ZIRAAT KATILIM HAS SET A STRATEGIC PRIORITY OF DISBURSING FUNDS PROVIDED FROM TURKEY AND ABROAD IN A MANNER TO BE MOST EFFICIENT FOR THE COUNTRY’S ECONOMY WHILE CONTRIBUTING TO INCREASING THE SHARE OF PARTICIPATION BANKING IN THE FINANCIAL SECTOR AS ITS STRATEGIC PRIORITY.

The Covid‑19 virus, which first emerged in China in 2020 before spreading all over the world, has taken a heavy toll on the global economy and social life. Thanks to the economic measures and incentives taken by countries in the first wave of the pandemic, the global economy started to recover and social life has largely returned to normal. Expectations of a period of strong growth due the realization of pent‑up in the second half of the year led to a rapid increase in commodity prices. In addition, the positive results in the progress achieved in creating Covid‑19 vaccines led to an increase in risk appetite in the financial markets when looking to the future.

The U.S. economy suffered one of the steepest contractions in its history due to the closure of the economy in the second quarter of 2020, and the rate of unemployment in U.S. rose to double digit levels. However, the continued implementation of expansionary monetary policies and the low interest rates implemented by the U.S. Federal Reserve (Fed) limited the negative effects of the pandemic on both the U.S. and the global economy. In addition, the incentive packages implemented by the U.S. government supported the economy and achieved a rapid recovery in the third quarter of the year. The election of Joe Biden as the president in the last quarter of the year removed uncertainties regarding the presidential election and brought the prospect of new economic incentives to the agenda.

MEASURES TAKEN BY OUR GOVERNMENT TO ALLEVIATE THE NEGATIVE EFFECTS OF THE PANDEMIC HAVE HELPED ENSURE ECONOMIC RECOVERY, WHILE SOCIAL SPENDING HAS ALSO EASED THE PRESSURES OF THE PANDEMIC, ESPECIALLY ON THE LOW‑INCOME SEGMENT.

The European economy was also negatively affected by the pandemic during 2020 with double‑digit contractions recorded in the second quarter of the year. Massive stimulus packages were announced by European countries, with the European Central Bank (ECB) also expanded the liquidity it provided. A second wave of the outbreak emerged in the last quarter of the year, leading to short‑term shutdowns in the economy. However, early progress in the vaccination rollout in Europe has injected optimism for a recovery in the European economy. The rapid appreciation of the Euro during the year can be considered a positive development for our country, given that our biggest export market is the European continent. In the final days of the year, the Brexit process was completed, ushering in the process of Britain leaving the norms and rules of the European Union in the new year.

The pandemic, which negatively affects social life in Turkey, has also had negative effects on the economy. Measures taken by our Government to alleviate the negative effects of the pandemic have helped ensure economic recovery, while social spending has also eased the pressures of the pandemic, especially on the low‑income segment. With the pandemic being brought under control in the third quarter of the year, economic activity has gained pace as expectations for the future have turned positive. In addition, with the encouragement of the institutions managing the economy, the banking sector acted to delaying real sector loan payments, thus helping ease financing difficulties.

Ziraat Katılım has set a strategic priority of disbursing the funds provided from Turkey and abroad in a manner which is most efficient for the country’s economy and contributing to increasing the share of participation banking in the financial sector. In 2020, the banking sector expanded by approximately 36% in terms of asset volume, the participation banking sector increased by approximately 54% and our Bank increased by 65% in terms of asset volume with the contribution of the base effect. In terms of profit, the banking sector recorded an increase of 19% compared to the previous year, the participation banking sector achieved an increase of approximately 52% and our Bank recorded a rise of 24% when compared to the previous year.

In line with the goal of increasing its share in the financial sector, the share of participation banking in the sector increased from 6.3% to 7.2% in 2020. Maintaining this positive performance in participation banking will contribute to the deepening of the Turkish financial system and helping it become better hedged against risks.

Holding the title of being Turkey’s first public participation bank, Ziraat Katılım continued to branch out in 2020, exceeding its target of 100 branches, despite the economic stagnation due to the pandemic. Our Bank has continued to comply with the measures taken since the beginning of the pandemic and has continued to provide financial solutions to our customers without compromising the quality of service. Ziraat Katılım has maintained its activities with devotion in order to contribute to participation banking, increase its support to our economy and create more added value. In the coming periods, it will continue to work to contribute more to our economy.

On behalf of myself and our Board of Directors, I would like to thank our employees for their devoted performances in the challenging conditions in 2020, our customers for their confidence in our Bank and our business partners and correspondents, who have always been there for us.

Hüseyin AYDIN
Chairman of the Board of Directors