The year 2018 was a period in which global economic activity slowly lost momentum due to the impact of trade wars and the downward revision of growth forecasts. In a year marked by a tightening of both global and local financial conditions, the Turkish economy has also been geared towards re-balancing.
The US economy, which spearheaded growth of developed countries, left behind a year of expansionary fiscal policy, while the Federal Reserve (Fed) was supported by this positive outlook in the economy and maintained a gradual process of rate hikes. The European Central Bank, on the other hand, adopted a more moderate pace than the Fed in its steps towards normalization in its monetary policy amid the increasing risks in the Euro Zone.
Against a backdrop of mounting uncertainty, one of the main issues in 2018 was the course of global growth. With the US and China mutually taking protective steps in foreign trade, the slowdown in the Chinese economy and the course of commodity prices put downward pressure on growth in developing countries during 2018. Rising protectionism in foreign trade looks set to continue to harm both the economies of these two countries, which make up about 40% of the global economy, as well as the world economy, for some time to come.
In 2018, Ziraat Participation achieved positive results in terms of profitability, exceeding its balance sheet targets.
In 2018, despite the volatility in exchange rates and the markets, the Turkish economy successfully passed yet another stress test and once again demonstrated that its economic foundations were sound. The balancing of the economy, a process ensured by implementing monetary and fiscal policies in a sound, timely and coordinated manner, will clearly contribute to the efforts to bring down inflation and promote financial stability. With the expectation of a lower rate of growth rate than in 2017, the growth composition shifted towards net exports with the support of global conditions.
In 2018, the Turkish banking sector continued to grow steadily with its high asset quality and strong equity structure. The impact of the financial turbulence experienced during the year on the banking sector’s asset quality was limited. Despite a slight rise in financing costs, the banking sector was easily able to access capital and capital-like credit facilities, primarily syndicated loans from international markets, and use these tools effectively.
In the participation banking sector, we have identified efficient resource supply as a strategic priority. Our bank also acted as an intermediary for the sale of the gold lease certificates issued by the Ministry of Treasury and Finance. As well as increasing the share of participation banking in the banking sector, we aim to increase the market share of our country in participation banking in international markets, and to bring domestic and foreign savings into the economy.
While the asset size of the banking sector as a whole increased by 19% in 2018, participation banking grew more rapidly, with a rate of 29%, and increased its share in the sector. The share of participation banking in the sector, which had stood at 4.9% in 2017, edged up to 5.3% in 2018. Ziraat Participation recorded a 55% expansion in the volume of its assets in the same period, boosting its share in the sector and playing an active role in the growth of participation banking. Looking at the profit figures, the Bank’s profit increased by 103% YoY in 2018, while the increase in profit in the participation banking sector was realized at 34% in the same period.
Ziraat Participation, the first public participation bank in Turkey, aims to respond to the needs of its customers in the best way by improving its product range. In 2018, Ziraat Participation achieved positive results in terms of profitability, exceeding its balance sheet targets. For the coming period, Ziraat Participation has adopted a principle of productivity-driven work and raising its return on equity and efficiency in the sector, while continuing to effectively expand its branch network. Our main strategy is to increase the share of participation banking in the overall financial sector, while growing faster than the overall sector.
On behalf of myself and the members of the Board of Directors, I would like to express my gratitude to all of our employees, our valued customers who have chosen to work with us, our business partners and our other stakeholders, especially our Management Team which has produced such a strong performance for Ziraat Participation in 2018.
Kind Regards,
Hüseyin AYDIN
Chairman of the Board
