Dear Stakeholders,

I wish God’s mercy to those who lost their lives in the earthquake that hit Kahramanmaraş and nearby cities, and I extend my condolences to their relatives. I also wish those who have been injured and impacted by the earthquake a quick recovery. Aware of the responsibilities that we had in the aftermath of the earthquake, we lost no time in mobilizing our means to deliver all necessary aid to the impacted area. I believe we will overcome these difficult days together, acting in unity and solidarity.

2022 was marked by uncertainties around global growth and mounting geopolitical risks. The world closely monitored developments, including the war between Russia and Ukraine, inflation, and monetary tightening steps of central banks vis-à-vis inflation. In 2022, the US Central Bank (the Fed) increased its policy rates by 425 basis points to 4.50%, and the European Central Bank (the ECB) increased its policy rates by 250 basis points to 2.5%. As for growth data, the US economy grew by 2.1% and Eurozone by 3.5% in 2022 on an annual basis, according to preliminary data. Meanwhile, China grew by only 3% due to the lockdowns and quarantines in place in 2022 and, thus, attained the lowest GDP growth since 1976.

Türkiye’s economy continued its sustainable growth in 2022. Despite all the negative developments that hit the world, Türkiye’s economy expanded its production capacity, led by exports and continued investments, at full speed. By attaining strong growth in the first two quarters of the year, Türkiye’s economy concluded 2022 with 5.6% growth.

As always, the Turkish banking industry stood by the national economy with its strong capital structure. The asset size of the banking industry grew by 56% compared with the previous year, reaching TL 14,344 billion in 2022. The capital adequacy standard ratio of the sector stood at 19.46%, quite above legal requirements.

In 2022, which we left behind, we, as VakıfBank, continued to make a difference in the sector with our strong balance sheet structure, innovative solutions for changing customer needs, and sustainable banking approach.. As of the end of 2022, we had increased our assets by 66.90% to TL 1,681 billion, maintaining our position as Türkiye’s second-biggest bank. We increased our performing loans, representing the biggest share among our assets, by 62.71%. We contributed TL 1,208 billion to the national economy through our cash and non-cash loans in 2022.

We supported production, employment, and exports in this period as well. We deployed Anchor Loan 2, a product we developed for companies operating in sectors of strategic importance, with firms planning to invest in production, export, and import substitutes coming first. As of the end of 2022, we grew our commercial loans by 68.21% to TL 755.2 billion. We tended to our customers and addressed all their needs with products such as Sky Limit, Sarı Panjur (Yellow Shutters), and Yeşil Konut (Green Mortgage). Having increased our consumer loans by 42.91%, we continued to support households. We also launched our “Platinum Plus Metal Card,” the newest member of the world of credit cards, for our premium segment customers. This card supports all next-gen payment and security features and enables our customers to benefit from multiple advantages and benefits.

In 2022, deposits continued to be the main source of funding. We expanded our customer base, attaining TL 1,128 billion in deposits. As of the end of 2022, we had increased our term deposits by 95.49% and demand deposits by 76.63% compared with the previous year. We took steps to protect the value of the Turkish Lira in alignment with current economic policies adopted vis-à-vis the developments in 2022. In this respect, we introduced the FX-protected TL Time Deposit, the Foreign Currency-Gold-Conversion FX- Protected TL Deposit, YUVAM, a physical gold admission system, and price-protected TL deposit accounts.

We continued to obtain funds from abroad in 2022. Despite the negative events that loomed over global markets, we obtained new sources worth USD 3.3 billion from international markets. Consequently, we have once again demonstrated both Türkiye’s and VakıfBank’s reputations and credibility before international investors. In 2022, we attained the best ratio among banks, having renewed all our syndication loans with a ratio of 97%. In December, we also signed a secured funding contract based on sustainability criteria. The contract had the highest amount among Turkish banks. We introduced funds worth EUR 400 million with a term of two years with this contract. Performance criteria for secured-funding transactions include new extensions with environmental and social themes, including such sub-categories as green housing, environment-friendly vehicles, and loans for women and young entrepreneurs. The minimization of the use of plastics at all our locations and the reduction of our total GHG emissions by 2% per annum were also included in our funding performance criteria. We will continue to assess alternatives to expand the share of extensions based on sustainable finance in our foreign-funded sources in the coming periods.

We also provided domestic and national products to the finance sector in 2022. With Vinov, we made it possible for customers to perform their payment and collection transactions with VakıfBank’s guarantee in a prompt, easy, and reliable fashion. We reached to around 900 thousand active Vinov users in 2022. With Vinov Workplace, introduced this year, we created a digital ecosystem for enterprises and organizations of all sizes, primarily businesses in wholesale or retail and businesses with a dealership/store network wishing to perform collections using VakıfBank’s guarantee.

We developed innovative products in this period as well. We launched Vibox, our digital money box app. With Vibox, we equip children with financial literacy skills while raising their awareness of saving with fun content and helping them discover alternative ways to deposit their savings. As we touch the lives of children thanks to this app, we hope to be a “familiar face” for them when they grow up.

As of the end of 2022, we had increased the number of our digital banking customers to over 11 million. At VakıfBank, we worked tirelessly in 2022 to offer the best experience to users, adapt ourselves to rapidly changing conditions, and be a pioneer in the industry. We enhanced VİBİ, our digital assistant, with new AI-based functionalities. We turned VİBİ into a financial assistant that provides customized suggestions and solutions. With “Benim Yerim,” available on VakıfBank Mobile, we have become the first bank to offer the broadest scope of options for mortgage, vehicle, and other personal payment transactions. Backed by our unprecedented and personalized innovative solutions, we will continue to offer the best user experience in the coming period.

Furthermore, in 2022, we rolled out contactless banking and moved paperwork-driven processes to the digital environment, thus contributing to sustainable banking. In this period, we also enabled sole traders to become bank customers remotely. By adding this functionality, sole traders can now discover the privilege of being VakıfBank customers promptly, easily, and securely. With Practical Collections, we enabled customers to seamlessly and easily collect the amounts owed to them without having to bear such additional costs as software development, technical integration, and reconciliation processes.

At VakıfBank, we continue to unwaveringly support the principles contained in the United Nations Global Compact, the world’s biggest corporate sustainability initiative. We have become the first Turkish bank to adopt the sustainability approach in the expected credit loss provisions policies as part of TFRS 9 in line with our sustainable banking activities. As part of the Climate Change program of the Carbon Disclosure Project (CDP, the world’s biggest environmental reporting platform), we maintained our performance score in 2022, attaining the B level. We also signed up and reported to CDP’s Water Security program for the first time this year and scored B-. Our aim for the coming period is to attain the highest performance in CDP ratings and become a leading organization in this field.

“Hack to the Future,” which is now a traditional event for us, was held in January 2022. We met up with youth in the metaverse, as they are always one step ahead of us when it comes to shaping the future. While providing an opportunity for youth to explore broader horizons, we had the chance to boost our energy. “Writing Your Future Is in Your Hands” was the motto we pursued when organizing the first edition of VakıfBank iOS Swift Bootcamp 2022, where we invited youth planning a career in software. This bootcamp enabled us to assist them in finding a place for themselves in the digital future and acquiring experience in this field.

In addition, we enjoyed the well-deserved pride of seeing how our investments in volleyball over the past 35 seasons paid off in 2022. At the start of the season, VakıfBank Sports Club set its eye on five trophies in five pools. Attaining the championship in all tournaments this year, we won every one of them and became the champion of Türkiye, Europe, and the world. VakıfBank Women’s Volleyball Team has also become Türkiye’s most victorious team, with the highest number of trophies won in the international arena.

We make a difference in the sector with our financial success, pioneering position in digital transformation and innovation, and competent team of employees. We will continue to create value in all areas for a sustainable economy, environment, and society. By this means, I would like to express my sincere gratitude to our customers and shareholders, who have trusted us in 2022; our employees, who have made great efforts in our success; our Board of Directors, who have never withheld their support; and all our other stakeholders for their contributions.

Yours sincerely,

Abdi Serdar ÜSTÜNSALİH

General Manager

TÜRKİYE’S SECOND-LARGEST BANKAs of the end of 2022, we had increased our assets by 66.90% to TL 1,681 billion and maintained our position as Türkiye’s second-largest bank.

TL 1,128 billion

We expanded our customer base and reached TL 1,128 billion in deposits.