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İşbank in 2009

Treasury Management

Along with the proportional increase in global risk appetite for financial market instruments, the risk premiums of Turkey and many other developing countries have returned to their pre-crisis levels. Moreover, the currencies of these countries have appreciated against the dollar as a result of capital inflows. When looking at the general economic developments throughout the world, both the US and European economies grew in the third quarter of 2009, for the first time since the beginning of the crisis, meaning that they have technically emerged from the recessionary period.

When market players seeking relatively high returns turned to the commodity markets and developing countries’ financial markets, oil and gold prices as well as the stock and bond markets of these countries have risen rapidly.

Nonetheless, in the last quarter of 2009, Dubai World, an investment company owned by the Dubai Government, filed to defer payment of company debts. Furthermore, Spain’s credit outlook was downgraded to negative and the credit ratings of 52 other nations, including Greece, Hungary, Ireland, Thailand, and Mexico, were lowered. These developments indicate that the effects of the global crisis and the uncertainty in the markets are lingering.

In 2009, the share of securities portfolio in İşbank’s total assets has increased, parallel to the tendency in the sector.

In 2009, the common strategy of the banking sector was to increase assets in securities portfolios.
In parallel with the contraction of the credit market and the recession in the overall economy in 2009, the CBRT resumed its flexible monetary policy and continued to cut interest rates throughout the year.

The consolidated balance sheet of the banking sector was up by 13.8% in 2009, compared to 2008, and reached TL 834 billion. Demand for credit was reduced in tandem with the contraction in business activities, and the number of non-performing loans increased.

All these developments during 2009 have prompted the Turkish banking system to widely adopt the strategy to increase assets in their securities portfolios, which continue to yield relatively high returns.

The securities share in the total assets of the sector has grown by 5 percentage points compared to 2008 year-end, reaching 31.5%. The ratio of total loans to total assets for the same period decreased to 47.1%, down by 3.1 percentage points compared to end-of-year 2008.

İşbank has taken a similar course parallel to the sector insofar as the balance sheet composition for 2009 is concerned.

Balance sheet management at İşbank
The Treasury at İşbank is responsible for effectively managing the Bank’s liquidity position to have the appropriate amount of funds needed for all types of products and services provided by the extensive branch network and also investment portfolios and FX positions as per the decisions of the Asset and Liability Committee.

These responsibilities are conducted by employing the most current risk management techniques, taking into account global market developments and other risk factors.

Derivative products as well as instruments for money, FX, and capital markets were utilized for the management of liquidity, investment portfolios, and FX positions, which are among the Treasury’s main activities. The objective of these transactions is to keep interest rate, exchange rate, and liquidity risks at minimum levels.