Dear Stakeholders,

The Covid-19 pandemic, which has had a profound impact on areas such as health, social life, trade, and education, remained on the global agenda throughout 2021. Although the increased vaccination rate and gradual normalization practices reduced global economic concerns, Delta and Omicron variants kept the concerns about the pandemic alive. Meanwhile, rising inflation has impacted the monetary policy decisions of developed countries’ central banks and the course of global markets. The Fed and the European Central Bank (ECB) did not change interest rates during their December meetings but announced that they plan to terminate asset purchase programs initiated during the pandemic period in 2022. The recovery of global economies experienced in 2021, despite a rise in inflation, was both due to supporting policies and the base effect. During this period, the US economy grew 5.7%, while the Eurozone economy grew 5.2%.

In terms of production, growth, and employment, the Turkish economy, on the other hand, stood out from many developed and developing countries, thanks to both effective vaccination efforts and selective economic policies implemented during this period. As a result, our country’s economy grew by 11% in 2021.

The Turkish Banking Sector continued to support the national economy during this period. As of the end of 2021, the asset size of the banking sector increased by 51% and reached TL 9,213 billion. The capital adequacy standard ratio, which is one of the most important robustness indicators of the sector, was well above the legal limits. In the coming period, the Turkish Banking Sector will continue to contribute to the national economy with its high capital adequacy ratio, strong liquidity structure, and effective balance sheet management.

VakıfBank has continued to support the Turkish economy during this period. Our asset size increased by 44% to TL 1,007 billion in this period thanks to our effective balance sheet management, and we maintained our position as the second-largest bank in Turkey. Loans contributed the most to asset growth. In this period, we increased our cash loans by 36% to TL 574 billion. Thus, we provided TL 766 billion in support to the economy through cash and non-cash loans. In this period, we placed particular importance on supporting the companies’ activities in terms of production, investment, and export. With the financing support we provided, we aimed to improve both the production and investment environment and contribute to employment growth. In this direction, we increased our commercial loans by 43% to TL 449 billion by the end of 2021. On the other hand, we have continued our support to households without interruption during this period. We stood by them with our innovative products and services. In this context, support for households exceeded TL 124 billion.

In 2021, deposits continued to be the main source of funding. In line with our widespread deposit strategy, we have increased our deposits by 43% to TL 591 billion. We have come a long way and in addition to total deposits, we particularly increased our demand deposits by 81% in this period. In December 2021, we offered our customers the Currency-Protected TL Term Deposit Account and the Currency Conversion-Currency Protected TL Term Deposit Account, as a financial alternative for our citizens looking to address their concerns about the increase in the exchange rate, while utilizing their savings. With the products and services we have diversified and developed, we will continue to increase our deposit volume in the coming period on the one hand and increase the number of our deposit customers on the other hand.

Despite the difficult market conditions caused by the pandemic that has affected the entire world, we have secured a total of USD 5.4 billion in new funding from international markets in 2021. We signed a total of USD 1.1 billion sustainable syndicated loan agreement in April 2021. After this renewal, which is the first sustainable syndicated loan of our bank, we secured a new sustainable syndicated loan of USD 650 million in November. By the end of 2021, we became the bank with the most sustainability-themed resources in terms of funding structure. In the upcoming period, we will continue to be active in the international markets with the long-term and affordable resources we provide.

In 2021, we have undertaken several activities to facilitate our customers’ access to financing while at the same time maximizing customer experience and satisfaction. We believe that digital transformation serves as leverage in our sustainable value creation. In this period, we quickly and safely implemented the remote customer application. In this context, we have achieved the acquisition of 74 thousand new individual customers. We also acquired 1.2 million new digital customers during this period. We moved transactions like increasing the money transfer limit, obtaining a password, changing account transaction type, and activation, which are among the most frequently performed transactions through branches and call center, to VakıfBank Mobile, aiming to provide our customers with the best mobile experience possible.

With our “digital facilitator” approach, we have continued to create digital solutions for our customers. In this context, we launched VBanko Cheque Digital in June 2021 to support the trust environment in trade by guaranteeing the value of cheques. With VBanko Cheque Digital, which is a special cheque, we have guaranteed more than the legal liability amount, offering digital convenience by showing the guarantee amount and maturity of the cheque with a simple click.

We are continually increasing our digital capacity, digital intelligence, and knowledge. We aim to make a difference in the industry with the technologies that we have developed, regarding the needs of our customers. In 2021, we completed the development of our Bank’s innovation, “Vinov.” With Vinov, our customers can make their future payments and collections reliably through digital channels under the VakıfBank guarantee. With Vinov, which we define as the next banking, we aim to eliminate the risk of collections and payments on the market and create a new ecosystem that would contribute to increased trade volume.

In 2021, Turkey signed the Paris Climate Agreement, which has the goal of limiting global temperature increase to 1.5°C by the end of this century. In this context, we continue to work in tandem with our country’s objectives to effectively manage climate-related risks and opportunities while also contributing to sustainable financing.

As VakıfBank, we continue to consistently support the principles contained in the United Nations Global Compact, the world’s biggest corporate sustainability initiative, which we signed in 2019. We attach great importance to the contribution made to the Sustainable Development Goals in all our activities. In addition, we regularly report our climate change strategy, risks, and performance to the Carbon Transparency Initiative. We also plan to participate in the CDP Water Program in 2022. Within this context, we aim to do our best in terms of water safety by reducing our water footprint. In 2021, we were one of the banks that provided support to the Task Force on Climate-Related Financial Disclosures (TCFD).

We are also working on social gender equality, which is one of our primary Goals for Sustainable Development. We aim to maintain a working environment where equality and business peace prevail by taking the necessary measures to ensure all our women and men employees’ health, safety, and well-being. We were chosen for the third time with a higher score in the Bloomberg Gender Equality Index (Bloomberg GEI) in 2021, which performs the greatest gender equality research on a global scale, and became one of four banks from Turkey to be included in this index. We aim to remain among the leading banks in the field of sustainability in the coming period as well.

In the 2021 FIVB World Club Championships, VakıfBank Sports Club, our longest-running social benefit project, triumphed once again, showcasing what Turkish women can achieve on the international stage. After that, we will continue to strive for sustainable success in volleyball, as in banking.

At VakıfBank, we will endeavor to create and further increase this value in every area from the economy to social life and from our employees to the environment in the coming period. By this means, I would like to express my sincere gratitude to our customers and shareholders who have trusted us in 2021, to our employees who have made great efforts in our success, to our Board of Directors who have never withheld their support, and to all our other stakeholders for their contributions.

Yours sincerely,

Abdi Serdar ÜSTÜNSALİH

General Manager

ASSET SIZE EXCEEDING TL 1 TRILLION