our financial
capital

In 2021, we, as VakıfBank continued to stand by our customers by continuing our support for our country’s sustainable development. During this period, we increased our assets by 44% to TL 1,007 billion. So we continued to be Turkey’s second-largest bank.

When the effects of the pandemic persisted this year, we worked tirelessly to ensure that the financial system functioned properly and that resources were allocated appropriately. In 2021, we increased commercial loans by 43% and personal loans by 16%, demonstrating our commitment to all segments of society. The support we provided to the national economy through cash and non-cash loans reached TL 766 billion in 2021.

In terms of funding, we increased our total deposits by 43% to TL 591 billion. In terms of non-deposit funding, we maintained our leading position in international debt capital markets. We continued to provide varied medium- and long-term foreign funds to support the national economy and our customers during this time, contributing a total of USD 5.4 billion in additional resources. We were the bank with the greatest sustainability-themed resources in its funding structure in 2021. We will focus on new and different alternatives in non-deposit financing in the upcoming periods and maintain our pioneering position in this field.

In 2021, despite the challenging market conditions due to the Covid-19 pandemic that hit the world, we obtained a total of USD 5.4 billion of new funding from international markets. With these operations carried out in foreign capital markets, we have revealed the reputation and credibility of Turkey and VakıfBank before international investors.

On March 22, 2021, we completed the largest one-time securitization transaction in the Turkish banking sector, with maturities ranging from 5 to 7 years and a total value of USD 1 billion 750 million, as part of the securitization program based on future flow transactions, with the participation of 7 different correspondent banks from around the world.

In April 2021, we obtained a syndicated loan of USD 237.5 million and EUR 691.3 million, amounting USD 1.1 billion, with a 105% rollover ratio, with the participation of 38 banks from 18 countries. We obtained USD 650 million in syndicated loans in November 2021, with the participation of 27 banks from 16 countries, consisting of USD 296 million and EUR 313.5 million. With this loan, we renewed all our syndicated loans under sustainable performance criteria.

We became the Turkish bank with the highest level of sustainability-themed resources in this period as a result of our sustainable Eurobond issuances and syndicated loan deals. We were granted the “Best Financial Institution Issuance of the Year” award at Bonds & Loans Turkey 2021 for our first Sustainable Eurobond issuance in 2020, one of the most prestigious and respectable awards in the financial industry. We successfully concluded our Bank’s second sustainable Eurobond issuance in September 2021. Nearly 180 institutional investors from all over the world, from the Middle East to Asia, from the UK to the US, participated in the transaction, which received a demand 4 times higher than the amount of the issuance. Thanks to the strong demand, the coupon rate of the bond amounting USD 500 million was 5.5%, 62.5 basis points below the initial level; the final rate of return was 5.625%. With the success of this transaction and the return of investors, we confirmed the success of our Bank’s activities in the field of sustainability and the sustainable finance program we have established once again. We cemented our pioneering and innovative role in this field by securing a new sustainability-themed resource amounting EUR 200 million with a maturity of 4 years in December. We have committed to reducing our carbon emissions, maintaining a high rate of female employees, and participating in the Carbon Disclosure Project (CDP) Water Program with this transaction under the theme of sustainability. In accordance with the “Sustainable Finance Framework Text,” we will make funding available to SMEs through renewable and sustainable energy projects, and green housing loans with the high environmental awareness that meet certain criteria.

Throughout 2021, we carried out dedicated sales transactions for qualified investors abroad, with a maturity of 3-12 months, amounting to approximately USD 193 million in various currencies as part of 9 different transactions, under the Global Medium-Term Note Program (GMTN).

With the spread of the Covid-19 pandemic in our country and around the world, we signed an Emergency Firm Support Project Loan Agreement amounting USD 250 million with the World Bank on September 9, 2020, with the TR Ministry of Treasury and Finance guarantee, to provide financing to the companies most affected by the crisis. We continue our extensions as part of this resource, which has a 7-year grace period and 23-year maturity.

We also strive to assume a pioneering role in environment-friendly financing. In 2020, within the scope of the French Development Agency (AFD) and Green Mortgage project, we obtained the largest amount of financing in the Turkish banking industry amounting EUR 200 million. We began extending these funds in 2021 with the “Green Mortgage Loan” campaign, as the first bank in the sector to obtain such a high amount of environment-friendly funding. As a result, we not only promote the construction of high-energy-efficiency homes in Turkey, but we also demonstrate our commitment to sustainable development goals through the financing we provide.

We continue to cooperate with the European Investment Bank (EIB), the World Bank (WB), the European Bank for Reconstruction and Development (EBRD), the German Development Bank (KfW), and the French Development Agency (AFD) to support the real sector with long-term and cost-effective resources.

As one of the most active banks in the international capital markets, we continue our uninterrupted support to deepen capital markets in Turkey, increase product diversity, and create resources for the national economy and the real sector by means of the transactions carried out under various structures.

Below are the details of our resources as of the end of 2021.

We make available sustainability-themed products, constituting one of our Sustainable Development approach’s essential components, for our customers to support socio-economic development by considering all segments of society. We promote social development and stand by all segments of society, from households to the real sector, with the support we provide.

While supporting our customers, we take steps to evaluate and manage the environmental and social impacts of the projects we finance, with the awareness that our most significant impact in the environmental and social domain is through financing.

In addition, in 2021, we introduced and made available to businesses the product named VakıfBank Environmental Vehicle Loan, which allows businesses to finance electric or diesel (Euro 6) environment-friendly vehicles that provide savings in fuel and help to reduce air pollution and carbon emissions. In this context, we finance 0 km vehicle and fleet loans for all vehicle types such as electric or low-carbon diesel-powered cars, trucks, and buses.

In addition, we implemented the Supplier Financing Loan for the Defense Industry during this period, which facilitates the access to finance of companies that are suppliers of companies by establishing protocols with our domestic and national defense industry companies to support the suppliers of our country’s national and domestic defense industry companies.

During the pandemic, we have continued to take steps that will help business owners remotely manage all their banking transactions. In June 2021, we realized the launch of VBanko Cheque Digital, supporting an environment of mutual trust in trade by securing the value of cheques. We supported the execution of secure trade even faster and more effectively with our VBanko Cheque Digital solution, which combines the trust of a letter of guarantee with the ease of circulation of a cheque. We were deemed worthy of the silver award in the field of “Product Innovation” at the Stevie International Business Awards 2021 with VBanko Cheque Digital; of the second prize in the field of “Future Of Customers And Consumers” at the IDC DX Summit 2021; and at the PSM Awards 2021, we were granted a gold award in the “Most Innovative Product/Service/Project” category and a silver award in the “Best Promotion Marketing Achievement” category.

Support for SMEs

In 2021, we offered many suitable new products to our SMEs.

In this context, we have continued to provide KGF Support Loan Packages to support SMEs that create added value in 2021. We provided financing to domestic producers who manufacture machinery, raw materials, and intermediate goods in certain product groups under favorable conditions as part of the package. Financing domestic machinery purchases, in particular, we enabled our SMEs to meet new technologies, contribute to energy efficiency and support domestic production. We have also made a sustainable contribution to the female and young workforce, especially with the KGF Additional Employment Support Package.

Meanwhile, with the TOBB Breath Loan 2021, we have contributed to the healthy growth of businesses and also to the environment and the sustainability of the economy with the Sustainability and Resource Efficiency and Eco-Friendly Vehicle Loan. In addition, by offering our “Profitable POS” product in 2021, we have enabled SMEs to make financial savings in their member merchant transactions.

We have expanded our VBanko Cheque product, which determines the “Cheque Warranty Limit” by evaluating the financial status and cheque payment performance together for the company. So we secured the cheques of merchants and got them to run their businesses without interrupting their payments. In addition, we have also enabled, using VBanko Cheque Digital, real people with commercial and legal activity to be able to define limits and warranty on their cheques over the internet and mobile banking channels and we have ensured that people who are not customers of our bank can see the defined warranties through mobile banking.

With the pandemic, rapid progress has been performed in digitalization globally. During this period, we continued to enrich our Commercial Mobile Banking application. We have ensured that SMEs can access many banking products and services through our Commercial Mobile Banking application. We continue our efforts in line with the regulations to enable SMEs to become remote customers.

During this period, we increased transaction diversity for our SME and commercial customers with Real-Time Campaign Management. This way, we can offer our customers the service they need when they need it through any channel they like.

We have strengthened our current structure to offer the products and services we provide to SMEs to a wider audience. In this context, we closely followed the needs of SMEs by performing customer visits both online and in person. We increased our SME loans to TL 130.4 billion according to the legal SME definition during this period.

In 2022, we will continue to support SMEs with our responsible financing and sustainable cooperation approach, offering new products allowing SMEs to access financing without interruption and protect employment.

We have ensured that SMEs can access many banking products and services through our Commercial Mobile Banking application.

Support to Local Governments

In 2021, we continued to support local governments in their financing needs through our responsible banking approach.

As VakıfBank, we are implementing all the solutions that our municipalities need by combining our know-how of many years for “Municipality Banking” with our powerful technological infrastructure in the fields of cash management and public collections.

We have become one of the banks integrated in a short time into the ”E-Municipality” system, which was established in 2021 under the coordination of the Ministry of Interior for the provision of local services to the citizens electronically.

We are one of the most active stakeholders of the E-Municipality system and have completed our preparations to support all municipalities. In this context, we support the integration of our municipalities into the collection module embedded in the E-Municipality system.

In the next period, we will continue to provide the necessary support to provide the funding that our municipalities will need in performing their services. At the same time, we will make the lives of both local governments and our citizens easier by producing innovative solutions for the banking business and transactions between citizens and local governments to be carried out quickly and effectively.

Support for Foreign Trade

Using our powerful correspondent bank network consisting of 1,318 banks and financial institutions in 122 countries worldwide, we mediate our customers’ transactions in terms of foreign trade, letters of guarantee, and payment. In addition, we provide alternative solutions to help our customers achieve medium- and long-term funding resources. We are mediating both domestic and foreign currency payments with our correspondent accounts in 16 different currencies and at more than 60 banks in many countries around the world.

In 2021, we offered our foreign trade expertise to our customers in line with our goal of becoming the “Leading Bank in Foreign Trade.” Despite the challenging market conditions that stemmed from the pandemic and continued to increase their impact in 2021, we have consistently improved our bank’s foreign trade market share and service quality.

In addition to our existing customers whose foreign trade transactions we mediated, thanks to new customer acquisitions in 2021, we increased the number of our foreign trade customers by 45% year on year. Consequently, using our increased number of foreign trade transactions, we increased our total foreign trade volume by 123% in 2021 compared to the previous year.

We have enabled foreign trade transaction requests to be conveyed through Internet banking and mobile banking channels, allowing customers to easily and quickly perform their transactions. We have enabled our customers to transfer the requests for mass transfers in accordance with their systems by integrating with our Bank and to quickly complete the money transfers in one flow. We have increased the number of our customers transferring foreign currency by 33% compared to the previous year, while also increasing the rate of automated Foreign Currency transfer transactions from 37% to 45%.

We have designed new advantageous transaction packages in line with our aims to ensure that our customers perform foreign trade transactions in exchange for competitive fees within specific quotas without any cost and to support our economy in the field of foreign trade.

We aim to make mobile banking sales of advantageous transaction packages, which we have prepared specifically to meet customer needs, by 2022, and to enable our customers to easily carry out all stages of foreign trade transactions through alternative channels.

We continue to diversify and cement our funding structure thanks to our strength and credibility in international markets. In this context, we support the import and export transactions of our customers with the loans we provide through the agreements concluded with international financing institutions such as European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), and Taiwan Export-Import Bank (TEXIM).

In December 2021, we signed a bilateral loan agreement with the Development Bank of China, and for the first time in the history of the bank, we obtained Yuan denominated international funding. The final maturity of the loan worth 3.5 billion Yuan, which has been provided to be utilized for the funding of foreign trade between the two countries and the overall funding needs, was 3 years. As a result, we provided funding of approximately USD 1.3 billion from correspondent banks within the scope of the bilateral loan agreements and post-financing transactions last year.

In 2022, we will continue to support our vast customer base trading with different parts of the world by correctly identifying their demands and needs with an awareness of the significant contribution foreign trade makes to the national economy. At the same time, we aim to offer innovative products under the most appropriate conditions to our customers and to provide alternative financing possibilities, with our high technology, high-quality service, and widespread network of correspondent banks as well as our knowledge and experience of many years in the field of foreign trade.

Support to Agriculture

With the belief that sustainable agriculture is critical in terms of our country’s future, as VakıfBank, we continue to stand by our farmers with our expert staff and attractive banking products and services. In this context, in 2021, we financed the operational needs of our farmers in a quick, easy, and cost-effective way.

During this period, we have provided loan support to our farmers, and in addition, we have provided service to our farmers who want to receive financial support through our Agricultural Banking tablet application, which we have previously deployed and continued to develop in 2021. As in previous years, in 2021, we have enabled our contract farmers to pay the product prices smoothly and healthily. In this context, we have mediated for approximately 25 thousand farmers who produce sugar beet for the Kayseri, Turhal, Çorum, Erzurum, and Erzincan sugar factories to pay the product prices quickly and smoothly within the framework of the pandemic rules.

We have touched 284,000 farmers so far, meeting all the needs of business and investment credit for producers, from vegetable production to greenhouse, livestock to fisheries, and as of the end of 2021, we have contributed nearly TL 2.1 billion to the industry. The number of VakıfBank contracted agricultural member businesses, where farmers can do interest-free shopping with VakıfBank TarımKart, exceeded 10,000 with the new agreements we made. In addition, as a result of the agreements we made in 2021, we increased the turnover of TarımKart member merchants by 83% compared to the previous year.

We attach great importance to agricultural chambers, associations, and co-operatives so that the micro-scale farmers can be protected and perform better production. As part of a collaboration with leading associations and co-operatives such as Tariş, Pankobirlik, irrigation co-operatives, sprawl, and cattle breeders’ unions, we have offered the partners of the unions an opportunity to meet agricultural input procurements at affordable costs. In addition, within the scope of the agreement concluded with the Turkish Grain Board (TMO), we mediated product price payments and supported the development of licensed warehousing activities. We provided loans to our producers against ELÜS (Electronic Product Bond) collateral.

In addition, we provided affordable interest rates for all types of financing needs of farmers, including tractor loans, agricultural land, agricultural equipment, and dairy animal purchases, with 5-year term investment loans. Within the scope of VakıfBank Agricultural Banking, we continue to provide services to our producers with more than 30 products such as “Organic Agriculture and Greenhouse Loan” to encourage farmers to modernize their production methods, “Agricultural Equipment Loan” for our customers to save labor and energy, and “Agricultural Land Purchase Loan” to re-introduce unused lands to production.

After we introduced our innovative solutions for farmers and businesses in the value chain of the Agricultural Banking business line, we supported many stakeholders and approximately 40 thousand farmers with more than 20 teams consisting of 70 people in designated locations outside the branches.

As VakıfBank, we will continue our efforts as not only a financing institution providing loans to the agricultural sector but also as a bank that completely engages in agricultural banking with the value added to the lives of farmers.

Support to Households

As one of the sector’s leading banks in retail banking with our experience and customer-focused strategy in the field of retail banking, we serve over 19 million retail customers and continue to provide financial support to households with our products in both loan and savings deposits.

As a bank that has been aiming to develop the country’s economy along with itself in all of its operations since the day it was founded, in addition to supporting production, exports, and employment, we are also striving to offer new products for our retail customers so that they can make the most of their savings. Devastating the entire world, the Covid-19 pandemic adversely affected the real sector and daily life as well as the financial markets. In this context, we support our retail customers with loans at affordable interest rates to help them minimize the impact of the pandemic.

As the digital transformation of our bank continues at full speed, we continue to offer innovative solutions that meet the demands and needs of our customers. With the emphasis we place on the spirit of digital transformation and innovation, we introduced another first in the banking sector. Thanks to our cooperation with Mastercard, we offered our customers the “Instant Digital Credit” and “Instant Digital Installment Additional Account” products, which will allow the retail customers who have digital spending habits to use credit through the payment screen for their e-commerce purchases.

Moreover, our Bank’s product Sky Limit remained an attractive option for users from every segment, allowing customers to easily manage their budgets by leaving credit limit management at their discretion, and also allowing them to do so via mobile or online banking without having to go to a branch. We continued to identify tailored limits for our customers determined based on their characteristics like sector, occupation, and income within the scope of the institution they work for and their duties and titles there. By the end of the year, we have acquired more than 1.8 million people as Sky Limit customers.

Responsible Finance

We are aware that we are responsible for the environmental and social impacts of the projects we finance within the framework of our responsible finance approach, which is the basis of our duty to contribute to society and the environment. In this context, “Environmental and Social Impact Assessment and Sustainability” is included as a particular title in our Credit Policy Document to evaluate the environmental and social impacts of the projects we finance. In this way, we focus on creating a positive indirect impact with the projects we provide financing for and prioritize environment friendly projects, energy efficiency, and renewable energy projects in the financing, whereas we include specific sectors within the scope of prohibited sectors and do not provide financing.

We request the documents that the projects must provide regarding environmental standards before the project financing. In addition to environmental criteria, we expect various social measures on employee and human rights, ethical values, non-child labor, and non-forced labor.

Since we consider it our responsibility to monitor the continuity of the positive impact created in the projects we finance, we also monitor the projects’ environmental and social performance during the investment and operation periods and realize the commitments made.

This process, which we have implemented at the project finance stage within the framework of a responsible banking approach, also facilitates our cooperation with international financial institutions such as the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the French Development Agency (AFD), and the German Development Bank (KfW). Thus, we can successfully manage the process of meeting the high ethical, environmental and social criteria, which are among the requirements of many projects that we provide financing through related institutions.

In 2020, we signed a USD 250 million Emergency Firm Support Project with the World Bank. Within the scope of the project to finance the working capital and investment loan requirements of SMEs most affected by the Covid-19 pandemic, every loan application to be funded under the World Bank policies must be subjected to the Environmental and Social Risk Management System. In this context, we designed an Environmental and Social Risk Assessment Tool for the project and initiated the loan extension process in April 2021.

Again, we signed a EUR 200 million resource agreement with the French Development Agency (AFD) for energy-efficient mortgage in 2020. As part of this funding, we aim to support the reduction of residential energy consumption and greenhouse gas emissions stemming from the residential construction industry to accompany Turkey on a more sustainable development path. With the agreement, we aim to contribute to developing the green mortgage market by raising awareness among construction manufacturers to make Turkey’s industry practices environment- friendly. On the other hand, customers who prefer budget-friendly and high-energy-efficient houses will also have easier access to loans throughout their economic life.