our financial
capital

In 2022, 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 66.90% to TL 1,681 billion. So we continued to be Türkiye’s second-largest bank.

We worked tirelessly to ensure that the financial system functioned properly and that resources were allocated appropriately. In 2022, we increased commercial loans by 68.21% and consumer loans by 42.91%, demonstrating our commitment to all segments of society. The support we extended to the national economy through cash and non-cash loans in 2022 exceeded TL 1,208 billion.

In terms of funding, we increased our total deposits by 90.83% percent to TL 1,128 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 3.3 billion in additional resources. We were the bank with the greatest sustainability-themed resources in its funding structure in 2022. We will focus on new and different alternatives in non-deposit financing in the upcoming periods and maintain our pioneering position in this field.

Despite successive monetary tightening and interest rate hikes in global markets, we obtained new funds worth USD 3.3 billion from international markets in 2022. With these operations carried out in overseas markets, we have once again demonstrated the reputation and credibility of Türkiye and VakıfBank before international investors.

On February 13, 2017, we swapped the USD 227.6 million tranche of the bonds we issued in 2012 subject to the provisions of Basel II-compliant subordinated debts with Basel III compliant, 10-year bonds which featured the option of early amortization at the end of year 5. In 2022, we decided to opt for such early amortization and conducted the amortization transaction on November 1, 2022, by obtaining the necessary permits from the Banking Regulation and Supervision Agency. With this transaction, we created quite a positive impact in terms of the Bank and the Turkish banking sector before investors.

We struck a deal worth USD 1 billion in May 2022 by renewing our sustainability-themed syndication loan with over 100%. In November 2022, we obtained a syndication loan worth USD 560.3 million with the highest renewal ratio among commercial banks. This way, we have become the bank to renew its total syndication loans with the best ratio, which is 97%.

We preserved our position as the Turkish bank with the most sustainability-themed resources owing to the repo and syndication loan transactions performed. In December 2022, we signed the highest secured funding agreement among Turkish banks worth EUR 400 million with a maturity of 2 years based on sustainability criteria. As an indicator of our sustainability commitments, 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. Our criteria also included the minimization of plastics use at all the Bank's locations via water-treatment systems to be deployed at branches, and an annual 2% reduction of total GHGs.

Throughout 2022, we carried out dedicated sales transactions for qualified investors abroad, with a maturity of 3-12 months, amounting to approximately USD 262.5 million in various currencies as part of 15 different transactions, under the Global Medium-Term Note Program (GMTN).

We also continue extensions from the Emergency Firm Support Project worth USD 250 million that we signed with the World Bank under the guarantee of the Turkish Ministry of Treasury and Finance.

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 worth EUR 200 million. Obtaining such a high amount of environmental funds in the sector for the first time, the Bank extended the entirety of the first tranche we drew in 2022, which was EUR 100 million. Our goal for 2023 is to withdraw the second EUR 100 million tranche of the Green Housing Project from AFD and continue our extensions without interruption. As a result, we not only promote the construction of high-energy-efficiency homes in Türkiye, 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 Türkiye, 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 2022.

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 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.

Support for SMEs

In 2022, we continued to support SMEs, who create high-added value for Türkiye's economy through their job creation capacity, with our products and services offered under SME banking. 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 239 billion according to the legal SME definition during this period.

In 2022, we continued to offer KGF (Credit Guarantee Fund) Support Loan Packages to SMEs to support companies that create added value. 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 packages while supporting production, employment, and exports. By financing domestic machinery purchases, in particular, we enabled our SMEs to meet new technologies, contributed to energy efficiency, and supported domestic production.

We helped exporting enterprises boost their export volumes and contributed to the support for enterprises with an export potential thanks to our KGF Export Support Package. Under the KGF Investment Support Package, we financed the investments and investment-related operating expences of enterprises with investment plans - enterprises in the manufacturing sector and exporting enterprises, in particular. Under the KGF Operating Expenses Support Package, we helped address enterprises' need for operating capital, while under the KGF Construction Services Finance Support Package, we contributed to the financing needs of construction companies' constructions yet to be completed.

We also rolled out the Women's Enterprises Loan under the agreement we struck with the World Bank which enabled us to procure a USD 250 million loan with a maturity of 23 years, 8 of which corresponded to a grace period. With this loan, we provided affordable loans to enterprises, regardless of segment, owned or run by women to help them grow their businesses and tackle their cash flows.

We continued to enrich our Commercial Mobile Banking app in this period, as well. We have ensured that SMEs can access many banking products and services through our Commercial Mobile Banking application. For real persons with commercial operations, we deployed a remote customer acquisition process whereby they can become customers anywhere they are, without having to visit a branch.

In 2023, 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.

Support to Local Governments

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 make it convenient for local governments to access finance, and, backed by our vision of becoming a sustainable bank, provide a holistic banking service to public and local governments.

In 2022, we supported all municipalities as their main solution partner and one of the most active stakeholders of the "E-Municipality Platform". Within this scope, we provided the necessary infrastructure for municipalities' integration into the collection module on the E-Municipality system. In addition, we continue to provide support to municipalities as a key solution partner for their technological development, while offering new enhancements tailored for them by identifying their needs.

As part of the Türkiye Sustainable Energy Finance Facility (TURSEFF), we provided finance to Manisa Metropolitan Municipality's "100% Electric Eco-Friendly Bus" project. This way, we contributed to the acceleration of a sustainable, environmental, and modern transformation, and the reduction of energy consumption and carbon emissions. As VakıfBank, thanks to the project and contributions to the program under the leadership of the European Bank of Reconstruction and Development (EBRD) within the scope of TURSEFF, we were deemed worthy of the "Energy Efficiency Finance Excellence Award" in 2022.

VakıfBank's Mass Funding Model, meaning the Pays 24/7 Card application, enables us to provide effective financial solutions to institutions.

Thanks to our Pays 24/7 cards, we assist people lacking the means to provide for themselves in their social integration through social aid. With a view to ensuring the effective utilization of the sources of aid in the fight against poverty, we collaborate with public institutions (municipalities, governorships/social assistance directorates under district governorships), and non-governmental institutions.

We allow users from public institutions to utilize the "VakıfBank Institution Card Web Portal" where they can swiftly and safely define and issue pre-paid cards to those in need, in addition to card renewals, password deliveries, balance top-ups, and reporting processes. This way, we guarantee institutions' card continuity, while reducing their costs and operational load and helping them effectively manage their labor.

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 through innovative solutions we developed for the banking business and transactions between citizens and local governments & other public institutions and authorities to be carried out quickly and effectively.

Support for Foreign Trade

Using our powerful global correspondent bank network consisting of 1,175 banks and financial institutions in 117 countries worldwide, we act as an intermediary for our customers' transactions in terms of foreign trade, letters of guarantee, and payment. It is thanks to this powerful correspondent network we continuously expand in line with customers' needs that we facilitate access to mid- and long-term sources for finance and offer alternative solutions to customers. As we serve as an intermediary for customers' domestic and overseas FX payments, we offer transfer services in 15 different currencies through our correspondent accounts at some 50 banks in many countries of the world. We also offer compelling prices to customers who make bulk transfers.

In an attempt to attain a sustainable foreign trade volume in rapidly evolving and digitizing global trade, we have acquired a significant number of new customers in 2022 owing to our expert sales and operations employee coupled with our advanced technology infrastructure. We have raised the number of customers performing foreign trade transactions by 45% year-on-year. With the growing customer base and rising transaction figures, we have increased our foreign trade volume by 72% year-on-year.

We took important steps in 2022 to simplify and accelerate foreign trade transactions, and offer price advantages. To address customers' needs more quickly and offer convenience, we also enabled transfer requests to be finalized swiftly via the Internet and mobile banking channels. We have increased the number of our customers transferring foreign currency by 43% compared to the previous year, while also increasing the rate of automated Foreign Currency transfer transactions from 45% to 52%. To offer cost advantages, we diversified compelling foreign trade packages, which we prepared in line with customers' needs, and made them available on mobile and Internet banking channels. Our goal for 2023 is to enable customers to conduct foreign trade transactions through end-to-end alternative distribution channels.

In addition to several subsidies and lending policies aimed at promoting and boosting exports in Türkiye, we have become a shareholder at İhracatı Geliştirme A.Ş. (İGE), an undertaking composed of Exporters' Associations, Turkish Exporters' Assembly (TİM), Türk Eximbank, and other banks, with a view to helping exporters access finance more conveniently and rapidly. We signed an MoU with İGE A.Ş, where we are a key shareholder, regarding credit extensions through the guarantee to be issued from İGE's equity for exporters. While we expect this financing tool to be a compelling alternative instrument for the issues that exporters face in terms of finance, we serve as an intermediary in its promotion and extension.

We continue to diversify and strenghten our funding structure thanks to our solid position 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 2023, we will focus on broadening our customer portfolio and work towards its sustainability being well aware of the significant contributions of foreign trade to the national economy. Taking customers' requests and needs into account, we will expand our products and services, and provide support to foreign trade customers, first and foremost exporters.

Support to Agriculture

With the belief that sustainable agriculture is critical in terms of our Planet'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 2022, we financed the operational needs of our farmers in a quick, easy, and cost-effective way.

As in previous years, in 2022, we have enabled our contract farmers to pay the product prices smoothly and healthily. In this context, we have served as an intermediary for approximately 20 thousand farmers who produce sugar beet for the Kayseri, Turhal, Çorum, Erzurum, and Erzincan sugar factories to pay the product prices quickly and smoothly. As per the agreement the Bank has with sugar factories, we provided Contract Production Loans. In addition, we extended a Transfer Credit to 318 cooperative members selling olives to Marmara Birlik, as per the memorandum of understanding we signed with the Marmara Birlik Olive Plantation Sales Cooperatives' Union.

Meeting all operating and investment loan requirements of producers in the area of vegetable cultivation, stockbreeding, tractor, and land acquisition, we reached 292 thousand farmers and contributed some TL 2.5 billion to the sector as of the end of 2022. In the same period, the number of farmer customers exceeded 250 thousand. Agricultural cash loan extensions, in the meantime, grew by 45%.

We expanded our network of contracted agricultural merchants where farmers could make interest-free purchases with TarımKart. We grew our TarımKart merchant turnover by 86% year-on-year.

In 2022, we initiated credit extensions with digital contracts and ensured producers would benefit from extensions without having to turn in contracts with wet-ink signatures.

We attach great importance to agricultural chambers, producers' unions, and co-operatives so that the micro-scale farmers are protected and cultivate better. 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, 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 farmers 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.

In the coming period, we plan to introduce a new digital agriculture application and the "SKY Agriculture" loan to farmers. This product will enable farmers to apply for an agriculture card and conduct extension processes on the app. This will both contribute to customer satisfaction and help reduce the Bank's operational burden.

At VakıfBank, we meet producers' financial needs with our financial products, while adding value to farmers with digital solutions and thus continuing to make a difference in agricultural banking.

Support to Households

As one of the sector’s leading banks in retail banking with our experience and customer-focused strategy, we serve over 20.4 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.

Leaving credit limit management to customers' disposal, and enabling them to manage their budget effortlessly on mobile or Internet banking channels without having to visit a branch, Sky Limit remained an attractive option for users of all segments. In 2022, we continued to define special limits to customers tailored as per their workplace, titles, and positions after we identified certain groups based on sector, occupation, and income. Also in this period, we introduced an alternative method for Sky Limit application processes. This alternative allows customers to file on the mobile banking channel a preliminary application for SKY Limit, which is a shining star of the sector. By the end of the year, we have acquired more than 2.4 million people as Sky Limit customers.

As part of the “Green Housing Loan” project with the French Development Agency (AFD), we continued with extensions specifically to finance completed and yet-to-be-completed houses with a building energy performance of Class A or B to increase the number of highly energy-efficient houses and contribute to sustainable development in 2022.

In this period, we also rolled out Yellow Shutters My First Home Mortgage Loan, a campaign specific to first-hand houses. We made it easy for customers, who would buy their first homes, to access mortgage by offering attractive interest rates and extension terms. To provide financing support to those customers who had FX or gold-denominated assets at banks but did not have a house, we rolled out the Yellow Shutters Extended Mortgage Loan campaign which offered convenient extension terms. Owing to the processes that we digitized, we contributed to a sustainable economy. We enabled customers who had taken out mortgages to make their interim payments through the mobile banking channel.

We also continued our support for environmentally-friendly products and practices. We launched the campaign titled "Heat Insulation Loan" for extensions to retail customers to reduce reliance on foreign energy resources and greenhouse gas emissions and attain energy savings in houses.