Message from the CEO

Dear Stakeholders,

The acceleration in normalization process driven by higher vaccination pace supported the global economy. However, the sudden increase in demand caused uncertainties in supply chain and impacted the economic recovery process. Supply constraints, inflated commodity prices and increased freight costs drove the product prices to surge. Accordingly, there were concerns emerging over global inflation outlook.

Despite these challenging conditions, Turkey managed to maintain its economic growth momentum by meeting the increasing foreign demand with the strong recovery in industrial production. According to economic indicators, Turkey's growth in 2021 is expected to be close to 10% level.

The banking sector is going through an unprecedented period. However, despite all the uncertainties caused by the pandemic and the volatile environment, the sector managed to maintain its strong capital and liquidity level, while continuing its uninterrupted support to the economy since the beginning of the pandemic. Thus, the Turkish banking sector once again proved its solid balance sheet structure and resilience in this extraordinary period.

As Yapı Kredi, our priority has always been the health of our employees and customers since the first outbreak of the pandemic in our country. Without compromising the measures we have taken, we continue to work hard to support the economy and reduce the effects of pandemic, without any interruption in our operations.

The Bank's support to the economy through cash and non-cash loans has increased by 21% since the beginning of the year, reaching TL 465 billion. In the same period, the Bank recorded a growth of 26% in TL cash loans, above our expectations due to the increasing demand from customers. In the third quarter, the bank continued to record across the board market share gain in TL loans among private banks and TL loans market share increased to 16.7%.

While maintaining its support to the economy, Yapı Kredi managed to preserve its liquidity level and solid capital structure at strong levels well above the regulatory limits. Total and FX liquidity coverage ratios were realized as 147% and 560%, respectively. On the capital side, despite the strong loan growth during the period, the capital adequacy ratio was 16.0% and the Tier 1 capital ratio was 13.7%, thanks to the Bank's internal capital creation capacity.

On the funding side, the Bank's customer deposits increased by 23% to TL 318 billion since the beginning of the year. Thus, the loan/deposit ratio, including TL bonds, continued to improve and declined to 101%. On the foreign borrowing side, Yapı Kredi executed sustainability-related repo transaction with Bank of America, one of the world's leading banks. The €225 million successful transaction includes the Bank's performance criteria aimed at improving greenhouse gas emission levels. In addition, in the second half of the year, the Bank signed its second sustainability-related syndicated loan amounted to $822 million. The performance criteria determined take the May targets to the next level. It includes improvements to the Bank's electricity supply from renewable energy sources and to ESG Risk Management Score of the Bank.

We are aware of the importance of sustainability for our industry, our customers and the areas in which we operate. Accordingly, we adopt sustainability in every field and integrate it into our business processes. In this context, we launched a new support to promote green energy. In collaboration with Yapı Kredi Leasing, our customers will be able to obtain rooftop solar energy systems with installment options for all types of structures without the need for any transaction. As an exemplary project, we renewed our Bodrum branch to meet 100% of its energy needs from green energy. We aim to expand this practice to other eligible Yapı Kredi branches in the coming period. As Yapı Kredi, we will continue our efforts in the field of sustainability for a better future while contributing more to the national economy.

I would like to take this opportunity to thank our customers, our shareholders for their trust, and our employees for their valuable efforts.


Gökhan Erün

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