Summary Report of the Board of Directors for 2020

Turk Eximbank continued to support Turkish exporters with credit and credit insurance facilities in 2020. In the reporting period, the Bank’s total support amounted to USD 45.6 billion. The Bank extended loans worth USD 28.5 billion, of which USD 6.9 billion is medium- and long-term credits. On the other hand, the Bank’s credit insurance support amounted to USD 17.1 billion. All of them combined bring the rate of support extended by Turk Eximbank to country’s total exports to 26.9% in 2020.

As of year-end 2020, Turk Eximbank’s paid-in capital was raised from TL 7.16 billion to TL 9.27 billion, which was covered by cash capital transfer of TL 750 million from the Treasury and by offsetting profit reserves in the amount of TL 1.36 billion.

Currently serving through 20 branches and 11 liaison offices, the Bank’s credit customers reached 10,612. The number of insured exporters, on the other hand, reached 4,617. Hence, the total number of customers increased by 4% to 13,102; of these firms, 71% are SMEs.

An overview of 2020 activities…

2020 was a year domineered by the COVID-19 pandemic for Turkey, as it was for the rest of the world. During this period, Turk Eximbank strove to effectively fulfill its part of the duty in the most effective way possible by quickly implementing the necessary measures in an effort to mitigate the economic and financial impacts of the pandemic. As part of the steps taken, maturity extension possibility was offered for credit programs, and was granted to credits with a total worth of USD 4.4 billion in 2020. Within the scope of Rediscount Credits, both medium-term FC credit facilities and also short-term TL credits were made available in addition to short-term FC credits. TL 7.9 billion were disbursed in credits within the scope of TL Rediscount Credits. Under the protocols signed with the KGF, Treasury-backed credit support packages were introduced, and TL 2.9 billion were extended in credits. In addition, export commitment periods and limit maturities assigned to insured buyers were extended.

Despite all the challenges 2020 has presented, credit support increased by 7% year-on-year. The insurance volume slimmed down by 2% in connection with the 6% decline in our country’s exports. Total support extended by Turk Eximbank in this period went up by 4% year-on-year to USD 45.6 billion.

With the aim of decreasing exporters’ financing costs in the first 3 quarters during which the effects of the pandemic were particularly heavy, single-digit TL lending rates policy was sustained taking into consideration also the CBRT funding cost, and CBRT-funded low-cost TL rediscount credit facility was offered besides the TL credits limited to the Bank’s shareholders’ equity extended to the SMEs and exporters manufacturing high-technology products. The Bank’s TL lending went up by 38% year-over-year and reached USD 2.6 billion.

High demand for Rediscount Credits originating from CBRT, which is an important source of finance for exporters, continued in 2020. Rediscount credits disbursed under the Pre-Shipment and Post-Shipment Rediscount Credit programs amounted to USD 23.5 billion, which accounted for 82.5% of the Bank’s total lending volume. The balance of the said fund reached USD 15.8 billion as of 31 December 2020.

The loans disbursed under International Loans Programs in 2020 amounted to USD 35 million, and 42 letters of intent were issued in favor of Turkish companies for projects/export deals to be carried out in 18 countries with goods and services export potential worth USD 4 billion. Within the scope of trade finance transactions, the Bank continued to provide competitive financing options to buyers of the investment goods exporters at “Commercial Interest Reference Rate” (CIRR) within the scope of the support granted by the Ministry of Trade.

During the reporting period, shipments worth USD 17.1 billion were covered under receivable insurance, with short-term export credit insurance representing 90% of it. While premiums collected totaled USD 52.4 million, claims paid amounted to USD 32.7 million.

New Products…

Besides increasing the support in 2020, Turk Eximbank introduced three new products:

• Letter of Guarantee Program was introduced to fulfill the letter of guarantee demands of international contractors and domestic manufacturers of investment goods for export on order-basis.
• Credit Program Based on the Insured Export Receivables has created a collateral pool of export receivables insured by Turk Eximbank and allowed exporters to borrow independently from shipment terms.
• Participation Finance Investment Credit, which works with participation banking principles, was introduced to finance exporters’ financing needs for investment outlays with the murabaha method.

Turk Eximbank continued to obtain funds to be offered to exporters...

Turk Eximbank carried on with its attempts to obtain low-cost funds from supranational institutions abroad such as the World Bank, Islamic Development Bank and Council of Europe Development Bank. In 2020, Turk Eximbank secured foreign currency funds in the amount of USD 3 billion from capital and credit markets for financing exports and export-oriented investments, and thus maintained the fund stock obtained from international markets at USD 9.5 billion level. Additionally, the Bank increased its total fund stock by 2% year-over-year in USD terms to USD 25.6 billion, including subordinated and domestic bond issues in TL, and CBRT rediscount facility of USD 15.7 billion.

Digital Transformation Keeps Up the Momentum …

While paving the way for becoming a digital bank, Turk Eximbank gave priority to internal and external process digitalization by adding momentum to electronic transformation processes. In this context, the first phase of the systemic infrastructure alteration project for achieving increased productivity, efficiency and speed in insurance processes went live in August 2020. On the other hand, Turk Eximbank Credit Online application launched in 2020 lets exporters access their credit information online.

Major Steps in International Partnerships …

Turk Eximbank attaches special importance to establish new partnerships and to strengthen the existing links of cooperation in order to maximize the support it lends and to help increase the competitiveness of Turkish exporters and contractors in the international arena. In this framework, a reinsurance contract was signed with Denmark’s official credit export agency EKF for financing the projects that will be jointly carried out by Turkish and Danish companies in third countries, and a general cooperation agreement was signed with the Eastern and Southern African Trade and Development Bank (TDB), which will pave the way for co-financing of projects/deals to be undertaken by Turkish companies in TDB-member countries or to be jointly undertaken by member-country and Turkish companies in other countries, in addition to the ones signed in earlier years.

Sustainable Export Policies…

Placing great emphasis on sustainable exports, Turk Eximbank began implementing the “Environmental and Social Risk Model” in order to assess environmental and social risks associated with credit and insurance transactions and to ensure their effective management in alignment with the Bank’s strategy.

Explanations about Turk Eximbank’s Balance Sheet and Profit & Loss Statement

Turk Eximbank’s balance sheet size reached TL 204.2 billion (USD 27.7 billion) as at 31 December 2020.

Turk Eximbank’s assets are composed of credits by 87%, liquid assets by 6%, and marketable securities measured at amortized cost and other assets by 7%.

The Bank’s loan portfolio reached TL 179 billion, up by 25% in the twelve months to end-December 2020. Of the total credits, 70% (TL 126.1 billion) are short-term credits and 30% (TL 52.9 billion) are medium- and long-term credits. Through effective risk assessment methods pursued, Turk Eximbank works arduously to timely and fully collect its credits. As a result, although a substantial portion of the Bank’s funds are channeled to the exports industry in the form of credits, the ratio of non-performing loans (NPL) to total loans is well below the sector’s average and stands at 0.3%.

Turk Eximbank’s total liabilities were worth TL 204.2 billion. Of these, 6% (TL 11.4 billion) consisted of shareholders’ equity, 92% (TL 189.4 billion) of external funds, and 2% (TL 3.4 billion) of provisions and other liabilities.

Out of the Bank’s shareholders’ equity of TL 11.4 billion, 81% (TL 9.3 billion) pertains to paid-in capital, 6% (TL 632.1 million) to profit reserves and others, and 13% (TL 1.5 billion) to net profit for the period.

TL 189.4 billion of foreign resources used for funding the Bank’s assets consisted of TL 115.5 billion in credits sourced by the CBRT, TL 45.1 billion in credits provided from domestic and foreign banks, TL 22.9 billion in marketable securities issued, TL 4.5 billion in subordinated loans, and TL 1.4 billion in borrowings from money markets.

At its Extraordinary General Assembly convened on 12 January 2017, Turk Eximbank switched to the registered capital system and increased the authorized capital to TL 10 billion. The Bank’s paid-in capital is currently TL 9.3 billion.

Although special and general provisioning ratio for the Bank for transactions within the scope of the Law governing its establishment is set at zero percent pursuant to “Article 21 - Exemptions” of the “Regulation on Procedures and Principles for Classification of Loans and Provisions to be Set Aside by Banks”, Turk Eximbank sets aside provisions within the frame of Turkish Financial Reporting Standards 9.

The ratio of Turk Eximbank’s liquid assets including short term loans to short-term liabilities was registered as 107% as of 31 December 2020.

The credit-weighted composition of Turk Eximbank’s balance sheet bears effects also on income. Of the Bank’s TL 5,011 million in total interest income, 84% (TL 4,229 million) came from interest earned from credits. On the other hand, the Bank’s interest expense was TL 3,789 million since the Bank secures funds by way of borrowing from domestic and overseas money and capital markets and through bond issuances. Of this amount, 55% (TL 2,085 million) was interest paid on borrowings from domestic and international markets, 44% (TL 1,682 million) was interest paid on marketable securities issued and 1% (TL 22 million) was other interest expenses. Hence, net interest income was TL 1,223 million.

The Bank booked a net profit of TL 1,511 million as of 31 December 2020. Therefore, the Bank registered return on assets and return on equity ratios of 0.78% and 16.4%, respectively, and a capital adequacy ratio of 20.02%.

The Bank carries out its operations in accordance with the legislation governing it and the provisions of its Articles of Association, and we hereby present our summary report pertaining for the period ended 31 December 2020 for your review.

		Rıza Tuna TURAGAY                  Deputy Chairman
Nail OLPAK Member		Ali GÜNEY Member		Osman ÇELİK Member
	İsmail GÜLLE Member		Fahriye Alev ARKAN Member