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Message from the Chairman 

Suzan Sabancı Dinçer, CBE


For us, creating the Turkey of the future is a responsibility that goes beyond banking.

Starting in 2020, the coronavirus pandemic continued to pose uncertainty on the global economy in 2021 as well, with the effect of new variants. Especially with the Omicron variant, which emerged at the end of 2021, the number of cases started to rise again. The development of vaccines against the virus and the successful progress of vaccination efforts, especially in developed countries, helped the global economic activities recover significantly. However, the continued spread of the virus in the countries with more limited progress in vaccination paves the way for the emergence of new variants, and the new mutations that emerge continue to pose uncertainty all over the world. Therefore, the progress in the coming period, especially in countries with low vaccination levels, will be the most important success criterion in the global fight against the virus.

As to the global economy, 2021 has been a year of recovery. International Monetary Fund announced its 2021 economic growth forecast as 5.9%, and the growth is expected to be at high levels. Stronger-than-expected economic recovery led to rapid increases in global risky asset pricing and commodity prices. Increases in commodity prices and problems in the supply chain caused global inflation pressures to increase significantly in 2021. The Fed states that with high inflation and a strengthening labor market, it is appropriate to conclude net asset purchases more rapidly, and that it may be required to normalize the policy rate earlier or at a higher speed. The Bank of England, on the other hand, surprisingly increased the policy rate by 15 basis points from 0.1% to 0.25% in December and stated that there might be some moderate tightening in the monetary policy.

Domestic economic activity, on the other hand, continued to grow strongly also in the third quarter of the year with 7.4%. Preliminary data for the last quarter indicate that economic activity continues its growth trend, although it lost some momentum. We consider that we will complete 2021 with double-digit growth. Our export continued its strong growth trend because of the recovery in foreign demand and closed the year at a record high of 225 billion dollars. As for imports, despite the decline in gold imports, the increase continued with the contribution of the strong increase in commodity prices and the positive course in domestic demand. Travel revenues continue to increase with the impact of higher vaccination and the removal of travel restrictions. Accordingly, a gradual improvement is observed in the current account deficit. The upward trend in the inflation continues due to high commodity prices, rising global food prices, cumulative exchange rate effects and high costs. In 2021, inflation was 36.08%. The Central Bank of Republic of Turkey (CBRT) stated that demand factors, core inflation developments and supply-side factors were evaluated separately, and accordingly, it has reduced the policy rate by total 500 basis points to 14% since September. The budget balance continued to perform positively. In 2021, budget revenues showed a strong increase of 37% annually, while the increase in budget expenditures was 33%. As a result, the budget balance reported a deficit of TRY 192.2 billion. In the Medium Term Program, the budget deficit estimate for this year was TRY 230 billion, and the year ended below this level.

In the banking sector; while the upward trend in retail loans continues, macro-prudential measures are taken to reduce negative impact on inflation and current account balance. Commercial loans also had an upward trend. The non-performing loan ratio in the sector remained low at 3.2% as of November, while the capital adequacy ratio stood at 17.8%.

Globally, 2021 has been a year of increased number of natural disasters such as fire and flood due to global warming. If emissions are not reduced, there is a risk that our world will face bigger disasters in the coming years. Likewise, in terms of global economy, these adverse events are expected to affect the economic parameters more and more. In this regard, the Paris Climate Agreement, which our country also signed, is of great importance in order to provide a better future for future generations. The recent increase in awareness on this matter in many countries, including Turkey, has brought environmental, social and governance (ESG) issues to the fore. Accordingly, sustainable finance principles have also become increasingly decisive in economic development, business decisions and investment strategies. In parallel with the strengthening of the ESG trend, investment and financing products to address these issues are also developing rapidly. In our country, the importance given to sustainable finance is increasing rapidly and it is becoming widespread in banking sector practices. We see that the amount of environmental/sustainable bonds issued by the banking sector has increased since 2016 and reached 2.7 billion dollars in total.

As one of Turkey's well-established institutions, we also consider sustainability as an important part of our business strategy. We position our activities, which we have continued for years, in line with the changing needs of our country, our society, the environment and our stakeholders. We are aware of the critical role and impact our industry has on sustainability issues. We are proud to be among the leading banks in our country's banking sector on such an important issue.

For us, creating the Turkey of the future is a responsibility that goes beyond banking. With this awareness, we work to provide value to our society in light of our environmental and social responsibilities, which are an important part of our bank's culture. We will continue to make all our investments and carry out all our operations for the future of our country and new generations, with a long-term perspective.

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