2010 Annual Report
2010 Activities
2010 at VakıfBank: the year of "new customer acquisition"
Acting on the vision of being the “primary banking partner” of its customers also in 2010, VakıfBank was able to acquire new customers and also to take a larger share of the transaction volume of its existing clientele.
strong customer relationships
In 2010, VakıfBank maintained the stable growth trend of the Corporate Banking business line that had been ongoing since its establishment in 2007.
Corporate Banking
VakıfBank offers all corporate banking products and services required by its customers with a specialized sales and operations staff, broad product portfolio, extensive branch network, upgraded technological infrastructure facilities and business processes.
The year of new customer acquisition
VakıfBank designated 2010 as the year of “new customer acquisition” and substantially increased the number of customers serviced in the corporate customer segment along this strategy, as it did in all other customer segments.
In parallel with its target of new customer acquisition, special emphasis was placed on dealership letter of guarantee agreements that covered the dealer and supplier networks of customers in the corporate segment, as well as on direct debit system (DDS) agreements and card-based collection system agreements.
Stable growth in corporate banking
In the corporate banking segment, VakıfBank offers service with its customer-oriented sales and marketing strategy, customized service approach, and perspective that considers clients as long-term business partners. The Bank achieved a significant market share gain in 2010 through new customer acquisition in this segment, and also through getting higher share from the transactions of its existing clientele. Ongoing since 2007 when the business line was established, the stable growth trend was sustained in 2010.
In 2010, VakıfBank pursued a proactive policy in financing high value-added projects that will increase production and employment; the Bank created funding facilities via long-term cash and non-cash loans for its clients’ investment needs, particularly in energy, privatizations and real property purchases.
On the back of efforts spent towards decreasing funding costs and making use of post-financing and various alternative deposit products in particular, funds were created that would enable extending the average maturity of the Bank’s balance sheet on the liabilities side and to reduce its costs in 2010.
The “Primary Banking Partner” of its Customers
Acting on the vision of being the “primary banking partner” of its customers also in 2010, VakıfBank was able to take a larger share from the transaction volume of its existing clientele. Practices such as the direct debit system (DDS) and card-based collection systems, dealership letter of guarantee agreements, wholesale payment systems and cheque integration systems helped VakıfBank make progress in becoming the primary banking partner of its existing clients as well as their subsidiaries and associates, while also helping the Bank acquire new customers among dealers and suppliers that constitute the other links of the financial chain.
Thanks to its extensive international correspondent network, specialized sales and operations staff, modernized foreign trade business flow processes and technological infrastructure, VakıfBank offers a rich portfolio of products based on a high-quality and efficient approach to service to corporate clients, who hold a major share in Turkey’s foreign trade volume. As a result, the Bank increased the number of its foreign trade customers and business volume significantly in 2010.
Considering customer relations as the basis for long-lasting partnerships and making it a principle to stand by its clients under any circumstance, VakıfBank aims to further solidify its cooperation with its existing clients via innovative products and cash/non-cash loan facilities in 2011, while broadening the reach of its corporate segment activities through new customer acquisitions.
Growing market share in cash management
During 2010, VakıfBank introduced new cash management products, gave momentum to the marketing of existing and new products, and significantly gained additional market share for the Bank via these products.
During the reporting period, the Bank paid numerous company visits aimed at the marketing of cash management products, and provided Cash Management Products training to 69 groups covering assistant specialists, SME portfolio managers, and officers within the frame of internal training activities.
“Gümkart”, the Bank’s product that enables to make customs payments within the customs area, was expanded to cover the entire country in 2010, whereby a total of 4,600 export companies were reached, upon which their customs payments were started to be made via VakıfBank.
Direct Debit System (DDS) and Agency Collection System (ACS) agreements were signed and enforced with a large number of corporate companies having countrywide dealer networks. In this frame, the Bank started to handle cash flows of these companies and their dealers.
The Wholesale Collection System improved with new customer acquisitions in 2010; under the system, cash transfer of client companies was handled by VakıfBank, which amounted to a transaction volume of TL 14 billion, and thus, the operational workload of branches was significantly alleviated.
The Cheque Integration System, which enables execution of customers’ collection cheque transactions electronically, was rolled out during 2010 and the Bank started to work with many companies within this scope.
Continuous Cheque Printing Software application offered to payment cheque customers was expanded across commercial customers, thus winning a large number of customers for the Bank.
On the back of a total of 102 cash management projects introduced during 2010, many corporate companies, universities, public institutions, metropolitan municipalities, foundations and associations across the country were included in VakıfBank’s portfolio, upon which the Bank started handling their cash flows.
High-quality services in project finance
VakıfBank provides high value-added solutions and high-quality service in project finance to its diverse base of clients consisting of public and private sector companies.
VakıfBank participates in syndicated loans, either as a mandated lead arranger or as a consortium member under the mandate of foreign banks, for the project financing of dam, highway, railroad, energy and airport investments in large scale government tenders or privatizations. In this scope, the Bank participated in syndicated loans for ten companies totaling USD 3,181 million in 2010; VakıfBank entered into syndication agreements with a total worth of USD 874 million. Including the syndicated loan agreements signed in the previous years, syndicated loans totaling USD 315.9 million were extended to six companies in 2010.
In addition to loans originating from VakıfBank, the Bank also offered and extended to investors credit facilities originating from foreign banks such as the European Investment Bank (EIB) SME Loans, Council of Europe Development Bank (CEB) Loans, Union Bank of Switzerland (UBS AG), Dresdner Bank, Credit Suisse, Commerzbank and Deutsche Bank in 2010.
Loans extended via corporate centers
Via a total of three corporate centers in Ankara and İstanbul, VakıfBank offers service to corporate conglomerates and companies affiliated thereto, as well as to multinational companies operating in Turkey.
(TL million) |
2009 |
Share |
2010 |
Share |
|---|---|---|---|---|
Agriculture |
269 |
0.8 |
380 |
0.8 |
Farming and Husbandry |
148 |
0.4 |
192 |
0.4 |
Forestry |
62 |
0.2 |
131 |
0.3 |
Fishery |
59 |
0.2 |
56 |
0.1 |
Industrial |
7,201 |
20.9 |
10,295 |
23.0 |
Mining and Coal Production |
446 |
1.3 |
254 |
0.6 |
Manufacturing |
6,201 |
18.0 |
8,832 |
19.7 |
Utilities |
555 |
1.6 |
1,209 |
2.7 |
Construction |
1,824 |
5.3 |
2,289 |
5.1 |
Services |
10,584 |
30.7 |
12,468 |
27.8 |
Wholesale and Retail Trade |
4,922 |
14.3 |
5,193 |
11.6 |
Hotel and Restaurant Services |
878 |
2.5 |
1,011 |
2.3 |
Transportation and Telecommunication |
2,076 |
6.0 |
2,188 |
4.9 |
Financial Institutions |
2,342 |
6.8 |
3,507 |
7.8 |
Real Estate and Rental Services |
103 |
0.3 |
199 |
0.4 |
“Self Employment” Type Services |
0 |
0.0 |
0 |
0.0 |
Educational Services |
69 |
0.2 |
69 |
0.2 |
Health and Social Services |
196 |
0.6 |
301 |
0.7 |
Other |
14,560 |
42.3 |
19,405 |
43.3 |
Total |
34,439 |
100 |
44,836 |
100 |
Commercial Banking
Ever since its inception, VakıfBank has been contributing significantly to the national economy through credit support aimed at all sectors from the manufacturing industry to the service sector, communications to trade, and foreign trade to tourism.
Customized solution understanding
Having embraced customer-focused approach and relationship banking as its main principles, Commercial Banking sustained its stable growth in 2010 with effective portfolio management, customized solution understanding, and quality service process. The business line provided solutions to thousands of commercial customers operating all over Turkey for their various financial needs from borrowing requirements to foreign trade finance.
A major supporter of the national economy since its debut through credit support extended to industrialists, exporters and businessmen, VakıfBank continued to increase its support to all sectors, ranging from the manufacturing industry to the service sectors, communication to trade, and foreign trade to tourism in 2010. Since 2009 during which the global crisis made its effects felt heavily, VakıfBank continued to fulfill the financing needs of its commercial customers and kept standing by its clients under any market condition, and expanded its customer base rapidly.
Growth that surpasses the sector’s average
During 2010, the Bank concentrated on non-cash loans and foreign trade transactions, and performed the sector’s average growth in both fields, generating additional commission income. In addition, the Bank financed energy investments and power distribution tenders in 2010.
With a view to taking place in the cash flow cycle of commercial customers and to becoming their primary banking partner, cash management products were marketed intensively, and the customer portfolio was expanded through implementations including DDS and card-based collection systems, dealership letter of guarantee agreements, and wholesale payment systems. The Bank attained 20% growth in the number of customers under the commercial segment in 2010.
VakıfBank targets to achieve profitable and broad-based growth in 2011, by maintaining its customer-oriented approach and its ceaseless support to the customer portfolio under the commercial segment. Along this line, Commercial Banking set its key goals for 2011 as becoming the primary banking partner of its expert and experienced people and broad product range, expanding its lending volume without compromising from its asset quality, acquiring new customers and establishing permanent relations with the customers acquired.
SME Loans
Difference created in the SME business line with the TAM brand in 2010
Having restructured the SME Banking service under the brand name “Commercial Initiative Center” (in Turkish: TAM) in 2009, VakıfBank transformed each one of its branches into a “Commercial Initiative Center” (TAM) during 2010 and took its service understanding specific to the SME segment one step further.
The reliable business partner of the SMEs, VakıfBank continued in 2010 to offer products and services that were aligned with the circumstances of their relevant sector and with the cash flow of the specific company.
On the back of the marketing activities conducted in 2010, VakıfBank increasingly expanded the lending and deposit volumes in the SME segment, and achieved 15% growth year-on in the number of customers in this segment.
In the year ahead, VakıfBank aims to further enhance its performance and profitability in the SME business line, and the added value it contributes to the national economy by producing special solutions tailored to the needs of the SMEs.
Cooperation with KOSGEB
The first bank in Turkey to collaborate with the SME Support Organization (KOSGEB), VakıfBank continued to intermediate KOSGEB loans in 2010. In addition, the Bank organized campaigns for KOSGEB-member SMEs that were unable to benefit from KOSGEB loans for any reason, in an effort to keep supporting the SMEs.
Support to regional development
Offering solutions for any need of the SMEs, VakıfBank made it a principle to support regional economic development, and maintained its support in this direction not only from its own funds, but also by way of channeling the funds secured from international financial institutions. In keeping with this principle, the Bank organized a campaign “Kalkınmada Öncelikli Yörelere Desteğimiz TAM” that promised full support via the Commercial Initiative Centers to the priority development regions. Under the campaign, the Bank extended TL 65 million in loans within as short a period of time as two months. Further to its aim of supporting regional development, the Bank established cooperation with development agencies.
Support to environment and energy investments
The originator of Environmental Banking in Turkey in 2008, VakıfBank extends various loans to environmentalist SMEs under the “Environment Package” and also participates in the Turkey Sustainable Energy Financing Facility (TurSEFF) by the European Bank for Reconstruction and Development (EBRD). The first to extend a loan among the banks taking place in the project, VakıfBank also became the bank to author the fastest loan extension within the frame of SEFF projects in place in 14 countries.
Sector-specific solutions in 2010
During 2010, VakıfBank provided the SMEs with the opportunity to meet their financial needs through various sector packages designed for the seasonal characteristics and cash flows of their relevant sectors.
In this frame, the Bank organized various campaigns targeting the SMEs:
SMEs engaged in the sectors that were covered by the campaigns were given access to fast and easy borrowing facilities incorporating various options such as flexible repayments and grace periods.
Cooperation with chambers and development agencies
In 2010, the Bank signed protocols with 170 chambers of commerce and industry, giving the chamber-member SMEs the chance to benefit from advantageous services.
The Bank also signed protocols with eight development agencies in the reporting period, enabling the SMEs whose projects were approved by the relevant agency to make use of co-financing facility.
Specialized sales staff
Taking place under the extensive branch network of VakıfBank, Commercial Initiative Centers are staffed with 640 specialized SME Portfolio Managers, the number of which increases by the day. Having espoused VakıfBank’s principle of specially tailored service to the SMEs, and offering financial advisory service to the SMEs in addition to services for fulfilling their needs, the sales team also attends various modern training programs on marketing, finance and banking. VakıfBank makes optimum use of these training sessions to contribute to the personal development of the SME Portfolio Managers, while at the same time targeting to fulfill the expectations of the SMEs by devising solutions to their current problems, and to enhance its service quality.
Increasing efficiency in public finance
Having adopted it as its primary principle to provide privileged services to public institutions and agencies with its innovative approach to service, VakıfBank increased its market share and efficiency in the public sector also in 2010.
On the back of far-reaching visits paid during 2010, VakıfBank gave pace to the promotion and marketing of its products and services through intensive customer visits, in an attempt to gain additional market share in banking activities addressing general and special budget administrations, higher education institutions, regulatory and supervisory agencies, healthcare institutions, local administrations and state economic enterprises.
Closely monitoring the cash flow requirements of public institutions, VakıfBank increased its marketing efforts with new products and services targeted toward this segment, and strengthened the synergy between private sector companies and the Bank by intermediating cash flow between public institutions and private sector companies.
Our main objectives in this field in 2011 include the integration of the public sector’s payment and collection transactions in the Bank’s system, production of diverse financial solutions tailored to the needs of public institutions, and increasing the Bank’s market share in the public sector in a permanent manner.
The reliable business partner of the SMEs, VakıfBank continued in 2010 to offer products and services that were aligned with the circumstances of their relevant sector and with the cash flow of the specific company.
Retail Banking
During 2010, VakıfBank increased the diversity of retail loan products offered, and made available loan types customized according to different customer segments. At the end of 2010, the Bank’s consumer lending grew 46.9% year-on and went up from TL 9,192 million at year-end 2009 to TL 13,503 million, while its market share rose from 9.8% to 10.5% in the same period.
Retail loans outgrowing the rate of increase in the overall sector’s placements
The repercussions of the global crisis that started in the last quarter of 2008 started dwindling in the banking sector during 2010, and the sector’s growth picked up with the decreased interest rates that came in the last quarter of the reporting period. While the rate of increase in the amount of consumer loan placements of VakıfBank was 16.5% in 2009, this ratio went up as high as 46.9% in 2010. In the first six months of 2010, VakıfBank pursued a more cautious growth in placements as compared with the overall sector; in the last six months of the year, however, the Bank surpassed the rate of increase in the overall sector’s placements and increased its market share.
Diverse loans tailored to different customer segments
Having increased the diversity of its retail loan products in 2010, VakıfBank responded to its customers’ expectations for different loans through special installment general purpose loans for primary care physicians (Aile Hekimlerine Özel TİK), in addition to the growth attained in retail loan placements via Establishment Anniversary Loan (Kuruluş Yıldönümü Kredisi), Holiday Loan (Bayram Kredisi) and New Year Loan (Yeni Yıl Kredisi). While targeting to grow the ratio of cross-sale of retail banking products through the No-Expense Installment General Purpose Loan (Masrafsız Taksitli İhtiyaç Kredisi), the Bank also further leveraged its competitive attitude in the banking sector with the provision of this loan to its customers.
VakıfBank had a very successful year in mortgage loans and highly outperformed the sector with 50.2% growth in its placements in 2010. The Bank increased its market share thanks to new product launches, campaigns targeted toward institutions, proactive marketing policies in the residential projects channel, and effective utilization of the real estate office channel.
The Bank also introduced different products in car loans, thereby adding to the diversity of its loan types, while also working towards expanding its affiliated car dealership network and enhancing its efficiency. As a result, the Bank achieved growth in the placement of car loans, as well as higher market share.
At year-end 2010, VakıfBank’s consumer loans expanded 46.9% year-on-year and rose from TL 9,192 million in 2009 to TL 13,503 million last year. General purpose installment loans (in Turkish: TİK) constituted 54.5% of the Bank’s consumer loan book, whereas mortgage loans and car loans accounted for 44.0% and 1.5%, respectively, of the consumer loans.
| Consumer Loans | ||
Loan Type |
2009 |
2010 |
General Purpose Loan* |
5,098 |
7,359 |
Car |
139 |
206 |
Mortgage |
3,955 |
5,939 |
Total |
9,192 |
13,503 |
* Including overdraft account balances |
||
TİK: Installment General Purpose Loans
During the reporting period, Installment General Purpose Loans grew 44.4% to TL 7,359 million and brought VakıfBank 11.8% share in the Installment General Loans market as at 31 December 2010.
Car Loans
VakıfBank’s car loans market share increased from 3.1% at year-end 2009 to 3.6% as of year-end 2010. While the overall sector’s car loans grew 28.1% throughout the year, VakıfBank achieved a remarkable 47.9% growth in its car loan placements.
Mortgage Loans
In parallel with the rate cuts by the CBRT, mortgage rates also continued to decline and fell below the 1% per month level, which led to a major revival in demand for mortgage loans. The sector’s mortgage loan risk exposure increased 35.5% in 2010, while VakıfBank’s mortgage loan portfolio grew 50.2%. Consequently, the Bank’s market share in mortgages rose from 8.8% in 2009 to 9.8% as of year-end 2010.
Innovations adding diversity to the product range
VakıfBank’s electronic collection system, which holds an important place in increasing the Overdraft Bankomat-7/24 Placements and enables cross-sale, has been added some extra features, and renamed the “School Collection” System.
Diversifying its retail banking products range with new products, VakıfBank initiated the Monthly Dues Collection System targeting housing complex/apartment building managements and residents in order to offer the best in service to its customers and to increase its market share in the sector.
In December, the Bank organized a “Shopping with POS using the Bankomat-7/24 Card” campaign in an effort to get the customers to more frequently use their Bankomat-7/24 cards in their purchases and to increase the use of Overdraft Bankomat-7/24 limit.
The Bank offered different repayment options that can address all consumers through Tourist Loan (Turistik Kredi), New Year Loan (Yeni Yıl Kredisi), Combined Installment General Purpose Loan (Birleştir TİK), and No-Expense Installment General Purpose Loan (Masrafsız Taksitli İhtiyaç Kredisi).
With the launch of the Yellow Shutter products under the mortgage loans, the Bank started offering 15 different types of products and added new ones to campaigns aimed at corporations. New types of loans introduced during 2010 include 2in1 Yellow Shutter (İkisi Bir Arada Sarı Panjur) and Yellow Shutter Loan linked to TCIP (DASKA Endeksli Sarı Panjur).
Thanks to the significantly increased number of affiliated dealers within the frame of Auto-matic Loans, VakıfBank increased the amount of placements generated on loans originated by the dealers channel, and targeted to fulfill different customer demands through Special Car Loan for Civil Servants (Kamu Personeline Özel Otomobil Kredisi), and Buy Now Pay Next Year Car Loan (Bugün Al Seneye Öde Otomobil Kredisi).
New consumer loans in 2010
No-Expense Installment General Purpose Loan: This is an installment general purpose loan extending financing support without charging a fixed fee to the customers. Introduced on 07 July 2010, the loan incorporated a second no-expense alternative, which offered the customers the chance to benefit from lower interest rates by increasing cross-sales.
Special Installment General Purpose Loan for Primary Care Physicians: The campaign was launched on 03 September 2010 for primary care physicians. The product aims to finance the physical and technical facilities of family care centers where primary care physicians provide service.
Medical Week Loan: On occasion of March 14th celebrated every year by healthcare professionals, a new campaign was launched on 08 March 2010 for medical professionals for the March 14th Medical Week.
Market share in Installment General Purpose loans gradually increases.
During 2010, VakıfBank’s Installment General Purpose Loans grew 44.4% to TL 7,359 million for a market share of 11.8% as at 31 December 2010.
Having increased the diversity of its retail loan products in 2010, VakıfBank fulfilled its customers’ expectations for different loans, while also leveraging its competitive attitude in the banking sector.
Mortgage loan interest rates floating below 1% boosted demand for loans.
The sector’s mortgage loan risk exposure increased 35.5% in 2010, while VakıfBank’s mortgage loan portfolio grew 50.2%.
Special Car Loan Campaign for Civil Servants and Salary Payment Customers: The product aims to fulfill civil servants’ and salary payment customers’ demands for loans for their brand new or second hand car purchases at low interest rates and loan allocation fees.
Buy Now Pay Next Year Car Campaign: Introduced as of 02 November 2010, the campaign aims at fulfilling customers’ demands for car loans at lower interest rates and loan allocation fees than the market conditions, while offering them the option to start installment repayments in 2011.
Mortgage loan campaigns in 2010
Yellow Shutter Mortgage Loan Products: Launched on 13 January 2010, the Yellow Shutter mortgage loan set is comprised of 15 different products designed to meet customer needs. Including various options such as increasing installment, decreasing installment, intermittent, postponing, deferred principal amount, deferred installments, periodic, early, fixed principal amount, interim payment, generous, all-inclusive, no-expense, advantageous, and house for your house, the products are offered to the customers with their different and advantageous features.
Most Environment-Friendly Mortgage Loan Yellow Shutter: Within the frame of the agreement made with TEMA (The Turkish Foundation for Combating Soil Erosion, for Reforestation and the Protection of National Habitats), saplings are planted in the forests of Tekirdağ, Karapınar (Konya) and Şanlıurfa on behalf of credit customers. Approximately 35 thousand saplings have been planted until the end of 2010.
Yellow Shutter Linked to TCIP: The product was introduced on 11 October 2010 to accelerate the finalization of workflows and procedures involved in the lending process, and offer faster and easier service to customers.
Special Yellow Shutter for the Public Sector: The product was devised for the mortgage loan demands of employees working in the public sector and put on the market on 08 March 2010.
Special Yellow Shutter for İlksan Members: The campaign was launched on 02 July 2010 for the employees and retirees of İLKSAN (Primary School Students Health and Social Assistance Fund).
Mortgage Loan Campaign for the CBRT Personnel: The campaign was initiated on 25 January 2010 for the mortgage loan demands of the employees and retirees of the Central Bank of the Republic of Turkey.
Special Mortgage Loan Campaign for the Healthcare Industry: The campaign was introduced on 29 March 2010 for customers working in the healthcare industry.
Police Week Mortgage Loan Campaign: The campaign was launched on 09 April 2010 to fulfill the mortgage loan needs of the members of the security department.
Treasury Operations
Pursuing policies in treasury operations that focus both on profitability and caution, VakıfBank balances its lending volume that grows in parallel with the strong expansion in the sector with the developments in the size of its marketable securities portfolio.
The Turkish economy made major strides in the normalization process.
During 2010, the economy administration and the financial sector regulatory and supervisory authorities implemented effective policies that observed financial stability, along with fiscal discipline, within the frame of the Medium Term Program. As a consequence, the impact of the crisis upon financial markets was alleviated and the Turkish economy made major strides in the normalization process.
As the global economy gradually recuperated, Turkey attained a high rate of economic growth, owing particularly to the strong domestic demand, and major expansion in loans in the banking sector. With the solid recovery displayed in the aftermath of the crisis particularly in emerging economies on the global scale, modifications were made to the expansionary monetary and fiscal policies, which were enforced to revive the economies. The decoupling that arose between developed and emerging countries resulted in decoupled monetary policies, and the CBRT started pursuing different policies, as did the central banks of emerging countries.
Recently, the CBRT has been waiting for the liquidity that arose from the expansionary monetary policies implemented by developed countries to be channeled to emerging countries. Taking into consideration, particularly, the solid growth, preservation of fiscal discipline, and Turkey’s possible promotion to investment grade after the probable assignment of an upgraded rating by the rating agencies, the CBRT has enforced an unprecedented new policy set that seeks to protect financial stability by restricting the current deficit.
Trading profit in the capital markets increased significantly
Last year, VakıfBank continued to pursue policies in treasury operations that focused on both profitability and caution. The lending volume that grew in parallel with the solid expansion in the sector was balanced by the developments in the size of the marketable securities portfolio. In the post-crisis normalization period, the interest market adapted to the low interest rates in keeping with the developments in the sector, and affordable funds were provided for relatively long-term operating and project loans.
In 2010, VakıfBank successfully maintained its leading position in the sector in capital markets operations, and substantially boosted its capital markets trading profit through its high trading volume in the secondary markets.
Saving deposits made up the biggest contribution to the rise in deposits.
In 2010, total deposits entrusted to VakıfBank amounted to TL 47.7 billion, consisting of Turkish lira deposits worth TL 35.3 billion and foreign currency deposits worth TL 12.4 billion.
Serving as an indication of the branch network rapidly expanding across Turkey and the trust depositors hold in VakıfBank, the amount of real person deposits grew 26% to TL 16.6 billion. The greatest contributor to this rise was the savings deposits, which increased remarkably by 42% and reached TL 12.4 billion. The said growth was also backed by deposit products that were designed to achieve a broad base in deposits, and the efficiently conducted campaigns.
Time deposits increased 23% year-on to TL 7.3 billion, taking 15% share of total deposits. This development in the composition of deposits proved to be an element that positively affected the Bank’s funding cost in 2010.
VakıfBank’s total deposits reached TL 47.7 billion in 2010.
Serving as an indication of the branch network rapidly expanding across Turkey and the trust depositors hold in VakıfBank, the amount of real person deposits grew 26% to TL 16.6 billion.
High profitability driven by high volume in secondary markets
In 2010, VakıfBank successfully maintained its leading position in the sector in capital markets operations, and substantially boosted its capital markets trading profit through its high trading volume in the secondary markets.
Emphasis will be placed on derivative products in 2011.
VakıfBank targets a healthy balance sheet growth with a view to maintaining profitability despite projected shrinkage in profit margins in 2011. The possible fluctuation and rise in interests on marketable securities will play a key role in the Bank’s strategies for creating the securities portfolio.
The Bank will keep offering products and campaigns addressing individual and corporate investors by making greater use of derivative products, as well, in an attempt to create a broad-based deposit portfolio so as to manage the interest rate and liquidity risks, in particular, and to sustain the increase in the share of savings deposits.
For the purpose of extending the average maturity of the Bank’s deposit portfolio and to expand the breadth of its base, increased use will be attained for deposits linked to interests on bonds, deposits with interim interest payments, multi-currency deposits and similar products. In order to have access to alternative funds besides deposits, the Bank intends to issue both Turkish lira and foreign currency denominated bonds. Emphasis will be placed on derivative products in 2011, so as to manage the interest rate risk of the fixed-interest loans portfolio.
Cost-focused fund management policy will be effectively pursued also in the future.
VakıfBank aims to increase its efficiency in treasury marketing function with a view to broadening its treasury product range, and thus to raise its commission income by offering alternative instruments, and primarily new derivative products to its corporate and retail customers.
Furthermore, a new unit will be set up under the Investment Banking organization, with the objective of increasing commission income through effective provision of TurkDEX instruments to the Bank’s customers. Enforced in the second half of 2010, the cost-focused fund management policy will be effectively maintained also in the year ahead.
Foreign Trade and Correspondent Relations
VakıfBank enjoys a respected and powerful position both in the sector and in the worldwide financial markets owing to its international banking operations. The Bank maintains its leadership in the sector and builds on its presence in international markets thanks to its longstanding experience and strong relationships.
Alternative financing solutions in foreign trade
One of Turkey’s leading companies in foreign trade transactions, VakıfBank was able to gain additional market share once again in 2010 with its innovative conduct, customized solution approach and alternative financing solutions.
Responding to customer requests for confirmation to the letters of credit and letters of guarantee via its extensive correspondent banking network, VakıfBank further expanded its fields of activity by participating in the risk sharing programs of IFC and EBRD.
In international banking, VakıfBank possesses expert staff and a dynamic and flexible structure that can quickly adapt to the changing global conditions. In the period ahead, the Division will continue to develop high value-added alternative foreign trade solutions that take customer needs and demands into consideration.
Correspondent relationships built on mutual trust and cooperation
International funding activities of VakıfBank are conducted and innovative solutions targeting toward the needs of foreign trade customers are produced, thanks to correspondent relationships carried out on the basis of trust, cooperation and reciprocation principles.
The strong correspondent network that consists of 1,624 banks in 109 countries worldwide is administered on the basis of mutual trust and cooperation and efforts are spent to expand this network by establishing new partnerships.
Structured finance
In March 2010, VakıfBank secured a syndication loan with a total worth of USD 950 million which consisted of two tranches of USD 170 million and EUR 566.5 million. Participated by 33 banks, the facility represented the largest syndication loan in the history of the Bank. This was followed by a two-tranche syndication loan of USD 720 million in total, consisting of two maturities in the second half of 2010. Participated by 32 banks, the facility consisted of two tranches of USD 145 million and EUR 453 million.
To support the real sector with long-term, low-cost funding, VakıfBank continues to cooperate with the European Investment Bank, the World Bank and the European Bank for Reconstruction and Development. VakıfBank is the only bank that offers the loans originating from these three international institutions under a single roof.
With the aim of backing the real sector by long-term affordable funds, VakıfBank continues to cooperate with the European Investment Bank, the World Bank, and the European Bank for Reconstruction and Development.
Credit Cards
Maintaining its service approach focused on customer satisfaction in credit cards in 2010, VakıfBank presented countless opportunities to VakıfBank Worldcard holders.
Based on its service approach focused on customer satisfaction, VakıfBank sustained its stable market share increase, which followed the transformation process that started in credit cards several years ago.
Following the transformation process that was initiated in credit cards in 2008, VakıfBank remained loyal to its service understanding focused on customer satisfaction also in 2010, and sustained its stable market share increase on the back of new product features, need-based sectoral campaigns, installment campaigns on the basis of member merchants, and campaigns earning additional Worldpoints.
VakıfBank’s credit card portfolio consists of:
VakıfBank credit cardholders are eligible to take advantage of all opportunities offered by VakıfBank member merchants as well as World member merchants. In addition, through periodic campaigns, cardholders are offered various opportunities such as earning additional Worldpoints, discounted shopping, promotions, additional installments and deferring installments.
MilPlus: An exclusive program from VakıfBank Worldcard
VakıfBank Worldcard holders can redeem the Worldpoints they earn from their purchases with MilPlus at triple value for plane tickets and at double value for bus tickets or hotel/tour reservations; cardholders can travel with the airline of their choice without paying additional airport landing fees.
In addition, when they do not have sufficient points, cardholders can use Advance MilPlus to pay back with the World points they will earn from their purchases within a year.
Frequent travelers are offered unique opportunities through exclusive campaigns of MilPlus.
Credit Cards |
2008 |
Market Share (%) |
2009 |
Market Share (%) |
2010 |
Market Share (%) |
|
|
|
|
|
|
|
Total Credit Card Receivables (TL million) |
737 |
2.17 |
982 |
2.68 |
1,387 |
3.18 |
Credit Cards Turnover (TL million) |
3,800 |
2.05 |
4,960 |
2.45 |
7,096 |
3.03 |
Number of Credit Cards |
2,026,962 |
4.67 |
2,245,011 |
5.06 |
2,398,943 |
5.11 |
Automatic bill payment from the credit cards
By issuing an automatic bill payment instruction for their VakıfBank Worldcard, cardholders can pay their Turkcell, Avea, Vodafone and Turkish Telecom bills, thus eliminating the trouble of following up their invoices, while they can make payments even if they are short of cash, and also earn Worldpoints.
PeşineTaksit (Installment for Outright Purchases): Especially for customers requiring installments everywhere
PeşineTaksit (Installment for Outright Purchases) is offered for those customers who prefer to pay for their purchases in installments even when they shop from business places that do not offer installment payment option. Customers wishing to enjoy the pleasure of paying in installments call AloŞubem at 444 0724 following their outright purchases and get up to 12 installments for their spendings.
SözünleKazan (Earn for your Word): Discount on the account statement for your word
Under the product feature introduced, cardholders promising to spend a specific amount every month for 12 months earn discounts on their account statements, the amount of which discount varies depending on the promised spending. With this feature that enhances customer loyalty, customers earn discounts on their account statements, and also benefit from numerous advantages including installments and Worldpoints in their purchases.
Automatic bill payment from the credit cards
By issuing an automatic bill payment instruction for their VakıfBank Worldcard, cardholders can pay their Turkcell, Avea, Vodafone and Turkish Telecom bills, thus eliminating the trouble of following up their invoices, while they can make payments even if they are short of cash, and regularly follow up on their bill payments on the account statement, through online banking branch and telephone banking facility.
BusinessCard
In 2010, VakıfBank’s BusinessCard program aimed at corporate, commercial and SME customers has been redesigned with additional product features. Relaunched under the slogan “the card that raises the bar in the business world”, the card served very positively to new customer acquisition and card usage by existing customers.
With a number of features including MilPlus flight program, installment option and Worldpoint earning at VakıfBank and World member merchants, Resource Utilization Support Fund exemption in export payments, and PeşineTaksit that enables installment payment of outright purchases, VakıfBank BusinessCard has been transformed into a very attractive product that meets the needs and expectations of commercial customers.
5% Worldpoint at Petrol Ofisi gas stations, the most profitable stop for commercial customers
The Bank devised a dedicated loyalty program addressing the diverse needs of different customer groups under the commercial segment, and undersigned a significant cooperation with Petrol Ofisi, the leading brand name in the fuel oil sector and lubricant company.
Under the initiative, owners of commercial vehicles with high fuel oil consumption like minibuses, cabs, shared cabs, public buses, shuttle buses, etc. who have taken out a commercial license plate loan earned 5% Worldpoints on all fuel oil or auto gas purchases made using their VakıfBank BusinessCards from Petrol Ofisi gas stations that participated in the campaign. Positive Card privileges Petrol Ofisi offers to its customers are also additionally reflected to VakıfBank customers.
Automatic bill payment from the credit cards
By issuing an automatic bill payment instruction for their VakıfBank Worldcard, cardholders can pay their Turkcell, Avea, Vodafone and Turkish Telecom bills, thus eliminating the trouble of following up their invoices, while they can make payments even if they are short of cash, and also earn Worldpoints.
As of year-end 2010, VakıfBank had 73,203 member merchants and took 3.50% market share in terms of member merchant turnover. The Bank ranks eighth in terms of member merchant turnover among card-accepting banks.
ASES card program specific to foundation and trust members
The ASES card program has been devised, which the foundations and trusts in Turkey can offer their members as a value-added service. Foundation and trust members who get ASES cards will benefit from special discounts at places where they will use their cards frequently, and will also be entitled to World member merchant opportunities. The Worldpoints to be earned on purchases will be at triple value for plane tickets and at double value for other services thanks to the MilPlus program incorporated by the cards. There is a gradual increase in the number of new foundations and trusts that join the program, as well as in the interest of the members in the ASES product.
New products and developments in member merchant services
Internet Banking transactions are gradually increasing.
The number of registered users of Internet banking rose 14% during 2010 and reached 1,472,544, while the number of active customers increased 26% to 527,478. As of year-end 2010, over 14 million financial transactions were performed on internet banking.
Alternative Delivery Channels
In an attempt to reduce operational costs and enhance efficiency, VakıfBank gives further pace to its efforts to shift the operational workload of the physical service network to Alternative Delivery Channels.
Internet Banking
The number of registered users of internet banking, which was launched in 2000, rose 14% over 2009 and reached 1,472,544 at year-end 2010, while the number of active customers increased 26% to 527,478.
As of year-end 2010, more than 14 million financial transactions were performed on Internet banking for a total transaction volume of nearly TL 24 million. The total number of transactions performed on Internet banking in 2010 was 100 million, with 14 million thereof consisting of financial transactions and 86 million of non-financial transactions.
In order to promote easy use and usage ratio of internet banking, VakıfBank introduced the Instant PIN application on its website, which allows for getting a PIN easily. Various campaigns are organized within the frame of ongoing efforts to render transacting via internet banking more attractive for the customers.
One-time PIN
As of year-end 2010, the number of customers using VakıfAnahtar and VakıfSMS, one-time PIN products of VakıfBank, stood at 2,189 and 324,832, respectively.
Telephone Banking
As of year-end 2010, VakıfBank’s telephone banking had received 7,967,652 calls. The number of calls received by customer representatives grew 65% year-on and reached 5,311,767; the response-to-call ratio for these calls was 92%.
153,444 financial transactions were performed via telephone banking for a total volume of TL 86.4 million.
In addition to the calls made by the call staff of telephone banking, an outsourcing company was engaged, thereby increasing the outbound call volume; as a result, 1,280,000 customers had been called as of year-end 2010. The Bank’s outbound calls team started making cross-sale to customers on the back of projects conducted with the subsidiaries. In this frame, premiums produced on insurance sales were worth TL 350,225 in 2010.
In 2010, VakıfBank took on technical infrastructure upgrading and hired new personnel to enhance customer satisfaction with telephone banking and service quality, as well as sustaining the quality of calls amid increasing call traffic. The Bank also launched a new project to enhance the technical infrastructure and increase functional capacity of the Interactive Voice Response system.
As of year-end 2010, VakıfBank served its customers via 2,260 ATMs in total, 2,254 of them located throughout Turkey 739 of which are Parabankomats (advanced ATMs), and 6 ATMS in the Turkish Republic of Northern Cyprus.
Telephone and internet banking personnel were given internal and external customer communication training. Also, indicators were identified and standards were established in relation to the quality of service offered to customers. With the new performance and shift scheduling systems put in place, performance and efficiency were increased.
“Customer Problems Center”
To maximize customer satisfaction, the Bank started collecting all complaints, problems and requests received from customers in a single channel; in this frame, an average of 30,000 to 50,000 requests are handled on a monthly basis. The customers were also started to be informed on the time the agents will get back to them with a response, and problems were started to be reported so as to devise corrective and preventive activities. The Bank also targets to introduce a new program that will channel customer requests to all units through a single program in a more efficient manner and that will enable regular monitoring of the requests.
ATM
As of year-end 2010, VakıfBank served its customers via 2,260 ATMs in total, 2,254 of them located throughout Turkey 739 of which are Parabankomats (advanced ATMs), and 6 ATMS in the Turkish Republic of Northern Cyprus. Having purchased 575 Diebold ParaBankomats during 2010, the Bank targets to leverage both its service network and its service quality.
Under a project commenced in 2009, ATM screens were redesigned with new colors, fonts and graphical elements in line with the Bank’s corporate identity, which were installed on all ATMs during 2010.
Authoring a first in Turkey, VakıfBank introduced Biometric ATM, which uses finger vein scan to allow ATM use, and launched the application on 15 ATMs as of year-end 2010.
With the aim of achieving increased use of ADCs and to free up more time for the branches to focus on sales, 100 kiosks have been purchased and installed in 50 branches as of year-end 2010.
In addition, a project is underway which offers ease of use to ATM users by connecting several accounts to a single card and allowing the selection of the desired account on the ATM to proceed with the transaction.
Installation of cameras and surveillance systems on off-branch ATMs has been brought to completion. As of 01 January 2010, cameras were mounted and infrastructures were finalized at 1,039 off-branch ATMs, thus providing live streaming to the head office.
VakıfBank attained a fast pace in stock operations.
Using the remote access system actively during sessions, 24 orders per second can be routed in stock transactions. The initiative enables direct and faster trading from head offices, increased markets usage capacity, and minimized trading costs.
Investment Banking
VakıfBank invests customers’ funds so as to produce optimum results by making alternative investment instruments available to account owners, and aims to increase its market share by intermediating capital markets transactions of companies.
Capital markets play an active role in the development of countries. It is key to provide capital accumulation, which serves as the driver of development, and to make effective use of this driver, as well as to closely monitor the rapid developments that occur in the capital markets.
It has gained more significance than ever before to preserve the competitive edge against the world markets in the capital market, which evolves and changes rapidly due to its structural dynamics. Holding an important place in the banking sector, VakıfBank is an active player in the money and capital markets. Its business strategies focused on investing customer assets so as to produce optimum results, customized solutions, and superior competence in the use of modern techniques have made VakıfBank a preferred business partner in money and capital markets for retail and corporate customers.
VakıfBank invests customers’ funds so as to produce optimum results by making alternative investment instruments available to account owners, and aims to increase its market share by intermediating capital markets transactions of companies.
Market use capacity has been increased in marketable securities trading.
The Bank made the necessary system modifications and achieved alignment with the new products and practices introduced by İstanbul Stock Exchange (ISE) in 2010, geared towards stock trading which holds a significant place within intermediation of marketable securities trading.
Carrying out marketable securities brokerage via all of its branches, the Investment Unit, internet and call centers, VakıfBank achieved positive developments in the use of alternative delivery channels, and increased trading volume by this channel.
In stock operations, VakıfBank acts as an intermediary in public offerings and stock trading on the ISE, within the frame of agency agreement with its subsidiary, Vakıf Yatırım Menkul Değerler A.Ş. (Vakıf Investment Inc.).
Using the remote access system actively during sessions, 24 orders per second can be routed in stock transactions. The initiative enables direct and faster trading from head offices, increased markets usage capacity, and minimized trading costs.
Alternative delivery channels are actively used in public offerings, as well.
Developments in national economy and technological innovations bring about significant changes on the supply side of the capital markets, as well. Companies, and even states, do not restrict themselves to their own domestic markets in tapping financing facilities, and the contest over taking a share from the worldwide capital movements gets more and more heated by the day.
Companies with growth potential are moving rapidly to tap capital markets for their financing needs. This trend gained speed particularly in 2010, in parallel with which public offerings were carried out. In these IPOs, book-building and sales transactions are handled through all of VakıfBank branches and its Investment Unit as well as via alternative delivery channels that include internet banking and the call center.
VakıfBank is an expert in mutual funds management.
As one of the first institutions to set up mutual funds in the Turkish market, VakıfBank is an expert in risk and asset management in mutual funds, as well. The Bank has two Type A (equity) and eight Type B (money market) mutual funds. Shares of the Bank’s mutual funds can be traded freely without quantity restrictions through all of the Bank’s branches as well as the alternative delivery channels including the internet branch, telephone banking and the ATM network.
As one of the first institutions to set up mutual funds in the Turkish market, VakıfBank is an expert in risk and asset management in mutual funds, as well. The Bank has two Type A and eight Type B mutual funds.
With a view to increasing the diversity of the Bank’s funds portfolio, VakıfBank established the Principal Protected Umbrella Fund in an initial amount of TL 1,000,000,000 based on the permission from the Capital Markets Board of Turkey (CMB), taking into consideration the market developments and customer needs and demands.
The Bank filed an application with the CMB for setting up two sub-funds under the umbrella fund, to respond to the demands of the two distinct groups of investors that await an increase or decrease in the USD/TL exchange rate. Upon receipt of the necessary permission, public offering of shares of both funds is planned to be held in January 2011.
VakıfBank has a 4.40% market share in mutual funds, which the Bank spends every effort to optimally manage in line with the customer needs.
Shareholder relations are carried out in a healthy and secure manner.
Within the scope of shareholder relations, records are maintained in a healthy, secure and up-to-date manner, and shareholders’ written information requests in relation to the Bank are fulfilled within the frame of applicable legislation.
General Assembly meetings are convened and held duly, documents to be presented to shareholders at the General Assembly meetings are prepared, necessary efforts are spent to ensure due keeping of the meeting minutes, and achieving alignment with applicable legislation in all aspects of public disclosure is a matter that is observed and monitored.
Furthermore, care is paid to make use of electronic communication means and the Bank’s website in all activities within the scope of shareholder relations.
The Bank capitalizes on cross-selling opportunities in precious metal trading.
During 2010, the Bank engaged in intensive marketing efforts in gold trading, while acquiring new customers and capitalizing on cross-selling opportunities. The target is to further increase the customer trading volume achieved last year both in terms of volume and profitability in the year ahead.
Regarded also as an investment tool in Turkey in the current market conditions, gold has been attracting substantial attention in the recent years. VakıfBank is a member of the Istanbul Gold Exchange, created to provide a secure, stable, and convenient platform offering free competition for trading precious metals, as well as precious metals-based capital markets instruments.
VakıfBank issues gold bars (2, 5, 10, 50, and 100 gram weights) in 995 and 999 purities as well as one-ounce GAP, 20-gram Sinan and Osmanlı commemorative coins. These are available to investors at all VakıfBank branches and through its Investment Unit.
As part of its efforts to diversify and enrich offerings of investment tools, VakıfBank also engages in daily trading of registered gold in 0.995 purity under the code İAB1 on the Istanbul Gold Exchange in addition to the sales of Vakıf-brand gold bars and coins. These gold bars with the code İAB1 are purchased on the Istanbul Gold Exchange, where they are kept under custody in VakıfBank’s name. The Bank’s sales of İAB1 registered gold bars are made to customers from this pool as well.
Major progress has been attained in dematerialization of marketable securities.
The Bank attained major progress in its efforts ongoing since 2005 to merge all customer accounts under a single VakıfBank Customer Number and to match identities with relevant accounts.
When compared with the total number of investment accounts, the number of those for which identity verification could not be made is now reduced to insignificant figures, and accounts without adequate ID information on the account owner and which are inactive have been moved to the archive and cleared from the system.
VakıfBank is a member of the Central Registry Agency as an intermediary and issuer to intermediate the dematerialization of capital markets instruments.
Since the introduction of dematerialization, VakıfBank’s mutual funds consist of Type A and Type B, and all of the shares representing the Bank’s capital have been dematerialized.
Strong communication, efficient promotion
VakıfBank continued to promote its retail and commercial products and services, as well as its credit card and corporate image ads and commercials on television, in newspapers, magazines, movie theaters, on the radio, internet and outdoor venues.
Communication and Media Relations
Having revised its products, services and technology in line with modern requirements so as to accurately and fully meet the individuals’ financial needs in the rapidly progressing world, VakıfBank, in 2008, completed the restructuring process that had been initiated in all of its units in 2005.
Offering service with its customer- and marketing-oriented corporate service model with its new products and services, as well its redesigned logo since 2008, VakıfBank continued to expand its product and service range in 2010.
VakıfBank continued to promote its retail and commercial products and services, as well as its credit card and corporate image ads and commercials on television, in newspapers, magazines, movie theaters, on the radio, internet and outdoor venues. The Bank publicized its products and services as well as its banking operations via press conferences, press releases and interviews. VakıfBank also actively took advantage of promotional opportunities in the domestic and international press with news coverage, ads and interviews placed through these channels.
In addition to numerous campaigns held to date, the “Whatever is on Your Mind” retail banking ad campaign as well as the “81 Provinces 81 Gifts” and “Wise People” credit card ad campaigns were met with particular admiration by the public.
VakıfBank remained one of the proud greatest supporters of social responsibility projects in 2010. The Bank’s support will continue at an increasing pace in the years ahead.
Social Responsibility
Just as in the past years, VakıfBank extended major support to education, culture, and sports, as well as to advancements in finance and technology also in 2010.
VakıfBank-sponsored arts activities
Being a VakıfBank classic, art galleries continued to host artists and art lovers in 2010. A total of 61 exhibitions at three exhibition halls in İstanbul brought together valuable artworks with art enthusiasts throughout the year. Supporting the Turkish Folk Music and Turkish Classical Music choruses formed by the Bank’s personnel, VakıfBank once again evidenced that it has a claim to make in every discipline of the arts.
Another event supported by VakıfBank was the “TFMD Press Photo of the Year” competition organized by the Turkish Photojournalists Association (TFMD) during the reporting period.
VakıfBank-sponsored sports activities
Making up an essential part of VakıfBank’s social commitments, the support extended to volleyball achieved much greater dimensions in 2010. Increasing its ongoing support to Little, Youth and Junior Girls’ Volleyball Teams, and to the Women’s Volleyball Team that has been undersigning major achievements for years in Turkey and Europe, VakıfBank also undertook the main sponsorship of Turkey’s Women’s National Volleyball Team, a.k.a. “Sultans of the Net”.
Having received our support for the first time during the Women’s Volleyball World Championships in Japan, the Sultans ranked 6th in the event, the team’s best-ever result. VakıfBank also sponsored “Ahi Evran Summer Biathlon Turkey Championships”, the second leg of the qualification rounds for selecting the athletes that will compete in the Biathlon World Championships.
VakıfBank-sponsored social activities
“Ayvalık 18th Handicapped Cultural and Artistic Activities” organized by the Federation for the Handicapped in September was another event sponsored by VakıfBank. Acting on the objective of reaching and supporting every segment of the society, VakıfBank was honored with an award by TEMADER, an association of terror victims and their families.
VakıfBank carried its support to tradesmen and artisans to the social arena. The Bank undertook the sponsorship of the “23rd Ahi Week Celebrations” held in İstanbul and Kırşehir on the week commencing 11 October 2010. Co-organized by the Ministry of Industry and Trade, Directorate General for Craftsmen and Tradesmen, and the Association of Craftsmen and Tradesmen, the activities take on an important role in keeping alive and promoting traditions and teachings that have survived centuries, which evolved basically from an artisan organization.
VakıfBank-sponsored international activities
VakıfBank kept contributing to the financial development of Turkey, and continued to support national and international activities to this end in 2010. The Bank was a major supporter of the “ADFIMI Development Forum 2010” organized on 5 and 6 October 2010 by ADFIMI (Association of National Development Finance Institutions in Member Countries of The Islamic Development Bank), of which it is a member.
In addition, the Bank sponsored Euromoney Turkey Finance&Invesment Forum held on June 16th, and the Active Academy 8th International Finance Summit organized on December 8th and 9th, thus continuing to make itself a name in the international platform. VakıfBank was honored with an award at the Finance Summit for its contributions to foreign trade.
VakıfBank remained one of the proud greatest supporters of social responsibility projects in 2010. The Bank’s support will continue at an increasing pace in the years ahead.
