Garanti Bank

The third largest private bank in Turkey Established in Ankara in 1946, Garanti Bank (“Garanti”) is currently the third largest private bank in Turkey. The Bank's main business segments are corporate banking,commercial banking, SME banking and retail banking where Garanti provides high quality and diversified financial services.

 

Garanti is fully integrated financial group with over 11,000 employees, 478 domestic and five international branches(Luxembourg,Malta and Turkish Republic of Northern Cyprus), four global representative offices(Shanghai,London,Moscow and Düsseldorf) and nine financial services subsidiaries. Its subsidiaries include GarantiBank International N.V. headquartered in the Netherlands and GarantiBank Moscow in Russia.Garanti's growth strategy focuses on retail banking and SME banking.

 

The Bank continuously develops innovative products and services to meet the varying financial needs of customers in these segments and to maintain and strengthen its leadership.

Garanti confidently continued along its growth trajectory in 2006 despite fluctuations in the economy Sustainable balance sheet growth Its strategy of achieving growth without compromising on profitability and risk management requirements brought Garanti to new record-breaking levels in the year of its 60th anniversary. The size of Garanti's balance sheet grew by 38% to YTL 50.3 billion while its free equity grew by 83% to YTL 2.8 billion and net income increased by 47.5% to YTL 1,064 million.

 

The Bank's performance has been remarkable in a year when the banking sector was negatively impacted by increasing competition, narrowing margins and economic volatility. In this new era where “real banking” is key, having managed to incorporate a customer-focused strategy, greater efficiency and innovation into its corporate culture,Garanti, with its superior service quality and human resources assets reflected its competitive advantages within the banking sector onto its financial results.Strong and solid loan portfolio Garanti is now one step closer to being the sector leader by having grown its cash loans base by 59%, above the sector average, and increasing its contribution to the real economy to YTL 36.9 billion through cash and non-cash loans. In line with its strategy, the Bank continues to increase the share of loans in its total balance sheet.

 

In 2006, our cash loans constituted more than half (54%) of total assets.Retail loans, with high growth potential, and SME loans,representing Turkey's underlying economic strength, both continue to be the driving forces in Garanti's loan growth.Leader in commercial banking Garanti continued to be the leader in commercial banking in 2006. Having increased its customer portfolio by 9%,Garanti provided banking services to 24,200 companies from various industries as of year-end.

 

Commercial banking reached a volume of USD 14.8 billion, an increase of 35% over 2005, and accounts for 34.2% of Garanti's business volume.The Bank of SMEs By achieving a 22% increase in the number of SME customers, bringing the total to 770,000, Garanti made significant advancements towards its goal of being “The Bank of SMEs.” The SME business line has a 19% share in total bank assets, a 14%share in balance sheet, and a 28% share in YTL Loans.

 

Over 5 million retail customers Garanti, with its 1,350 retail banking personnel, serves 5.2 million retail banking customers with a total relationship volumef USD 14.5 billion. In 2006, loans issued to retail banking customers amounted to YTL 4.5 billion, or 20% ofthe Bank's total loan portfolio. Retail deposits were YTL 12.8 billion, constituting 42% of the Bank's total deposits.As of year-end 2006, the retail banking volume comprises 27.2% of the Bank's total. Garanti serves its retail customers,through its nationwide network of 478 branches, 1,500 ATMs, Internet Branch and Call Center.

 

In consumer lending, Garanti grew well above the sector average even though this was the area most negatively affected by fluctuations throughout the year. The Bank achieved sector leadership in credit cards based on per card spending as a result of Garanti's distinct innovative products such as Flexi Card and Bonus Trink with Pay Pass features. A success story: Garanti payment systems In 2006, Garanti was the bank that increased its market presence in payment systems most, and reached a market share of 22%. By increasing the number of issued cards from 5,006,663 to 5,625,014 at the end of 2006, Garanti achieved a year over year growth of 12.35% and a six year growth of 367%. Credit cards, one of the major components of non-interest income, constituted 52% of the Bank's commission income in 2006.

 

This year, all of Garanti's payment system products have continued to grow in terms of users, transaction volume, member corporations and POS numbers. Through investments undertaken in 2006, Garanti is providing services with 213,603 POS terminals and 190,901 merchants, increasing its market share in terms of work place turnover from 19.6% to 22.2%.The efficiency of alternative delivery channels Garanti Bank customers carry out 82.5% of their comparable banking transactions, including those in cash,through alternative delivery channels (ADC).In 2006, the number of active customers using ADC was 800,000 The number of customers having used ADC at least once a year was above 1.4 million. The number of customers not using branches approached 574,000. The total number of customers having carried out transactions through Garanti Paramatik is over 1.5 million.In 2006, 27% of credit card sales realized by the Bank as well as 32% of utility payments and 45% of personal loan applications were realized through ADC.Garanti, the leader in internet banking, has one of the largest call centers in Turkey. By investing in alternative delivery channels, the Bank has significantly increased operational efficiency and profitability.Garanti's track record includes many products and services in the Turkish and international banking sector that it pioneered The needs and expectations of customers are the focal points of Garanti Bank's products, services and business methods. As a result, 'getting to know the customer'constitutes the foundation stone of marketing activities.

 

Garanti Bank aims to identify the specific requirements of its customers and provide solutions within this framework.The Bank differentiates itself by keenly observing its constituents, accurately forecasting change within the market environment, efficiently utilizing its superior technological infrastructure and deftly creating practical applications. In this regard, Garanti fosters a strong culture of research and development.Bonus Card: a hallmark in Turkey's credit card market In 2006, Bonus Card, the first chip equipped and EMV compatible card in Turkey, achieved transaction volume of YTL 18.3 billion through 4,479,547 users and 131,245 merchants. Moreover, on December 30th, which was the day on which the highest number of transactions were carried out, Bonus Card broke another record and became the card that achieved the highest number of transactions. An efficient strategy producing high returns Garanti's strategy has always been to achieve efficient, profitable and sustainable growth.

 

As a result of advanced risk management techniques implemented, Garanti increased its volume without compromising on asset quality.The bank minimized operational workload in branches thanks to investments made in technology and alternative delivery channels. It managed to increase its profitability in a consistent and sustainable manner by focusing its strategy on higher yielding assets and maintaining competitive service quality.As a result of all these developments, Garanti's net income rose by 47.5% to YTL 1,064 million and its return on average assets increased to 2.45% (2.3% in 2005) while its return on average equity increased to 25% (20.7% in 2005).In a year with economic volatility, the fact that Garanti managed to increase its profitability ratios as well as its assets and shareholders' equity levels at a much higher rate than its competitors make the Bank's performance all the more impressive.Future Plans Garanti will take new steps towards becoming a regional bank while continuing its robust and healthy growth in the local market.

 

In addition to the 50 new branches opened in 2006, Garanti will open more than 70 additional branches reaching a total of 560 by year-end 2007. With its world class service quality, extensive product offerings and highly competent bankers, the Bank targets to present the Garanti difference to an even wider customer base. It is certain that competition will increase in all customer segments with the continued entry of foreign banks into the sector. However Garanti is confident that it will always be ahead of competition with its customer-centric approach which will continue to be the key to full customer satisfaction.Garanti with the synergy created by its partners, its technological infrastructure, capital strength, highly competent human resources,competitive advantages, and world class products and services, will no longer be bound by Turkey's borders. As globalization becomes a prerequisite in attaining long-term sustainable growth, Garanti will be more active in other markets in the region and form new international alliances.