Annual Report 2011

2011 ANNUAL REPORT Contents SECTION I - Introduction SECTION II – Management and Corporate 03 Annual Report Compliance Opinion Governance 04 Agenda of the Ordinary General 102 Summary of the Board of Directors’ Shareholders’ Meeting Annual Report 05 Amendments to Article of Association 103 Board of Directors and Auditors 06 About Garanti 104 Senior Management 08 Corporate Profile 108 Committees and Committee Meetings 09 Our Vision, Mission and Strategy Attendance 10 Main Pillars of Our Strategy 111 Support Services Providers 11 Our Core Values 111 Risk Management Policies 12 Milestones in Garanti’s History 116 Audit Committee’s Assessment of 14 2011 Macroeconomic Overview the Internal Control, Internal Audit and 16 Chairman’s Letter Risk Management Systems 17 Letter from the CEO 118 Related Party Risks 20 Financial Highlights 120 Corporate Governance Principles 22 Garanti in 2011 Compliance Report 22 Key Financial Indicators 22 Key Financial Ratios SECTION III – Unconsolidated Financial 23 Garanti’s Competitive Advantages and Statements Market Shares 134 Independent Auditors’ Report 24 Garanti: The Leading Bank in Turkey 135 Unconsolidated Financial Report as of 24 Key Financial Figures (5 year) and for the Year Ended December 31, 26 Assessment of Financial Position, 2011 Profitability and Debt Payment Capability SECTION IV – Consolidated Financial 27 Garanti’s Credit Ratings Statements 28 Auditors’ Report 220 Independent Auditors’ Report 28 Profit Distribution 221 Consolidated Financial Report as of and 29 Information on Garanti Bank Share for the Year Ended December 31, 2011 30 Awards 307 Directory 36 2011 Activities 38 Retail Banking 40 Private Banking 42 SME Banking 44 Housing Finance 45 Commercial Banking 46 Corporate Banking 47 Cash Management and Transaction Banking 48 Project Finance 50 Branchless Banking / Alternative Delivery Channels 52 Call Center 54 Payment Systems / Credit and Debit Cards 58 Investment Banking 60 Insurance and Pension 62 International Banking 64 Treasury 66 ABACUS 68 Human Resources 70 Garanti’s Integrated Subsidiaries In Garanti Bank 2011 Annual Report, the next generation barcode technology 88 Continuous Progress and Innovation “QR code” is used. Please scan the image with your “QR Code Reader” equipped 94 Sustainability and Garanti smartphone to access the related website for additional content on Garanti. This annual report is printed on 100% recycled paper. Introduction Food is an essential necessity of life… A This is where we step into Garanti Bank’s requisite for human survival… Hence we kitchen. The products and services offered consume food to obtain the necessary by Garanti are backed by significant kitchen nutrients, to stay healthy, and to lead a fit and work of numerous teams. Just as in a chef’s energetic life. culinary production; management, organization and teamwork processes are pursued in This “obligation”, however, is almost Garanti’s kitchen. Everything smoothly flows completely transformed with the new in a structure for the creation of better and approaches introduced to processes from innovative products and services. preparation and cooking to presentation phases. It has merged with concepts we have Thousands of highly motivated and devoted heard of so far in the management world, and employees of Garanti blend in their unrivalled has turned into a skill, a form of art, a job and competencies and execution skills to create even an industry. high quality services and products. The ultimate goal is to make sure that these But how did food merge with services and products leave a “delectable management? taste” on the palates of customers enjoying the Garanti privilege. “Kitchen” is the primary place where meals are cooked and even enjoyed most of the time. It Garanti themed its 2011 Annual Report around is a production center. Successful production “kitchen” with the aim of emphasizing the in the kitchen calls for sound management, importance of the management kitchen for good organization, correct timing and sustainable success. Garanti successfully creativity. A visual feast filled with delicious delivers the “kitchen” and “management” tastes emerges from the combination of skills, metaphor throughout all stages, and it goes inventiveness and focus of the person or the beyond and above the expectations and team performing the cooking. differentiates with its innovative approach to processes. Garanti knows what Turkish people For cooking, it is necessary to combine the want, sees what the global economy requires, relevant-costs with quality ingredients - in and prepares itself accordingly. Garanti takes other words, advanced purchasing skills are safe and sound steps for sustainable growth. required! The quality of the result is derived from a perfect combination of the ingredients Garanti knows that it is capable of making the and their cooking. Recipes serve to predict the dreams it has for its customers come true. The outcome; and for distinction, creativity has to Bank carries on its operations in line with the go hand in hand with the recipe. A good dish target of best presenting the ideas produced should have an elegant look, as much as an in the management kitchen. Its achievements, exquisite taste. Presentation has a major role in awards, competent employees and happy the first impression the dish creates. customers nourish Garanti in the preparation and the offering of innovative, high quality, and While a good preparation and cooking process customer-oriented products emerged from the produces a delectable course, an execution “Garanti Kitchen”. And it shall continue doing based on correct planning and effective so… management creates successful results. GARANTI BANK 2011 ANNUAL REPORT 1 More than “Food”… “You can tell a lot about a fellow’s character by the way he eats jelly beans.” Ronald Reagan / Former President of the United States “All happiness depends on a leisurely breakfast.” John Gunther / American journalist and author “Good food ends with good talk.” Geoffrey Neighbor / Food blogger “Bear in mind that you should conduct yourself in life as at a feast.” Epictetus / Philosopher “Food is our common ground, a universal experience.” James Beard / Famous American gourmet “I feel a recipe is only a theme, which an intelligent cook can play each time with variation.” Madame Benoit / Famed expert in French cuisine “A smiling face is half the meal.” Latvian proverb “You can’t just eat good food. You’ve got to talk about it too. And you’ve got to talk about it to somebody who understands that kind of food.” Kurt Vonnegut / Author – A major name in contemporary American literature “A good cook is like a sorceress who dispenses happiness.” Elsa Schiaparelli / Famous Italian fashion designer “To eat is a necessity, but to eat intelligently is an art.” François de La Rochefoucauld / 17th Century French author “I like a cook who smiles out loud when he tastes his own work. Let God worry about your modesty; I want to see your enthusiasm.” Robert Farrar Capon / American priest who has written books on cooking in his life 2 GARANTI BANK 2011 ANNUAL REPORT DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Sun Plaza Bilim Sok. No: 5 Maslak, Şişli 34398 İstanbul, Türkiye Tel : (212) 366 6000 Fax : (212) 366 6010 www.deloitte.com.tr ANNUAL ACTIVITY REPORT Compliance Opinion To the General Assembly of T. Garanti Bankası A.Ş.: We have audited the accuracy and compliance of the financial information in the accompanying annual activity report of T. Garanti Bankası A.Ş. and its consolidated financial affiliates with the audit report issued as of December 31, 2011. The Board of Directors of the Bank is responsible for the annual activity report. As independent auditors, our responsibility is to express an opinion on the audited annual activity report based on the compliance of financial information provided in the annual activity report with the audited financial statements and explanatory notes. Our audit was performed in accordance with the accounting standards and principles and procedures of preparing and issuing annual activity reports as set out by the Banking Act No: 5411. Those standards require that we plan and perform our audit to obtain reasonable assurance whether the annual activity report is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. ln our opinion, the financial information provided in the accompanying annual activity report presents fairly, in all material respects, the financial position of T. Garanti Bankası A.Ş. as of December 31, 2011 in accordance with the prevailing accounting principles and Standards set out as per the Article 40 of the Banking Act No: 5411. The financial information provided in the annual activity report is in compliance with the audited financial statements and explanatory notes, and also includes the summary Management eportr and our audit opinion on these financial statements. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBESİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED Hasan Kılıç Partner İstanbul, March 15, 2012 GARANTI BANK 2011 ANNUAL REPORT 3 Agenda of the Ordinary General Shareholders’ Meeting 1- Opening and formation of the Board of Presidency, 2- Authorization of the Board of Presidency for signing the minutes of the Ordinary General Meeting of Shareholders, 3- Reading and discussion of the Board of Directors’ Annual Activity Report and Auditors’ Reports, 4- Reading, discussion and

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