Page 44 - A&T BANK ANNUAL REPORT 2012

GENERAL INFORMATION
CORPORATE MANAGEMENT
FINANCIAL INFORMATION
Dear Shareholders,
We are honored to host you at the Annual Shareholders Meeting of A&T Bank. We would hereby like to present you with a
brief assessment of economic and banking developments in Turkey, followed by information on the financial and operational
performance of the Bank in 2012.
The environment of uncertainty, which prevailed the world over in the wake of the economic crisis, persisted into 2012. Global
economic activity has not yet reached desired levels; the ineffectiveness of fiscal policies in supporting growth, especially in
developed countries, continues to hamper the recovery. Lingering public finance problems in the US are a major threat to
global growth while uncertainties over the economic outlook of the European Union fuel the risk of recession. Despite regional
discrepancies, growth prospects for emerging markets, which grew robustly during the preceding period, have also been
revised downward, mainly due to adversities in more developed countries. On the other hand, the rise in global liquidity, which
is a result of the quantitative easing policies implemented by developed nations in order to stimulate their economies, bolsters
the risk appetite of the markets and thus instigates capital flows towards emerging nations with relatively sound financial
structures and high growth potential.
In Turkey, during the first nine months of 2012, economic activity continued to slow. The country’s economy, which had
recorded GDP growth of 8.5% for the prior year, expanded at an annualized rate of 3.2% at the end of the first nine months of
2012. A pessimistic growth outlook for the Eurozone, which plays a key role in Turkey’s export volume as its major trading
partner, dampened external demand. However, exports continued to trend upward driven by rising demand from Africa and the
Middle East, which accounted for a steadily growing share of Turkey’s export volume in the reporting period. In the meantime,
imports declined due to shrinking domestic demand.
Turkey’s foreign trade deficit decreased by 21% to US$ 84 billion in 2012 compared to US$ 105.9 billion a year earlier.
Improvement in the trade balance led the current account deficit to fall by 36.6% to US$ 48.9 billion in 2012 compared to US$
77.1 billion the prior year. Interest rates in the domestic market decreased due to supportive policies of the Central Bank and
a partial improvement in global risk perception; loan interest rates also tend to decline in parallel with market rates. On the
inflation front, the consumer price index (CPI) dropped to 6.16% in 2012, compared to 10.45% a year earlier.
Indicators suggest that the banking sector, which began to implement Basel II in July 2012, generally retained its solid
structure. Banks also maintained high capital adequacy ratios and posted strong profits. Scenario analyses that measure the
resilience of the banking sector against potential shocks arising from loan and market movements indicate that total equity of
the sector is strong enough to absorb possible shocks.
• In 2012, total assets of the sector increased by TL 153.1 billion to TL 1,370.8 billion, up 12.6% compared to year-end 2011.
The balances of the loans and securities portfolios, the most significant placement items, were TL 794.8 billion and TL 270
billion, respectively. Loans and non-performing loans (gross) rose by 16.4% and 23.4%, while securities dropped by 5.3%,
compared to year-end 2011.
• Total deposits increased 11% over year-end 2011, reaching TL 771.9 billion while total equities amounted to TL 181.9 billion,
an increase of 25.7%.
• Profitability performance indicators suggest that the Turkish banking sector has retained its healthy structure compared to
the banking industries in other countries. The sector recorded profit of TL 23.6 billion in 2012, rising TL 3.7 billion or 18.9%
year-on-year. Return on equities increased from 15.5% to 15.8% in the same period.
• At the end of 2012, the capital adequacy standard ratio stood at 17.9%, compared to 16.6% at year-end 2011.
THE BOARD OF DIRECTORS REPORT
SUBMITTED TO THE GENERAL ASSEMBLY