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Banking Focusing on Human and Production BANKING FOCUSING ON HUMAN AND PRODUCTION 2020 ANNUAL REPORT Türkiye Finans Katılım Bankası A.Ş. - Annual Report Reporting Period: 01.01.2020 - 31.12.2020 Corporate Title: Türkiye Finans Katılım Bankası Anonim Şirketi Headquarters Address: Saray Mahallesi Sokullu Caddesi No: 6 Ümraniye/İstanbul Headquarters Telephone: 0216 676 20 00 (pbx) Headquarters Fax: 0216 676 29 05 Website: www.turkiyefinans.com.tr E-mail: [email protected] Registered E-mail: [email protected] SWIFT Code: AFKBTRIS Trade Register No: 401492 İstanbul Trade Register Directorate Central Registry (MERSİS) No: 0068006387095226 CONTENTS Presentation Management and Corporate Financial Information and Assessment Governance Practices On Risk Management 2 Türkı̇ye Fı̇nans in Brief 50 Independent Auditor’s Report on 78 The Audit Committee’s Assessment 3 Our Vision, Our Mission, Our The Annual Report of The Board of of Internal Audit, Internal Control, Corporate Values Directors Risk Management and Compliance 4 Türkı̇ye Fı̇nans’ Milestones Functions; Committee Activities 52 Board of Directors and Audit During The Reporting Period 8 Awards Committee 81 Information Concerning Risk 10 Summary Financial Information 54 Executive Vice Presidents Management Policies by Risk Type 12 Amendments to the Articles of 56 Unit Managers Within Internal 82 Information Concerning Risk Association and their Reasons Systems Management Policies by Risk Type 12 Capital and Shareholder Structure 57 Organization Chart 84 Information Regarding 13 About the National Commercial 58 Governing Bodies and Committees Consolidated Affiliations Bank (NCB) At The Bank, Participation of Bank 85 Statement of Responsibility for The Directors and Committee Members 13 Shares Belonging to the Board 2020 Annual Report In Meetings of Directors and Executive Vice 86 Dividend Distribution Policy of The Presidents in Türkı̇ye Fı̇nans 62 Türkı̇ye Fı̇nans Advisory Committee Bank and Participation Banking Activities 16 Message from The Chairman 87 Assessment of Financial Position, 64 Ordinary General Assembly Meetin 18 Assessment of The CEO Profitability and Solvency 65 Articles of Association Amendment 22 Macroeconomic Outlook and 88 5-Year Summary Financial Document Sectoral Developments Information, Including The Current 66 Summary of The Board of Year 28 Türkı̇ye Fı̇nans’s Operations in an Directors Report Presented to The Assessment of Their Results 89 Information Regarding Credit Geneassembly Rating Agency Rating Assignments 47 Information on Research, 68 Human Resources Practices and The Nature of Such Ratings Development and Applications for New Services and Activities 74 Information About Related Party 90 Publicly Announced Unconsolidated Transactions Entered Into by The Financial Statements and Related Bank Disclosures at December 31, 2020 together with Audit Report 76 Other Information 216 Publicly Announced Consolidated 77 Activities for Which Support Financial Statements and Related Services are Outsourced and the Disclosures at December 31, 2020 Persons and Organizations From together with Audit Report Which They are Obtained Contact Information PRESENTATION Türkiye Finans 2020 Annual Report 2 TÜRKİYE FİNANS IN BRIEF Thanks to its integrated channeling strategy, Turkiye Finans continuously digitalizes its services through a rapid, uninterrupted and high quality customer experience, and offers its customers a wide range of transactions and services with diversity in distribution channels through ongoing technological investments. Türkiye Finans was established in 2005 A new era of momentous change and Türkiye Finans: A face of participation with the merger between Anadolu Finans, transformation at Türkiye Finans began banking looking ahead was the first special finance corporation on 31 March 2008 when the National in Turkey, founded in 1991 with 100% Commercial Bank (NCB) acquired a 60% Having shaped its objectives and domestic funds, and Family Finans, which stake in the Bank. road map for growth in line with the operated in the participation banking principles of participation banking, sector between 1985 and 2001 under With the participation in the NCB, which Türkiye Finans continues its operations the name of the Faisal Finans Kurumu. is one of the largest capital in the Middle with the aim of ongoing improvement This union of strengths was established East area, Türkiye Finans assumed a in technological infrastructure, business in order to generate more value for new and reinforced corporate identity, processes and service approach through Turkey and to bolster the competitive bringing a new breath of fresh air to a customer-oriented understanding. advantages of both entities. participation banking, whose target audience had been growing steadily. Thanks to its integrated channeling The merger between Anadolu Finans strategy, Türkiye Finans continuously and Family Finans was approved by the With the National Commercial Bank digitalizes its services through a rapid, Banking Regulation and Supervision (Saudi Arabia) as its main shareholder, uninterrupted and high quality customer Agency (BRSA) on 28 December 2005. Türkiye Finans is a leading company experience, and offers its customers The name of the Bank was changed to that has achieved a remarkable a wide range of transactions and Türkiye Finans Katılım Bankası A.Ş. on 30 transformation, underpinned by its services with diversity in distribution December 2005. “growth reflex”, deeply-rooted know-how, channels through ongoing technological experience and its vision to carve out investments. This merger brought new growth a name for itself in the future of our momentum into the participation banking country’s participation banking. Taking firm steps towards sustainable sector and Türkiye Finans quickly became growth, Türkiye Finans offers an one of biggest participation banks in innovative and high value-added Turkey. products, services and solutions to a wide range of customers in the commercial and corporate banking and retail banking segments through its strong service platform which was comprised of 3,731 employees, 319 branches and effective alternative distribution channels as of the end of 2020. Türkiye Finans 2020 Annual Report PRESENTATION 3 OUR VISION, OUR MISSION, OUR CORPORATE VALUES OUR VISION OUR MISSION We are the participation bank To introduce participating of those who win and share bank to all individuals and together to life. corporations in Turkey with sustainable and profitable growth. OUR CORPORATE VALUES We Are Focused Diversity Is Innovativeness Is We Are Success Is On Customers Our Richness Our Strength A Single Team Our Passion It is our priority to The diversity of We use our creativity We are an agile team We strive to constantly make life easier for our our customers and and different manners of working for a common improve, to always customers who trust employees is our major thinking to improve our goal, trusting and achieve better results us and exceed their richness. products, services and respecting each other. and to be the best in the expectations. processes. competition. PRESENTATION Türkiye Finans 2020 Annual Report 4 TÜRKİYE FİNANS’ MILESTONES National Commercial Bank (NBC), the bank with the largest capital in Saudi Arabia and across the Middle East, acquired 60% of Turkiye Finans and became the Bank’s controlling shareholder. 2005 2010 2013 • Founded upon merger of Family • Launched “Organik BES”, Turkey’s first • Launched the card fee-free credit Finans and Anadolu Finans with a interest-free Individual Pension Scheme card Happy Zero and the Turkey’s first paid-up capital of TL 250 million, (IPS). mother-tailored credit card Happy Türkiye Finans began operating on 30 Anne. 2011 December 2005, with a network of 108 • Launched Haremeyn Card, offering branches. • Secured the then-largest murabaha privileges in hajj and umrah visits, and syndicated loan, worth of USD 2006 Haremeyn Şua card, showing the qibla 300 million. on the compass it features. • Increased the number of branches to • Received BBB in foreign currency 122. • Launched Siftah Card, offering SME credit rating from the international customers the option of installment • Increased the paid-up capital to credit rating agency Fitch, becoming purchase over cash payment price, TL 279 million. one of the top five Turkish banks with and Faal Card, targeting tradesmen the highest credit rating. 2007 and businesses. • Increased the number of branches to • Launched commercial credit cards • Launched “Akıllı Hesap”, the time 182. (“Business Card” and “Ticari Kart”) deposit product offering lucrative targeting corporate and commercial 2012 profit shares and other advantages. customers, to the use of the business • Overhauled its corporate identity • Secured the then-largest world. and chose Turkey’s trademark color murabaha syndicated loan of the • Increased the number of branches to turquoise as its corporate color to participation banking scene, worth of 137. emphasize its stance as the more USD 500 million. accessible, active, sincere and • Increased the paid-up capital to • Sponsored the exhibition “Dialogue innovative bank. TL 292 million. in the Dark”, visited by more than • Secured the then-largest murabaha 7 million people across 130 cities. 2008 syndicated loan, worth of USD • Undertook the commitment to support • National Commercial Bank (NBC), 350 million. The Historic Kırkpınar Oil Wrestling the bank with the largest capital in • Launched “Finansör”, the first of its Tournament, added to the List of Saudi Arabia and
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