolidated financials, Garanti’s asset size reached TL 456 billion 328 million, its contribution to the economy through cash and non-cash loans increased to TL 354 billion 745 million 437 thousand. The Bank delivered an ROAE (Return on Average Equity) of 17.5% and ROAA (Return on Average Assets) of 2.0%.
Commenting on the topic, Garanti Bank’s CEO Fuat Erbil stated that: ‘We finished the third quarter of 2018 with a solid balance sheet, well above the required level robust capital and liquidity via successful management of the challenging market conditions. In light of our sustainable development priority, our contribution to the economy reached TL 355 billion. With all of our stakeholders’ trust in our bank, our customer, human and operational excellence centricity, we overcame the challenges as one big team. The number of customers who prefer Garanti exceeded 16 million. We increased our customer deposit market share to 11.9% with the trust of our customers. We pioneered a new era with our innovative service model capturing benefits of digitalization, where customers receive all kinds of services from a single point in the fastest and easiest way. We continue our work for an inclusive economy where all individuals equally benefit from the opportunities, support active participation of women in economic life and contribute to the development of Turkey's entrepreneurial ecosystem.’
Mentioning that Garanti was recognized "Best Retail Bank in Turkey" by World Finance Magazine and "Best Retail Bank in Europe" by European CEO Magazine for its innovative projects and solutions on customer experience, digital transformation in its branches, as well as its instant e-commerce loan, Erbil said: ‘the international recognitions for our innovative projects on digital transformation and customer experience motivate us to excel and provide our customers with an excellent end-to-end banking experience. In the report published by Forrester Research, our mobile application Garanti Cep was named “Europe's Best Mobile Banking Application” in the category of user experience and #2 in total evaluation after BBVA. Furthermore, Global Finance named Garanti “Best Consumer Digital Bank in Turkey” and “Best Consumer Digital Bank in Mobile Banking in Western Europe”. On behalf of Garanti and Turkey, we are proud of these achievements. I would like to thank all my colleagues and our stakeholders, who trust and support us.’
Türkiye Garanti Bankası A.Ş., announced its financial statements dated June 30, 2018. Based on the consolidated financials, in the first half of 2018, Garanti’s asset size reached TL 384 billion 878 million, its contribution to the economy through cash and non-cash loans increased to TL 319 billion 244 million 923 thousand. The Bank delivered an ROAE (Return on Average Equity) of 18.1% and ROAA (Return on Average Assets) of 2.1%.
Commenting on the topic, Garanti Bank’s CEO Fuat Erbil stated that: “ In the first half of the year, we could further strengthen our solid balance sheet with our stakeholders’ trust in us. Through the confidence granted by our high capital adequacy ratio, our contribution to the economy increased to TL 319 billion. We successfully rolled over our syndicated loan in the second quarter and underlined Garanti’s power in creating sustainable funding. Adding an innovative product to our foreign funding in June, we issued Turkey’s first social bond for women entrepreneurs with IFC. In July, we extended Turkey’s first green loan and once again continued to lead the sector in the area of sustainable finance.”
Adding that Garanti was the only bank from Turkey among 26 leading banks around the world to prepare global banking principles for sustainable development, Erbil said; “Supporting responsible and sustainable development is one of the strategic priorities of Garanti. We shape our products and services within this context and also manage our customers' environmental and social risks. We support women's participation in the workforce and we work to create an inclusive economy in which all individuals benefit equally from opportunities. With our focus on customer experience and digitalization, we started a new era in banking and transformed more than 600 branches where our customers receive all kinds of services from a single point of contact in the fastest and easiest way”.
Indicating that, it was an honor to see Garanti rewarded for its success, Erbil said: “We ranked among the best of Central and Eastern Europe. We were named ‘Best Bank for Sustainable Finance’ by Euromoney, ‘Best Project Finance House’ and ‘Best Structured Finance House’ by EMEA Finance. In Institutional Investor’s Emerging EMEA survey that covers 473 companies, we were recognized among ‘Most Honored’ institutions as the only banking executive team from Turkey. I would like to thank all my colleagues and our stakeholders, who trust and support us.”
Türkiye Garanti Bankası A.Ş., announced its financial statements dated March 31, 2018. Based on the consolidated financials, in the 3 months period of 2018, Garanti’s asset size reached TL 359 billion 882 million, its contribution to the economy through loans and non-cash lending reached to TL 298 billion 250 million 713 thousand. The Bank delivered an ROAE (Return on Average Equity) of 18.3% and ROAA (Return on Average Assets) of 2.2%.
Commenting on the financial results, Garanti Bank CEO Fuat Erbil stated that: “Despite the challenging market conditions, we made a strong start to 2018 by continuing to support the economy. While growing faster than the sector in TL loans, we sustained our leadership in consumer loans. In the first three months of 2018, we grew our TL loans and TL deposits by 4%, and gained market share with our customers confidence in us. We work with our sustainable development focus and continue to be the solution partner of our customers, while maintaining our asset quality with effective risk management, stable and cautious policies and strong capital. Leading the transformation of the banking sector, we provide speed and convenience to our customers with all the innovative steps we take in digital banking and aim to deliver an excellent customer experience.”
We are pleased to present our first integrated report. This report integrates information from the annual Sustainability Report we used to publish in addition to our Annual Report. The Report was prepared in accordance with the GRI G4 Sustainability Reporting Guidelines of the GRI to core option, covering the 12-month period ended 31 December 2017. It also constitutes a summary of Garanti Bank’s progress in 2017 on its commitment to implement the ten principles of the United Nations Global Compact (UNGC) in our business activities.
With this integrated report, we provide a concise overview of both our financial and non-financial performance, showing the value that Garanti Bank creates for all its stakeholders, the economy and the society. We believe that integrated reporting serves to even better reflect Garanti Bank’s efforts in value creation. This first integrated report is only the start of integrating our financial and nonfinancial information and we will continue to take further steps to become more integrated.
POSITIVE GROWTH MOMENTUM IN GLOBAL ECONOMIES
The year 2017 ended very positively as global economies gained strength above and beyond the initial expectations in the beginning of the year. While the pick-up in economic activity seems to be relatively stronger in advanced countries, emerging markets also grew faster in 2017 relative to the previous year.
The Turkish economy, backed by timely incentives, showed solid progress in growth. Supportive economic policies including the Credit Guarantee Fund (CGF) scheme increased confidence in the economy and hence, lifted the growth notably. We expect GDP growth to reach 7% at year-end 2017, compared to 3.2% in 2016. However, this robust domestic demand repressed inflation. Together with the currency depreciation, headline inflation rose to 11.9% in 2017. As a response to inflationary pressure and volatility in currency, the Central Bank of Turkey (CBRT) maintained its tight stance and average funding cost increased by around 450 bps in 2017.
Despite the rise in interest rates, revitalization in economic activity and active balance sheet management supported fundamentals of the banking sector and the sector delivered better results than expected.
HIGH QUALITY EARNINGS PERFORMANCE, ONCE AGAIN, UNDERPINNED BY DYNAMIC ASSETLIABILITY MANAGEMENT
As Garanti Bank, we successfully completed the year with our sustained focus in excellent customer experience, sound solvency ratios and efficiency. The year was highlighted with the CGF scheme, which boosted business banking loan growth and helped asset quality. In supporting SMEs and businesses, the engine of our economy, we were the first mover in providing CGF loans with our agile sales team and quick system integration. Accordingly, we grew by 28% in TL business banking loans. In consumer loans, albeit fierce competition in the sector, we further strengthened our leadership position among private peers. Amid the growing economy, as I mentioned previously, CBRT kept its tight stance to cope with inflationary pressures which, in turn, pressured deposit costs in the market. In this environment, in order to manage cost and duration mismatch, we focused on growing SME & retail deposits and, as a result, enhanced our deposit base further with 16% growth in TL deposits. Moreover, in order to take advantage of the opportunities in the global market environment, we continued to tap international markets to raise alternative funding sources for cost and duration mismatch management. Accordingly, we successfully renewed our syndications, and for the first time we issued Basel III Compliant Subordinated Notes in the amount of USD 750 million and with 10 year tenure. Receiving a record demand of USD 4 billion, our Basel III Compliant Tier II issuance became the lowest costing transaction of a bank in Turkey, while also generating the largest order book ever. With the International Finance Corporation (IFC), we signed an unprecedented agreement based on mortgages that would support 'Green Mortgage' projects, for the first time in Turkey. These transactions are solid sign of the credibility established by Garanti before the international capital markets. Garanti will continue to be among the leading institutions of the Turkish financial sector with its sustainable growth strategy, innovative services, and ongoing investments in human capital.
We strive to create value for our customers, employees and all our stakeholders. We qualified for the FTSE4Good Emerging Markets Index with our performance in environmental, social and governance areas. We became the first and the only company from Turkey to be listed in the Bloomberg Financial Services Gender Equality Index with our HR practices and the support we provide to women for their increased role in business life and higher contribution to the economy. We became the only financial institution worldwide to be included in the 2017 CDP Water A List.
Disclosing climate change strategies using the CDP platform, we also retained our score in the climate change program and we were listed among CDP Turkey Leaders. We became the only company from Turkey qualified to be included in the Dow Jones Sustainability Emerging Markets Index for three consecutive years.
ANOTHER YEAR OF CLEAR BEAT
We are delighted to share that we delivered outstanding results in every aspect. While maintaining our leadership position among private banks in consumer lending, we significantly grew our TL business banking loans. As of today, the loans we have provided under the Credit Guarantee Fund surpassed TL 18 billion. Driven by the growth in TL business banking loans, we recorded 20% growth in TL loans, surpassing the projected 15% growth at the beginning of the year. While growing, we continued to make effective use of our capital. Our capital adequacy ratio increased to 16.8% in 2017 from 14.7% in 2016. Strong capital ratios are the result of high quality earnings. We have been constantly increasing our ROAE since 2015, which reached 16.6% as of yearend 2017, beating our initial expectations of 15.5-16%. In line with our strategic focus on efficiency, we improved our cost-to-income ratio by 4 pp vs. our 1.5 pp estimate. This high core banking profitability enabled us to strengthen our capital.
We work together and alongside our Retail, SME, Commercial and Corporate customers to find the best solutions for all their needs. There is nothing coincidental about the fact that we have ranked #1 in the net promoter score among peers for two consecutive years. As a pioneer in digital transformation for over 20 years, today we reached a point where we bring the banking service to our customers’ locations and serve Turkey’s largest digital customer base with close to 6 million active customers.
In our actions, we are guided by the principles of trust, integrit y, accountability and transparency toward all our stakeholders. Our efforts in supporting financial literacy, health and inclusion resulted in touching the lives of 809,397 customers that started using savings products. Renewable energy makes up more than 60% of our electricity generation loan portfolio; in fact, we command 30.2% market share in Turkey’s installed wind power capacity as of year-end 2017. We transform savings into sustainable investments by offering sustainability products & credit lines and TL 9.3 billion lending based on impact investment principles. Our efforts to support the financing of renewable energy led to avoid GHG emissions of 5.4 million tCO2 e from hydro, solar and wind power plants that we participated in financing. The scope three footprint of our energy production portfolio has been zero in new project finance commitments.
Our engagement activities with our stakeholders led to 8 policies and position papers that contribute to Sustainable Development Goals (SDGs), while our community investment programs addressed three different social challenges with a Social Return on Investment value of more than two.
As our most valuable asset is human, we continued to invest in our employees fo cusing on their development, s atis fac tion a nd well-b eing. We provided 36 hours of training per employee in 2017. We embrace a fair and transparent management policy based on performance, focused on equal opportunities, diversity and internal promotion. As a result, we outperformed the sector with our employee engagement score of 65%.
This year, we expect global macro drop to be supportive given recoveries in investment, manufacturing and trade. Going forward, global GDP growth figures and the steps advanced economies will take with respect to their monetary normalization processes will be of great importance for the external financing conditions of other economies.
In Turkey, we expect CBRT to maintain its tight stance in the absence of significant improvement in inflation. This suggests a positive real rate, which might favor the country throughout the year given upbeat sentiment globally. Nevertheless, this flow may support our current account deficit and inflation.
At Garanti, as always, we will sustain our uninterrupted support to the economy while optimizing capital allocation and prioritizing risk-return balance. Following the robust lending growth linked to CGF-loans, we envisage a normalized TL loan growth. Deposits will be the main source of funding, yet we will continue to tap international funding when market conditions are favorable. We are not expecting any difficulty in reaching international funding sources.
Our new branch service model represents a new era in the Turkish banking sector. Going forward, we will continue to focus on this transformation to increase digital penetration in customers as well as in processes, thus to further enhance customer experience and loyalty.
Given our capital generative growth strategy, advanced risk management systems and organizational agility in capturing new opportunities, we are looking at the future with confidence. We act with the awareness of the impact of each and every action we take, and with the responsibility of being an institution that shapes the future and leads the sector. With our competent human resources and extensive branch network in every city of Turkey, we keep working to offer excellence in customer experience, ensure responsible and sustainable development, operational efficiency and employee happiness.
I am grateful to all our stakeholders who trust and support us.
ALİ FUAT ERBİL President & CEO