Message from the Chairman

This year is a meaningful and important one for Türkiye; we celebrate the 100th anniversary of our Republic with great honor. I commemorate Gazi Mustafa Kemal Atatürk and his fellow fighters with longing, respect and gratitude. As in every issue that concerns our country, we will continue to be at the forefront in the 100th anniversary of our Republic.

In the first nine months of 2023, the focus in the global markets was again mostly inflation, growth and actions taken by central banks to tackle high inflation. According to the International Monetary Fund's Global Economic Outlook report dated October 2023, global growth is expected to slow down to 3.0% in 2023 from 3.5% in 2022 and then settle around 2.9% in 2024. Although global inflation levels have been improving, supported by tighter monetary policies, it is still above historical levels. This fact drives central banks all over the world, especially developed economies, to take measures to tackle inflation.

Despite the challenging backdrop, Turkey has been able to grow its economy with a controlled manner. The country has recorded an annual growth of 3.9% supported by domestic demand in the first half of the year. Leading indicators point to an ongoing strength in economic activity backed by strong domestic demand in the third quarter as well, despite a slight quarterly backdrop. On the other hand, strong demand conditions together with deterioration in pricing behavior, stickiness of services inflation, increase in energy prices and cost pressures create upside risks to the inflation outlook. In order to tackle with high inflation, Central Bank of Turkey has raised policy rate to 30% and announced its decisive stance to continue the monetary tightening process in order to establish the disinflation course. CBRT has also said that it will continue to simplify and improve the existing micro- and macro prudential framework.

Turkish banking sector continued to support the economy, while strengthening its balance sheet structure. In the first nine months of the year, total loans increased by 56% annually and reached TL 9,998 billion. In the same period, the deposit base grew by 67% to reach TL 12,548 billion. Thus, the loan/deposit ratio of the sector improved by six points compared to the same period of the previous year and decreased to 80%.

On the asset quality side, the positive trend continued, and the non-performing loans ratio improved 74 basis points since the end of 2022 and realized as 1.6% at the end of September 2023.

Yapı Kredi continued to contribute to the Turkish economy and the Turkish banking sector with its commitment to sustainability in all aspects of its operations. Going forward, preserving strong fundamentals, Yapı Kredi will continue to support the economy and its customers, while maintaining its focus on asset quality, liquidity healthy balance sheet structure and capital levels.

I would hereby like to extend my thanks to all our customers and shareholders for their continuous support and trust, and our employees and their families for their devoted efforts.

Ali Y. Koç
Chairman of the Board

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