Garanti Bank remains resilient amid volatile Turkish economy

Turkey’s banking sector is expanding despite market risk. Garanti Bank has remained resilient thanks to insightful strategy, technological infrastructure and a focus on quality

Garanti Bank’s Istanbul headquarters
Garanti Bank’s Istanbul headquarters 

The second half of 2016 saw a sharp deterioration in risk perception towards emerging economies. At the same time, tumultuous political and geopolitical events led to the Turkish economy shifting away from other emerging economies.

And yet, despite these adverse developments, Turkey’s macroeconomic indicators were largely unscathed: economic growth contracted only slightly during the third quarter of 2016, before quickly bouncing back and exceeding economists’ expectations.

Remarkably, while political events were hitting headlines worldwide, Turkish GDP growth for the year came in at a respectable 2.9 percent. Against this setting, the Turkish banking sector was able to maintain its positive momentum and achieve impressive results.

Across the sector, there was an increase in net profits to TRY 37.53bn ($10.73bn) in 2016, up substantially from TRY 26.05bn ($7.45bn) the previous year, according to the Turkish Banking Regulation and Supervision Agency.

Garanti Bank’s resilience and strategy provides a prime example of how leading banks can remain stable even against a shaky external backdrop. Set apart from the competition with its technology, rich product range and efficient and dynamic process management, Garanti is able to provide its 13.2 million retail customers with a distinctive and quality service.

How did Garanti Bank’s retail performance remain resilient throughout 2016?
Despite the fluctuations in the economic environment and in exchange rates, Garanti was able to accurately assess the market and its customers’ needs in 2016.

The bank was not only able to manage its deposit costs effectively, but also managed to increase its market share in the aggregate measure of its time deposit products, including those in both domestic and foreign currency.

Notably, the bank was also instrumental in instilling savings habits in 356,000 of its customers. It was able to do so through the implementation of sound products such as its NET savings account product.

Also influential was the introduction of the Turkish Government’s incentivised marriage and housing accumulating accounts, which act to encourage citizens to save money.

Over the course of the year, Garanti increased its share in the consumer loans market (excluding consumer credit cards) to 14.6 percent, and thus held onto its position as Turkey’s biggest private bank lender to consumers.

In addition, it disbursed general purpose loans to approximately one million individuals over the course of the year, bringing the total volume to TRY 18bn ($5.15bn) and accounting for 11.52 percent of market share.

Furthermore, the bank was able to preserve its leadership among private banks for its mortgage provision, which accounted for 14.2 percent of total market share.

In April 2015, Garanti launched a new series of SMART funds which offer customers a brand new perspective on their investments. The funds hold investments in a number of commodity market products in both domestic and overseas markets.

By the end of 2016, Garanti had introduced SMART funds to nearly 26,000 retail customers, with the total volume of investment reaching more than TRY 570m ($163.01m).

Not only have the funds grown remarkably quickly over the past year and a half, but they have now become the largest variable fund available in the market.

What infrastructure does Garanti have in place?
Garanti has been operating in the retail banking sector for 29 years. The bank provides a wide range of financial services through an extensive distribution network of 959 domestic branches, with seven branches in Cyprus, one in Luxembourg and one in Malta.

It has three international offices in London, Düsseldorf and Shanghai. It also has a total of 4,825 cashpoints and an award-winning call centre, as well as internet, mobile and social banking platforms, all built on cutting-edge technological infrastructure.

How does Garanti differentiate itself from competitors in terms of market position?
Established in 1946, Garanti Bank is Turkey’s second-largest private bank, with consolidated assets of $88.8bn as of the end of 2016. Garanti is unwavering in its drive to maintain sustainable growth by creating value for all of its stakeholders.

At the core of our strategy is the principle of approaching customers in a transparent, clear and responsible manner, while continually improving the customer experience by offering products and services that are tailored to their needs.

Indeed, the bank owes its leading position in the Turkish banking sector to its competent and dynamic human resources, unique technological infrastructure, customer-centric service approach, innovative products and strict adherence to quality.

Garanti continues to differentiate itself and facilitate the lives of its customers with its dynamic business model and advanced technology, which is integrated with its innovative products and services.

Its custom solutions and wide product variety both played a key role in achieving its current position of holding $73.3bn in cash and non-cash loans. In addition, high asset quality continues to set Garanti apart from others in the sector. This is achieved through advanced risk management systems and established risk culture.

One of Garanti Bank’s core values is sustainability: a commitment to build a strong and successful business for the future, while minimising negative environmental and social impacts and upholding corporate governance.

Garanti’s sustainable approach is reflected in its community investment programmes, with commitments in a broad variety of arenas such as sports, arts, nature, education and the business world.

What can we expect from Garanti Bank in the coming years?
The year ahead will likely see continued volatility in both national and global markets. Despite challenging market conditions, Garanti aims to draw on its differentiated and dynamic business model to sign its name under many new success stories.

Garanti will take several key actions over the coming year. In line with the aims of Banco Bilbao Vizcaya Argentaria (BBVA), Garanti’s new majority shareholder, the bank will ensure that customer satisfaction remains a top priority.

BBVA’s tagline reads: “Creating Opportunities”; Garanti will bring new opportunities to its customers by offering them the best banking solutions, helping them make the best financial decisions and making a true difference in their lives.

In 2017, Garanti Bank’s asset growth is expected to remain loan-driven. Looking ahead, the bank will continue to actively shape its fund mix and optimise its funding costs.

While deposits will make up the larger part of its funding base, the focus for deposit growth will remain on sticky, low-cost mass deposits. Besides deposits, Garanti will continue to use alternative funding resources.

Amid ongoing regulatory compliance requirements in the industry, Garanti will focus on improving efficiency in its business processes, resource utilisation and customer relations in order to reach its sustainable profitability target.

Within these strategies, savings accounts, consumer loans and investment products will remain focal points. Furthermore, Garanti will aim to increase the adoption of payment and loyalty products which are vital to attracting customers’ cash flows to the bank.

In keeping with the constantly growing digital trend in the banking industry, Garanti will continue to offer easily accessible new products and services for customers and keep increasing the share of digital channels in sales.

Garanti is also renovating its service model at branches to provide a more digital and user-friendly experience. By using digital technologies, Garanti will aim to offer better, easier and faster services.

As branches continue to play a significant role in how customers bank, Garanti will continue to invest in its working relationship with customers.