MATERIAL TOPICS DISCUSSED IN THIS SECTION

Financial Performance and Profitability

Customer Experience and Satisfaction

Responsible Products and Services

Financial Inclusion

Integrated Risk Management

Ethics and Compliance

• Ziraat Participation designs, develops, and provides its financial products and services in accordance with and in alignment with the principles of participation banking.
• Participation banking principles are a business philosophy that aims to generate and share value for all stakeholders rather than merely serving as a system. The foundations and principles provided by participation banking also align with ESG principles, which encourage responsible business behavior.
• Participation banking, which prohibits speculative market transactions, significantly contributes to the resilience of institutions and enables them to readily cope with the challenges during periods of crises and fluctuations. In this respect, participation banking is a system that promotes resilience and long-term development.

ZIRAAT PARTICIPATION IS COMMITTED TO CONTRIBUTING TO THE DEVELOPMENT OF THE TURKISH ECONOMY AND THE WELFARE OF ITS STAKEHOLDERS.

Ziraat Participation, the participation banking subsidiary of Ziraat Bank, which is the natural leader and well-established institution in our country's financial industry, contributes to building an economic structure that encompasses all segments of society and offers equal opportunities for everyone.

In addition to Ziraat Participation's robust financial structure, its capacity to quickly capitalize on emerging opportunities within the frame of its dynamic and proactive strategy and incorporate them into its performance is a key component and driving force behind its efficiency and profitability. In the 2023 reporting period, Ziraat Participation's asset size reached TL 384 billion.

Ziraat Participation, which achieved the performance growth it targeted in its business lines, marked significant growth in the funds it extended, the funds it collected, and its equity.

Extended funds, which indicate the contribution to the Turkish economy, totaled TL 260 billion in 2023.

Following an effective risk management policy in the allocation process of extended funds, Ziraat Participation's non-performing loans (gross)/extended funds ratio was at a low level of 0.77% in 2023. This rate is significantly lower than the average rate in the Turkish banking sector.

Ziraat Participation's share in the participation banking sector was 17.9% at the end of 2022, while it was 18.8% as of the end of 2023.

For detailed information regarding Ziraat Participation's financial performance in 2023, please refer to the 2023 Annual Report.

CUSTOMER SATISFACTION IS A CONCEPT INCLUDED IN THE MISSION OF ZIRAAT PARTICIPATION.

Ziraat Participation's primary objective is to provide optimal treatment to its customers, who are its reason for existence, by delivering prompt, precise, and high-quality solutions to fulfill their demands and needs. The Bank provides its products and services to its customers through a wide range of alternative distribution platforms in addition to its branches, which are its traditional distribution channels.

During the reporting period, the Bank's customer base across all segments reached 1,163,058.

Bank's corporate website provides up-to-date information about the product and service range of Ziraat Participation in the Retail, Commercial and Private Banking segments.

Digital banking applications, which have grown significantly in recent years, have played a key role in serving the financial needs of Ziraat Participation customers at their utmost convenience, resulting in exceptional customer satisfaction. The extensive efforts dedicated to digitalization have significantly enhanced the service experiences of both individual and corporate customers.

Katılım Mobile serves as the digital channel of Ziraat Participation.

While the number of customers utilizing Katılım Mobile and usage rates continue to grow, the innovations that have been implemented have also contributed to reaching more customers.

• In 2023, Katılım Mobile's device identification method enabled faster login and transaction processing, and structural improvements continued to enhance transaction speed and security.
• The new feature of Katılım Mobile, the Send Document function, which enables customers to conveniently submit missing or updated documents without the need to visit a branch, has been made available for use.
• With the new TR ID card and face recognition technology, users can now conveniently carry out transactions such as Forgot My Password, Get Password, Sim Card Verification, and Mobile Phone Number Update using Katılım Mobile.
• Enhancements have been made to the user interface and editing features of the Internet Branch. Additionally, informational boxes have been incorporated into Katılım Mobile as part of marketing initiatives.
• Katılım Mobile and Internet Branch commenced stock trading brokerage services during the report's preparation for publication.

When considered in terms of contribution to sustainability, the widespread availability of digital services plays a significant role in minimizing reliance on paper and subsequently reducing waste.

• For 2024, the following actions are scheduled within the scope of projects for Katılım Mobile and Internet Branch:
• Receiving commercial customer applications from Katılım Mobile via video call and providing distance application opportunities,
• Allowing corporate customers to utilize the digital approval structure,
• Enabling private banking customers to utilize the Katılım Mobile application with a unique theme,
• Continuing infrastructure renewals and arrangements to enhance the user experience.

In 2023, the number of Katılım Mobile users increased by 9%, the number of Ziraat Participation credit cards in use increased by 42%, and the number of automatic bill payment orders increased by 37%.

The insurance product range is growing through innovations

Ziraat Participation has introduced İlk Ateş SME Insurance, Limit Protection Insurance, Corporate Package Insurance, Individual Assurance Insurance, Personal Accident Insurance, Entrepreneur Support Insurance, Farmer Support Insurance, Farmer Friendly Insurance, Agricultural Finance Life Insurance, and State Supported Receivable Insurance products in 2023.

Capacity to provide services in four different languages

The Central Banking Branch of Ziraat Participation provides services in four different languages: Turkish, Arabic, English, and sign language.

This practice, which demonstrates an inclusive service approach, is also part of the initiatives undertaken for Banking for the Disabled Customers.

The total number of customers of the Branch, which gained 12,340 new customers in 2023, increased by 18.38% compared to the end of 2022 and reached 79,471.

100% of the customers acquired in 2023 joined the portfolio through video calls.

The growing significance of customer satisfaction in digital banking

The Customer Satisfaction and Communication Quality Unit at Ziraat Participation conducts enhancing complaint management, telephone banking, and video call account opening processes through continuous development studies.

The unit, which conducts telephone banking customer representative surveys, also performs satisfaction surveys at 6-month intervals within the context of digital channels, compiles the feedback and suggestions from the Bank's customers regarding its products and services, and carries out development studies.

Customer inquiries received through any channels of communication are recorded in the Bank's system, and customers are promptly informed via text messages and e-mails that their inquiries have been recorded and are being processed.

The customer inquiries, which are recorded, are meticulously processed and analyzed by the Customer Satisfaction Center teams responsible for managing and addressing inquiries. Customers receive feedback via their preferred communication channel (text message, email, phone, or written) for their finalized inquiries.

In addition, the SME Participation Digital brand was established in 2023 to facilitate customers' ERP solutions, open banking, and smart cash flow financial transactions. This channel provides a range of products and services related to e-document management (invoicing, storage, tracking, etc.), bookkeeping (account statement, stock tracking, barcode identification, credit card usage, etc.), payment processing (instant withdrawal, payment link sharing, invoice matching, etc.), and bank account transactions.

A WIDE RANGE OF PRODUCTS, SERVICES AND SOLUTIONS WITH HIGH VALUE PROPOSAL

Generating added value through collaborations with KGF, KOSGEB, and KFK

Support for the real sector in the aftermath of the pandemic

Within the framework of the protocol signed between Ziraat Participation and the Credit Guarantee Fund (KGF), it is aimed to minimize the adverse impacts of the COVID-19 pandemic on business operations and provide financial support for investment projects. Financing opportunities are still being provided to businesses within the scope of the protocols.

In 2023, the management of the Islamic Development Bank approved the "Emergency Working Capital Loan Financing product to Support SMEs in Türkiye" in exchange for the Turkish Government's Treasury guarantee, and the disbursements have begun. Within this scope, in 2023, a total of EUR 9 million was disbursed to 11 SMEs and medium-sized enterprises that are commercial segment customers.

Providing assistance in times of disasters and emergencies

Ziraat Participation remained committed to supporting its stakeholders who were affected by economic challenges caused by various disasters and emergencies that occurred in different regions across our country in 2023.

In order to provide financial support to businesses impacted by heavy rainfalls, floods, and landslides in Amasya, Kastamonu, Sinop, and Samsun provinces in 2023, the “Amasya, Kastamonu, Sinop, and Samsun Provinces Emergency Support Financing” product developed in cooperation with KOSGEB was offered to stakeholders.

A protocol called “İstanbul Başakşehir Emergency Support Financing” was signed between KOSGEB and the Bank in order to provide financial assistance to businesses impacted by the floods in 2023 in the Başakşehir district of İstanbul province, and work has been initiated in this direction.

In order to provide financial assistance to the businesses impacted by the fire in İnegöl district of Bursa province, disbursements were made within the scope of the Bursa İnegöl Emergency Support Financing resource package, which was also developed in cooperation with KOSGEB.

In order to provide financial support to businesses impacted by heavy rainfall and storms in İstanbul (Şile and Ağva), Bursa (Gemlik), Diyarbakır (Bismil), Batman (Central), Zonguldak (Alaplı and Ereğli), and Düzce, the “İstanbul, Bursa, Düzce, Diyarbakır, Batman, and Zonguldak Provinces Emergency Support Financing” protocol was signed between KOSGEB and the Bank.

Systematic support for exports

In alignment with the goal of contributing to the country's economy, Ziraat Participation provides long-term financing option with appropriate profit sharing rates to both SMEs and non-SME businesses that are members of exporter associations. In 2023, a total of USD 48.7 million was disbursed from the Vade-SİZ Export Finance product package.

As part of the protocol on equity guarantees signed between Islamic Credit Guarantee Fund (KFK)* and Ziraat Participation, it is aimed to provide financial support to customers in the exporter or foreign exchange earning services sector, thereby enhancing their access to financing.

The KFK-Equity Export Support Package sub-protocol has been signed and preparations to make the product available have been initiated.

Within the scope of the collaboration between KFK and the Bank and the equity protocol signed, studies are underway to develop the KFK-Financial Leasing Package, which will be made available to both SMEs and non-SME companies.

Within the frame of the protocol, a financial leasing limit of TL 20 million was promptly disbursed to facilitate consumers' access to financing. Ziraat Participation will persist in its funding efforts supported by KFK in 2024.

The Export Preparation Support Financing, currently in progress, aims to provide support to export customers in covering expenses related to production, such as raw materials, products, and semi-products to enhance the competitiveness of companies:

* KFK was established through a partnership between the Ministry of Treasury and Finance of the Republic of Türkiye, the Participation Banks Association of Türkiye (TKBB), and 6 participation banks operating in our country. KFK aims to meet all kinds of credit and financing needs by providing novel guarantee and surety solutions, both domestically and internationally, tailored to the specific requirements of the Turkish market and in compliance with the principles and standards of interest-free banking. Ziraat Participation holds a 15% participation share in KFK.

SUSTAINABILITY-ORIENTED PRODUCTS

Ziraat Participation expands and diversifies its range of its SDG-related products and services following participation banking principles.

Support for customers in earthquake zones

Following the devastating Kahramanmaraş earthquake disaster that occurred on 6 February 2023 and was deemed the disaster of the century, Ziraat Participation extended a comprehensive array of support to its customers in the region and ensured that loan repayments were postponed for the region.

The Bank also provided financing and collateral support packages designed in collaboration with KFK, KGF and KOSGEB to SME customers, with priority given to the regions impacted by the earthquake.

In 2023, Ziraat Participation sustained its commitment to the real sector by augmenting its support for production and export.

The initial phase of the SME Value Proposition Project, which will provide 360-degree financial solutions to SMEs through its products and services, has been completed in 2023. Innovations were implemented in areas such as Foreign Trade, Insurance, Cash Transactions, and Energy consultancy within the project's scope to streamline customers' financial transactions.

For companies that provide export revenue and have high-tech production

The “Vade-SİZ Export Credit” Package was implemented to facilitate easy access to financing for businesses that are members of exporters’ associations, with the objective of contributing to the economy of our country. 5 different companies received USD 15 million in financing within this context.

Current average and export cost support were received from all companies in proportion to the amounts disbursed. Customers who contribute to the country’s export revenue and possess high-tech production capabilities now have access to the subject product, and fulfilling the companies’ demands further improved customer satisfaction and loyalty.

Ziraat Participation also provides support to export companies that contribute foreign currency to the national economy through its “Vade-SİZ Export Credit” product through exporter associations. In the reporting period, USD 48.7 million of resources were allocated to 76 distinct exporter customers within this context. No collaboration was established with any exporter association during the reporting period.

Resources from the Islamic Development Bank to SMEs and medium-sized enterprises

EUR 13 million of the second tranche of EUR 46 million for the use of SMEs and medium-sized (mid-cap) enterprises provided by Ziraat Participation from the Islamic Development Bank (IDB) under the guarantee of the Ministry of Treasury and Finance of the Republic of Türkiye, was made available to customers in 2023.