Dear Stakeholders,

In 2021, the main agenda items of global financial markets were sustainability, the combat against climate change, and green financing. With sustainability at the heart of our corporate strategy, we joined the Task Force on Climate-Related Financial Disclosures (TCFD) last year and realized the first sustainable syndicated loan transaction in the history of our bank. I am delighted to present to you, our valuable stakeholders, the Integrated Annual Report that we prepared at international standards in line with this vision.

In 2021, vaccination efforts that gained momentum in many parts of the world and easy access to vaccines helped fight the pandemic effectively. However, the pandemic-related variants that emerged in the second quarter of the year and their spread rate increased the global risk perception. The increasing global inflation pressure has prompted the central banks of developed countries to take tightening steps in their monetary policies. Within this context, as the US Federal Reserve (the Fed) decided in December 2021 to reduce its asset purchase program, following the first meeting of the year held in January 2022, Fed President Jerome Powell announced that they have plans to increase the interest rate in March 2022. At the same time, Christine Lagarde, President of the European Central Bank (ECB), expressed her worries about rising inflation, raising expectations that the ECB will go for an increase in interest rates in 2022. The Bank of England (BoE) became the first institution to increase interest rates among the central banks of developed countries following the decision to increase interest rates in the last month of 2021 and raised interest rates by 25 base points in February for the second time. All these indicators suggest that we are at the end of policy interest rates being at historic low levels.

Meanwhile, the Turkish economy entered a recovery period in 2021 thanks to the proactive policies implemented under the leadership of the economic administration. The capacity utilization rate in the manufacturing industry surpassed the pre-pandemic period and reached from 78.7% to 75.4% at the beginning of 2021. Our exports also reached the historical peak, reaching USD 225.4 billion with a 32.9% increase year-on-year. Last year, fixed capital investments also increased with direct support to producers and households and incentives provided to industrialists and entrepreneurs. At the same time, Turkey’s economy has passed a successful year, with the boost from the tourism season, which has been a positive one due to the easing of restriction measures. I expect our country’s economy to continue on its path with policies that support investment, production, manufacturing, employment, and exports in the coming year.

The banking sector, which contributed the most to the growth of the Turkish economy, left behind a year of achievements. As of the end of 2021, the asset size of the industry grew by 51% year on year, reaching TL 9,213 billion. Total cash and non-cash loans increased by 44% compared to last year, reaching TL 6,670 billion. The total deposits, the biggest funding source for the sector, increased by 53% to TL 5,303 billion. The Turkish Banking Sector preserved its strong capital structure in 2021 as well. The sector’s capital adequacy ratio was 18.34%.

We, VakıfBank, continued our support for the investment, employment, and manufacturing climate of Turkey’s economy in 2021, which has been the case for 67 years. Increasing its total assets to TL 1,007 billion, our bank maintained its position as the second-largest bank in Turkey. Loans contributed the most to asset growth. Our bank’s support to the national economy through cash and non-cash loans reached TL 766 billion.

VakıfBank will, as always, be in the forthcoming period alongside our entrepreneurs, tradesmen, farmers, and employees and will continue to support the sustainable and strong growth of Turkey’s economy. I would like to take this opportunity to thank our customers, shareholders, and investors who have trusted us, our employees who have made great efforts in our success, and all our other stakeholders for their contributions.

Yours sincerely,

Mustafa SAYDAM

Chairman of the Board

OUR TOTAL CASH AND NON-CASH LOANS REACHED TL 766 BILLION.