IN LINE WITH ITS VISION OF BEING A LEADING FINANCIAL INSTITUTION IN THE SECTOR, ZIRAAT PARTICIPATION MAINTAINED ITS RAPID GROWTH TO CLOSE THE YEAR 2021 WITH A HEALTHY GROWTH PERFORMANCE, WHICH IT ACHIEVED IN LINE WITH ITS GOALS OF PROFITABILITY AND EFFICIENCY.

Dear Stakeholders,

In line with its vision of being a leading financial institution in the sector, Ziraat Participation rounded off the year 2021 with a healthy growth performance, which it achieved in line with its goals of profitability and efficiency, continuing its rapid growth.

As of the end of 2021, Ziraat Participation had achieved a 63% expansion in its total assets when compared to the end of 2020, with its balance sheet expanding to reach TL 98.3 billion. Ziraat Participation ended 2021 with a profit of TL 559 million, thanks to its approach to service which prioritizes customer satisfaction and the successful execution of its business cycle structured with a focus on efficiency.

Our support to real sector goes from strength to strength

Ziraat Participation responds to its customers’ needs and expectations by offering the most correct solutions and value propositions through the most accurate channel. The Bank maintains its operations in line with its vision of being an effective participation finance institution in its region as well as in international markets.

Ziraat Participation continued to support the financing of the real sector, especially SMEs, in 2021. The volume of cash funds disbursed by Ziraat Participation during 2021 increased by 58% compared to the end of the previous year, to reach TL 66.4 billion. On the other hand, non-cash funds grew by 86% to reach TL 29.6 billion. Backed by its successful and effective funding activities, Ziraat Participation’s total support to the Turkish economy reached TL 96 billion.

The volume collected funds increased by 68% YoY in 2021 to reach TL 78 billion.

Attaching the highest importance on maintaining asset quality

Ziraat Participation adopted a growth strategy focused on maintaining and improving asset quality. The Bank’s allocation and fund disbursement processes and its early warning and risk monitoring infrastructure under continuous improvement accordingly.

In line with our strategies of sustainable growth and focusing on the customer, the volume of funds disbursed continued to grow rapidly in 2021. In this period when risk management policies have been executed uncompromisingly, the Bank’s NPL ratio remained significantly lower than the sector average, at just 2.5%. In 2021, Ziraat Participation’s capital adequacy ratio stood at 14.02%.

AS OF THE END OF 2021, ZIRAAT PARTICIPATION HAD INCREASED ITS TOTAL ASSETS BY 63% YoY, REACHING A BALANCE SHEET SIZE OF TL 98.3 BILLION.

TL 36.9 billion in lease certificate issuances

Ziraat Participation successfully performed 28 lease certificate issuances in 2021, with a total amount of TL 11.6 billion. Ziraat Participation plays an active role in the capital markets as part of its strategy of enriching its resource structure. Ziraat Participation obtained approval from the Capital Markets Board for lease certificate ceilings of TL 1 billion, TL 12 billion and TL 15 billion in order to issue lease certificates in Turkish lira in the local market with its subsidiaries Ziraat Katılım Varlık Kiralama A.Ş. and ZKB Varlık Kiralama A.Ş. Since the date of its foundation until the end of 2021, our Bank has issued lease certificates of TL 36.9 billion in batches with different compositions within this framework.

“Eli Bol Account”, the latest addition to our range of deposit products

Ziraat Participation successfully continued its efforts to diversify the range of products which it offers its customers. The Eli Bol Account, which was designed in this context, was offered to our customers through our branches on 10 December 2021.

The Ziraat Participation Eli Bol Account is a type of account where two products are offered together. A part of the investment amount in the private current account opened on behalf of a customer is utilized in the participation account, which is based on profit/loss partnership agreement opened on behalf of a customer by the Bank. The other part is profited in the transactions of selling lease certificates by the Bank with the promise of repurchase, and purchasing the lease certificates by the customer with the promise of resale.

Products contributing to the value of the Turkish currency

Ziraat Participation started to offer the Currency Protected TL Participation Account product to its customers from 23 December 2021. In addition, our customers with gold funds may benefit from the Gold Conversion TL Participation Account by converting gold to TL upon request. Our Bank may open a Currency Protected TL Participation Account for our customers who hold funds denominated in the US dollar, Euro and British pound in their branches by converting their foreign currency to TL.

With these new products, our customers will not only be able to keep their funds in the TL accounts without being affected by exchange rate movements, but will also play an important role in protecting the value of the Turkish currency.

The Breath 2021 Support Finance

Protocols were signed between the Credit Guarantee Fund (KGF) and Ziraat Participation within the scope of support packages aimed at reducing the negative impact of the pandemic on businesses and to support investment. The support packages were made available to the beneficiaries. On the other hand, the Breath 2021 Support Finance protocol was implemented jointly with the Turkish Chambers and Exchanges Association (TOBB) and the KGF. The protocol aims to provide financing and surety specific to the SMEs at affordable conditions, and also to continue to contribute to the Turkish economy by increasing production and employment.

Contribution to employment with the Additional Employment Support Package

The Ministry of Treasury and Finance, the KGF, the SSI, İŞKUR (the Turkish Employment Agency) and Ziraat Participation signed a protocol which was aimed at meeting the financing needs of SMEs and non-SME businesses at affordable conditions and to provide them profit support. The condition for this support was that the SMEs and non-SMEs should commit to provide additional employment by reducing the negative effects of the pandemic on cash flows and maintaining the employment which they had created within this scope. In this context, within the framework of the Treasury Backed Surety System, the KGF guaranteed “Additional Employment Support Package” was prepared and rolled out to customers.

Support for manufacturing sector with the Manufacturing Based Import Substitution Support Package

In order to finance investments which will boost the production and employment capacities of businesses holding investment incentive certificates for manufacturing industry investments by reducing the negative effect of the pandemic on industry, the KGF-guaranteed “Manufacturing Based Import Substitution Support Package” was prepared within the framework of the Treasury Backed Surety System in 2021.

Finance support for regions affected by floods

Protocols were signed between KOSGEB and the Bank in order to reduce the effect of the negative situation experienced in areas affected by natural disasters on businesses and to encourage investments in domestic production. Support packages were made available to the beneficiaries.

The Bank included in the “Artvin, Düzce and Rize Provinces Emergency Support Financing” program announced by KOSGEB. The purpose of this program is to provide financial support at affordable conditions to businesses affected by the floods in the Düzce, Rize and Artvin provinces in July 2021 and which operate in the sectors supported by KOSGEB.

The businesses were affected by the floods which hit the Western and Central Black Sea regions and in various districts of Van in Turkey in August 2021. In order to provide financial support to these businesses at affordable conditions, KOSGEB and our Bank signed the “Emergency Support Financing Protocol for the Provinces of the Western and Central Black Sea Region and the Districts affected by floods in the Van Province”.

For a life in safer houses

The Ministry of Environment and Urbanization and our Bank signed a protocol on Dividend Support within the scope of the “Law on Transformation of Areas under Disaster Risk” No. 6306. The “Urban Transformation Financing” products, which were prepared for the purpose of construction, reinforcement or acquisition, were made available to enable the beneficiaries live in safer houses.

Forward Export Financing product to promote exports

We offered our new financing product, “Forward Export Financing”, to customers who are exporters. This product enables exporters who are customers with us, and who receive their payments through a forward letter of credit, to collect their receivables from our bank in advance without waiting for the maturity of the letter of credit. In this way, we support our exporters to expand their competition opportunities in international markets by increasing their forward sales opportunities, to clear their receivables from commercial and political risks, to open up to new and target markets, and to access to post shipment financing opportunities.

Our information systems value proposition is even stronger

Under our information systems activities, with FAST, it is possible to transfer money to an account in a different bank with an IBAN or an easy address.

As part of the transition to open source systems, the transition to the Pardus operating system was completed for all branches.

Ziraat Participation became the first participation bank to offer services to customers in social housing projects, thanks to its integration with TOKİ. With the establishment of the dematerialized gold transfer system, it was also possible to transfer gold instantly.

Our customers, who have foreign currency risk in their follow-up accounts, were given the opportunity to restructure their entire debt in Turkish lira in order to facilitate payments and not be affected by exchange rate losses.

The “Personal Basic Needs Support Loan” structuring process was offered to the customers via Internet Banking.

The Forward Export Financing Project was completed and thereby, the product range, which is offered to the customers, was increased. The distance customer acquisition project was completed and the technological infrastructure was established for persons to become a customer without coming to the branch.

Important new applications in digital banking

With the completion of the Digital Document Approval infrastructure, customers could approve one or more documents through the Internet Branch and Participation Mobile without needing to visit Ziraat Participation branches.

Insurance Transactions were made available to customers through digital channels. Work was taken to allow transactions such as receiving and tracking bids and monitoring policies to be performed. In the first instance, the Compulsory Earthquake Insurance (DASK), Compulsory Traffic Insurance and Motor Vehicle Insurance transactions were brought into use.

Our member businesses can view their bank statements by clicking on the member business transactions tab in the Internet Branch and on Participation Mobile

The Digital Order Transactions feature allows our customers to send their orders through Participation Mobile without having to go to our branches. These transactions generally involve digital EFT Orders and Foreign Trade Transaction Orders. In the coming periods, we will continue to work to ensure that other instructions are performed via Participation Mobile.

As of 1 May 2021, the Central Banking Branch started to open accounts via video calls. Participation Mobile was renewed in terms of design and experience in order to offer a digital customer experience in the best way possible, and was offered to our customers. Our Bank aims to successfully continue its technology-based investments in digital channels in 2022.

Human resources which strengthen with new entrants

Ziraat Participation has developed its most valuable asset, its human resources, with new participants.

334 new colleagues joined us in line with the needs of the branches and head office units in the Bank’s rapidly growing organizational structure. As of the end of 2021, Ziraat Participation employed a total of 1,529 people.

The Ziraat Participation branch network added 16 new branches its organization in 2021, taking the total number of branches up to 121.

We would like to thank all of those who contributed to our success in 2021

In 2022, we will continue to work with dedication to increase our contribution to the real economy. Our deep-rooted corporate culture, our values and the ethical principles which we adhere to will provide us with the energy we need on our path towards this goal.

We resolutely maintain the work on our projects by adhering to our mission of bringing participation banking to the masses. Our ultimate goal is to generate value for the Turkish economy at an increasing rate, to support sustainable development and the welfare and future of our people in a multifaceted manner.

We know that we have high goals. Our stakeholders’ contribution and unwavering support is extremely important in our determination to reach these goals.

On behalf of myself and the management team at Ziraat Participation, I would like to thank everyone who has contributed to our performance in 2021.

Respectfully,