HALKBANK SUSTAINABILITY REPORT| 2018 |

MESSAGE FROM
THE CHAIRMAN OF THE BOARD

Esteemed Stakeholders,

In order to add more value to our Productive Turkey and for our people, we are delighted to share with you our fifth Sustainability Report.

Every year, we share our report on the sustainability performance of our Bank with an aim to develop “transparent”, “clear” and “responsible “ sustainability reporting with a centralized approach.

Despite a combination of global and local uncertainties during 2018 which negatively impacted the balances of the banking sector, the strong financial position of Turkey’s banking sector continued its support to the economy whilst preventing a liquidity squeeze within the domestic market. With our Bank’s vision as “The Bank of Productive Turkey”, we were able to protect and support Turkey’s economic stability.

With the support given, creating strong and conscious SMEs which will contribute to the country’s economy are one of the indispensable factors for our target of a “Strong and Productive Turkey”. Whilst fulfilling for role as a global bank and with a vision as the sector’s leading SME Bank during 2018, continued our mission to provide a quality personal service, added value to our customers, shareholders and employees not only in terms of the economy but also in terms of social and environmental benefits.

Halkbank won the first place prize in the “Banking and Other Financial Services” sector at the Turkey’s 500 Largest Services Exporters Awards organized for the third time by the Turkish Exporters’ Assembly(TIM).

As Halkbank; moving forward, taking into consideration the global and domestic trends as well as the changing needs, our vision will be to create a sustainable growth model that will create value for all our stakeholders. Whilst developing the corporate strategy, we will also take into consideration the main developments and expectations within the framework of sustainability as important data sources.

I would like to thank all our stakeholders for their continuous contribution and support in Halkbank's sustainability efforts and for a stronger Turkey.

Best Regards,
R. Süleyman ÖZDİL
Chairman of the Board

MESSAGE FROM THE GENERAL MANAGER

Esteemed Stakeholders,

As one of the strongest supporters of the real sector with its contemporary banking approach, our Bank continues to improve the quality of its products and services in line with the demands and expectations of our customers, and strives to add value to our country with our corporate sustainability culture. Sustainability Culture is a corporate priority for our bank and supports our continuous development whilst steering us to move forward with innovative steps in line with our strategies towards “A Strong Turkey” goal”. I am delighted to share our fifth annual report with you which we prepared with a transparency understanding and is an important source of happiness for us.

The stakeholder analysis and sustainability priorities which are managed by our Sustainability Committee and carried out with the participation of all of our stakeholders are the main topics that form the content of this report. This process, in which all stakeholder expectations are determined and evaluated actively, is annually developed within the scope of our activities of Sustainability Management.

In 2018, global financial markets mobility and protectionist policies that began to stand out in world trade directly affected the economies of emerging market.Financial fluctuations occurred worldwide that led to the Turkish economy having to take some precautions. With the “New Economy Program” which focuses on export- focused economic growth and places information and technology on the center in the industry, aims to provide stability and balance the economy whilst maintaining high budget discipline and to also realise economic change for sustainable growth in the medium term.

2018 which is the year of this report, became a year in which we continued our support for the development of our country and for sustainable improvements.

Our Bank completed 2018 with 2,5 billion TRY net profit and 9.3% return on equity. While our total assets reached to 378,4 billion TRY with a 23.9% increase when compared to 2017, our total deposits reached to 248,9 billion TRY.

The volume of our commercial loans including SME loans reached to 205,8 billion TRY by increasing 27.9% in 2018.As a result of our leading activities at the field of SME, our total loans including in cash and non-cash loans became 333,6 billion TRY with a 28% increase. During the same period, our tradesmen’s loan volume reached 31,1 billion TRY.

Our Bank, which carries out its activities by applying all of its corporate governance principles on all decision-making mechanisms was included in the BIST Sustainability Index during November 2018 and October 2019 and is solely for those corporates that have the highest sustainability performance within Borsa Istanbul. Our Bank also became one of the companies included within the “FTSE4Good Index Series” (FTSE Emerging) founded by independent organization FTSE on the London Stock Market within 2018.

Within the reporting year, international targets such as Global Development Goals and Paris Agreement were evaluated within the scope of the hardship and opportunities and as a result of our sustainability understanding, fundamental issues such as climate changes, human rights as well as financial performance ranked among the top targets and strategies of Halkbank. Within the scope of the sustainability activities, we aim to improve our current performance and whilst adding value simultaneously.

Our Bank,whose awareness with regards to the problems deriving from climate change and the risk of low water resources, responded to these risks by also taking into consideration The Carbon Disclosure Project (CDP) Climate Change and Water Program within this report as we have done during the previous years. Our Bank continues to take precautions to develop the energy and environmental performances.

I believe that we will continue to add value our country with continued successes without sacrificing from our understanding of the productive resource usage and the understanding of banking based on financing diversity..

I would like to express my gratitude to all of our stakeholders who support Halkbank on this journey of sustainability.

Sincerely,
Osman ARSLAN
Director General

MESSAGE FROM
THE PRESIDENT OF THE SUSTAINABILITY COMMITTEE

In the world, practices about sustainable business models are gaining importance and is positively affecting the banking sector.

Halkbank maintains its activities creating common values for the community and nature, increasing collaborations for the future of the next generations, where transparency, continuous development and innovation is at the forefront with the belief of a more livable future as well as for the business world and economy.

As a member of the Halkbank family, we are targeting to create positive values for our shareholders by gathering our sustainability strategies with our main operations and our perfection with the effort of including our sustainable business model into the whole processes of the bank.

Our Sustainability Committee which maintains its activities with the vision of the Bank of the Productive Turkey performs the coordination of all of the activities which serve this vision by defining the necessities and the expectations of our shareholders.

Within this scope, action plans complying with the sustainable developments both in our country and in the world are formed.

While we define all of the steps to be taken for the fight against climate change under the notion of sustainability as in the whole world, we are managing the concerning risks and opportunities in compliance with our sustainability strategy by evaluating the effects of the issue on the activities of our bank. In addition to the official processes, issues such as technologic transformation and the expectation of the public are within our evaluation criteria.

Apart from being a financial leader as a bank which has an important place for the Turkish economy, we care to have a position that paves the way for the corporations and shows the sustainability activities in Turkey by carrying out our own efforts whilst increasing awareness of our sustainability performance.

By increasing the integration of sustainability into our business model; Our main objective is to strengthen the relations between economic, social and environmental issues and to improve our performance further.

Sincerely,
Sadık TILTAK
President of the Sustainable Committee