Garanti Bank / Investor Relations SUBJECT Announcement regarding 2016 Annual Report DATE ...

385 Pages·2017·6.72 MB·English

TO : Investment Community
FROM : Garanti Bank / Investor Relations
SUBJECT : Announcement regarding 2016 Annual Report
DATE : March 3, 2017

Our Bank’s annual report for the period of 01/01/2016-31/12/2016 in Turkish and English are attached
hereto as PDF files.

In contradiction between the Turkish and English versions of this public disclosure, the Turkish version
shall prevail.

Sincerely,

We declare that our above statements are in conformity with the principles included in the Board’s
Communiqué, Serial II Nr.15.1, that it exactly reflects the information we received; that the information
complies with our records, books and documents; that we did our best to obtain the correct and complete
information relative to this subject and that we are responsible for the declarations made in this regard.

Yours sincerely,
Garanti Bank

Contact Garanti Bank Investor Relations:
Tel: [phone]
Fax: [phone]
E-mail: [email protected]
www.garantiinvestorrelations.com
s h a r in g
moments
GARANTI bank 2016 ANNUAL REPORT
CONTENTS
INTRODUCTION 57. Cash Management and Transaction CORPORATE GOVERNANCE
1. Annual Report Compliance Opinion Banking 101. Summary of the Board of Directors’
2. Agenda of the Ordinary General 58. Payment Systems / Debit and Annual Report
Shareholders’ Meeting Credit Cards 103. Board of Directors
59. Branchless Banking / Digital 107. Senior Management
ABOUT GARANTI Channels 112. Garanti Bank Organization Chart
5. Corporate Profile 61. Call Center 113. Organizational Changes
6. Shareholding Structure 62. Customer Experience Management 115. Commitees and Commitee
7. Our Vision and Mission 63. Assets and Liablities Management Meetings Attendance
8. Main Pillars of Our Strategy Department
9. Strategic Priorities 64. Treasury RISK MANAGEMENT
10. Our Core Values 65. International Banking 125. Risk Management Policies
11. Milestones in Garanti’s History 66. Insurance and Pension 134. Support Services Providers
15. Sustainability Policy 67. Anti-Fraud Monitoring Department 136. Important Developments
17. Garanti’s Competitive Advantages 68. ABACUS Regarding 2016 Operations
19. Garanti with Numbers 69. Human Resources 139. Audit Committee’s Assessment
70. Learning and Development of the Operations of Internal Control,
2016 OVERVIEW AND 71. Occupational Health and Safety Internal Audit and Risk Management
2017 OUTLOOK Systems
23. 2016 Macroeconomic Overview GARANTI’S INTEGRATED 141. Related Party Risks
25. Letter from the Chairman SUBSIDIARIES
26. Letter from the CEO 73. GarantiBank International N.V. CORPORATE GOVERNANCE
29. 2017 Outlook 74. Garanti Romania PRINCIPLES COMPLIANCE
75. Garanti Pension and Life REPORT
GARANTI IN 2016 76. Garanti Securities 145. Corporate Governance Principles
33. Assessment of Financial Position, 77. Garanti Asset Management Compliance Report
Profitability and Debt Payment Capability 78. Garanti Leasing 163. Decleration of Responsibility
34. Performance Indicators and Ratios 79. Garanti Fleet
37. Garanti’s Position in the Sector 80. Garanti Factoring 164. Financial Tables - Unconsolidated
39. Garanti Bank Share 81. Garanti Payment Systems
41. Garanti Bank’s Ratings 82. Garanti Mortgage 268. Financial Tables - Consolidated
42. Profit Distribution 83. Garanti Technology
43. Awards 379. Türkiye Garanti Bankası A.Ş.
CONTINUOUS DEVELOPMENT Directory
2016 ACTIVITIES AND AND INNOVATION
PROJECTIONS 85. Organization and Process
49. Retail Banking Development
50. Private Banking 86. Customer Analytics, Innovation and
51. Housing Finance Product Development
52. Consumer Finance 87. We are Innovators
53. SME Banking
54. Commercial Banking SUSTAINABLE BANKING
55. Corporate Banking 93. Sustainable Banking
56. Project Finance 98. Sponsorships
INTRODUCTION
Considered as a symbol of good luck in all cultures, the four-leaf Believing that customer satisfaction can be achieved
clover is rarely found in the nature. Hence, it is believed that only through delivering a good experience to customers
lucky people chance upon the four-leaf clover. Looking at the at all points of contact, Garanti, drawing its courage
values it has contributed to the lives of its customers, employees, therefrom, has been asking its clients “Anything else
shareholders and the society over the course of 70 years that it has we can help you with?” for 70 years... Constantly
been active, it is no coincidence that clover is the symbol of Garanti. working, continually improving and delivering service at
its customers’ doorsteps through every channel...
Working towards a sustainable world with its responsible, consistent,
human-centric and innovative business model, Garanti generates Garanti offers customized solutions and a rich product
the good luck of the four-leaf clover and shares it not just with range. It makes life easier for its customers. It provides
Turkey, but the world. the facilities to make their dreams come true. Maintaining
its sustainability focus, Garanti works to maximize the
“Sharing moments”... It grows happiness, lessens sorrow, lets you value it contributes to its investors, stakeholders and the
enjoy life more and makes it easier to deal with hardships. The ones economy.
on your side along the road are crucial.
Taking its goal beyond creating merely economic value,
Acting on the motto of “offering our customers a perfect customer Garanti targets to add value to the environment, the
experience by putting them at the center of all our operations society and the world. While backing global efforts
and activities”, Garanti works to understand its customers, devise in relation to climate change, the Bank also extends
solutions that suit their needs, deliver the best service experience support to renewable energy investments, as it also
and ensure their satisfaction on an ongoing basis. To this end, the signs its name under initiatives promoting women’s
Bank “listens” to the answers of its customers, and designs its participation in the economy...
processes from their perspective, vesting them in a fast-moving,
understandable and simple format. Through its competent human Garanti writes a success story with the economic and
resource, Garanti maintains a clear, transparent, courteous, solution- social outputs in its sector and in Turkey... It generates
oriented and pleasant interaction with customers. The Bank good luck and shares it. With the confidence derived
constantly invests in digital platforms, thus backing its activities from all of these factors, Garanti makes a point of
with state-of-the-art technology, and offers pioneering solutions. “Sharing Moments” in its 2016 Annual Report.
All of these guarantee that Garanti is instantly alongside its We will be standing by you tomorrow, as we always
customers for all their needs, which makes up one of the Bank’s have done... Today and always... And we will be asking,
core values. “Anything else we can help you with?”
“Happiness always comes with friends”, says famous poet
Euripides. Although happiness has a different description for
everyone, there are also many common “instants” of happiness.
Achieving your wishes... Your dream house, that car you wish you
owned, your passion to set up your own company, your desire to grow
your business... New beginnings, new thrills, new achievements...
Working hard to get there... Building your own good luck... Friends
by your side who give courage and support... Garanti is right in that
“instant”... Garanti is a friend that encourages you, supports you
through good and bad days, and shares your happiness.
DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.
Maslak no1 Plaza Eski Büyükdere Caddesi Maslak Mahallesi No:1
Maslak, Sarıyer 34398 İstanbul, Türkiye
Mersis No: 0291001097600016 Ticari Sicil No: 304099
Tel: [phone] Fax: [phone]
www.deloitte.com.tr
(CONVENIENCE TRANSLATION OF INDEPENDENT AUDITOR’S REPORT
ON THE MANAGEMENT’S ANNUAL REPORT ORIGINALLY ISSUED IN TURKISH)
INDEPENDENT AUDITOR’S REPORT ON THE MANAGEMENT’S ANNUAL REPORT
To the Board of Directors of Türkiye Garanti Bankası A.Ş.
Report on the Audit of Management’s Annual Report in accordance with Independent Auditing Standards
We have audited the annual report of Türkiye Garanti Bankası A.Ş. (“the Bank”) and its consolidated subsidiaries (together will be
referred as “the Group”) for the period ended 31 December 2016.
Management’s Responsibility for the Annual Report
The Bank Management is responsible for the preparation and fair presentation of the annual report which is consistent with the
consolidated financial statements prepared in accordance with “the Banking Regulation and Supervision Agency (“BRSA”) Accounting
and Reporting Regulations” including the regulation on “The Procedures and Principles Regarding Banks’ Accounting Practices and
Maintaining Documents” published in the Official Gazette dated 1 November 2006 with No. 26333, and other regulations on accounting
records of banks published by the Banking Regulation and Supervision Board and circulars and pronouncements published by the
BRSA and Turkish Accounting Standards for the matters not legislated by the aforementioned regulations (“the consolidated financial
statements”) in accordance with the Article 514 of the Turkish Commercial Code No. 6102 (“TCC”) and the regulation on “Preparing and
Publishing the Annual Report by Banks” published in the Official Gazette dated 1 November 2006 and No. 26333, and for such
internal control as management determines relevant to the preparation and fair presentation of such annual report.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Bank’s annual report based on our audit conducted in accordance with the
provisions of the Article 397 of the TCC and the regulation on “Independent Auditing of Banks” published in the Official Gazette
dated 2 April 2015 with No. 29314. Our audit involves whether the financial information provided in the annual report are fairly
presented and consistent with the consolidated financial statements, based on our audit report dated 30 January 2017.
We conducted our audit in accordance with Independent Auditing Standards, which is a part of Turkish Auditing Standards issued
by the Public Oversight Accounting and Auditing Standards Authority (“POA”). Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information
provided in the annual report are fairly presented and consistent with the consolidated financial statements and are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the historical financial information. The procedures
selected depend on the auditor’s judgment.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial information provided in the Management’s annual report, in all material respects, are fairly presented
and consistent with the audited consolidated financial statements.
Other Legal and Regulatory Requirements
In accordance with paragraph three of the Article 402 of the TCC, nothing significant has come to our attention that may cause
us to believe that the Bank may not continue its activities for the foreseeable future in accordance with Independent Auditing
Standard 570 “Going Concern”.
DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.
Istanbul, 2 March 2017
Member of DELOITTE TOUCHE TOHMATSU LIMITED
Müjde Şehsuvaroğlu, Partner
AGENDA OF THE ORDINARY GENERAL
SHAREHOLDERS’ MEETING
1 - Opening, formation and authorization of the Board of Presidency
for signing the minutes of the Ordinary General Meeting of
Shareholders,
2 - Reading and discussion of the Board of Directors’ Annual Activity
Report,
3 - Reading and discussion of the Independent Auditors’ Reports,
4 - Reading, discussion and ratification of the Financial Statements,
5 - Release of the Board Members,
6 - Determination of profit usage and the amount of profit to be
distributed according to the Board of Directors’ proposal,
7 - Determination of the remuneration of the Board Members,
8 - Informing the shareholders about remuneration principles
of the Board Members and directors having the administrative
responsibility in accordance with the Corporate Governance
Principle no. 4.6.2 promulgated by Capital Markets Board of Turkey,
9 - Informing the shareholders with regard to charitable donations
realized in 2016, and determination of an upper limit for the
charitable donations to be made in 2017 in accordance with the
banking legislation and Capital Markets Board regulations,
10 - Authorization of the Board Members to conduct business with
the Bank in accordance with Articles 395 and 396 of the Turkish
Commercial Code, without prejudice to the provisions of the
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Banking Law,
11 - Informing the shareholders regarding significant transactions
executed in 2016 which may cause conflict of interest in accordance G
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with the Corporate Governance Principle no. 1.3.6 promulgated by RA
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Welcome
“WELCOME ON BOARD”
What a thrill it is – the first day at work... Garanti’s employees are the drivers
and the assurance of its quality. Hence, “employee happiness” is a strategic
priority for the Bank. Greeting the enthusiastic new hires with the “Welcome
on Board” program on their first day at work, Garanti offers a significant
career opportunity to EACH employee.
Adopting a fair and transparent management policy based on performance and
internal promotion, Garanti invests in its human resource. In 2016, Garanti filled
vacant positions internally at a rate of 85%, while 88 people joined the Bank in
management trainee programs, and 1,250 people were employed into other positions.
ABOUT
GARANTI
CORPORATE PROFILE
Established in 1946, Garanti Bank is Turkey’s second largest With its dynamic business model and superior
private bank with consolidated assets of US$ 88.8 billion as of technology integrated to its innovative products
December 31, 2016. and services, Garanti continues to differentiate
itself and facilitate the lives of its customers. Its
Garanti is an integrated financial services group operating custom-tailored solutions and wide product
in every segment of the banking sector including corporate, variety play a key role in reaching US$ 73.3
commercial, SME, payment systems, retail, private and investment billion cash and non-cash loans. The high
banking together with its subsidiaries in pension and life insurance, asset quality attained through advanced risk
leasing, factoring, brokerage, and asset management besides management systems and established risk
international subsidiaries in the Netherlands and Romania. culture place Garanti apart in the sector.
Building on the Bank’s core values, Garanti Bank
As of December 31, 2016, Garanti provides a wide range of financial defines Sustainability as a commitment to build a
services to its more than 14.6 million customers with approximately strong and successful business for the future,
20 thousand employees through an extensive distribution network while minimizing negative environmental and
of 959 domestic branches; 7 foreign branches in Cyprus, one in social impacts, and sharing long-term values
Luxembourg and one in Malta; 3 international representative offices with its customers, staff, shareholders and the
in London, Düsseldorf and Shanghai with 4,825 ATMs, an award- communities it operates in. Garanti further
winning Call Center, internet, mobile and social banking platforms, strengthens its sustainable banking approach
all built on cutting-edge technological infrastructure. through community investment programs
in a variety of topics ranging from sports to
Moving forward to maintain sustainable growth by creating value to education, arts to nature and informing the
all its stakeholders, Garanti builds its strategy on the principles of business world.
always approaching its customers in a “transparent”, “clear” and
“responsible” manner, improving customer experience continuously
TI by offering products and services that are tailored to their needs. Its
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O and services offered with strict adherence to quality carry Garanti to a
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A leading position in the Turkish banking sector.
Following the best practices in corporate governance, Garanti is
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controlled by two powerful entities, Banco Bilbao Vizcaya Argentaria
S.A. (BBVA) and Doğuş Group with shares of 39.9% and 10.0%,
respectively. Having shares publicly traded in Turkey, depositary
T receipts in the UK and the USA, Garanti has an actual free float of
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PO 50.06% in Borsa Istanbul as of December 30, 2016.
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TI B Note: Per disclosure dated February 21, 2017, Dogus Group and BBVA have reached an agreement for Dogus Group to transfer its shares
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A representing 9.95% of the total issued share capital of Garanti Bank to BBVA at TL 7.95 per share. Upon corporate approvals of Dogus Group and
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SHAREHOLDING STRUCTURE
39.9%
BBVA (BANCO BILBAO
VIZCAYA ARGENTIARA, S.A.)
10%
DOGUS GROUP
3.13% DOMESTIC RETAIL INVESTORS 3.84%
0.71% FOREIGN RETAIL INVESTORS RETAIL INVESTORS
18.26% UK & IRELAND
45.3%
INSTITUTIONAL
INVESTORS
15.18% NORTH AMERICA A
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5.73% CONTINENTAL EUROPE (EXCLUDING TURKEY) TI
2.68% ASIA
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2.30% TURKEY
1.15% REST OF THE WORLD
0.96% UNIDENTIFIED
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Insider Holdings 16 A
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The chairman, members of the Board of Directors, the CEO and the Executive Vice Presidents are allowed to own publicly-traded shares of Garanti N
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Bank; their transactions in Garanti Bank shares are publicly disclosed pursuant to Capital Markets Board regulations. L
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Note: Institutional shareholder and foreign individual shareholder composition data based on IPREO Shareholder ID Analysis dated January 2017; EP
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the actual free float ratio and the share of local individual shareholders are all based on Central Agency Registry Agency data. RT