Commercial Banking

İşbank continued to perform successfully in the commercial banking business line in 2011.

In 2011 İşbank maintained its consistent stance in the commercial banking business line as it continued to stand by Turkey’s industrialists, tradesmen and artisans. The Bank serves its commercial banking customers through:

• 38 commercial branches,
• mixed branches located all over the country,
• 25 commercial sales regions,
• experienced field organization, customer relationship managers and customer representatives.

In 2011 İşbank registered a significant growth in its commercial banking loan portfolio.
Having performed successfully in the commercial banking business line in 2010, İşbank continued to do so in 2011 as well.

İşbank remained the unchallenged leading supplier of installment-based commercial loans in 2011, a business line in which it controlled a 19.2%(*),(**) market share. The Bank’s portfolio of such loans amounted to TL 14.7 billion as of the end of the year.

While providing small and medium sized enterprises (SME) with working capital and investment financing, İşbank continued to support SMEs’ purchases of commercial vehicles and property in 2011. The Bank remained the leading provider of commercial vehicle loans, a business line in which it controlled a 27.2%(*) market share.

Deposits grow in parallel with an expanding loan portfolio
In 2011 İşbank also increased its volume of commercial demand deposits. Paralleling the growth in its commercial loans portfolio, the volume of such deposits being held by the Bank increased by 12.7% year-on.

The biggest private bank in lending in 62 cities
As of year-end 2011, İşbank had supplied more cash commercial loans to customers than any other privately-owned bank in 62 of Turkey’s 81 cities and it ranked in the second place in 15 cities. This is the clearest possible evidence of İşbank’s standing not just as the biggest lender to the commercial sector but also of its policy of dispersing its lending risks as widely as possible in geographical terms.

In 2011, İşbank once again focused on developing relations with SMEs and other commercial customers with an eye on addressing local needs.

Increasing cooperation with professional and sectoral associations, as well as with public institutions
In 2011 İşbank once again focused on developing relations with SMEs and other commercial customers with an eye on addressing local needs. In line with this, the Bank continued to enter into agreements with professional chambers, associations and other organizations. Some of the highlights of the Bank’s activities in this area, that are carried out through last year, are presented below.

• As in previous years, İşbank continued to collaborate with the Turkish Grain Board (TMO) in 2011. Under an arrangement with the board, the Bank extends loans against TMO receipts, to its own depositors who have surrendered their produce (wheat, barley, corn and rice) to the board.
• Three protocols were signed under the ongoing collaboration between İşbank and the Small and Medium Enterprises Development Organization (KOSGEB). One covers the provision of emergency support loans in general, while the other two cover zero-interest working capital support loans and emergency support loans in the city of Van, which suffered from a destructive earthquake in October last year. Loans are now being supplied by the Bank under these protocols.
• İşbank signed a protocol with the Agriculture and Rural Development Support Institution related to the EU’s Instrument for Pre-Accession Rural Development (IPARD) program. Preparations are now being made to call for loan applications under this protocol.
• Under the agreement signed in October 2010 between İşbank and TÜRMOB, a union of professional chambers for independent accountants, financial advisors and certified public accountants in Turkey continued to cooperate on the “LUCA – Bank Account Activity Integration Project”, which automatically keeps track of movements among the accounts of firms whose books are maintained by certified public accountants.
• İşbank continues to collaborate closely with the Turkish Pharmacists’ Association. Under agreements with that organization, the Bank handles pharmacists’ Social Security Corporation payments and it also extends loans covered by the association’s mutual assistance fund.

Summary information about funds secured from abroad and provided to SMEs

• In February 2009, EUR 20 million was obtained from the German Development Bank (KfW) under the Small Enterprises Loan Programme II (SELP II) to be used in financing the fixed capital investment and working capital requirements of small firms operating in 49 cities covered by Turkey’s investment incentives regime. In September of the same year, another EUR 3.6 million loan was obtained to finance small businesses in the cities of Muş, Hakkari, Van and Bitlis. Total of these facilities were extended as loans and they are currently being extended to some of these customers within the frame of their principal repayments. On 29 December 2011, another agreement covered by SELP II was signed under which EUR 31.4 million more is to be received on four-year terms in addition to the EUR 23.6 million already received in previous years. This new facility will also be used as loans to small businesses.
• İşbank has entered into an agreement with the European Bank for Reconstruction and Development (EBRD) under which EUR 20 million worth of investment and working capital financing is being provided to micro, small and medium-sized businesses in cities other than Ankara, İstanbul and İzmir. A separate agreement with the European Investment Bank (EIB) covers EUR 250 million worth of support for investments being undertaken by SMEs particularly in the areas of energy, infrastructure, tourism, health and education. Through these two agreements, İşbank provided SMEs with opportunities of financing.
• İşbank has secured USD 40 million under EBRD’s “Turkey Sustainable Energy Financing Facility” to finance activities and investments that are undertaken by qualifying SMEs in Turkey to improve energy efficiency and to make use of renewable energy resources.
• In 2011, İşbank signed credit agreements worth USD 50 million with Korean Eximbank and worth EUR 150 million with EIB. These funds are to be used to provide financing to SMEs in 2012.

Solutions, sectoral packages and products that are customized to meet customers’ needs
Based on the results of its ongoing efforts carried out in the field as well as at headquarters, İşbank identifies the needs and wishes of firms and it designs products and services accordingly.

• İşbank manages a diverse array of products and services including loans and cash management products for tradesmen, artisans and industrialists. The offerings that were made in 2011 to meet the financial needs of its customers in the best way possible included:
• “Inventory Management” and “Spare Parts Inventory Management”: Two newly developed cash management and commercial loan products.
• “Vadematik”: A commercial credit card for purchasing goods with specialized features that allow payments to be made at a specified date or placed on installment. The outstanding balance at one billing date can be rolled over until the next billing date.
• “İşbank Agricultural Produce Card”: A card that can be used to channel TMO payments to farmers under a protocol between the Bank and TMO.
• “Workplace Rent Loan”: A loan that has been developed to provide financing for commercial customers’ rent payments.
• “My Own Business Loan”: A lending product specially designed for qualifying merchant customers.
• “Product Receipt Loan”
• “Rent Assignment Credit”: A lending product under which customers assign their rent receivables to the Bank to finance their working capital needs.
• Domestic FC Bill Credit by Way of Guarantee”: A lending product providing payment guarantees on foreign currency-denominated bills when all the parties are residents of Turkey.
• “Chinese Yuan FC Loan”: Foreign currency loans denominated in Chinese Yuan.
• “Exchange Rate Protected Foreign Currency Loan with Option”: A lending product specially designed to protect customers who have borrowed in foreign currencies against excessive increases in exchange rates.
• “Early Payment TL / FC Spot Loan”: A lending product that makes it possible to completely pay off the outstanding principal and interest remaining on a loan.
• “Fixed Interest Rate Revolving Loan”: A lending product for customers who prefer to avoid being affected by movements in interest rates during the lifetime of a loan.
• “FC-Indexed Spot Loan”: A lending product that makes it possible for spot loans to be taken out in a foreign currency.
• “Micro-SME Quick-Guarantee Package”: A lending product which is made available to tradesmen and artisans and to micro-SMEs that are active in manufacturing or services for loans provided under the “Micro-Loan Project” with Credit Guarantee Fund guarantees and which makes it possible for requests for guarantees to be finalized within a week’s time.
• “Interchange Financing”: A lending product that provides financing to dealerships for vehicles which they have received via interchange until the vehicles are sold.

İşbank is a consultant and solution partner for the commercial sector in Turkey.
Maintaining a close and constant watch on changes and movements in the business scene parallel to the developments taking place in the global economy, İşbank acts as a consultant for its commercial customers and keeps them supplied with information.

As it did in 2010, in 2011 İşbank again carried out an intensive program of visits to customers through which it identified and responded to their particular needs at their own premises. The number of customer visits made by field and headquarters teams reached 250,000 last year. In addition to such customer visits, the Bank conducted its informational and advisory “İş’le Buluşmalar” meetings in Ankara, Afyonkarahisar, Mardin, Trabzon, Çorum and Malatya in 2011.

In order to provide its customers with more differentiated and focused service, İşbank has set up a “Sector-Specific Banking / Agriculture and Tourism Unit” within the Bank.

17 new international awards for the İŞ’TE KOBİ website in 2011
Located at www.istekobi.com.tr, İşbank’s İŞ’TE KOBİ website was created to provide businesses–especially SMEs–with information and to contribute to their development and education. Designed to be a loyalty and information program through which news and information about current events and issues are shared, the number of İŞ’TE KOBİ members topped 30,000 as of year-end 2011.

In 2011 İŞ’TE KOBİ received 17 new awards bringing the total number granted to the website in competitions conducted by respected international organizations to 21. Four of these awards were related to SUNUMATİK, a service offered to SMEs free of charge that allows firms to prepare meaningful and effective presentations in Turkish and English employing ready-to-use templates and tools.

İşbank regards commercial banking as one of the main arteries on the roadmap of the sector’s future growth. In line with this view, the Bank will continue to focus on commercial banking by providing broad-based, high-quality, differentiated service and consistent support.

(*) Market shares are based upon the monthly industry data (including participation banks and development and investment banks) published by the Banking Regulation and Supervision Agency and are calculated excluding interest accruals and rediscounts.
(**) Includes overdraft accounts.