• Presentation
  • Türkiye Finans in Brief
  • Our Vision, Our Mission, Our Corporate Values
  • Strategic Priorities and Main Initiatives for 2014
  • Türkiye Finans Milestones
  • Awards and Recognitions
  • Summary Financial Information
  • Amendments to the Articles of Association
  • Capital and Shareholder Structure
  • Chairman’s Message
  • Message from the CEO
  • Customer Constitution
  • Macroeconomic Outlook and Sectoral Developments
  • An Assessment of the Bank’s Position in the Sector in 2014
  • An Assessment of Türkiye Finans’ Activities in 2014 their Results
  • Türkiye Finans’ Plans for 2015
  • Research & Development: New Services and Activities
  • Compliance Opinion Related to Annual Report
• Management and Corporate Governance Practices
  • Board Members and Audit Committee
  • Executive Vice Presidents
  • Unit Managers within Internal Systems
  • Organization Chart
  • Governing Bodies and Committees at the Bank, Participation of Bank Directors and Committee Members in Meetings
  • General Assembly Meeting Agenda
  • Summary of the Board of Directors report presented to the General Assembly
  • Information Concerning Human Resources Practices
  • Information about the Related Party Transactions, the Bank Enters
  • Information about Consolidated Affiliation
  • Other Information
  • Activities for Which Support Services are Outsourced and the Persons and Organizations from Which They are Obtained
• Financial Information and Assessment on Risk Management
  • The Audit Committee’s assessment of Internal Audit, Internal Control, Risk Management and Regulatory Compliance Functions; Committee Activities during the reporting period
  • Information About Risk Management Policies by Risk Type
  • The Statement Of Concerning Annual Report 2014
  • Dividend Distribution Policy
  • Proposal of Profit Distribution
  • Assessment of Financial Position, Profitability and Solvency; Asset Quality and Profitability
  • Information About Credit Rating Agency Rating Assignments and the Nature of Such Ratings
  • 5-Year Summary Financial Information Including the Current Year
  • Appendix 1: Independent Auditors’ Reports, Financial Statements and Related Disclosures and Footnotes as of and for the Year Ended 31 December 2014
  • Contact Details
• Contact Details
• Türkçe

Esteemed Shareholders,

We would like to warmly welcome you all to our Bank’s 24th Annual General Assembly. On behalf of the Board of Directors, we respectfully thank you for honoring the Bank’s 2014 General Assembly with your presence.

Before passing on to the Board of Directors’ and the Auditors’ reports, the financial statements and our assessment of the Bank’s 2014 results, we should first share with you a review of the year’s developments in the global and Turkish economies.

An Economic Overview of 2014 and Outlook for 2015

The global economy started 2014 with the termination of the Fed’s asset purchases and concerns regarding its negative impacts on emerging economies. While yields on Treasury bonds in the USA were rising, the USD started a revaluation process. Other developed countries were struggling with the difficulties of the post crisis period and slowing growth. Developing countries, principally China, entered a period of slow growth for structural reasons.

In 2014, the Fed was slowly decreasing asset purchases while the ECB and BoJ maintained expansionary monetary policies by taking additional measures in response to the volatility in financial markets and the continued fragility in the global growth outlook. Therefore, the risk appetite in global markets improved somewhat in the second quarter, even though the deceleration in global growth continued. All commodity prices, primarily prices of energy, declined around the world. This decline resulted in a deterioration in perception for energy exporting countries, and their financial assets remained under pressure. On the other hand, with the expectation that energy importing countries would reap the benefit of low energy costs, their financial assets positively decoupled. However, the current levels of energy prices and the continuing geopolitical risks do increase the risk of contagion, which may increase unease concerning the financial markets.

It is anticipated that both developed and developing economies will grow more rapidly in 2015 thanks to supportive monetary policies in developed economies and declines in energy prices. The Fed is expected to start raising interest rates at a measured pace within the year, and that uncertainties will ease. On the other hand, a serious halt in capital inflows to developing economies is not expected. However, there are two risks to the 2015 outlook; the steps taken to support the growth of developed economies may prove ineffective; and the contagion of problems that may be faced in energy exporting countries to other developing economies.

The Turkish Economy in 2014

The perception of the TL’s risk marked a significant deterioration at the beginning of 2014. In response, the CBRT tightened its monetary policy by increasing interest rates sharply in a bid to limit the devaluation of the TL and curb the increase in inflation. Between May and August, the CBRT decreased interest rates in a measured fashion on the back of the improvement in global liquidity conditions. Throughout the rest of the year, the easing in inflation was put back due to the high food prices and delayed impact of the devalued TL. The CBRT kept interest rates on hold and maintained its cautious stance.

Due to the effective monetary policy applied by the CBRT, funding costs and the return on TL assets, having increased in the first part of the year, started to decrease in the middle of the year. Thanks to the sharp fall in energy prices in the second half of the year, inflation started to decline and the current deficit started to narrow, with domestic markets becoming less sensitive to the exchange rate volatility. The final days of 2014 provided the opportunity of compensating the majority of losses sustained at the beginning of the year, thanks to the CBRT’s cautious stance and developments in the global economy, which worked in Turkey’s favor.

Economic activity was rebalanced in 2014 thanks to the impact of developments in domestic and foreign financial markets. Although the Turkish economy grew strongly in the first quarter of 2014, thanks to both domestic and foreign demand, there was a remarkable slowdown in economic activity starting from the second quarter due to a combination of the CBRT’s tightening at the beginning of the year and the challenging financial conditions. In this period, foreign demand sustained its positive contribution. The economy grew by 2.8% in the first nine months of the year when compared to same period of the previous year. Inflation was close to double digit levels in the middle of the year but improved despite weak domestic demand, to end the year at 8.2%. The current account deficit, on the other hand, narrowed to USD 47 billion in 2014, from the USD 65 billion at the end of 2013.

With the application of structural reforms and balanced financial conditions in 2015, the economy is expected to grow by around 4%, as projected under the MTP (Medium Term Plan). Inflation is expected to decline in 2015 thanks to the high base effect and declining energy prices. The current account deficit is expected to remain near 5% of GDP in 2015 thanks to low energy prices.

The Turkish Banking Sector and Türkiye Finans in 2014

The sector’s total assets grew by 15% YoY to TL 1,994 billion in 2014, with an 11% YoY increase in deposits to TL 1,057 billion. The volume of loans increased by 18% YoY to TL 1,272 billion, while shareholders’ equity expanded by 20% YoY to TL 232billion. In this period, the loans in the participation banking sector grew by 4% YoY to TL 71 billion, deposits grew by 6% YoY to TL 65 billion, shareholders’ equity grew by 9% YoY to TL 10 billion and total assets grew by 8% YoY to TL 104 billion. Although the participation banking sector posted slower growth than in previous years, its share in the sector’s assets remained at 5.2% while Participation banking’s share in loans declined from 6.3% at the end of 2013 to 5.6%. The segment’s share in deposits decreased from 6.5% to 6.2%, while its share in shareholders’ equity dropped from 4.6% to 4.2%.

The banking sector’s average loans to deposits ratio declined in the middle of the year but bounced back strongly in the second half of the year to 120% by the end of 2014. In this period, security issuances from domestic and foreign markets grew by 47% YoY to TL 89.3 billion.

The sector’s growth and profitability was constrained by developments in financial markets, the CBRT’s interest rate hikes at the beginning of the year and the BRSA’s regulations implemented in the second half of 2013 and at the beginning of 2014. Despite the recovery in the second half of the year, the sector’s total profit remained stable at TL 24.7 billion due to the rapid increase in costs at the beginning of the year. In the participation banking segment, on the other hand, the total profit declined sharply to TL 89 million.

The Treasury pressed ahead with TL and foreign currency sukuk (lease certificate) issuances in 2014 while other participation banks, including our Bank, also issued sukuk certificates. Despite of the selling pressure in financial markets, the demand for issuances by the Treasury and participation banks was strong.

Growth rates are expected to be limited in 2015 due to the measures taken for the sector and domestic and foreign developments. Funding costs are expected to be lower in the coming period, while 2015 is foreseen as a better year in terms of profitability.

With the developments in the Turkish economy and the positive contributions of our employees, at the end of 2014:

Our total asset volume increased by 33% YoY to TL 33.5 billion while funds collected increased by 26% YoY to TL 19.1 billion. The total volume of loans which we extended grew by 33% YoY to TL 24.3 billion while non-cash funds rose by 20% YoY to TL 10.6 billion.

Türkiye Finans generated a pre-tax profit of TL 425 million in 2014. Our net income stood at TL 334 million. After setting aside legal reserve funds, the remaining part will not be distributed and will be set aside as a reserve fund. The net profit share income grew by 26% to TL 1.1 billion in 2014.

Türkiye Finans decided to increase its capital in an Extraordinary General Assembly held on 29 August 2014. Our capital was increased from TL 1,775 million to TL 2,600 million. A TL 600 million portion of the increased capital was met through legal reserve funds while TL 225 million was paid in cash by shareholders. After this increase, our Bank’s capital rose to TL 2,600 million.

Our Bank’s capital adequacy ratio stood at 12.47% at the end of 2014.

Esteemed Shareholders,

This completes our presentation of the annual report, balance sheet, and profit & loss statement showing the results of Türkiye Finans’ activities in 2014. We now submit these for your consideration and approval.

In closing and on behalf of the Board of Directors, we would like to take this opportunity to thank our shareholders, our employees, and our customers for their confidence in our bank. We respectfully thank you, our valued shareholders, for honoring our 2014 Annual General Assembly with your presence.

Yours sincerely,

TÜRKİYE FİNANS KATILIM BANKASI A.Ş.

BOARD OF DIRECTORS