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Dear Stakeholders,
Reflecting on the past year, our journey through 2023 has been characterised by resilience in the face of adversity and strategic agility amidst global and local uncertainties. Our steadfastness has enabled us to navigate through challenges and seize opportunities for investing in the bank’s future.
The year 2023 was marked by strong performance and achievements. The profitability levels of 2023 were exemplary, especially considering the bank operated with a very low risk appetite during a period of heightened market and credit risks. The challenges of the Turkish economy and the effects of the high-interest environment in the UK market were well-managed with historically low-risk approaches. It was reassuring to see that our long-term preparation for high-interest conditions paid off well. Our no mismatch policies regarding currencies, maturities, and interest rates resulted in an asset composition that contributed to a healthy net interest margin, driving this year’s profitability. Notably, these positive results were achieved while investing heavily in both human resources and technology.
It was equally gratifying for Group stakeholders to observe a very similar performance in 2023 across all Group Banks and companies, despite heightened local challenges. Initiatives such as Open Investment, Technology banking, and T-Gate continue to be the main drivers of the Group’s success, particularly in terms of profitability.
A significant highlight of 2023 was the appointment of Erhan Raif from the Group as CEO. It was intriguing to see him return to the same bank where he began his career over 30 years ago. Having served as CEO in a Group bank once before, I have no doubt he will replicate his past successful results. In his first six months, he has successfully assembled a fine team of C-suite executives to execute the digital transformation of the bank. Philip Sowter joined as COO and Deputy CEO, Kemal Sinecan as CTO, and Murat Ozer as CSO, all of whom are valuable members of this team poised to build TBUK 2.0. Emre Kunduraci, the current GM, is transitioning to the new Chief of Staff role and Board Secretary. Commercial Banking will be led by Andre Van Zijl, joining us in 2024 as CCO. The year 2024 began with the strengthening of our second line of defence with new CRO and Interim MLRO appointments. I also want to thank Kursat Asardag, our Executive Director and CFO, for his dedication over the past five years at TBUK. I wish him well in his new challenges in a new industry. These appointments have strengthened the bank’s governance structure through the creation of key management roles and robust succession plans, ensuring we are prepared for future challenges and opportunities.
Our revised strategic plan aims to initiate healthy growth after a period of stability. The exponentially growing UK-Türkiye relations and the consistently increasing interest of Turkish business people in using London as their international base are the main drivers behind the bank’s growth plans. The strategic ideation sessions held during our off-site meetings in various locations have been instrumental in sharpening our focus and execution plans.
Achieving full compliance with Consumer Duty Principles ahead of the regulatory deadline exemplifies our commitment to operational excellence and customer trust. Investments in systems, controls, and risk management frameworks, underscored by significant cooperation with expert consultancy firms, have fortified TBUK’s foundation for sustainable growth. The completion of the first phase of the Financial Crime Mitigation Framework Enhancement & Digitisation project marks a significant milestone in ongoing efforts to safeguard the bank’s operations and customer interests. Our operational resilience and focus on enhancing customer experience remain steadfast. Investments in cybersecurity, fraud prevention, and the successful implementation of the Confirmation of Payee project have significantly strengthened our defensive capabilities and customer service standards.
The global economy recorded a growth rate of 3.1% in 2023. However, the pace of expansion is expected to decelerate to 2.4% in 2024, influenced by central banks’ tight monetary policies and the resultant impact on the real economy via the credit markets. Despite these challenges, a rebound in global growth to 3.1% is anticipated for 2025, contingent on the absence of major disruptions.
In the UK, the Bank of England has maintained its policy rate steady at 5.25%, reflecting the broader trend of central banks sustaining elevated rates to navigate inflationary pressures and economic uncertainties. This stance, along with the resilient performance of the global banking sector amid liquidity stresses and various risks, outlines a complex yet navigable economic landscape for our operations.
The UK housing market has shown signs of recovery, with house prices increasing by 0.7% from the previous month and 1.2% year-over-year as of February 2024, spurred by reduced borrowing costs.
In Türkiye, facing high inflation, the Central Bank of the Republic of Türkiye increased the policy rate to 45% to stabilise the economy and bolster foreign investor confidence. This move toward orthodox economic policies has been positively received, marking a pivotal moment for Türkiye’s economic outlook.
I extend my deepest appreciation to our employees, customers, and shareholders for their continued support and trust in our vision and strategy. Your commitment is the cornerstone of our success and drives our pursuit of excellence.
Looking ahead, we remain focused on our strategic priorities of digitalisation, operational efficiency, and customer-centricity. Our conservative yet strategic approach to asset management, coupled with our investments in technology, people, and infrastructure, positions us well for sustainable growth.
With great pride and anticipation, we eagerly look forward to commemorating our 50th anniversary in the UK in 2024, a testament to our enduring commitment and success. Our 50th-year celebrations come with exciting news and events. Thanks to our support, the number of Turkish art galleries participating in the prestigious Photo London fair has reached eight. The pre-pandemic Mayfair branch will soon reopen to serve its HNW clients. T-Gate London will become operative this year near the Borough Headquarters, which will also undergo major renovations to create more open, collaborative, and digital workspaces. After the completion of the HQ renovation, Harringay premises will be refurbished to meet the growing needs of our North London operations. We will host receptions in Istanbul, London, and Cyprus to celebrate these well-earned 50 years of presence in the UK, one of the world’s most challenging financial markets.
The positive economic outlook for Türkiye and the profitability achieved across the Group in 2023 reinforce our confidence in our strategic direction and future prospects.
Thank you for your unwavering support as we continue to navigate these interesting times and capitalise on the opportunities that lie ahead.
With great pride and anticipation, we eagerly look forward to commemorating our 50th anniversary in the UK in 2024, a testament to our enduring commitment and success.