Dear Stakeholders,

Ziraat Participation accomplished a high and healthy performance in 2017.
Ziraat Participation continued its rapid growth in 2017 with the vision of being the leading participation bank of the industry and accomplished a high and healthy performance towards profitability and efficiency targets.

Despite the negative effects of all global economic factors, geopolitical developments and volatility of our economy, Ziraat Participation managed to reach its targets in 2017 through its accurately designed strategy, resilient business model and strong financial structure.

As of the end of 2017, our bank has increased its total assets by 80% compared to 2016 and reached an asset size of TL 14.3 billion.

We have recorded a profit of TL 158.9 million in 2017
Ziraat Participation has completed the year with a profit of TL 158.9 million through successful execution of customer satisfaction based service approach and efficiency focused business cycle.

Another development supporting the healthy growth in our balance sheet has been TL 500 million of capital provided by the Prime Ministry Undersecretariat of Treasury of the Turkish Republic.

Capital expenditures realized to expand our branch network since inception has turned to a decreasing trend in 2017 which had a positive impact on our financial structure.

We attach particular importance to maintain the quality of our assets
Our infrastructure for the allocation and application of funds processes and early warning and risk monitoring systems are continuously being improved and special attention is being paid to maintain the asset quality of Ziraat Participation.

I can gladly state that in a year of rapid growth of loans, with financing oriented growth and customer based balance sheet strategy, we have executed successful risk management policies and achieved a 0.3% of non-performing loan ratio, which is considerably below the industry average.

We continue to support the real sector
Ziraat Participation continues its journey towards its vision of being a strong participation bank in both regional and international markets by understanding its customers’ needs and expectations and providing them the most appropriate solutions through the most appropriate channels.

Cash financing by Ziraat Participation increased by 103% when compared to 2016 and reached TL 11.7 billion whereas non-cash financing grew by 74% and reached TL 6.1 billion. Total support to Turkish economy has been TL 17.5 billion. Share of cash financing in Ziraat Participation’s balance sheet increased by 10 points to 82%. Within this period, we have increased our support to finance the real sector, particularly the SMEs which are vital to our economy.

As of the end of 2017, total current and participation accounts have increased by 78% compared to prior year and reached TL 10 billion.

Within the framework of increasing and expanding the diversity of the resources, we continued to provide funds from domestic and foreign banks in 2017. In this context, USD 155 million of Murabaha syndication has been renewed upon redemption date in 2017 by the participation of 6 different banks from 13 countries at an amount of USD 236 million. In addition to this, our subsidiary Ziraat Katılım Varlık Kiralama has issued 9 lease certificates at an amount of TL 1.1 billion and received more than expected demand from qualified investors.

In May 2017 Fitch Ratings, an international rating institution, announced Ziraat Participation’s foreign currency long term rating as BB+. This has strongly confirmed the confidence in Turkish economy and our bank.

FILIKA Card FILIKA Card has been offered to our customers in 2017.

Within the framework of our correspondent services agreement with Ziraat Bank, our customers were given the opportunity to reach Ziraat Participation through Ziraat Bank branches and ATM’s all over the country.

We are developing new products to increase the share of Participation Banking
By virtue of its mission, Ziraat Participation is focused on improving the share of participation banking in the total banking market and reaching a wide population with the products and services of participation banking as well as growth in numerical terms. In this context, in line with our participation banking principles we continue our research and development activities to provide our customers with alternative solutions.

In 2017, Ziraat Participation realized a project financing through a product called Istisna which was a first in the participation banking industry. With this Istisna transaction, one of the largest city hospitals of Turkey, Manisa Integrated Health Campus project was funded by Ziraat Participation Bank in May 2017 within the frame of a public private partnership (PPP) of a consortium of Islamic Participation Bank and three other international banks.

Another significant transaction of 2017 has been a Musaraka transaction with a customer in logistics industry. This transaction is the second profit and loss sharing project of Ziraat Participation.

Another area where the Bank has actively participated has been Treasury-backed Credit Guarantee Fund transactions. Within this scope, Ziraat Participation has reached a total financing magnitude of TL 1.4 billion and provided almost 1,000 companies to take advantage of this opportunity.

With Ziraat Portföy’s (a subsidiary of Ziraat Finance Group) Short-term Lease Certificate Participation Fund, an alternative savings opportunity was offered to funds who would like to invest their savings in interest-free instruments but unable to do so due to term constraints. Those products were first traded through Ziraat Participation branches.

“Gold Collection Days” which aimed to bring precious metals in the economic activities, which otherwise are not included in the ecosystem, was a significant step towards the increase of diversified resources.

Another significant breakthrough of Ziraat Participation in 2017 was the offering of FILIKA Card to its customers. FILIKA Card is structured for the needs of individual customers in line with participation banking principles. Card based systems are the first phase of our strategy on making the lives easier and improving the value offered to our customers.

We invest on digital banking
In order to offer our customers faster and more effective solutions for their banking transactions, we invested on digital technologies in 2017 and updated our web and mobile applications. In the process of improving the diversity of our products and services in alternative distribution channels, with our vision based on customer satisfaction, our customer base actively using the internet banking has increased by 100%.

Within the framework of our correspondent services agreement with Ziraat Bank, our customers were given the opportunity to reach Ziraat Participation through Ziraat Bank branches and ATM’s all over the country.

We are committed to keep on investing in digital banking and improving alternative distribution channels in 2018 and going forward.

Ziraat Participation has added 19 new branches to its network in 2017 and reached a total of 63 branches.

We improved our accessibility with new branches
Ziraat Participation has added 19 new branches to its network in 2017 and reached a total of 63 branches. While our geographical spread has further expanded, our first step in corporate branch structuring, Ankara Corporate Branch has started serving our customers.

With our rapid growing organization structure, 269 employees joined our team to work with us in our headquarters and branches. Total number of our employees reached 890.

ZKB Varlık Kiralama was founded
In order to meet the demands of corporate customers who want to issue lease certificates and investors who want to invest on those certificates, Ziraat Participation has founded its second lease certification subsidiary, ZKB Varlık Kiralama A.Ş.

ZKB Varlık Kiralama was founded with the objectives of offering corporate customers alternative investor base rather than bank loans, allocate corporate risks to the investors in the market and to expand the perspective of corporate offerings in an environment where most offerings are realized through banks. The Company will accomplish these objectives by being an exclusive intermediary for third parties’ lease certificate issuances.

As the new and concrete statement of our support to Islamic capital markets, ZKB Varlık Kiralama offers a new and significant opportunity for funds, investment and portfolio management companies to make their resources available to real sector and ultimately to Turkish economy at an increasing rate.

We completed our TFRS 9 transition activities
BRSA has issued new regulations on the calculation of provisions in accordance with Turkish Financial Reporting Standards (TFRS).

Ziraat Participation has completed its activities related to these regulations and make their accounting and system platforms ready for the calculation of provisions to comply with the “Regulation for Provisions” starting with 1 January 2018.

Thanks to all who have contributed to our success in 2017
We will continue to work devotedly to increase our support to real economy, with our values and ethical principles which are the reflections of our long-established corporate culture.

Committed to our mission of expanding the share of participation banking, our ultimate goal is to create an increasing amount of value to Turkish economy and support the sustainable development while continuing our projects.

While we move further to reach our higher goals, I would like to thank all our stakeholders, particularly our employees who walk along with us and contribute to our successful performance.

 

Kind regards,

 

Metin ÖZDEMİR
CEO