MURAT BİLGİÇ
CHAIRMAN OF THE BOARD OF DIRECTORS
REAL SECTOR
FURTHER CONCRETIZING ITS CONTRIBUTION TO THE TURKISH ECONOMY WITH THE SUPPORT IT LENDS TO THE REAL SECTOR, OUR COMPANY CONTINUED TO TAKE PLACE AMONG THE LEADING SERVICE PROVIDERS OF THE LEASING SECTOR WITH THE FINANCING FACILITIES IT MAKES AVAILABLE TO THE SMES.
Dear Stakeholders,
Before presenting for your review and approval the annual report, financial statements and profit distribution proposal, which provide a summary of the 2019 performance and results of İş Leasing and which have been prepared in accordance with the Capital Market Law and applicable legislation, I would like to give an overview of the world and national economy, and make a brief assessment of the leasing sector, and the position of İş Leasing.
A YEAR OF REGRESSION FOR GLOBAL GROWTH AND TRADE
2019 went down in the history as a year characterized by shrank industrial production volumes, increased protectionist trade policies, expansionary steps of central monetary authorities, Brexit, and global and regional political issues.
While the US had one of its longest lasting growth periods, Eurozone displayed a weaker growth as compared with the previous year. The emergence of political uncertainties in Italy, Spain and UK during the course of the year, and the Brexit process reflected negatively on the growth tendency in the area. While Japan grew below the projections amid the Asian economies that continued to lose momentum, Chinese economy registered the lowest growth performance of the past three decades.
With the increased weight of global risks in 2019, almost all central banks and primarily the US Federal Reserve (the Fed), which was expected to implement a tight monetary policy throughout the year, turned to expansionary monetary policies. The objective of this move was to restrain the negative effects and expectations stemming from increased downside risks with the increasing liquidity.
Global growth estimate for 2019, which was revised downwards several times by the International Monetary Fund (IMF), stands at 2.9%, which is the lowest level observed after the 2008-2009 period.
Global trade declined in parallel with contracted demand, and the World Trade Organization (WTO) announced its growth estimate for total external trade volume at the lowest of the past decade with 1.2%.
The IMF revised its growth projection for 2020 as 3.3%. The predicted slowdown in growth rates is also backed by some lead indicators such as the Manufacturing Purchasing Managers Index (PMI). Data flowing in the last quarter of 2019 point at contracted activity in major economies including the US, Germany, Japan, Russia, South Korea and the UK. The growth issues of China (IMF 2020 projection 5.8%) and the reduction of the demand it creates play a big part in this stagnation.
Within this general framework, monetary policy tool options of global monetary authorities (low and even negative interest rates and excess liquidity) are increasingly diminishing. The authorities are anticipated to back the current process with enriched fiscal policies and to lend support with public expenditures against the stagnation signals of the economy.
AFTER CONTRACTING FOR THREE QUARTERS, THE TURKISH ECONOMY IS BACK ON GROWTH TRACK.
The Turkish economy spent the period between the second half of 2018 and the first half of 2019 dominated by high-interest and high-inflation and shrank demand as a period of successful rebalancing. While a gradual improvement has been observed throughout the year, after performing on the negative side for three quarters, the economy signaled that it has set out on a positive course with its 0.9 value in the third quarter of 2019.
The funding costs that picked up amid the high-inflationist environment slipped down to early-2018 levels within the scope of the rebalancing process backed also by the global conjuncture. During this recuperation period, it was observed that investment appetite began to revive slowly and the realization of postponed investment demands gained speed.
While record levels were reached in exports in 2019, the current deficit, which was at its lowest of the past nine years with the effect of contracted demand, improved gradually.
With the growth figures back to positive values, the direction of domestic demand will be critical. In this framework, the course of oil prices will be watched closely with respect to the level of current deficit, as is customary. The funding of current deficit and public borrowings to be undertaken in an effort to support growth will almost be the most important variables regarding the value of the Turkish currency and interest rates.
We believe that 2020 will be another year compelling prudence and close monitoring and controlling of financial risks.
AMID TOUGH CONDITIONS, İŞ LEASING CONSOLIDATED ITS STRONG POSITION IN THE SECTOR.
After remaining flat (in fact, having declined when sale-and-leaseback transactions are excluded) in the three years from 2015 through 2017, the sector ended 2019 with 46.7% contraction YoY in parallel with the weakened demand and investment environment.
Amid the specific market conditions of 2019, İş Leasing adopted a selective and risk-sensitive approach to its credit expansion. Further concretizing its contribution to the Turkish economy with its support to the real sector, our Company continued to take place among the leading service providers of the leasing sector with the financing facilities it makes available to the SMEs.
In line with the projected rate of growth for our country in 2020, we are anticipating the new transaction volume of the leasing sector to gradually acquire an uptrend upon revival of postponed investments.
Maintaining our belief that we will build on and further increase our performance in a relatively more balanced economic and sectoral environment in the year ahead, I would like to thank all our stakeholders who have stood by us with their support and contributions on behalf of the Board of Directors and myself.
Sincerely,
Murat Bilgiç
Chairman of the Board of Directors
