Message From Chairman

We build life-long and successful partnerships with all our stakeholders through understanding and best fulfilling their needs.

Dear Partners,

As the robust growth trend in global economy carried on in the first six months of 2018, the risk for trade wars rose notably, caused by large economies, prominently the US, focusing on protective policies. Faced by this risk, IMF revised its growth estimates for the US and EU countries.

IMF released its World Economic Outlook report as revised in July with the title "Less Even Expansion and Rising Trade Tensions". Pointing to the possible serious consequences of large economies' mutual protective policies and retaliations, the report made the evaluation that "These actions could derail the recovery and depress medium-term growth prospects, both through their direct impact on resource allocation and by raising uncertainty and taking a toll on investment".

IMF Managing Director Christine Lagarde announced the results of the report IMF issued with protective policies in the G20 Meeting for Finance Ministers and Central Bank Presidents. According to the report, protectionist trade policies and potential retaliatory measures may leave an impact on global GDP to the extent of causing a drop by 0.5 points.

Another factor that may affect international markets in the upcoming period could be the inflation outlook. The strong trend in demand conditions combined with quickening inflation may push the central banks of developed countries to position their policy more aggressively than anticipated.

Having closed 2017 with a growth above expectations, Turkey seems to maintain the same momentum in the first quarter of 2018 in economy. In Q1 of this year, Turkish economy performed a growth of 7.4 percent in parallel with the overall growth rate achieved throughout 2017.

IMF's World Economic Outlook Report released in July stated that financial conditions tightened for some economies with external deficits - notably Turkey, where growth is projected to be 4.2 percent this year. IMF had projected a growth rate of 4.4 percent in its report released in April.

We think that the stress on financial markets will ease in the second half of the year, with elections having been already completed and the government's positive signals for macroeconomic policies to be implemented in the upcoming period. Economy Plan expected to be announced in September will also signal some developments in economy for us in the upcoming period.

In the banking sector, the contributions by KGF (Credit Guarantee Fund) slowed down in Q1 2018 compared to the previous year, while credit growth started to normalize.

As QNB Finansbank, we have maintained our above-the-sector growth also in the first half of the year. As of 30 June 2018, our total assets grew by 19 percent compared to year-end results, reaching 149 billion 266 million TL, while our net period profit was 1 billion 133 million TL as of June 2018.

Compared to the end of 2017, our bank's performing loans increased by 14 percent to TRY 93 billion 217 million and our customer deposits by 13 percent to TRY 73 billion 818 million. Total equities of QNB Finansbank reached TRY 13 billion 235 million with a 9-percent increase as per 2017 year-end figures.

We channeled our intensive efforts in the banking sector to social efforts as well in the first half of 2018. "Young Talents Project" that ÇEV Art runs with QNB Finansbank's sponsorship went global. In order to support the youth in the project, Çev Art signed a partnership agreement with Villa Musica, Germany's leading classical music foundation.

We keep supporting art, an indispensable component of modern and developed societies. Modern ceramics by Alev Ebüzziya Siesbye, a world-wide known ceramic artist, and local earthenware from the collection of Prof. Dr. Hüsamettin Koçan started to be exhibited in Bayburt Baksı Museum between 19 June and 21 October 2018, with QNB Finansbank's support.

We will continue to announce good news on the new efforts we will undertake to prepare our children and youth for the future in the second half of 2018.

I would like to express my thanks to all my financier colleagues and stakeholders for their contributions to make us grow even further by undertaking significant achievements in the first half of 2018.

Kind regards,

Ömer A. Aras