2014 Annual Report
Ziraat Bank’s Subsidiaries in 2014

The Bank’s main goal is for subsidiaries to have a 10% share Ziraat Finance Group’s total assets and a 15% share in its profit within 5 years.

TL 2,027 million

Ziraat Bank’s total investment in its subsidiaries as of the end of 2014

Montenegro

A permission was obtained from BRSA to establish a subsidiary bank in Montenegro, which would be 100% owned by Ziraat Bank.

Ziraat Bank’s corporate subsidiary strategy is to enhance the synergies between domestic subsidiaries operating in various sectors and foreign subsidiaries spread over a wide region to the highest level, and to ensure that each partnership is popular among customers and corporations, and that they are the most profitable corporations in their sectors and achieve sustainable profitability and growth under the Ziraat Finance Group.

Within this framework, the Bank’s primary goal is to command a pioneer subsidiary portfolio which has a high competitive power with a wide product range, channel diversity, competent human resources, easy processes and modern technological infrastructure in all operational sectors and regions, to fulfill all financial needs of Ziraat Group’s customers with the most appropriate value proposition.

In line with these strategies and goals, the Bank always considers organic and inorganic growth alternatives in all countries and sectors that the Bank sees potential based on profitability and efficiency.

The Bank’s main goal is for subsidiaries to have a 10% share Ziraat Finance Group’s total assets and a 15% share in its profit within 5 years.

Ziraat Bank stepped up its efforts to establish a new subsidiary in 2014 with this goal. Ziraat Bank obtained necessary permits from the authorities to establish a participation bank in Turkey with capital of TL equivalent of USD 300 million, and to establish a subsidiary bank in Azerbaijan with capital of Manat 50 million (around USD 64 million). The work on establishing these two banks is expected to be completed in the first half of 2015.

Ziraat Bank obtained permission from the Banking Regulation and Supervision Authority to establish a subsidiary bank in Montenegro, which would be 100% owned by Ziraat Bank. The Bank applied to the Central Bank of Montenegro for a banking licence.

As of the end of 2014, Ziraat Bank’s total investment in its subsidiaries had reached TL 2,027 million, of which TL 708 million had been invested in domestic subsidiaries and TL 1,319 million in foreign subsidiaries.

Capital increases to enhance the capital structures of the Group’s subsidiaries had amounted to TL 131.9 million for domestic subsidiaries and USD 2.3 million for foreign subsidiaries during 2014.

Foreign Subsidiaries

Ziraat Bank International AG
Ziraat Bank International AG has been operating in Germany for 50 years with 134 employees. The Bank has 9 branches in Berlin, Duisburg, Frankfurt, Hamburg, Hanover, Cologne, Munich, Nuremberg and Stuttgart. The Bank also has one representative office in Istanbul. The Bank provides services to corporate and retail customers.

At the end of 2014, Ziraat Bank International AG’s paid-in capital stood at EUR 130 million, with shareholders’ equity of EUR 170 million, total assets of EUR 1,327 million, loans of EUR 1,280 million and deposits of EUR 1,133 million. Loans grew by 57% YoY and the Bank’s net profit came in at EUR 9.4 million.

Ziraat Bank BH d.d.
Ziraat Bank BH d.d. started operations in 1997. The Bank is the first bank in Bosnia Herzegovina to be fully owned by foreign capital.
The Bank provides an entire suite of banking products and services to its corporate and retail banking customers through 28 service units, 37 ATMs, 18,000 credit cards, 16,000 debit cards, and 843 POS devices throughout the country. The Bank had 247 employees at the end of 2014.

As of the end of 2014, Ziraat Bank Bosnia d.d.’s total assets amounted to USD 342 million, with loans of USD 232 million, deposits of USD 215 million and shareholders’ equity of USD 48 million. The Bank wrote a net profit of USD 2.4 million for the year.

Ziraat Bank (Moscow) CJSC
Ziraat Bank (Moscow) CJSC entered operation in Moscow in 1993.

The Bank’s operations are mainly based on corporate banking activities. In 2014, the Bank achieved 17% growth in total assets, 21% in cash loans, 60% in non-cash loans and 125% in its pre-tax profit in Rouble basis.

The Bank commanded USD 60 million in total assets with USD 25 million of loans and a USD 2 million of profit.

Kazakhstan Ziraat International Bank (KZI Bank)
The Kazakhstan-Ziraat International Bank was established in 1993. The Bank was incorporated as the first foreign capital-owned bank in Kazakhstan. Based in Almaaty, the Bank continues to offer services in corporate and retail banking through three branches located in Almaaty, Astana and Shymkent. The Bank plans to open a sub-branch in Almaaty in 2014 and other branches in the cities of Karaganda and Ataru, increasing its number of branches to 7.

As of the end of 2014, the Bank’s total assets amounted to USD 179 million, with shareholders’ equity of USD 103 million and a net profit of USD 9 million for the period. Its return on equity increased from 6% to 9%. The Bank’s loan book was worth USD 125 million in 2014, representing a 17% YoY surge. The value of the Bank’s deposits was realized at USD 74 million.

Turkmen Turkish JSC Bank
The Bank was established in 1993 with the equal participation of Turkmen Turkish Joint Stock Commercial Bank, Ziraat Bank and Dayhan Bank.

The Bank’s branch network was expanded in 2014 to cover all cities in Turkmenistan. The Bank reached an asset size of USD 138.2 million as of the end of 2014. In this period, the Bank achieved 76% growth in its asset size, 48% in its loan volume, 107% in its deposits and 41% in its net profit.

Uzbekistan-Turkish Bank (UTBANK)
The Uzbekistan Turkish Bank (UTBANK) was founded in 1993 in Tashkent by Ziraat Bank and Agrobank (Uzbekistan), with each controlling an equal stake.

Serving its customers in all business segments of banking, UTBANK’s total assets stood at USD 66.6 million at the end of 2014. The Bank’s deposits amounted to USD 19.2 million with shareholders’ equity of USD 26.4 million, while it recorded a net profit of USD 2.1 million in the year.

Domestic Subsidiaries

Ziraat Bank’s domestic subsidiaries operate in the fields of insurance, life insurance and pension, leasing, investment banking, asset management and IT.

TL 703 million

Ziraat Sigorta increased premium generation by 24% YoY in 2014.

18.48%

Ziraat Hayat ve Emeklilik had a market share of 18.48% in 2014.

Ziraat Sigorta A.Ş.
Ziraat Sigorta was founded on 11 May 2009, and initiated insurance operations in 2010. The Company succeeded in being a role model in the sector by maintaining its sustainable growth and profitability.

Ziraat Sigorta completed fifth year of activity and maintained its steady development in 2014. Ziraat Sigorta increased premium generation by 24% YoY to TL 703 million.

As of the end of 2014, the Company commanded an asset size of TL 468 million and shareholders’ equity of TL 150 million. The Company’s net profit increased by 18% YoY to TL 65 million.

Ziraat Hayat ve Emeklilik A.Ş.
Ziraat Emeklilik was authorized for incorporation on 2009 and entered operation in the life insurance and personal accident insurance branches at the beginning of 2010. The Company has maintained its leadership position in premium generation for life insurance policies since its foundation. It reached market share of 18.48% and generated premium of TL 606 million as of the end of 2014.

Ziraat Emeklilik has been present in the Private Pension System since July 2011. The Company’s fund size increased by 109% YoY and its number of participants increased by 99% YoY in 2014. Funds reached TL 731 million with 248,000 participants. The Company had TL 2.1 billion in assets and shareholders’ equity of TL 272 million as of the end of 2014.

TL 1.9 billion

Ziraat Leasing increased its asset size to TL 1.9 billion in 2014 by outperforming the sector.

TL 22.2 billion

Ziraat Yatırım recorded transaction volumes of TL 22.2 billion on the Borsa Istanbul Equity Market in 2014.

117%

Ziraat Portföy’s assets under management grew by 117% YoY and reached TL 3.9 billion.

500

Ziraat Teknoloji, staffed by around 500 competent and dynamic employees, provides IT services.

Ziraat Finansal Kiralama A.Ş.
Ziraat Leasing, which was established in 1991, continued its growth by outperforming the sector in asset size and net leasing receivables in 2014.

As of the end of 2014, the Company had TL 1.9 billion in assets and shareholders’ equity of TL 200 million.

Ziraat Yatırım Menkul Değerler A.Ş.
Ziraat Yatırım entered operation in 1997. The Company continues its operations with four branches, 16 investment centers and one communication office.

The Company recorded transaction volumes of TL 22.2 billion on the Borsa Istanbul Equity Market, TL 6.9 billion in the Derivatives Market, TL 73.6 billion in the Repo-Reverse Repo Market and TL 8.3 billion in the Bonds and Bills Market Outright Purchase and Sale Market during 2014. The Company intermediated in TL 4.7 billion of private sector bond and bill issues as part of its corporate finance services.

As of the end of 2014, the Company had TL 98 million in assets and TL 78 million in shareholders’ equity.

Ziraat Portföy Yönetimi A.Ş.
Ziraat Portföy, established in 2002, manages individual and corporate portfolios in addition to ten mutual funds owned by Ziraat Bank, four mutual funds owned by Ziraat Yatırım and ten private pension funds.

The Company realized a number of innovations in 2014. Ziraat Portföy received a licence and increased the standard of its technology security. The Company grew by 100% with the investments it undertook in human resources.

In 2014, the Company’s assets under management grew by 117% YoY from TL 1.8 billion to TL 3.9 billion. The Company jumped from 8th to 5th position among 48 asset management companies.

Ziraat Teknoloji A.Ş.
Staffed by around 500 competent and dynamic employees, Ziraat Teknoloji provides IT services to Ziraat Bank and its foreign/domestic partnerships in the fields of application development, system management, support-operations and technical consultancy since its foundation in 2001.

Ziraat Teknoloji moved to the Teknopark in Yıldız Technical University in April 2013. The Company has played an important role in Ziraat Finance Group’s transformation project with the products that it developed in line with the ISO 9001 and ISO 27001 standards.