Ziraat Bankası 2011 Faaliyet Raporu

Introduction

Management and Corporate Governance Practices

Information on the Activities of the Committees

Attendance by the Members of the Board of Directors and of the Audit Committee in the Meetings Held During the Reporting Period

Related Party Transactions

Activities for Which Support Services are Outsourced in Accordance with the "Regulation Concerning the Outsourcing of Support Services by Banks and the Authorization of Organizations Providing Such Services" and the Persons and Organizations from Which they are Obtained

Financial Information and Risk Management

Statutory Auditors Report

Audit Committee's Assessment of the Operation of the Internal Audit, Internal Control, and Risk Management Systems

Independent Auditor's Report; Unconsolidated Financial Statements and Notes for the Period January 1- December 31, 2011

Ziraat Bank's Financial Standing, Profitability and Solvency

Ratios

Risk Management Policies Adhered to According to Types of Risk

31 December 2007 – 31 December 2011 Summary Balance Sheet and Income Statement

Credit Ratings

Independent Auditor's Report; Consolidated Financial Statements and Notes for the Period January 1 - December 31, 2011

Ziraat Bank's Financial Standing, Profitability and Solvency

In 2011, Ziraat Bank targeted a well-balanced balance sheet structure and gave importance to improving asset quality and productivity element. The Bank’s total assets grew 6.3% as a result of its 2011 activities and reached TL 160.7 billion.

During the reporting period, the Bank concentrated on lending activities and attained 24% expansion in total cash loans in keeping with its target of 25% growth in loans on an annual basis. The share loans including rediscounts got from total assets rose from 38% to 44% during the twelve months to end-2011, whereas the share of marketable securities dropped from 51% to 44%. In 2011, agricultural loans and retail loans grew 39% and 30% respectively.

The ratio of NPL to total loans that stood at 1.5% at year-end 2010 declined to 1.2% at year-end 2011. Excluding loans arising from funds for which the Bank does not set aside any provisions and other receivables, this ratio goes down to 1%. The NPL ratio to total loans remains well below the sector’s average of 3%. The NPL ratio to total loans that lags highly behind the sector’s average is an indication of the Bank’s gradually improving assets structure.

In 2011, Ziraat Bank focused on increasing its profitability by reducing its funding costs through effective liability and deposit management. In addition, work was started during the reporting period to increase the diversity of funds in an effort to secure long-term, low-cost resources. On the deposits wing, the Bank gave weight to broad-based and permanent deposits. While deposits remained the most important source of funding for the Bank with 70% share of the liabilities at year-end 2011, non-deposit resources increased their share from 6% at year-end 2010 to 19% year-on. The share of shareholders’ equity, on the other hand, stood at 8% at the end of 2011.

The Bank posted TL 2,101 million in net profit on its 2011 activities. The Bank’s RoE as at year-end 2011 was 16.1% and its capital adequacy ratio was 15.6%, which is higher than the legal requirement.

At TL 13.7 billion, interest income makes up the Bank’s most important income item. A breakdown of interest income shows that interests charged on loans make up the biggest item. As a result of the lending activities during the reporting period, the share of interests charged on loans within total interest income rose from 47% to 54%.

Other operating expenses amounted to TL 2,622 million. Personnel costs represent the highest share with 50% within other operating expenses.