WITH THE NEW PRODUCTS AND SERVICES THAT WILL CONTRIBUTE TO THE DEVELOPMENT OF PARTICIPATION BANKING, ZIRAAT KATILIM PROVIDES THE MOST APPROPRIATE SOURCE OF FINANCING FOR ITS STAKEHOLDERS AND ENHANCES ITS SERVICE QUALITY DAY BY DAY.

In order to meet the financial needs of its customers through the right channels at the right time and with the right value proposition, Ziraat Katılım has ensured product, service and distribution channel diversity in line with participation banking principles. The Bank has continued to be the reliable solution partner of its customers in corporate and retail banking business lines by increasing service quality.

Ziraat Katılım maintained its strong financial and operational performance in 2020, generating a profit of TL 639 million, an increase of 24% over the previous year.
Ziraat Katılım is determined to continue to increase the support it provides in financing to the real sector and its contributions to economic growth in the future, in line with Turkey’s 2023 targets.

CORPORATE AND ENTREPRENEURIAL BANKING

Providing the most appropriate solutions and value propositions for the needs and expectations of its individual and corporate customers through the most appropriate channels, Ziraat Katılım continues to increase its product variety.
In order to assist vulnerable customers who were ravaged by the earthquake which struck the Elazığ and Malatya provinces on 24 January 2020, Ziraat Katılım signed the “Elazığ and Malatya Emergency Support Loan Protocol” with KOSGEB to provide financial support under appropriate conditions.

Within the scope of this protocol;

• Cancelling of all financing debts of Bank customers who had lost first degree relatives
• Repayments on commercial/personal financing for our customers whose homes or places of business had been destroyed or severely damaged were postponed for a period of between 6 months and one year without any profit share being taken.
• The commercial and personal financing instalments of our customers in provinces and districts affected by the economic fallout of the earthquake were postponed for three months without any profit share being taken.

Ziraat Katılım took a series of measures aimed at minimizing possible damage from the Covid‑19 pandemic on economic life, a worldwide phenomenon which also affected our country as well.

In this context, our bank branches continued to operate between 9AM and 5PM believing that sustaining the country’s production infrastructure and labor market was the common goal of all stakeholders of the economy.

In line with the “Economic Stability Shield” implementation, the following support was provided to prevent any deterioration in cash flows which our citizens and business world could experience during this period:

• Requests by our commercial and personal customers to defer instalment payments were received.
• Appropriate maturity restructuring practices were put into effect for the current financing of our customers whose cash flows had been disrupted or were foreseen to be disrupted, or who may have problems in payments.
• Provided that the companies paying their personnel salaries through Ziraat Katılım maintained their employment at the end of February 2020, extensions of up to 3 months of personnel salary expenses were provided where necessary.
• Additional limit requirements of customers with financing limits at Ziraat Katılım for working capital and the Direct Debit System which may arise due to current conditions were met immediately.

WITHIN THE SCOPE OF THE “TOURISM SUPPORT FINANCING PACKAGE”, THE EXTENT OF SUPPORT PROVIDED TO CUSTOMERS WITH A GRACE PERIOD OF UP TO 1 YEAR AND WITH PREFERENTIAL PROFIT SHARE RATES HAS EXCEEDED TL 170 MILLION.

Within the framework of the Treasury Backed Guarantee System contributions provided to customers continued increasingly.

Within the scope of the Economic Stability Shield measures, a protocol was signed between KGF and Ziraat Katılım within the framework of the Treasury‑Backed Bail System in order to finance the basic needs of legal customers who were directly or indirectly affected by the pandemic, with appropriate conditions.

Within the scope of this protocol, various support packages were prepared to meet the variable needs of customers. These packages are listed below:

“Work Continuation Financing Support Package”: As of the end of February 2020, real/legal person businesses which maintain their registered number of employees and do not reduce them and which are directly or indirectly affected by the pandemic, were eligible to benefit from this support package.

“Cheque Payment Support Package”: This package is planned to help maintain commercial activities of legal customers who use cheque payments in their commercial activities, and allow them to pay their cheque obligations using an appropriate source of financing. Real/legal person businesses which are cheque issuers (excluding individual customers) directly or indirectly affected by the pandemic benefited from the support package.

Tourism Support Financing Package”: The package, aimed at helping tourism companies and their suppliers maintain their operational and employment capabilities, is aimed at covering the fixed expenses and expenses of tourism companies in respect to their salary/rental payments with a cash or TL guarantee letter for the purchase of goods linked to a contract or a particular invoice.

Within the framework of the Treasury‑Backed Surety System, customers were provided with over TL 5 billion in financing through the “Work Continuation Financing Support Package” and the “Cheque Payment Support Package”, which offer KGF‑guaranteed financing. .Within these financing packages, a range of our customers’ needs, including personnel salary payments, cheque payments, raw material purchases and service purchases were granted preferential profit share rates and periodic financing opportunities without payment.

Within the scope of the “Tourism Support Financing Package”, the extent of support provided to customers with a grace period of up to 1 year and with preferential profit share rates has exceeded TL 170 million.

“Basic Needs Support Financing”: This package has been prepared in order to finance the basic needs of individual customers in areas of health, rent and invoices (electricity, water, natural gas) under appropriate conditions. More than 5,000 customers have already benefited from this financial support.

A range of products to meet the diverse needs of customers

Within the scope of the protocol on corporate equity guarantees which had been signed between Kredi Garanti Fonu A.Ş. and Ziraat Katılım, the “KGF COSME 2nd Term Program PGS Equity” sub‑protocol was signed in order to ensure the competitiveness and sustainability of SMEs, to encourage the enterprise culture and to support SMEs’ access to finance.

Within the scope of this program, a financing support program with a maximum 12‑month grace period was put into practice for real and legal person enterprises established in accordance with the laws of the Republic of Turkey and which fit the definition of being SMEs.

For the financing of public lodging sold by the General Directorate of National Real Estate the “Public Lodging Finance” product was prepared within the framework of the protocol signed between the institution and Ziraat Katılım in February. With this product, customers who have the right to purchase public lodging in all provinces were offered financing opportunities.

Under the leadership of the Ministry of Treasury and Finance of the Republic of Turkey, the KAD‑SIS (Jeweler Gold Valuation System) project, in which public banks are stakeholders, was aimed at increasing scrap gold collection activities, reaching wider masses and bringing gold which had been kept “under the mattress” into the economy.

With this system, as of 26 August 2020, Ziraat Katılım customers’ are able to transfer “under the mattress” gold to their Bank accounts through İAR authorized jewelers through special software and hardware.

Physical gold collection can be carried out, including on weekends, through the contracted jewelers of the Istanbul Gold Refinery. Since the transition to the system, approximately 47 kilograms of gold had been collected as of 31 December 2020.

Within the framework of the New Economy Program set out by the Ministry of Treasury and Finance of the Republic of Turkey, in order to increase the savings base of the Turkish economy and develop the non‑banking financial sector, the project of bringing public insurance companies together under a single roof has been prepared as a part of the reforms planned in the insurance and private pension sector. Within the scope of this project, Ziraat Sigorta A.Ş., through which Ziraat Katılım carries out its agency activities, changed its title to Türkiye Sigorta A.Ş., and Ziraat Hayat ve Emeklilik A.Ş. changed its title to Türkiye Hayat ve Emeklilik A.Ş.

ZIRAAT KATILIM CONTINUES TO BE THE FIRST CHOICE FOR ITS CUSTOMERS IN THE RETAIL BANKING BUSINESS LINE WITH ITS INNOVATIVE APPLICATIONS, COMPETENT PERSONNEL AND EXTENSIVE SERVICE NETWORK.

PERSONAL BANKING

Ziraat Katılım continues to be the first choice for its customers in the retail banking business line with its innovative applications, competent personnel and extensive service network.

Dedicated to developing retail banking products which are compatible with new technologies, Ziraat Katılım works to a basic principle of increasing the variety of products and services offered by taking into account customer demands and needs.

The Bank implemented a wide array of innovations in payment systems in 2020 in order to provide its customers with a fast, safe and enjoyable shopping experience at all times.

The Ziraat Katılım Bankkart, the Bank’s first credit card product in 2020, was made available to credit card customers. In the intensively competitive environment in the payment systems sector, this product attracted a significant amount of interest. The Ziraat Katılım credit card provides customers with a fast and secure shopping experience at the highest level.

Ziraat Katılım’s number of debit cards increased 40% compared to the previous year, with debit card turnover increasing by 90% compared to the previous year, and the volume of transactions carried out with debit cards exceeded TL 1 billion.

The share of Ziraat Katılım debit cards in participation banks increased by 2% in terms of the number of cards and turnover. Ziraat Katılım was one of the top five banks in terms of debit card usage activity, with a 39% usage rate.

Ziraat Katılım’s network of businesses continued to grow. The number of POS and new generation Payment Recorder Devices (PRD) increasing by 73% and the POS turnover increasing by 94% compared to the previous year.

The Bank, which started to offer Zero Housing Financing for the financing of new homes at the beginning of 2020, continues to attract applications for this financing.

The cooperation between Ziraat Katılım and Turkish automotive brands, realized at the end of 2019, continued with the aim of supporting domestic production. In this vein, a Special Vehicle Financing Package for Domestic Production was offered to customers who will purchase zero mileage domestic production passenger and commercial vehicles.

Ziraat Katılım will unwaveringly press ahead in its activities, facilitating its customers’ access to financing and ensuring that financing is available under favorable conditions in the coming periods.

ZIRAAT KATILIM HAS STEPPED UP ITS WORK TO INTEGRATE ALTERNATIVE DISTRIBUTION CHANNELS INTO ITS BANKING PRODUCTS AND SERVICE DELIVERY PROCESS.

DIGITAL BANKING

Ziraat Katılım has stepped up its work to integrate alternative distribution channels into its banking products and service delivery process.

In 2020, the Bank continued to develop new products and services in alternative distribution channels, which provide considerable benefit in reaching wider customer masses in numerical terms.

The design and experience of Katılım Mobil was renewed in order to offer the best digital customer experience.

The “Digital Approval” application was made available to individual customers in order to approve forms received with signatures from the customers in the branches through Katılım Mobile.

With the facility to carry out tax and social security payments using data matrix technology in Katılım Mobil, payments can be performed quickly and easily.

The password retrieval and renewal processes in digital channels have been improved, facilitating digital channel access.

With the Ziraat Katılım Bankkart product, it has become possible to carry out related transactions through the Internet Branch, Participation Mobile and Customer Contact Center.

With the FAST (Instant and Continuous Transfer of Funds) new payment system, customers can perform money transfers between their accounts in different banks 24 hours a day, 7 days a week.

In line with Ziraat Katılım’s digitalization strategy, the Corporate website, developed entirely with Open Source Code, was renewed by taking the customer experience and innovative applications into consideration

Ziraat Katılım; continues to work on the use of biometric verification methods to be used in distance customer applications, which are being used increasingly in banking with technological developments.

New project studies of the Bank that will enable to use of biometric data in digital channels more intensively will continue in 2021.

Ziraat Katılım participated in the “BiGA Digital Gold” project prepared for the use of blockchain technology in the financial sector.

In order to improve operational processes and to enhance the customer experience, the Bank ensured that customer notifications received from 14 different channels were reported and analyzed using “Artificial Intelligence Supported Text Analytics”

Within the scope of the “Open banking” application, Ziraat Katılım completed the infrastructure work to open its banking services (API) to external customers. The “Open banking” application is aimed at ensuring individuals or organizations aiming to develop applications in the field of banking and finance can carry out these activities, and all that the entrepreneurs who have an idea or project in the field of banking and finance can develop innovative and trending applications by using this infrastructure.

Within the scope of “Open Banking”, Ziraat Katılım started work on Account Information and Payment Order Initiation services under the leadership of the Central Bank and the BKM (Bankalararası Kart Merkezi A.Ş.‑ Interbank Card Center). This work is expected to be completed in 2021.

Common (Joint) ATM Project (TAM ATM) which is carried out by public banks is progressing rapidly. In this context, Ziraat Katılım carried out the first pilot ATM installation and brought it into use. The Bank plans to expand its rollout of ATMs throughout Turkey in 2021.

Ziraat Katılım aims to successfully continue its technological investments in digital channels in 2021.

TREASURY MANAGEMENT AND INTERNATIONAL BANKING

In line with the real sector and foreign trade financing strategy…

Ziraat Katılım expanded its asset size by 65% in 2020, while pursuing a strategy to finance majorly the real sector and foreign trade.
Ziraat Katılım pressed ahead with its resource diversification in asset liability management with the main resource being participation funds, and it established a liability base of the balance sheet taking into consideration optimum cost and term.
Ziraat Katılım has effectively deployed interbank borrowing and financing products to fulfill the required reserve liability and to meet its liquidity needs in line with the principles of participation banking, and to assess the surplus and fulfillment of reserve requirements.

ZIRAAT KATILIM STARTED TO ISSUE AN “EXPORT VALUE ACCEPTANCE DOCUMENT (İBKB)”, STATING THAT THE COSTS RELATED TO EXPORT TRANSACTIONS CARRIED OUT BY EXPORTERS ARE BROUGHT TO THE COUNTRY.

Correspondent Relations

Ziraat Katılım has correspondent relationships with many banks and financial institutions

Since its establishment, Ziraat Katılım has completed the legislative harmonization process with many banks, established swift correspondent relationships, and signed mutual wakala/murabaha agreements with many banks. Within the framework of these agreements, the Bank has obtained foreign funds to increase resource diversity through interbank murabaha and wakala transactions.

Working to rapidly meet the demands of its customers in the field of foreign trade, Ziraat Katılım had reached 42 different correspondent accounts in 16 different currencies at the correspondent banks as of the end of 2020.

Ziraat Katılım plays an active role in the capital markets as a part of its strategy to enrich the resource structure. The Bank obtained issuance approval with a ceiling of TL 12 billion from the Capital Markets Board to issue a TL denominated lease certificate in the local market with its affiliates, Ziraat Katılım Varlık Kiralama and ZKB Varlık Kiralama. Within this framework, issuances were made in different amounts with a total of nearly TL 12.6 billion.

In 2020, Ziraat Katılım continued to provide long term resources from the World Bank and various other development banks, for financing SMEs and foreign trade financing and to maintain its financing support for SMEs and the real sector.

Ziraat Katılım aims to complete the following steps in 2021:

• Significantly increase the number of correspondent banks and the level of foreign trade volume,
• Use a murabaha syndicated loan with the participation of international banks,
• Continue issuing lease certificates in the domestic markets,
• Add depth to the capital markets by carrying out corporate lease certificate issuances in favor of third parties other than Ziraat Katılım,
• Provide increasing support to the real sector by maintaining a supply of resources from international institutions for the financing of SMEs and foreign trade,
• Mediate new transactions within the scope of country loans.

ZIRAAT KATILIM’S SUDAN BRANCH BECAME OPERATIONAL AND STARTED TO CARRY OUT INTERNATIONAL PAYMENT TRANSACTIONS.

Credit and Foreign Trade Operations

Ziraat Katılım started to issue an “Export Value Acceptance Document (İBKB)”, stating that the costs related to export transactions carried out by exporters are brought to the country.

This transaction is carried out within the scope of the amendments realized with the Communiqué (Communiqué No: 2019‑32) /56) on the Amendment of the Communiqué (Regarding Export Costs) (Communiqué No: 2018‑32/48) on the Decree No.32 on Protecting the Value of Turkish Currency published in the Official Gazette dated 31 December 2019 and numbered 30995.

It has been ensured that the customs declaration information can be received digitally from the Customs Data Warehouse System (GÜVAS) under the Ministry of Commerce. The follow‑up of open export accounts where Ziraat Katılım is an intermediary bank can also be carried out through this system.

Ziraat Katılım’s Sudan Branch became operational and started to carry out International Payment transactions.

The period for responding to banks in electronic mortgage cancellation transactions was extended by the General Directorate of Land Registry and Cadaster. Due to the extension of the period, the completion of the release transactions was automated, and the transaction was completed automatically in the system with the user’s approval according to the return time of the Land Registry Directorate.

It is made possible that more than one vehicle guarantee can result in a single flow.

Integration was achieved in electronic mortgage transactions, and transactions got underway with pilot branches

OPERATIONAL TRANSACTIONS

Ziraat Katılım conducts its operations with the objective of reducing the work load of branches by standardizing participation banking product and service offering processes.

In this context, the Bank implements many projects which will contribute to operational efficiency.

Letters of Confiscation responded to via KEP (Registered E‑mail)

Steps were taken to ensure that an automatic reply is given to the letters of confiscation, which are notified to Ziraat Katılım via the National Electronic Notification System) via KEP. Letters of confiscation, which had previously been sent to the courier company and physically submitted to the debt collection office will be processed online with the development software. Within the scope of the Bank’s digitalization strategies, a step was taken towards protecting the environment by minimizing the amount of paper and stationery used in transactions.

Measures to ease operational workload

Cheque transactions, whose flow is initiated by the branches and sent to the Operations Center for detailed information data entries, have been taken from the Head Office’s business pool by the branches with less work intensity (workload) and were entered. By directing the transactions that are intense in OPM to branches with lower transaction volume and concluding them in a short time, the workload in branches with a heavy workload was distributed to other branches and an effective pool management was achieved.

The MOPI EFT flow was created in order to carry out detailed data entry and approval processes of the EFTs, whose flow had been initiated by the branches, in the OPM, the Head Office work pool. With this development, thanks to the MOPI EFT system, detailed EFT data entries of all branches were opened to our branches which are not occupied with the Head Office work pool.

Monthly branch routine invoice payments were brought within the scope of automatic payments and representation expenditure expenses were taken to the Head Office, reducing workloads.

Thanks to the integration between the Public Information System and Ziraat Katılım, inquiries can be carried out into salaries and other payments of personnel working in the public institutions, and paid online on the system.

Collective Tax Payments

Work was taken to ensure that the tax payments of the Revenue Administration were automatically collected by the system, based on the instructions to be issued by the taxpayers over their national ID or Tax number information.

With this system, corporate or individual customer tax payments can be carried out collectively with the information provided by the customer

FAST/KOLAS

FAST (Instant and Continuous Transfer of Funds), the 24/7 money transfer system commissioned by the Central Bank of Turkey, and KOLAS (Easy Addressing System), which enables money transfer by mobile phone, e‑mail, the National ID number, Tax Number, foreigner ID number or passport number was commissioned as a pilot application on 18 December 2020.

ZIRAAT KATILIM HAS COMPLETED AND COMMISSIONED THE FOLLOWING IMPORTANT PROJECTS WITHIN THE SCOPE OF ITS IT ACTIVITIES.

INFORMATION TECHNOLOGIES

Ziraat Katılım aims to increase its efficiency, quality and speed by improving customer experience in the field of IT. The Bank has achieved significant progress by integrating the innovation and change management required by the times into its systems and processes.

Ziraat Katılım has completed and commissioned the following important projects within the scope of its IT activities.

• The work mentioned within the scope of the Transition to Open Source Systems was completed:
• In all branches, client machines were switched to an open source operating system.
• An Open Source video conference system was put in place.
• The “Depo” product, which is an open source file sharing system, allowed the sending of internal and external files.
• Open source asset inventory and configuration management processes and systems were implemented.
• The corporate website was renewed with the open source code.
• Credit card infrastructure was implemented with the Ziraat Katılım Bankkart project.
• The telecommunication center remote working infrastructure was established
• Central infrastructures were strengthened so all Bank personnel could work remotely, and necessary software and hardware equipment was installed and delivered to the end user.
• The system infrastructure of the Sudan Branch was established and brought online. The branch website was prepared and brought into service.
• The profit sharing ratio of participation accounts opened through digital channels was privatized.
• Call Center/IVR‑Participation Mobile Approval Integration was carried out.
• A payment infrastructure was established with Katılım Mobile QR, enabling donation, social security and tax collection transactions.
• It was made possible to conduct order money transfer transactions transmitted from the branches via the Operation Center and Participation Mobile.
• With the Participation My Customer Project, it is possible to monitor customer information on an end‑to‑end basis in real time.
• Through integration with new brands, the ÖKC (Payment Recorder Device) POS park was enlarged
• Integration work was completed in order to respond to the confiscation notifications delivered to the Bank via the UETS (National Electronic Notification System) via the KEP (Registered E‑mail).
• Steps were taken to ensure that collective MTV (Motor Vehicle Tax) payments could be carried out.
• The Public Common ATM Project was completed.
• The school Collection System was established.
• Integration with the Public Personnel Electronic Salary Payment System was completed.
• Working in conjunction with the Digital Transformation Office, the first and second phases of the National Data Dictionary project were completed.

ZIRAAT KATILIM, THE PERFORMANCE SYSTEM, WHICH IS BASED ON FAIR, COMPETITIVE AND NUMERICAL FACTORS, CONTINUED TO ADD NEW MEASUREMENT MODELS AND SIMILAR PROJECTS TO ITS EXISTING STRUCTURE IN 2020, IN ORDER TO ENSURE THAT OUR EMPLOYEES COULD ACHIEVE COMMON GOALS BY UNITING AROUND THE SAME VISION AND STRATEGY.

FINANCIAL MANAGEMENT

In line with our Bank’s growth targets, asset items, resource diversity, and the income‑cost balance are analyzed with sub‑breakdowns in the balance sheet and income statement. Any extraordinary increase in revenues and/or expenses is immediately reported to the Senior Management through effective income and expense management monitoring.

Within the scope of budgeting and analytical balance sheet studies, the web‑based Management Reporting System, which was put into practice at the Bank in 2019 reached 51 with the new reports issued in 2020.

The web‑based Management Reporting System, which was implemented at the Bank in 2019 within the scope of budgeting and analytical balance sheet work, had reached 51 reports with the new reports created in 2020. With the Province‑based sector analysis report, which was distributed in 2020 and made available for use, the developments of our Bank, Participation Banking and Banking sector are analyzed with statistical data and quarterly web‑based visual presentations.

Our legal reporting project, which was launched in 2020 with the aim of providing fast and accurate data, was completed. This ensured that the reporting to public authorities could be completed in less than 10 minutes. All reports placed in the model are prepared on a daily basis. The time spent for report preparation, which had been carried out manually before the project, is used for report checks and error detection after the project becomes widespread. In this respect, the efficiency and effectiveness of our legal reporting processes increased significantly.

The performance system, which is based on fair, competitive and numerical factors, continued to add new measurement models and similar projects to its existing structure in 2020, in order to ensure that our employees could achieve common goals by uniting around the same vision and strategy.

In this context, on the main banking system, the following projects were taken into the scope of application.

• The Service Contract application project, aiming to effectively manage the profitability of the portfolio/branch, to reflect income to the transaction branch/the portfolio manager who makes the transaction, based on the effort and time spent on the other unit’s customer,
• The Performance measurement project based on the number of reports prepared by the Project and Company Analysis department employees and their and scores,
• The automatic performance bonus calculation project within the framework of the principles determined according to the success rankings formed as a result of the individual performance evaluations of our Bank employees,
• The project to estimate target numbers with the artificial intelligence based statistical analysis by segmenting the branches and portfolios according to their similar characteristics.