Message From General Manager

QNB Finansbank signed its name under significant achievements in the name of its customers and shareholders.

Esteemed Shareholders and Members of the Board,

We have navigated successfully through 2017, the 30th anniversary of the establishment of our Bank. Our profitability was above our targets and our growth rate outdid both our targets and the competition.

As of December 31, 2017, Finansbank's total loans increased by 31% compared to year-end 2016 and reached TL 82,683,000. Net interest income rose by 25% compared to last year and reached TL 5,652,000,000. Our profit for the period equaled TL 1,603,000,000. Finally, our shareholder's equity reached TL 12,155,000,000, marking a 20% year-on-year increase. We have expanded our customer deposit base by 26% in 2017, reaching TL 65,297,000,000.

Thanks to our robust financial backbone and credit ratings, we were able to diversify our funding base and reach a wide network of investors.

In April 2017 we secured international funding worth USD 200 million for 3 years, with sundry project finance loan receivables as collateral.

In May we completed a Eurobond issuance with a size of USD 750 million and a tenor of 5 years. The issuance, originally planned for USD 500 million, was increased to USD 750 million following 6 times increase in appetite after successful investor meetings in London and New York. This bond issuance, to which more than 220 investors worldwide expressed interest, was not only the USD Eurobond issuance with the lowest rate realized by Turkish banks in the last two years, but also the highest amount of senior unsecured raised ever by the Bank, demonstrating the trust of international markets in QNB Finansbank with QNB as the new main shareholder.

Within the scope of the EUR 300 million Women in Business Support Program of European Bank for Reconstruction and Development (EBRD), we initially received a loan of USD 55 million to provide to businesses owned or managed by women entrepreneurs. We were the fastest Turkish bank that availed the first tranche and became the only Turkish bank qualified for the second tranche increasing the total loans obtained from EBRD to EUR 100 million. The loan has European Union and Turkish Ministry of Labor and Social Security as guarantors.

We continued with the second term of the Agricultural Financial Literacy Project, a social responsibility activity in cooperation with European Fund for South East Europe (EFSE) and the Frankfurt School. Farmers in 10 different cities were trained from August to December by trainers of the Frankfurt School regarding financial tools as well as agricultural topics such as irrigation technologies, risk of drought, husbandry.

In November we secured a syndicated loan from international marketes in the amount of approximately USD 775 million for financing foreign trade. Compared to 2016 there has been an increase in the number of participant banks and we achieved a roll over ratio of 135%.

In December we obtained, under our DPR Securitization Program, approximately USD 550 million financing for a tenor of 10 years. All these borrowings attest to the trust of markets, investors and correspondents in our Bank.

In terms of operations and digitalization of financial services, we continued to pave the way. Mobile banking was introduced for carrying out Western Union transactions, making QNB Finansbank the first bank in Turkey to offer international money transfer on mobile phones., the first digital bank in Turkey, has become five years old in 2017. Forming a brand-new category in banking, was the first 100% digital and branchless bank in Turkey. Having reached 870 thousand retail customers, has been serving SMEs since October 2016 with the Şirketim brand and already reached 10 thousand customers. Thanks to the new credit card product we introduced in December, we aim to accelerate our growth and be able to meet almost all banking needs of our retail customers. With the unique experience it offers customers through special bonds established with clients, has a Net Promoter Score of 74. The credit card will enable to have an exclusive position.

Our achievements were recognized by many awards in 2017.

In Bonds&Loans Turkey that awards transactions in project finance and private sector bond issuance, we were given four awards in three categories, two of which are first places. In the category "Transportation Finance Loan of the Year", we became first with the 3rd Airport in Istanbul and second with Galataport projects. In addition, Galataport Project was awarded first place in the category "Infrastructure Finance Loan of the Year", and the project for the 3rd Airport in Istanbul became third in the category "Project Finance Loan of the Year".

We will continue to focus on children in our social responsibility projects. Our "Tiny Hands Big Dreams" platform has reached thousands of children. We will go on implementing projects that support the creativity and analytical thinking of children and youngsters. We were awarded the grand prize in the 16th Golden Compass Public Relations Awards for the "Tiny Hands Program the Future Project" realized in cooperation with Microsoft Turkey and Habitat Association. We were also awarded for the Miraculous Mathematics Exhibition that travels the country on special trucks and that acquaints children with the fun mathematics universe.

We won three awards at Internal Auditors Association Awareness Awards. The Bank won the "Corporate Awareness" award with Finans AuditPro, a journey program for those interested in audit as a career; the "Corporate Awareness" award with Anatolia Visits Program; and Hatice Pınar Yıldız, one of our Bank's auditors, was given the "Individual Awareness" award for her contribution to social media efforts by TİDE.

Turkey was included for the first time in the independent study of Talent Board, a non-profit organization based in the USA. QNB Finansbank was awarded in the Candidate Experience Survey whereby employment process is assessed by questionnaires with candidates themselves.

As QNB Finansbank we went on with corporate social responsibility studies, sponsorships and organizations that help social and economic development. We will continue our support to arts, sports and entrepreneurship in line with our mission of creating from today the future leaders.

2017 witnessed the fourth Bosses of the Future Competition, whereby we target the realization of projects having the potential of adding value and creating employment. 5,800 projects have been evaluated since 2013. In 2017, 46 projects out of 450 made it to the finals. 250 promoters were trained in entrepreneurship. We believe we contribute significantly to the entrepreneur ecosystem with the "Bosses of the Future Competition".

In 2018 we aim to keep up the QNB Finansbank 2017 picture and outgrow the sector in all areas. We foresee that the banking sector will primarily continue to grow in corporate loans. Measures in line with macro policies toward motivation of exports support such forecasts. We will continue to grow corporate loans in parallel with sectoral growth and focusing on risk costs. Our competitive policies in corporate banking and project finance will be maintained and we will increase our market share in foreign trade operations.

We are well aware of the importance of investment in innovation in the improvement of financial performance. As QNB Finansbank we have achieved significant improvement in operational efficiency as a result of our investments in technology and eventually our customers were able to complete their transactions in a faster manner. In the future we will continue to prioritize projects that will result in increase of our operational efficiency. In 2018 we aim to increase the number of active users of our digital channels.

I offer my gratitude to all our customers, shareholders and business partners who add to our strength while reaching our targets.


Temel Güzeloğlu