Chairman's Message

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Esteemed Stakeholders,

As it is well known, the world is living through an unprecedented economic reality stemmed from COVID-19 pandemic. It is a fact that economic landscape has been deteriorating substantially and near-term outlook is very negative with high uncertainity. Primarily due to downside risks, the international policy-making institutions are revising their outlook on downside. IMF just recently announced that the world economy is projected to decline by 4.9% this year, which is 1.9% point lower compared to April projections. This unique circumstance is not analogy of past depressions, therefore in its essence is unprecedented which the latter ultimately requires very customized and tailored business management.

In a nutshell, the overall economic activity is compressed as a result of taken measures by the government. The emerging reality has nearly impacted all sectors, regardless of the scale of severity of the impact, but the positive fact is that this shock in the end is temporary, basically it is supposed to be out of the agenda within a certain period of time. Additionally, it is worth immediately to be mentioned that quick recovery to pre-pandemic period would not be easy, since normal flow of capital, labor etc. between countries would need some lag. Therefore, business management decision should consider all aspects of this unprecedented event and act accordingly. In general, the Turkish economy is expected to be affected by the pandemic moderately if compared to other countries, and it is because of relatively succesful management of health issues and transition to gradual re-opening of the economy.

So far, the overall banking system has succeded 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 April has increased by 22% as opposed to prior year and reached TL 5.227 billion. The same trend applies to credit portfolio. Total credits of the industry reached TL 3.104 billion with an 21% increase.

It is a tradition, therefore, we are proud to say that PASHA Bank as a dynamic market player keeps going on its healthy expansion. 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 by 17% to reach TL 2.023 million when compared to the 2019 year-end. Our gross cash loan and leasing receivables portfolio, comprising 69% of total assets, reached TL 1.387 million with a 27% 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 subtance of the overall risk approach of the Bank. In addition to that, the Bank is applying forward-looking provisioning as a requirement of IFRS-9 standard, which in the essence means recognition of future credit risks in advance.

The year of 2020 is unique, since it is the final year for current strategy phase and the year ahead of upcoming 2021-23 strategy period. In general, the current strategy formulation process in the Bank has two edge; first one, is fine-tuning of 2020 strategy with the aim of consideration of new realities, the second one, working on strategy of the next period. Actually, the exercise is not limited with the calibration of the new realities, but extended with considering the longer horizon. In the end, it is supposed to calculate the probability of deviation from strategic KPIs and to formulate preventive measures or actions to bring the projections to the required path. In overall, the being designed strategy of the Bank would not only cover impressive bottomline performance, additionally, it would focus on introducing totally different value proposition to the market, which in turn acquire its aspiration from the values of shareholders. It is worth to mention that the 2023 strategy formulation process of the Bank is an inclusive process capturing contribution of different stakeholders; shareholder office as facilitator and coordinator, external consultant as creative thinker, and managerial team of the Bank as fine-tuner, and executor.

While executing the strategy, we would continue to make substantial investments to the information technologies, risk management, credit management, fund raising, talent acquisition etc. and development of our employees that are of foremost importance. In overall, agility and know-how regarding focus sectors are expected to be differentiating capabilities of the Bank. It is extremly important to remind that initiatives by the Bank with respect to strenthening risk management capacity is proved to be very preventive considering current market challenges.

We will continue to make efforts to diversify the 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, PASHA 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 volatility 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. In fact the 2023 strategy formulation process has been designed so that to provide new patterns into the operations of the Bank by fully utilyzing comparative advantage in this regard.

I am truly looking forward to share prosperous operating environment with all stakeholders which provides enourmous benefit to all parts, and serves to build business relationships based on mutual interest.

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,