MURAT BİLGİÇ
Chairman of the Board of Directors
Firm steps
As we determinedly embrace change, we quickly adapt to the current circumstances and evolving conditions drawing on our experience, agile management concept, our innovative strength, and the hard work of our colleagues, and charge ahead strongly to perpetuate our position in the future.
Dear Stakeholders,
Before presenting the annual report, the financial statements and profit distribution proposal which provide a summary of the 2020 performance, and results of İş Leasing that have been prepared in accordance with the Capital Market Law and applicable legislation for your review and approval; I would like to give an overview of the global and national economy, and make a brief assessment of the leasing sector and the position of İş Leasing.
Global economy is suffering a contraction induced by the pandemic.
Having burst into our lives in 2020, the pandemic evolved into a health and economic crisis of a global scale with constantly increasing reach and depth. It imprinted the reporting period as it suppressed the entire value chain due to the destruction it caused on production capacity and supply chains.
In an effort to mitigate the impacts that the pandemic produced on the global economic activity, many countries have declared relief packages of asset purchases that cover unprecedented magnitudes, liquidity support and credit schemes, while central banks turned to expansionary monetary policies; central banks of developed economies such as the US Federal Reserve System (the Fed) and the European Central Bank (ECB) injected significant liquidity to the markets through massive bond purchases, in addition to pursuing low-interest rate policies.
As equity markets sustained historic plunges due to the surged volatility in financial markets, high outflows took place in asset investments in developing countries due to the declined global risk appetite, and risk premiums increased markedly.
As geopolitical events also took their toll on global economic activity, the US Presidential election held in the last quarter of the year and the ensuing developments gained the foreground in the world politics.
European countries sustained the hardest hit in terms of economic damage in 2020, during which all economies including the world’s leaders suffered from high contraction rates particularly in the second quarter. China has been the only major economy that did not shrink, benefiting also from the fact that it has taken the pandemic under control.
While the Economic Outlook released by the IMF in January 2021 estimated a contraction of 3.5% for the global economy due to the pandemic, the global growth projection for 2021 was revised as 5.5%.
In the long run, the policies that will be pursued by emerging markets and developing economies in order to ameliorate their healthcare and educational services, digital infrastructures, business and governance practices will help alleviate the economic damage caused by the pandemic and increase shared welfare.
Growth of the Turkish economy was restricted as well.
After starting 2020 with increasing momentum following the rebalancing period, the Turkish economy shrank in the second quarter in connection with the repressive impacts of the pandemic-related restrictive measures applied on economic activities. Having grown 4.5% year-over-year in the first quarter, the economy suffered a sharp decline, narrowing down by 9.9% with the effect of the globally stagnated economic activity in the second quarter. Notwithstanding, with the 6.7% growth registered in the third quarter, Turkey decoupled from the G-20 countries, undersigning the strongest performance in that league, and ended the year with 1.8% growth.
As a result of expansionary monetary and fiscal policy and financial repression, the Turkish economy exited stagnation with a V-shaped growth; meanwhile the balance of payments, exchange rate and inflation fronts presented significant issues. Having adopted an upturn, inflation hit the year’s highest level at 14.6% in December. Deserting the rate cut policy sustained for nearly a year and turning to tight monetary policy and simplification in June 2020, the Central Bank of the Republic of Turkey (CBRT) hiked the policy rate up to 17% from end-September until year-end. This shift in policy showed its positive reflections as Turkish Lira began to be appreciated while country risk premium began falling. In 2021, the CBRT will likely maintain its tight stance for a little longer.
The expansion in the foreign trade deficit that is stemmed from the pronounced contraction in European countries which receive a substantial portion of Turkey’s exports, coupled with the decline particularly in transportation and tourism revenues, and resulted in deteriorated current accounts balance. Depending on the course of the relations between the US and EU, a more positive picture may possibly arise in the financing of current deficit in the period ahead, considering the betterment tendency of the risk perception towards Turkey.
İş Leasing further cemented its position in the sector.
Having markedly contracted in 2019, the leasing sector’s transaction volume has increased by 29% -reaching USD 3.3 billion and outdoing the projections- despite decelerated economic activity due to the impact of the pandemic in 2020. The main driver behind this performance was the revival in postponed investments in the third quarter of the year, owing to the policies implemented by the economic administration.
Even amid such an extraordinary economic environment defined by increased challenges and uncertainties on a global scale, İş Leasing sustained its support to the SMEs and the real sector, and preserved its asset quality through effective risk management. With the successful results it has achieved, our Company increased its market share and the number of its customers.
Having set its focus on sustainability and digitalization, our Company gradually increases its share in the financing of renewable energy investments, and takes to the fore particularly with its financing solutions addressing solar energy. While the high amounts of loans secured from international financial institutions manifest our commitment in this respect, they also attest to the strength of our financial structure and our brand name.
As we determinedly embrace change, we quickly adapt to the current circumstances and evolving conditions drawing on our experience, agile management concept, our innovative strength, and the hard work of our colleagues, and charge ahead strongly to perpetuate our position in the future. As we carry out the necessary transformations for the future world, we are realizing change in order to rapidly take our place within the “new normal” with our comprehensive digitalization infrastructure project.
Given the ongoing presence of the pandemic in our lives in 2021, it is our topmost priority to safeguard our employees’ health in view of the developments related to the vaccine and medication, and to ensure continuity of our services.
Believing that healthy and good days have many more achievements in store for us, on behalf of the Board of Directors and myself, I would like to thank the İş Leasing family for helping us drive our Company to success with their support and contributions, and all our stakeholders.
Sincerely,
Murat Bilgiç
Chairman of the Board of Directors
