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İŞBANK
ANNUAL REPORT 2014
36
İŞBANK AND
ITS ACTIVITIES
IN 2014
In 2014, the volatility in exchange rates
required a strong emphasis to be given to
the foreign currency borrowing tendency
of both the financial and real sectors. The
Reserve Option Mechanism (ROM) continued
to be actively used and intended to support
the CBRT’s foreign exchange reserves.
The control of foreign exchange liquidity
through foreign exchange selling auctions,
which were adjusted according to market
developments, also continued.
In order to ensure the continuity of financial
stability, the CBRT maintained its integrated
approach to the interest rate policy, reserve
requirements and liquidity management
in 2014. Thus, the CBRT, by curbing
uncontrolled credit growth and excessive
borrowing tendency, tried to eliminate the
impacts of capital flows fluctuations and
currency exchange rate volatility.
Banking sector balance sheet
composition
The sector’s total asset size increased 15.5%
in 2014, climbing to TL 1,890
(*)
billion. With
the impact of rising global uncertainties and
volatility, the sector’s asset growth in 2014
came in at 10.3 percentage points below the
growth rate in 2013.
As a result of the rising funding costs in the
first half of the year, declining growth in the
Turkish economy coupled with a slowing
global economy and measures taken to
curb domestic consumption, credit growth
in the banking sector lost pace and stayed
below the rate of 2013. As of year’s end,
loan volume growth had dropped by 12.5
percentage points, from 31.9% in 2013
to 19.4% in 2014. The ratio of total loans
in total assets stood at 62.3%
(*)
, up 2
percentage points when compared to 2013.
While the sector continued with to record
positive loan based growth during the year,
the total securities portfolio grew 4.8% in
2014 compared to 2013; however, its share
in total assets decreased 1.6 percentage
points, to 15.6%
(*)
, in 2014.
The banking sector’s total deposits increased
11.6% in 2014, to TL 987
(*)
billion. In the
same period, TL deposits rose 11.7%while
TL equivalent of foreign currency deposits
grew 11.6%. The USD equivalent of total
foreign currency deposits recorded a 2.5
% rise and amounted to USD 157.6
(*)
billion
by end-2014. Meanwhile, the share of total
deposits in liabilities decreased to 52.2%
(*)
,
down from 54.1%
(*)
a year earlier.
Deposits continued to be the main funding
source in 2014. However, non-deposit
sources, especially security issuances,
were also utilized. Through the securities
issuances in domestic and foreign markets,
the diversification of funding sources,
reduction of funding costs and elimination of
maturity mismatches, to a maximum extent,
were made possible.
İşbank continued to implement
effective and dynamic balance sheet
management.
İşbank’s balance sheet management is
maintained by dynamic strategies created
for changing market conditions. It is based
on keeping necessary resources available at
any time for existing products and services
and on efficiently managing loan and
investment portfolios along with foreign
currency and liquidity positions.
While İşbank’s balance sheet development
followed a trend similar to that of sector in
2014, the share of the securities portfolio
in assets declined to 17.2%, down from
17.5%, while the share of loans increased
from 64.1% to 65.3% during the year.
While deposits accounted for the lion’s
share of liabilities at 56.2%, TL and FC
denominated securities grew by 69.9%. In
2014, the Bank issued domestic bonds/bills
amounting to a nominal value of TL 10.6
billion, with maturities ranging from three
months to one year, as well as Eurobonds
that amounted to USD 3.3 billion, with
maturities extending up to 10 years.
Strong risk management and high
quality balance sheet structure
The main objective of İşbank is to create an
optimum risk-return balance by focusing
on asset quality, cost control and efficient
use of capital and to further strengthen the
Bank’s balance sheet structure through a
sustainable profitable growth strategy.
Treasury activities related to liquidity,
investment portfolio and currency positions
are executed in accordance with the Asset-
Liability Management Risk Policy principles.
Liquidity, interest rates and currency risks
were managed in line with the Bank’s
risk appetite without compromising its
sustainable profitability policy.
Advanced risk management models were
used in all banking activities. In line with
market developments and with the target
of keeping structural interest rate and
exchange rate risk at acceptable levels, the
Bank benefited from all of the opportunities
offered by money and capital markets,
including derivatives.
İşbank aims to further strengthen the Bank’s balance
sheet structure through a sustainable profitable growth
strategy.
(*)
Calculated using monthly sector data published by the Banking Regulation and Supervision Agency. Interest accruals and
rediscounts are not taken into account. Participation banks are excluded.