Ziraat Bankası 2011 Faaliyet Raporu

Ziraat Bank serves its customers wherever possible. With service points in 17 different countries around the world including Turkmenistan, Germany, the USA and Saudi Arabia, Ziraat Bank provides Turkish businesses and foreign customers with products, services and solutions on an international platform.

International Subsidiaries

Ziraat Bank aims to serve its customers wherever possible. With service points in 17 different countries around the world including Turkmenistan, Germany, the USA and Saudi Arabia, Ziraat Bank provides Turkish businesses and foreign customers with products, services and solutions on an international platform.

ZIRAAT BANK INTERNATIONAL AG

Ziraat Bank’s largest international subsidiary, Ziraat Bank International AG is one of the largest banks backed by Turkish capital operating in the European Union.

Active in corporate, commercial, and retail banking, Ziraat Bank International AG’s corporate and commercial banking services are mainly comprised of cash and non-cash credit transactions related to financing foreign trade between Turkey, Germany and other EU countries as well as firms operating in Germany and multinational firms.

Constantly increasing its total assets each year, Ziraat Bank International AG has been mediating the money transfers of Turkish citizens living in Germany to Turkey for 47 years with a modern and rapid technical infrastructure.

The “Non-Cash Money Transfer” facility, added to Ziraat Bank International AG’s rich product spectrum in 2011, allows Bank customers to undertake money cashless transfers and to complete these transactions in the shortest time possible.

Ziraat Bank International AG has broadened its activities in retail banking in recent years. Making use of the internet as an effective delivery channel, the Bank offers its customers comprehensive internet banking services. The “Ingenious Account”, one of the Bank’s internet banking products, was rated “Constantly Good” for the fifth consecutive time by “Stiftung Warentest/Finanztest”, the most respectable independent consumer foundation in Germany.

Included in the savings deposit insurance fund of Bundesverband deutscher Banken e.V. (Banking Association of Germany), Ziraat Bank International AG is also a member of Entschädigungseinrichtungdeutscher Banken GmbH (the deposit protection fund of Germany). Also a member of Verband der Auslandsbanken in Deutschland e.V. (Association of Foreign Banks in Germany), Ziraat Bank International AG has been represented at the board of the association for the last four years.

The Bank has a total of ten branches operating in Frankfurt, Hamburg, Cologne, Hannover, Berlin, Duisburg, Stuttgart, Munich, Nurnberg and Essen.

As of December 31st, 2011, Ziraat Bank International AG’s paid-in capital stood at Eur 108 million, with shareholders’ equity of Eur 155 million, Eur 760 million of loans and deposits amounting to Eur 720 million. Employing a total of 148 people, the bank’s total assets grew by 32% YoY in 2011 and reached Eur 907 million.

TURKISH ZIRAAT BANK BOSNIA d.d.

The first foreign bank established in Bosnia & Herzegovina, Turkish Ziraat Bank Bosnia d.d. started operating in 1997.

The bank provides an entire suite of banking products and services to its corporate, commercial, and retail banking customers through 30 ATMs, 23,000 credit cards, 10,000 debit cards, and 749 POS devices and 157 employees, as well as at a total of 21 service units across the Federation.

Turkish Ziraat Bank Bosnia d.d. succeeded in maintaining its profitability, even though the country has been hit hard by the global crisis since 2009. As of December 31st, 2011, Turkish Ziraat Bank Bosnia d.d.’s total asset volume amounted to US$ 108 million, with loans of US$ 48 million, deposits of US$ 58 million and its shareholders’ equity of US$ 46 million.

ZIRAAT BANKA AD SKOPJE

Ziraat Bank converted the Skopje Branch, which was opened for service in 1999, into a banking subsidiary operating under the company name “Ziraat Banka AD Skopje” in March 2008.

The bank operates in a total of 5 branches in Macedonia, of which three are in Skopje – the capital city –which includes the central branch, and the Old Turkish Bazaar and Ramstore branches, and two branches in Tetovo and Gostivar.

The bank’s primary target is to maximize the synergy created with the backup strength of Ziraat Bank, to enhance customer satisfaction by expanding its product and service portfolio and to contribute to the strengthening of economic and commercial relations between Turkey and Macedonia.

With its internet branch that came online in 2011 and its credit card project which is currently in the final stages of development, the bank aims to enrich its product and service portfolio, to offer complementary products and create cross-sales opportunities. In the country, which has been hit hard by the global crisis in the recent period, Ziraat Banka AD Skopje maintained its profitability. Its total assets amounted to about US$ 54 million with shareholders’ equity of around US$ 24 million as of December 31st, 2011.

ZIRAAT BANK (MOSCOW) CJSC

Seeking to meet all of the banking needs of its Turkish and Russian customers and adopting a customer-focused approach to service in the conduct of its activities, Ziraat Bank (Moscow) CJSC started operations in 1993 in Moscow.

The Bank offers rapid, modern and high quality banking services to Russian companies, as well as to Turkish companies operating in Russia, in areas of corporate and commercial banking and non-cash loans.

At the end of 2011, Ziraat Bank (Moscow) CJSC’s total assets amounted to US$ 52 million, with loans of US$ 42 million and shareholders’ equity of US$ 27 million. Its total assets grew by 12% YoY with its loans growing by 59.7% YoY.

KAZAKHSTAN-ZiRAAT INTERNATIONAL BANK

The Kazakhstan-Ziraat International Bank was incorporated as the first foreign capital-owned bank in Kazakhstan in 1993.

Headquartered in Almaty, Kazakhstan-Ziraat International Bank provides services through three branches located in Almaty, Astana and Shymkent. As of December 31st, 2011, the bank’s total assets amount to US$ 112 million, with shareholders’ equity of US$ 76 million and a profit of US$ 2 million for the period.

AZER-TÜRK BANK ASC

Incorporated as a joint venture of Ziraat Bank and Agrarkredit QSC (Republic of Azerbaijan), Azer-Türk Bank started operations in 1995.

The Bank currently provides services through five different units, with four branches: Central, Baku, Ganca and Nakhchivan and the Customer Services Department under the Head Office organization.

As of December 31st, 2011, Azer-Türk Bank’s total assets amounted to US$ 82.6 million, with shareholders’ equity of US$ 14.8 million and a net profit for the year of US$ 1.4 million.

Thanks to the transparency of its activities and its sensitivity in dealing with money laundering, as well as the high quality of its banking transactions, the bank was deemed worthy of the ”2010 Quality Recognition Award” by Citibank N.A. New York.

TURKMEN TURKISH JOINT STOCK COMMERCIAL BANK (TTJSC BANK)

The Turkmen Turkish Joint Stock Commercial Bank has been operating in Turkmenistan as a subsidiary of Ziraat Bank since 1993.

Capable of providing a full-scale banking service, the bank has taken on a significant role in advancing of economic, commercial and social links between Turkmenistan and Turkey since its foundation and also become one of the ports linking Turkmenistan with the rest of the world.

With its 5 exchange offices, the Bank is one of the country’s most active banks in terms of foreign currency transactions. In addition, one of the Bank’s three Western Union points ranked among the world’s top 500 points in terms of transaction volumes.

At the end of 2011, the bank’s total assets amounted to US$ 58 million, with shareholders’ equity of US$ 5.3 million and a net profit of US$ 2.9 million during the year.

UZBEKISTAN-TURKISH BANK (UTBANK)

Uzbekistan Turkish Bank (UTBANK) was founded in 1993 in Tashkent as a joint venture between Ziraat Bank and Agrobank (Uzbekistan), with each controlling an equal stake.

The Bank serves its customers in all business lines of banking. At the end of 2011, UTBANK’s total assets amounted to US$ 113.6 million, with US$ 13 million of deposits, shareholders’ equity of US$ 19.2 million and a net profit of US$ 1.2 million during the year.

Domestic Subsidiaries

Through the synergy it has built with its subsidiaries concentrated in the finance sector, Ziraat Bank develops and enhances its products and services portfolio.

The strong relations it has developed with its domestic subsidiaries increase Ziraat Bank’s cross selling facilities, helping the Bank to gain new customers.

ZiRAAT SiGORTA A.Ş.

Ranking among the top 20 insurance companies in its first year, Ziraat Sigorta grew about four times more rapidly than the sector average in 2011.

Founded on May 11th, 2009, Ziraat Sigorta began its insurance operations in 2010 and completed its first operating year with premiums amounting to TL 173 million. This result placed the company at 18^th ranking in the sector, out of a total of 57 companies. Having generated TL 318 million in premiums in the non-life insurance branch in 2011, the company grew by about four times as rapidly as the sector average in 2011. With this result, the company ranked 12^th in this area out of a total of 59 corporations, and increased its market share from 1.4% in 2010 to 2.2% by the end of 2011.

At the end of the year, the company ranked 2^nd in bancassurance premium production and 1^st in the sector in terms of its return on equity and premium production per employee.

The company’s shareholders’ equity, which had stood at TL 19.3 million on January 1^st, 2010, the first day the company became operational, rose to TL 75 million by the end of 2011, while its assets rose to TL 198 million with a pre-tax profit of over TL 52 million.

In its first operating year, the company offered two new products to the insurance market through Ziraat Bank. The “Hospital Daily Compensation” product was enhanced to include assurance for cancer treatment and renamed as “Medical Support Insurance” in 2011, while the product entitled “My Family is under Ziraat’s Assurance” was enriched with the advance payment assurance of TL 25,000 in addition to the existing guarantees.

Besides the high quality standards provided with the efforts of the company’s employees, the adoption of this new company by Ziraat Bank as its primary shareholder, as well as Ziraat Bank’s involvement in the insurance business contributed to Ziraat Sigorta’s successful results.

ZiRAAT HAYAT VE EMEKLiLiK A.Ş.

Having commanded a leading position in the life insurance branch in its first year of foundation, Ziraat Hayat ve Emeklilik A.Ş. also began to operate in the Private Pension System in July 2011.

Founded on May 11^th, 2009, Ziraat Hayat ve Emeklilik A.Ş. entered operation in the life insurance and personal accident insurance branches at the beginning of 2010. The company was also involved in the Private Pension System in July 2011 as the representative of Ziraat Bank.

During 2010, the company’s first year in operation, the company was the sector’s leader in the life branch with premium production of TL 601.7 million, corresponding to a market share of 27.6%, based on the end year premium production data published by the Association of the Insurance and Reinsurance Companies of Turkey (TSRŞB). The company maintained its leading position throughout 2011.

According to TSRŞB data, the company commanded a 30% market share at the end of 2011, generating TL 806 million in premiums, corresponding to a 34% YoY increase. This result ensured that the company maintained its number one position (out of 27 companies) in the sector in 2011.

The total assets of Ziraat Hayat ve Emeklilik A.Ş. rose from TL 437 million at the end of 2010 to TL 900 million by the end of 2011, corresponding to an increase of approximately 106% YoY. On the other hand, while the life insurance sector grew by 23%, it is notable that Ziraat Emeklilik grew by 34%.

In July 2011, Ziraat Emeklilik began its operations in the Private Pension System, which has been developing rapidly for the last seven years.

Through the Private Pension System, the company serves various customer masses through an array of private pension plans such as “Güldüren Yarınlar Planı” (planning for a future that will make you smile) that can be bought by everyone, the “Bereket Planı” (Plan for Plenty) aimed at non-interest investment instruments and the “Şemsiye Planı” (Umbrella Plan) that provides special advantages to newcomers who enter the System with their savings. Other major products are as follows: “Hayata Dair Yıllık Hayat Sigortası” (Annual Life Insurance for Life) that pays an indemnity not only in the event of death or disability but also in the event of contracting a dangerous illness; “Hayat Arkadaşım Yıllık Hayat Sigortası” (Annual Life Insurance for my Spouse) which is optional and which offers various assurances; and “Group Private Pension System”, “Group Accident Insurance” and “Group Life Insurance” for corporate customers.

Ziraat Hayat ve Emeklilik A.Ş. aims to make more effective use of its distribution channels and expand its product range in 2012 in such a manner that it is able to provide special solutions to its segmented customers by stressing the importance of the niche market.

ZiRAAT FiNANSAL KiRALAMA A.Ş.

With 20 years of service under its belt, Ziraat Leasing maintained its leadership in the sector in 2011.

Founded in 1991, Ziraat Leasing has carved out a position for itself as a stable, deeply rooted and powerful company in the sector. Working to a principle of producing the right financial solutions for the right projects, the company provided about US$ 1.2 billion of financing for various projects.

Having maintained its steady growth in 2011, Ziraat Leasing increased its turnover by 40% to TL 286 million and its total assets by 42% to TL 559 million during the year.

By providing financing to a wide array of sectors, including construction, healthcare, textiles, food, steel-iron, metal processing, printing and manufacturing industry, Ziraat Leasing aims to support technological advancement in mechanization. Having played a key role in promoting the use of financial leasing for agricultural machinery, Ziraat Leasing maintained its position as the leader in its sector in 2011 with the leasing transactions directed at the agricultural sector.

Ziraat Leasing’s mission is “to finance investments by producing effective and accurate solutions in order to contribute to the national economy and to the deepening of financial markets”. Working to its vision of “being the first choice of leasing company for investors and employees”, and with Ziraat Bank’s support and experienced staff, the company moves forward to be one of the pioneering and leading companies in the sector.

ZiRAAT YATIRIM MENKUL DEĞERLER A.Ş.

Ziraat Yatırım Menkul Değerler was set up in 1997. The company is an active participant in the capital markets with its professional team of 110 staff and its mission of providing an efficient service to its customers.

Holding authorization certificates for Trade Brokerage, Public Offering Brokerage, Portfolio Management, Investment Consultancy, Trade on Credit, Short Sale and Borrowing-Lending, Options and Derivatives Transactions, the company provides services through 5 branches and 20 investment centers, as well as its internet branch and full-service call center on 44 44 979. All domestic branches of Ziraat Bank function as agencies of Ziraat Yatırım Menkul Değerler.

Ziraat Yatırım Menkul Değerler undertakes active use of alternative delivery channels. The company’s comprehensive delivery channels include the Company’s internet branch at www. ziraatyatirim.com.tr; “Ziraat Trader”, which allows orders to be placed via mobile phones, tablet PCs and data screens; and the Bank’s full-service call center, on 44 44 979.

Ziraat Yatırım Menkul Değerler’s trade volume in the stock exchange market reached TL 22.1 billion by the end of 2011. During the same period, the company recorded a total of TL 59.7 billion in repo-reverse repo transaction volume in and outside the ISE, while its outright purchase and sale transaction volume in the bonds and bills market reached TL 8.5 billion. As a leading participant of the derivatives exchange market, Ziraat Yatırım’s total derivatives transaction volume was realized at TL 10.8 billion in 2011.

ZiRAAT PORTFÖY YÖNETiMi A.Ş.

Founded in 2002, Ziraat Portföy Yönetimi is an asset management company that manages its clients’ investment portfolios of capital market instruments.

With TL 1.5 million of capital, Ziraat Portföy Yönetimi manages ten mutual funds owned by Ziraat Bank, four mutual funds owned by Ziraat Yatırım and six private pension funds owned by Ziraat Hayat ve Emeklilik and nine private pension funds owned by Groupama Emeklilik.

The total volume of assets managed by the company reached TL 2.1 billion as of December 2011. With this result, the company commanded a 4.3% market share, ranking 7^th among 32 asset management companies. The company closed 2011 with a net profit of TL 1.6 million.

FiNTEK FiNANSAL TEKNOLOJi HiZMETLERi A.Ş.

Since its foundation in 2001, Fintek has been providing IT services to Ziraat Bank and its subsidiaries in the fields of infrastructure, integration, system management, support-operations, application development and technical consultancy.

Holding the TS ISO/IEC 27001 Information Security Management System certificate, Fintek ranked among the top 100 IT companies in “Turkey’s Top 500 IT Companies Survey” in 2011 - as in previous years.

With its competent and dynamic human resources, that expanded to include a total of 587 staff, and by employing its technology and expertise to the full, Fintek constantly aims to achieve more.

The company continued to provide strong technological support to Ziraat Bank in 2011 with its innovative and up-to-date technological investments and products that comply with the TSE EN ISO 9001: 2000 criteria.

As the architect of the Finart project, Ziraat Bank’s basic banking practice, Fintek undertook a number of application development projects in 2011, in line with its continuous development approach, in order to maximize operational efficiency and customer orientation. These projects include a project of generating “Customer Profitability” information aimed at providing substantial information to the Bank’s decision makers from all levels, and an infrastructural work for the practice entitled “Corporate Content Management”, which would include forms and documents in processes and ensure the management of these forms and documents through an automation system. The “Central Queue System” was developed in order to better manage customer overcrowding in branches, with touch-screen kiosks installed in branches. Moreover, the Bank’s ATM portfolio was enhanced with 1,505 recycle ATMs, which can perform palm validation in card or non-card transactions.

Fintek’s organization was restructured in 2011 in order to meet Ziraat Bank’s IT needs more accurately and rapidly. Thanks to its renewed organization and the projects it carries out, Fintek will continue to provide Ziraat Bank with a fast and superior technological infrastructure and hardware support in 2012 by increasing the Bank’s operating efficiency in line with the Bank’s purpose of gaining a competitive edge in the sector.

BiLEŞiM ALTERNATiF DAĞITIM KANALLARI VE ÖDEME SiSTEMLERi A.Ş.

Bileşim Alternatif Dağıtım Kanalları ve Ödeme Sistemleri A.Ş. provides an alternative delivery channel and payment system services to Ziraat Bank.

Bileşim A.Ş. successfully passed audit for compliance under the security standards set by major international payment card organizations such as Visa and MasterCard. The Company was the fourth firm in the service provider category to be awarded PCI DSS (Payment Card Industry Data Security Standards) certification in Europe and the first in Turkey. The Company continues to fulfill all the requirements of the certification and again successfully passed the relevant annual audit with international standards in 2011.

Servicing one of Turkey’s biggest ATM networks, Bileşim A.Ş. climbed up thirteen places to rank in 62^nd position in the “Income from Sales” category in the “Top 500 IT Companies - Turkey 2010” listing. The company also climbed two levels to rank in 25^th position among 50 companies in the “Services” category and also ranked second in the category of “Income from Outsourced Services”, which is its primary field of activity.

With its robust financial and technological infrastructure, personnel who are highly specialized in their fields and a dynamism that allows the company to rapidly adapt to innovations, Bileşim A.Ş. maintained its leading position in the sector in 2011.