INVESTOR RELATIONS

Dear stakeholders,

I would like to start by clarifying some of what you may have heard on the news that attacks the confidence in and the credibility of our Bank and misleads the public and investors. We are seeing an effort by some print and broadcast media institutions to associate our bank with the allegations being heard in the court case taking place in the U.S. which gives the impression that our bank has violated the sanctions mentioned in the case.

Let there be no doubt that our bank has never used any mechanism, method, or system other than the regular foreign trade practices used by all global finance companies.  Foreign trade transactions and money transfers are conducted in an open and transparent manner and are available for monitoring by the relevant authorities. Audits by independent international audit institutions have never found our banking services to be inconsistent with the law or international banking rules at any time during the time period mentioned in the case. Halkbank has always complied with national and international regulations in all its businesses and transactions throughout its 80-year history, and it is determined to continue to do so in the future.

Dear stakeholders,

The Turkish banking industry keeps a close eye on global economic developments and sets future goals based on data gathered from financial markets. Recently, expansionary fiscal policies by central banks are being replaced by a trend of smaller balance sheets in the global financial markets with risk-taking trends making way for more cautious fund management. Though there are higher expectations that the FED will maintain its resolution to increase funding interest rates in the new year, emerging countries continue to display positive economic indicators. The Turkish economy’s performance is stellar in this regard, with an 11.1-percent growth rate in the third quarter of 2017.

The banking industry was one of the greatest backers of the Turkish economy, which surpassed the expectations of international credit rating agencies. We have achieved the fastest industrial production index growth since 2011, making a breakthrough especially in export-related industries. Undoubtedly, the rise in manufacturing was also the result of the Credit Guarantee Fund (CGF), of which our bank was a founding partner. CGF-guaranteed loans made it significantly easier for SMEs to access the resources they need.

We are delighted to have taken the lead in SME Banking during this period as one of the biggest supporters of a strong Turkey that produces, exports and recruits. By September 2017, we have accomplished a great feat, taking the top spot among all other banks with more than 20 billion Turkish lira in CGF loans issued. In the first nine months of the year, we boosted our market share in SME loans to 14.4 percent as a vigorous supporter of a productive Turkish economy.

We have entered a new period in our financing support of tradesmen and craftsmen.  We have increased the working capital loan upper limit for tradesmen and craftsmen to 200,000 Turkish lira following a recent decision by the bank.  We have introduced the Treasury Interest Rate-Supported Business Ownership Loan for tradesmen so that they can purchase their own place of business as well as the Treasury Interest Rate-Supported Vehicle Ownership Loan for them to buy the brand-new vehicles needed for their businesses.

We continue to create value for the industry and country through our successful financial results and through the solid reputation we hold as seen through the eyes of investors. We ranked as Turkey's fifth largest bank by increasing our asset size to 279.7 billion Turkish lira in the first three quarters of the year. We raised our total loans, including non-cash loans, by 20.4 percent to 248.2 billion Turkish lira when compared to year-end 2016. Our cash commercial loans, including SME loans, grew by 21.4 to 153.5 billion Turkish lira.

We are determined to strengthen our funding structure by continuing to diversify. Most recently, we have issued a bond in the form of Tier-II capital worth 1 billion Turkish lira with a 10-year maturity. We want to develop alternative products to re-direct investors' short-term deposit investment habits into long-term investments with a higher yield. For that purpose, we plan to lead the way once again by issuing a bond-like capital in the form of a public offering.

In addition to our financial accomplishments, we also attach great importance to conducting productive social, cultural and environmental projects. We were delighted to become one of the companies listed in the FTSE4Good Emerging Markets Index (FTSE4Good Russell) by the FTSE, an independent organization of the London Stock Exchange and Financial Times. We got ranked in the list as a result of our environmental, social and corporate governance performance.

Dear stakeholders,

Our nation is sure to accomplish a great many feats in the future thanks to our boundless energy and hard work. Halkbank will continue to support the community, the arts, sports, education, the environment and our youth while conducting its core business. The presence of you, our esteemed stakeholders and customers, gives us the strength we need to achieve our goal of a stronger Turkey. Thank you for the trust you put in us.

Sincerely,

Osman Arslan
CEO