PARTICIPATION BANKS 2012 PARTICIPATION BANKS ASSOCIATION OF TURKEY PARTICIPATION BANKS ASSOCIATION OF TURKEY PARTICIPATION BANKS 2012 PARTICIPATION BANKS ASSOCIATION OF TURKEY PARTICIPATION BANKS ASSOCIATION OF TURKEY CONTENS PRESENTATION WORLD ECONOMY TURKISH ECONOMY Mr. UFUK UYAN While Western The Turkish economy The participation banking economies shrunk, decelerated, the system gaining momentum Eastern economies grew current account deficit 06 08 20 started to narrow TURKISH BANKING SECTOR GLOBAL INTEREST-FREE BANKING PARTICIPATION BANKS The banking sector Global interest-free banking Participation banks have growing on the back of has reached US$ 1.6 trillion room to grow 28 economic stability 34 40 INTERVIEW ANALYSIS ANALYSIS Mr. OSMAN AKYÜZ Mr. FAHRETTİN YAHŞİ Mr. AHMET BEYAZ “2013 will be a better year Our aim is to ensure our We will continue to do than 2012” bank has a robust structure the firsts… in the international arena 48 54 4 58 PARTICIPATION BANKS ASSOCIATION OF TURKEY CONTENS PARTICIPATION BANKS ASSOCIATION OF TURKEY ANALYSIS ANALYSIS YEAR OF FOUNDATION 2002 Mr. UFUK UYAN Mr. V. DERYA GÜRERK We power the Continuing to create added development of the value through the concept of MEMBERS Turkish economy principled banking PARTICIPATION BANKS OPERATING IN 64 72 TURKEY CHAIRMAN OF THE BOARD OF DIRECTORS Ufuk UYAN Kuveyt Türk Participation Bank Inc. MEMBERS OF THE BOARD OF DIRECTORS Albaraka Türk Participation Bank Inc. Asya Participation Bank Inc. Kuveyt Türk Participation Bank Inc. Türkiye Finans Participation Bank Inc. FINANCIAL DATA FINANCIAL STATEMENTS SECRETARY GENERAL Main Financial Financial Statements of Osman AKYÜZ Tables and Charts Participation Banks AUDITORS 78 84 Süleyman SAYGI - İsmail GERÇEK HEAD OFFICE Kısıklı Caddesi No: 22 Altunizade 34662 Üsküdar/İstanbul PHONE +90 216 651 94 35 (Pbx) FAX +90 216 651 94 39 WEB PAGE ALL BRANCHES www.tkbb.org.tr Participation Banks with all their Branches E-MAIL [email protected] 94 5 PARTICIPATION BANKS ASSOCIATION OF TURKEY PRESENTATION Mr. Ufuk UYAN Chairman of Participation Banks Association of Turkey The participation banking system gaining momentum n interest-free participation ban- crises every 10-15 years, and the increa- king sector has earned two popu- sing frequency of these crises in recent ye- Consisting of banking, Sukuk, Tekaful Alar characteristics such as ‘sound ars has raised concerns and distrust thro- and mutual funds and operating in 75 co- and healthy banking’ on the back of be- ughout the world. The financial and debt untries in the world through more than ing closed to speculative transactions and crisis in the Eurozone in 2012 is a clear 600 institutions, the interest-free finance uncertainties in addition to adopting a example of this, itself following the global sector grew by approximaPhoney 15% in close relationship with real economic ac- economic crisis that was triggered by the 2012 over its 2011 level, reaching a volu- tivities. This is why participation banking US financial crisis in 2007-2008 – the basis me of US$ 1.6 trillion in 2012 from US$ 1.4 has become a banking model that attracts of which can be traced back even earlier trillion in 2011. The business, and the in- interest and attention, not only in our to 2004-2005. The fact that global finan- terest-free banking and Sukuk operations own country or in Islamic countries, but cial transaction volumes were 500 times in particular, attracts interest from all over also from almost all regions and countries higher than the real sector’s transaction the world. US$ 131 billion worth Sukuk throughout the world. In recent years, our volumes in October 2008, a time when was issued only in 2012. Thus, the primary Union has received requests for meetings the effects of the global crisis were at their Sukuk issuance volume had reached US$ about participation banking from all over most pronounced with the bankruptcy of 398 billion and secondary market reached the world, as the attention in the business Lehman Brothers, reveals that the major US$ 231 billion by the end of 2012. grows. Meanwhile, there have been a se- reason of the crisis was the abnormal and ries of conferences and panel discussions unhealthy growth in the financial sector, There were a number of initiations in organized in many countries, led by Ma- decoupling from the real sector and cre- Turkey regarding Participation Finance laysia. A sense of insecurity in the global ating bubbles. However, the interest-free during 2012. The Treasury issued a US$ and conventional finance system lies on finance sector does not allow such exces- denominated Sukuk for the first time. the basis of this interest and attention. sive growth and bubbles, due to its cha- Compared to an offer of US$ 1.5 billion by The repetition of financial and economic racteristics mentioned above. the Treasury, external demand amounted 6 PARTICIPATION BANKS ASSOCIATION OF TURKEY PRESENTATION to US$ 8 billion. Furthermore, the return The key development in our sector in It will depend on us - or in other rate of the lease certificate was formed at 2012 was that participation banks succee- words the sector players – to ensure that the lowest level (2.8%). The Treasury, aga- ded in increasing their share in the sector, participation banks attain their deser- in, undertook another initiation in 2012 with an increase in their share in total as- ved position in the market. Possessing issuing TL denominated Sukuk at an amo- sets from 4.6% to 5.1%, and in total funds the right information for every segment unt of TL 1,625 million with the aim of inc- collected from 5.6% to 6.1% and in total in society, preventing disinformation, reasing domestic savings, expanding the funds utilized from 5.8% to 6%. In hard efforts to increase information and awa- investor base and diversifying financial figures, total assets increased by 25% to reness through publications, meetings, instruments. The Treasury also started ini- TL 70,245 million, total funds collected panels, forums and conferences aimed at tial preparations for the establishment of by 23% to 49,151 million and total funds universities, professional economic ins- two participation banks to enhance par- utilized by 22% to TL 49,980 million. The- titutions and non-governmental organi- ticipation banking and improve its share se figures compare to the overall banking zations will serve as the most important in the sector, with the target of raising the sector’s growth rates of 13% in total as- tools in reaching this aim. In addition to share of participation banking in the total sets, 11% in deposits and 17% in loans. As our duties with regard to informing, we system from the current 5-6% to 10% wit- such, the participation banking segment must also strive when it comes to ban- hin 2-3 years. Meanwhile, there have also saw growth rates double that of the wider king operations. We can comfortably been some statements from large-scale sector, particularly in terms of total assets claim that our sector has achieved signi- private banks indicating that they may and total funds collected. Another reason ficant progress in this area. We have suc- consider establishing participation banks. the wider sector has displayed a relatively ceeded in accessing a larger customer low rate of growth in funds collected (de- base by rapid branching and alternative One major development concerning posits) was the fact that the sector has distribution channels, adapting the most participation finance was the removal of addressed bonds and T-Bills in source up-to-date banking technologies, having some taxes and charges on the issue of collection in addition to deposits. Having qualified human resources and following Sukuk by the private sector - which had gained full banking status at the end of customer oriented policies in all operati- been the largest hurdle - and some tax 2005, participation banks have displayed ons and products. However, we will have items were reduced to the levels of other rapid growth in all indicators since then. to work even harder and focus more on domestic borrowing instruments, such as The number of employees in participation customer satisfaction if we are to seize Treasury bonds and T-Bills, in an equali- banks increased by 11% during the year, the opportunities. We are in a position to zation of conditions. At the same time, in from 13,857 at the end of 2011 to 15,356 achieve this with our existing potential, line with the CMB’s new Lease Certificate by the end of 2012, effectively meaning motivation and strategies. I would he- (Sukuk) Communiqué Draft, Sukuk will that the participation banking sector bro- reby like to extend my appreciation to all not only be issued via asset leasing but ught 1,500 new jobs to the country’s ove- of our employees who have contributed also will be permitted via other partici- rall employment. The number of branches to our customers’ satisfaction, and to our pation finance tools such like Murabaha, also increased from 685 to 829 during the shareholders who have provided their Mudaraba and Musharaka. year. full support. 7 PARTICIPATION BANKS ASSOCIATION OF TURKEY WORLD ECONOMY While Western economies shrunk, Eastern economies grew ■ Developed Western countries, which could not shake off the effects of the recession which resulted from the global financial crisis, faced a harder year in 2012. According to an IMF report, while Western economies grew by 1.6% in 2011, the same countries could only muster up 1.2% economic growth in 2012. ■ Eurozone Economies suffered a contraction in 2012. Having recorded 1.4% growth in 2011, the Eurozone economy contracted by 0.6% in 2012. Germany, the motor of the EU economy, managed 0.9% growth, preserving its appearance in the block.