Message from the CEO

Dear Stakeholders,

2020 has been a year overshadowed by the coronavirus (Covid‑19) pandemic that gripped the whole world, the effects of which are still ongoing. Having deeply impacted the whole life all around the world in the first half of the year, the pandemic once again revealed how fragile global economic balances are. Measures adopted in an effort to prevent the spreading of the disease resulted in economic crises in many countries around the world.

During 2020 that has been the stage to many other difficulties apart from the Covid‑19 pandemic, as a nation we were grieved by the earthquakes in Elazığ and İzmir, while environmental disasters happened in various parts of the world, and regional geopolitical tensions arose.

Succeeding in sustaining its economy and stability despite all these challenges, Turkey introduced measures that would mitigate the economic and social impact of the pandemic, such as eased regulatory framework, additional liquidity support and tax relief in parallel with the central banks and regulatory authorities in the world, and embarked upon a rapid recovery process in the second half of the year. Normalization steps also began to be taken upon positive implications of the process, and while certain temporary regulations were discontinued toward the end of the year to put the economy and the system back on their regular order, practices compatible with the current economic conditions were reintroduced.

Yapı Kredi carefully continued to apply the protective measures in line with the guidance provided by the Ministry of Health and comprehensive precautions implemented across the Koc Group. Our Bank carefully and attentively managed the process on the basis of a 5‑phase action plan. The Bank continued to protect employee health at a superior level through remote working arrangements, sanitization, social distancing rules, and protective gear supplied to all levels within the organization, without allowing any interruption in the services rendered to our customers.

In addition to those, Yapı Kredi carries on with its initiatives that will support its customers and the national economy, while taking into consideration the economic effects of the process as well. Launched during the reporting period, postponement granted ‑upon request‑ to loan repayments of individual and corporate customers is still being implemented. Day‑to‑day banking needs and commercial activities of customers are backed by existing credit lines, which are being increased where necessary. Furthermore, our activities are ongoing within the scope of Treasury‑backed and CGF‑guaranteed (Credit Guarantee Fund) “Cheque Payment Support Package” and “Opex Loan Support Package” announced by the Banks Association of Turkey.

In 2020, Yapı Kredi postponed loans worth approximately TL 19 billion of its more than 450 thousand customers to support them through rough times, and expanded the range of transactions that can be performed via the digital channels, order to reduce the risk of contact. The Bank increased cash withdrawal limits from the ATMs, upper limit of contactless credit card spending, did not charge any commission on money transfers made through ATMs, digital and mobile banking, and lifted the obligation to pay the minimum amount due on credit cards of its customers, upon request. Additionally, the Bank launched a system prioritizing healthcare workers and individuals above the age of 65 at call centers, and allocated a TL 10 million‑fund for procuring equipment and consumables needed by health institutions and healthcare workers.

Looking at the Bank’s 2020 performance, total cash and non‑cash loan volume augmented by 20.0% and rose to TL 382.7 billion, and the solid support extended to the national economy continued at the same pace. Total assets of Yapı Kredi, on the other hand, grew 18.3% over the previous year, and amounted to TL 486.5 billion. As gross operating profit reached TL 14.9 billion, the Bank’s net profit was registered as TL 5,080 million and its return on tangible equity as 12.0%.

On the funding side, total deposits went up to TL 264.4 billion, up by 14.4%, and the market share among private banks came to 14.2%. The Bank’s customer deposits expanded by 14.7% as compared to end‑2019 to TL 259.3 billion, and the Bank’s market share within private banks reached 14.5%. In line with its strategic goals, Yapı Kredi attained 16.4% market share in Turkish lira demand deposits, up 70 basis points annually, and 13.6% market share in foreign currency demand deposits, up 9 basis points, and kept supporting funding costs.

Yapı Kredi preserved its robust balance sheet structure through continued strengthening of its sound liquidity structure despite market volatilities. The Bank’s total and FC liquidity coverage ratios were 148% and 454% respectively, whereas its consolidated capital adequacy ratio was 16.7% and Tier‑1 ratio was 13.6% with the support of internal capital generation (excluding the regulatory forbearances).

On the back of new products and services developed with digital transformation, the number of digital banking active customers was increased by more than 1 million and that of mobile banking active customers by more than 1.1 million. 16% of customers who did not use digital banking applications before the pandemic got acquainted with the Bank’s digital banking applications in this period. Moreover, new customer acquisition increased by more than 2 times via the new service model,“Video Transaction Assistants”, in 2020. All these developments drove the share of non‑branch channels in total banking transactions to 97% as at year‑end.

Besides the strong performance of Yapı Kredi, 2020 has been the scene to important developments for the Bank. The change of the shareholding structure was finalized with the enforcement of the share sales agreement signed by and between the two controlling shareholders in February, and 9.02% share held by UniCredit was acquired by Koc Holding. UniCredit sold 12% of its shares to the market. Hence, free float ratio of Yapı Kredi went up to 30%.

In May, the Bank secured a syndication loan for USD 283.5 million and EUR 534.6 million which was participated by 38 banks from 18 countries, and a fund from European Bank for Reconstruction and Development (EBRD) in the amount USD 100 million for medium‑scale enterprises to fulfill their short‑term liquidity needs. The strong support to the Turkish economy continued through the second half of the year, and a syndicated loan of USD 334 million and EUR 440.5 million that was participated by 39 banks from 21 countries was secured also in this period. All in all, the Bank obtained funds worth more than USD 2 billion throughout the year, including the syndication obtained from international markets thanks to solid international relationships and shareholding structure. Moreover, the confidence held in the national economy and Yapı Kredi in the international markets was endorsed once again with the subordinated debt issue of USD 500 million carried out in January 2021, which achieved a book building of more than six times of the targeted amount.

Our support to the SMEs that are the backbone of the national economy continued and further increased also this year. Lending within the scope of CGF programs are place among the largest‑volume financing support extended to the SMEs amounted to TL 8.3 billion in 2020, and total CGF market share rose to 19.0%. Hence, Yapı Kredi successfully retained its market share leadership in CGF programs in 2020.

The 2020 Integrated Annual Report gives an account of the Bank’s integrated business model that creates long‑term shared value for all of its stakeholders. In this report, Yapı Kredi takes a holistic approach ranging from its sustainability priorities to risk and opportunity management, from its future strategies to stakeholder communication and environmental, social and governance management concept.

Yapı Kredi embraces a responsible growth understanding that creates value for all segments of the society, paying attention to the effects its banking operations have on all its stakeholders for 76 years. With a customer‑centric and innovative approach to banking, the Bank focuses on digitalization, and Works hard and committedly to offer the best to its customers. Investments in digitalization and R&D will continue at an increasing extent in the future, and solid collaborations in this area will go on.

In line with its sustainable and innovative product development targets, our Bank carried out its first green bond issue in January 2020. Allocating the funds generated on the bond to renewable energy projects, Yapı Kredi sustained its support to Turkey’s transition to a low‑carbon economy. In this framework, renewable energy projects accounted for 43% of the energy loan book of the Bank at the end of 2020.

On the other hand, Yapı Kredi continues to be guided in its operations by the Sustainable Development Goals, which are intended to devise solutions to global issues and spread the concept of responsible finance. The Bank continues to take place among the banks steering the sector with respect to sustainability through the United Nations Principles for Responsible Banking (UN PRB), of which it is a founding signatory. Additionally, based on its disclosure to the Carbon Disclosure Project (CDP), the world’s leading environmental reporting initiative, it has qualified for the leadership category in CDP Water Security program this year, as it did last year. With its high performance in sustainability management, the Bank remained a constituent of Borsa İstanbul (BIST) Sustainability Index, and FTSE4Good Emerging Markets Index, an index measuring environmental, social and governance performances of companies maintained by FTSE Russel, a global index provider affiliated to the London Stock Exchange. Regarding gender equality among its priorities, Yapı Kredi has been one of the five companies from Turkey that qualified for the Bloomberg Gender Equality Index in 2021 with its 2020 reporting under the said Index.

Yapı Kredi has provided solid bases for its goals in the coming years with its powerful performance in 2020. The Bank carries on with its responsible growth that contributes to the national economy, while uncompromising from its service quality based on its “Unlimited Service” concept, and maintaining the health of its employees and customers as its top priority.

While presenting our 2020 Integrated Report, I would like to take this opportunity to thank all our stakeholders, and particularly, our loyal customers that carry our Bank into the future, our shareholders for their unyielding trust and support, and our employees for their valuable efforts.


Gökhan Erün

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