INVESTOR RELATIONS

Esteemed Stakeholders,

The banking sector played a pivotal role in the growth achieved by the Turkish economy in terms of production, employment, and exports throughout 2017. Turkish banks achieved successful results in financing the real economy, standing out with effective use of resources while the world banking system moved toward an increasingly more restrictive lending environment.

At a time when Turkey is achieving record economic growth, we will take further steps to bolster Turkey's position among the world's major economies. We will write new success stories with an investment- and export-based approach that is primarily financed through domestic savings and foreign direct investments that do not trigger inflation or current account deficit, while promoting qualified employment by keeping foreign investors’ interest alive during this time of increasingly important international funds. With a total asset size of 3.3 trillion Turkish lira, the Turkish banking sector should see another year of successful performance in 2018.

We embarked on 2018 with new hopes, and this year also marks the beginning of a new era for the Halkbank family. As we mark our 80th year, we will take steps to project Halkbank's time-honored banking tradition into the future, and undergo a thorough overhaul in every field in 2018. Our priority will be to enhance our balance sheet and service quality at the same time. We will further strengthen our organizational structure this year. We will recruit new personnel and invest in branch improvements to provide superior service to our customers everywhere. As a first step, the traditional design and operational roles of our branches will change, and 1,300 young people will join the Halkbank family this year. Halkbank will become younger and more dynamic with new digital and mobile banking investments. We are determined to maintain our transparency and compliance with international banking regulations.

The main goal behind the entire transformation is to offer innovative solutions in line with the needs and expectations of the real economy by developing new SME and Artisan Banking products. We intend to support SMEs and entrepreneurs who want to start or grow their business by offering them specialized products such as Employment Support Loans and Business Development Loans for SMEs. We will enlarge the share of SME loans within our cash loans to 40 percent by the end of 2018.

The strong performance, driven by balanced and controlled growth in 2017, was evident in our balance sheet. Halkbank increased its cash loans by 28.5 percent, to take the number four spot on the Turkish banking sector at a time when cash loans rose by 21 percent compared to 2016 year-end in the banking sector as a whole. In the same period, our SME loans soared 33.3 percent to 77.6 billion Turkish lira, and our share of the SME loan market climbed to 14.8 percent. Halkbank maintained a strong funding base with a 28.6 percent increase in deposits, reaching 193.2 billion Turkish lira. In the same period, Halkbank's assets grew by 31.9 percent to 305.4 billion Turkish lira, making it the fifth-largest bank in the sector.

Esteemed Stakeholders,

Halkbank is a strong family with a robust financial structure and subsidiaries that are trailblazers in their lines of business. We are growing rapidly with our insurance, pension, investment, real-estate management, leasing, factoring, portfolio management and payment system companies, as well as our two banks in Europe. Drawing strength from our 80-year history, we will continue to put in our best efforts, as we have always done, with our 18,000-strong workforce across almost a thousand domestic branches to leave lasting legacies for posterity. Confident that we will achieve successful results aligned with our targets in 2018, we thank all of our stakeholders for their unwavering trust in Halkbank.

Sincerely,

Osman Arslan
CEO