Chairman's Message

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Esteemed Stakeholders,

The Turkish economy has started to give strong signals of recovery from the recession occurred throughout the current year. It seems that the government focuses on building the new economic structure by utilizing the favorable structural balance in the economy, namely positive current account balance. Ultimate goal in this new framework is to enter into sustainable economic growth path and have overall welfare to expand in the long-run.

In general, the latest data as the end of third quarter display increasing number of positively performing indicators. The industrial production have performed narrowing negative growth, tourism and export behave quite well and strong, inflation is on downward trend despite having some base effect, rates in the economy nicely follows trend of inflation etc. are actually examples for those indicators. In addition to that, newly announced New Economic Program of 2020-2021-2022 is expected to have some boost to overall weak recovery in the economy, since the Program envisages some institutional & structural reforms which play as bottleneck for economic growth. The fact is that, the Program targets 5% economic growth in the medium-term on the back of one-digit inflation, small current account deficit and declining unemployment rate.

Despite hard and challenging times, the overall banking system has succeeded to maintain risks within the acceptable levels, and profitability at two-digit territory. But it is a fact that, overall slowdown in the economy, is being reflected into the performance indicators of the banking system. In any way, according to latest data, the total assets of the system in the end of August has increased by 10% compared to the end of the previous year reaching TL 4.270 billion. The same trend was recorded in loan portfolio as well, where growth rate and amount equal to 6% and TL 2.537 billion, respectively.

It is a tradition, therefore, we are proud to say that PASHA Bank as a dynamic market player keeps going on its healthy expansion with the pace of above the market. In general, continuous investment onto strengthening of internal capabilities, starting from building core competencies for managing business to increasing human capital potential of the Bank, has already demonstrated its strategic return in the form of capable navigation through the stressful times.

As a result, total assets of the Bank increased 19% as compared to the same period of the prior year to TL 1,605 million. Our gross cash loan and leasing receivables portfolio, comprising 66% of total assets, reached TL 1,055 million with a 23% increase. Due to effective risk management framework, and prudent credit policy pursued by the Bank we have been successful in preserving low level of NPL in our balance sheet. It is worth to underline that flexible revisiting of credit policy, adjusting tactics of credit and underwriting policy to the current realities of macroeconomic environment etc. are forming substance of the overall risk approach of the Bank. As a reliable indication of trust to the Bank and the national economy, the Bank's paid-in capital has been increased by TL 245 million in cash to a total TL 500 million and an investment property which will be used as the new headquarter of the Bank has been acquired.

The year of 2019 is actually the mid of new 2020 strategy of the Bank where the strategic objectives have been set like continuing as an investment bank, leveraging up, increasing profitability and achieving diversification. To achieve strategic objectives, the Bank would need to quickly build its balance sheet up. By the end of new strategic period, in 2020, aggressive growth of the business is envisaged where project finance, sale and leaseback and cash loans are supposed to be main drivers. All strategic targets and initiatives of the Bank are supposed to yield two-digit growth in main performance indicators, fast convergence to efficiency and profitability metrics vis-a-vis the benchmark and reliable business partner in supporting regional economic relationships. In overall, the designed strategy of the Bank doesn’t only cover impressive bottomline performance, additionally, it focuses on introducing totally different value proposition to the market, which in turn acquire its aspiration from the values of the Bank and the shareholders. It is worth to remind that due to changing economic environment, the Bank has initiated revisiting of the current strategy. In essence, the on-going process is not a change in strategy, but is finetuning with the aim of consideration tough economic realities. Within this exercise the Bank considers possible strategic options by understanding new market realities, in addition, studying experience of different investment banks across the world which ultimately results in a very good fine-tune of the current strategy. Actually, this exercise is not limited with the calibration of the current strategy, but extended with considering the next strategic period, even vision for longer horizon. In the end, it is supposed to calculate the probability of deviation from strategic KPI’s and to formulate preventive measures or actions to bring the projections to the required path.

In order to execute the strategy successfully we would allocate substantial investments in strengthening internal capabilities, including employee development, information technology, to build up the required capabilities. In overall, agility and know-how regarding focus sectors are expected to be differentiating capabilities where the Bank would need to excel risk management, credit management, fund raising, talent acquisition etc. are the direct examples for the latter. It is extremely important to remind that initiatives by the Bank with respect to strengthening risk management capacity is proved to be very preventive considering current market challenges and supportive considering IFRS 9 provisioning.

We will continue to make efforts to diversify bank’s funding structure and expand our correspondent network and investor base. In this regard, it is important to emphasize competitive advantage of the Bank which goes beyond the country borders, and comes with the strength of the Group’s presence across the region. The fact is that, the Bank has opportunity to attract funding from both Azerbaijan and Georgia, in case it sees favorable interest rate developments there, and this potential is being materialized during the current strategic period. We will maintain our prudent approach to managing credit risks so that the asset quality of the Bank is not affected by the current environment characterized with increasing tensions and stress in the market. We shall continue our efforts of offering products and services that are tailored to our customers’ needs to make banking experience a gainful experience with PASHA Bank.

I am truly looking forward to share prosperous operating environment with all stakeholders which provides enormous benefit to all parts, and serves to build business relationships based on mutual interest. to have an operating environment supported with stability at macro level and shared prosperity of stakeholders at micro level. Therefore, I would like to take this opportunity to thank our valued employees and our management team for their dedicated professional work, our customers for their confidence in PASHA Bank and our shareholders and all business partners for their valuable support. It is definitely their goodwill that renews our belief in ourselves and our potential to be more.

Sincerely Yours,