FINANCIAL INFORMATION AND RISK MANAGEMENT
ANNUAL REPORT 2012
Welcome to the 89th Ordinary General Meeting of İşbank.
As we present the Board of Directors’ Report, Auditors’ Report and the Profit & Loss Statement showing our 2012-year results for your
review and approval, we respectfully greet you all.
During 2012, the loss of pace in global economic activity became more evident, which led the central banks of developed countries to extend
their loose monetary policy implementations in a broader scale in an effort to support economic activity.
After displaying a strong growth performance in 2010 and 2011, the Turkish economy registered a real economic growth rate of 9.8% in
the first nine months of 2011, which dropped to 2.6% in the same period of 2012 in conjunction with the decelerated domestic economic
Despite the crisis that increased its depth in 2012 in the Euro Zone that represents the largest export market for our country, Turkey’s
exports grew by 13% as compared to 2011, while imports were down by 2%, and the foreign trade deficit declined by 21%. In parallel
with the narrowed foreign trade deficit, the current account deficit also slid down significantly. As the Turkish economy continued with its
positive decoupling in 2012, the international rating agency Fitch upgraded Turkey’s long-term credit rating from BB+ to BBB-, investment
grade, in November.
The cumulative effects of the rise in energy prices and the rapid depreciation of the Turkish lira in late 2011 created an upward pressure on
CPI particularly in the first half of 2012. In the last quarter of the year, however, the decline in inflation became marked with the effect of the
weak domestic demand conditions and the base effect. In 2012, inflation measured 6.16% on the consumer prices index (CPI) and 2.45% on
the producer prices index (PPI).
Total assets available to the banking industry grew in parallel with the economic activity that displayed a moderate outlook in 2012 amid the
soft landing scenarios in the Turkish economy. As the sector continued to expand in terms of the number of branches opened and ATMs put
to service, the total assets of the banking sector increased by 12.6% year-on to TL 1,371 billion at year-end 2012.
Due to the fact that the recovery in international markets took longer than expected and the weak course of domestic demand, the growth
of the banks’ loan volume remained at 16.4%, which was low compared to the previous year. Making up the primary funding source of the
sector, the deposit volume showed 11.1% increase in 2012. In the reporting period when asset quality showed progress, collections made on
non-performing loans continued to positively influence profitability.
When considered from the standpoint of İşbank, 2012 has been a year of solid performance in terms of business volume and profitability.
As of 31 December 2012 compared to the end of the prior year;
• Loans increased by 16.5% to TL 106,716 million,
• Deposits increased by 7.2% to TL 105,383 million,
• Assets increased by 8.5% to TL 175,444 million,
• Shareholders’ equity increased by 26.8% to TL 22,719 million,
and net profit amounted to TL 3,310 million.
During 2012, the Bank gave priority to cost control, effective capital management, creation of sustainable revenue sources, and achieving
efficiency increase. On the assets side, the tendency to move from the securities portfolio to loans continued, and the share of loans to
total assets reached 60.8% as at year-end 2012. On the funding side, cost-oriented strategies and effective pricing policies resulted in a
somewhat increased interest rate margin as compared with 2011. As overseas funding facilities were actively used in 2012, efforts went on
to diversify funding resources and extend their average maturity. In 2012, average return on assets and return on equity stood at 2.0% and
The Turkish economy is anticipated to register a faster growth in 2013 as compared with 2012. The developments in Turkey’s primary
exports markets, and particularly those in the European Union countries will be telling on the course of economic activity also in the period
ahead. Current account deficit and the data on the financing of the deficit will probably remain important with respect to economic balances
in the year ahead.
We hereby submit our Annual Report, Balance Sheet and Profit & Loss Statement pertaining to our 2012 activities for your review and
approval. We would like to express our gratitude to the Turkish public for their steadfast trust in our Bank, to the institutions of the Turkish
State for their continuous support; we thank all our employees for their dedicated efforts; and we extend our respects to you, our valued
shareholders, for having honored this General Meeting with your presence.
TÜRKİYE İŞ BANKASI A.Ş. BOARD OF DIRECTORS
Summary Report of the Board of Directors