ABOUT GARANTI

“A classical fencer is supposed to be one who observes a fine position, whose attacks are fully developed. One must not forget that this regularity is not
possible unless the adversary is a party to it. Fencing is a conventional bout, which consists of parries, attacks, and returns, all rhyming together.”
Louis Rondelle (The great French master of fencing of the 19th Century)
ABOUT GARANTI
In 2010, Garanti refrained from
destructive competition and
continued to be Turkey’s most
profitable private bank, on the back
of its competence in accurately
analyzing the current conjuncture,
forecasting, and making the right
moves.
08 GARANTI BANK ANNUAL REPORT 2010
GARANTI BANK ANNUAL REPORT 2010 09
CORPORATE PROFILE
Garanti Bank, with an established history of
64 years, today is Turkey’s second largest
private bank having total consolidated assets
reaching US$ 90 billion.
Garanti provides a wide range of financial
services to its 10 million customers through
an extensive distribution network of 853
domestic branches; 6 foreign branches in
Cyprus, Luxembourg and Malta; 4 international
representative offices in Moscow, London,
Düsseldorf and Shanghai; over 3,000 ATMs;
an award-winning Call Center; and the
state-of-the-art internet and mobile banking
platforms built on cutting-edge technological
infrastructure.
Garanti operates in every segment of
the banking sector including corporate,
commercial, SME, retail, private and
investment banking. Along with its nine
expert subsidiaries providing services in
payment systems, pension, leasing, factoring,
securities, and portfolio management, Garanti
is an integrated financial services group.
Moscow-based GarantiBank Moscow (GBM),
Amsterdam-based GarantiBank International
(GBI), and Romania-based Garanti Bank SA
with its 65 branches are also included among
these subsidiaries.
Garanti commands a pioneering position in
all lines of business through the profitable
and sustainable growth strategy it pursued
since the day of its inception. Its competent
and dynamic human resources capable of
making a difference, unique technological
infrastructure, customer-centric service
approach, innovative products and services
offered with strict adherence to quality carry
Garanti to a leading position in the Turkish
banking sector.
Following the best practices in corporate
governance, Garanti is co-managed by
two powerful companies, Doğuş Holding
and GE Capital, under the principle of
equal partnership. Garanti stands out as
a strong and prestigious brand with an
effective management style and prudent risk
management approach.
Developing new and innovative products and
services, Garanti accomplished many firsts not
only in Turkey, but in the global banking arena
as well. With its dynamic business model and
importance placed on technological innovation,
Garanti continues to differentiate itself and
to facilitate the lives of its customers as it
unconditionally stands by them.
Its custom-tailored solutions and the wide
product variety play a key role in Garanti’s
positioning as the largest lender in Turkey
with its contribution to the economy of more
than US$ 57 billion cash and non-cash loans*.
The high asset quality attained through
advanced risk management systems and
established risk culture differentiates Garanti
from its peers.
Refraining from limiting its contribution to
the sector and the national economy via
banking services alone, Garanti is dedicated to
creating added value for the society. Within
this context, Garanti’s long-term support
in the areas of culture, arts, environment,
education, and sports reflects its commitment
to this mission, as well as its keen sensitivity to
sustainability.
*Based on BRSA consolidated financials
10 GARANTI BANK ANNUAL REPORT 2010
VISION/MISSION/STRATEGY
SHAREHOLDING STRUCTURE OF
T. GARANTİ BANKASI A.Ş.
as of December 31, 2010
Share
(%)
Doğuş Holding A.Ş.
26.7025
Doğuş
Other
Araştırma
Shareholders Geliştirme ve
48.6339
Müşavirlik
Hiz. A.Ş.
3.7989
OUR VISION
GECC
GE
(GE CapItal
Araştırma
CorporatIon)
ve
19.8503
Müşavirlik
Limited Şirketi
1.0000
Doğuş Nakliyat
ve Tic. A.Ş.
0.0144
INSIDER HOLDINGS
The Chairman, members of the Board
of Directors, the CEO and the Executive
Vice Presidents are allowed to own
publicly-traded shares of Garanti Bank;
their transactions in Garanti Bank shares
are publicly disclosed pursuant to Capital
Markets Board regulations.
Is to be the best Bank in Europe.
OUR MISSION
Is to continuously and noticeably increase the value we create for our customers,
shareholders, employees, the society and the environment by utilizing our influence,
agility and organizational efficiency.
OUR STRATEGY
Is to maintain long-term sustainable growth by continuously creating value.
GARANTI BANK ANNUAL REPORT 2010 11
MAIN PILLARS OF OUR STRATEGY
Focus on customers
• Innovative products and high service
quality
• Unrivalled competence, experience and
implementation capability
• Exceptional business processes
throughout the Bank
• Guidelines on customer satisfaction
Focus on the continuity
of technological
innovation
• The best and the fastest technological
equipment that is progressing continuously
and integrated with business segments
• Most up-to-date IT infrastructure
Focus on competent
human resources
OUR CORE VALUES
Focus on sustainable
income sources and
profitability
• Focus on high-return products and
profitable business segments
• Increasing non-interest income
• Emphasis on creation of customer-driven
income
• Continuous improvement in cost of
borrowing and free capital
• Development of cross-selling opportunities
by prioritizing products and packages that
enhance customer loyalty
Focus on strong
distribution channels
• Extensive and efficient branch network
• Effective and broad-based utilization of
alternative distribution channels
• Continuous improvement in competency
and efficiency of human resources
• Performance-based incentive structure
Focus on risk
management and audit
Focus on operational
efficiency
• Measurement of risk using globally
accepted standards
• Portfolio-wide risk management that
associates risk with return and leads to
optimal allocation of economic capital
• Proactive audit systems
• Focus on improving productivity
• Focus on cost/income synergies
Focus on disciplined
growth
Focus on corporate
governance and social
responsibility
• Sustainable and profitable balance-sheet
growth focused on real banking
• Strong asset quality
• Outstanding service and distribution
competencies in reaching target markets and
a wide customer base
• Commitment to corporate governance,
ethics and corporate values
• Playing an active role in establishing high
standards for social development with an
approach toward creating value for the
society and the environment
12 GARANTI BANK ANNUAL REPORT 2010
Setting strategies
to be adopted for
the execution of
its vision and
mission, Garanti
also defined binding
corporate values
that all employees
shall abide by.
These core values,
indispensable for
Garanti employees at all
levels, have become
a way of life and
way of doing
business for all
employees of the Bank.
“Our customers…”
Team work
are the focus of all our operations and
efforts.
• We always strive to satisfy our customers
above and beyond their expectations.
• We are honest, courteous, helpful,
solution-oriented and always pleasant.
• We believe in effective team work and
open lines of communication. We do not
compromise these principles.
• We are opposed to strict layers of
hierarchy.
• Garanti team members from the CEO
to the lowest ranking personnel and all
institutions we work with as one unit to
realize the vision.
• The effective team work of the Bank is
strengthened by collaboration, mutual trust
and respect.
“Garanti and its
employees have high
moral values”
• We conscientiously obey rules and
regulations without exception.
• Having a good conscience is very
important for both the organization and the
individuals within it.
“The most important
element for us is the
human factor”
• We value individuals and invest
continuously in human resources.
• Our quality is driven and ensured by our
employees.
• Every team member is driven primarily by a
quest for quality.
• We understand the importance of
delegating responsibilities.
• We encourage our employees to use
initiative.
• We believe in the creative and productive
powers of motivation and strive to generate
such an environment.
• We believe that each member of our team
is a leader in his/her field and the best at
what he/she does.
Continuous progress
• We maintain the quality of our services by
constantly improving ourselves rather than
maintaining the status quo.
• Investing in our people and technology
to achieve continuous progress is an
inseparable element of our policy.
• Our primary duty is to sustain a high level
of quality while constantly improving the
quality of our products and services.
• Our approach to improving quality is
proactive; we strive to identify the
needs and expectations of our customers
and address them even before they are
voiced by the customers.
Social responsibilities
• We exert every effort to be beneficial to
society, the environment and humanity.
• We are confident that our exemplary work
will promote good will within the banking
sector and the entire country.
GARANTI BANK ANNUAL REPORT 2010 13
MILESTONES IN GARANTI’S HISTORY
• First bank to work during
lunch time
•Introduced the first Cash
Management Account in
Turkey (E.L.M.A.).
• Became the first
multi-branch private bank in
Turkey to offer real-time online
services.
• The first Turkish bank to offer
internet and telephone banking
together.
• Went public; its shares
began trading on the ISE.
• Founded in
Ankara.
1946
1983
1990
1993
1995
1996
• First Turkish company to
issue shares in international
markets.
• Joined Doğuş Group, a
conglomerate operating
in finance, industrial and
services sectors.
• Introduced Bonus Card, Turkey’s
first chip-based and multi-branded
credit card.
• Introduced Shop & Miles, Turkey’s
first credit card that earns miles while
shopping.
• First private bank to
launch “Business Owner
Package”dedicated to support
SMEs.
• Established Cash Management
unit and offered Turkey’s first
Direct Debit System.
14 GARANTI BANK ANNUAL REPORT 2010
1997
1999
• Established Turkey’s
first interbank card
platform with Bonus
Card.
2000
2001
2002
2003
• Introduced world’s first flexible credit card, FlexiCard,
enabling customization of all parameters including
financial and visual.
• Introduced Bonus Trink, the PayPass featured credit
card with contactless chip technology.
• Initiated Turkey’s first bill payment service via P.O.S.
machines.
• Offered “5 minute loan” service whereby the applicant
receives the evaluation in 5 minutes.
• World’s first bank with ID scanning facilities
in branches created Turkey’s first “paperless
banking”operating environment.
• First private bank to offer “Woman Entrepreneurs
Support Package”.
• The only bank in Turkey with exclusive rights to issue
American Express Centurion Line Cards and to accept
merchants to its network.
2005
• Merged with Ottoman
Bank, another banking
subsidiary of Doğuş
Group.
• The first bank to offer “Virtual
P.O.S.” system.
• Launched Turkey’s first
e-trade website
(http://eticaret.garanti.com.tr)
• First bank in the world to
issue trade payment rights
securitization.
• Offered Turkey’s first
Online Direct Debit
System.
• First bank in the world to offer
SMS-based money transfer via
CepBank.
• First Turkish company to receive
the Investors in People (IIP)
achievement certificate for the quality
of its human resources practices.
• Turkey’s first cardless bill payment
and money deposit transactions
through ATM.
• General Electric and Doğuş Group
became equal strategic partners in
Garanti Bank.
2006
• Bought back founder share certificates,
an important move toward improved
corporate governance.
• Launched Turkey’s first Inventory
Finance System.
• Established Turkey’s first mortgage call
center, 444 EVIM.
• Launched Loan via P.O.S., commercial
installment loan offered through P.O.S.
system, a first in the world and in Turkey.
• Performed Turkey’s first cardless
remittance via ATMs, where both parties
are non-bank customers and want to
transfer money.
2007
• Partnership agreement with one of the
prominent insurance companies in Europe,
Eureko B.V. (Holland) to transfer 80% of
shares in Garanti Insurance and 15% of
shares in Garanti Pension.
• Launched “Garanti Discount”, Turkey’s
first web-based supplier financing system.
• Launched Turkey’s first Direct Debit
System with risk sharing model.
• Introduced PayPass featured Bonus Trink
credit cards in the form of watch and key
fob – both firsts in Europe and sticker- a
first in the world.
• Bonus Trink started to be used in public
transportation in Samsun and Çanakkale, a
first in Europe application.
• Introduced Environmentally Friendly
Bonus Card, a first in Turkey and Europe
with its features as an ecologic product
such as its plastic, communication
materials and donation characteristics.
• First bank in Turkey to offer web-based
transactions on TurkDex (The Turkish
Derivatives Exchange)via online banking.
2008
• Established Environment Committee
with the aim of evaluating and
managing environmental risks which
are caused directly by the operations
or indirectly by the provided loans.
• Introduced another first in Turkey by
performing Western Union transactions
through ATMs as well as Internet
Banking.
• Launched the world’s first NFC
(Near Field Communication) payment
enabled SIM card “Bonuslu Avea”.
2009
2010
• Turkey’s first bank to offer
“e-government” payments.
• Introduced Money Card, Turkey’s first credit
card which is multi-branded and also offers
brand-specific loyalty benefits.
• Launched Turkey’s first last minute
EFT service.
• Offered Western Union transactions via
Internet branch as a first in the world.
• Developed Turkey’s first Gold
Financing System.
• Launched DCC (Dynamic Currency
Conversion) P.O.S. enabling foreign card
holders to pay in their own currencies.
• Submitted its greenhouse gas emissions
emerging from its operational activities to the
Carbon Disclosure Project.
GARANTI BANK ANNUAL REPORT 2010 15
2010 MACROECONOMIC OVERVIEW
Turkish economy
was one of the world’s
fastest-growing
economies in 2010
driven by domestic
demand, while
current account
deficit expansion led
some measures to be
taken.
Following 2009 that was heavily inflicted with
the effects of the global financial crisis upon
economic activity, 2010 was a year of recovery
for the world economy. According to IMF data,
the global economy that contracted by 0.6% in
2009 is estimated to expand by 4.8% in 2010.
Despite the accelerated worldwide economic
growth in 2010, the disparity in the growth
rates of developed and emerging countries
became even more pronounced. As developed
countries suffered from a graver and deeper
impact due to the crisis that arose from their
own financial markets, the result was a slower
pace of post-crisis recovery in these countries
compared to emerging countries. While
increasing unemployment ratios in developed
countries and debt issues that became evident
particularly in Europe made it difficult for
economic activity to be restored to its former
state, pre-crisis levels have been recaptured in
many of the emerging countries, within which
especially Asian countries are active.
Turkey stands out among emerging countries
for her quickly revitalized economic activity
in 2010 following the sharp contraction of
4.7% in 2009. With 8.9% growth rate in the
first three quarters of the year, the economic
expansion in Turkey represents the highest
figure among European and OECD countries.
Although official data are yet to be published,
Turkey is estimated to emerge as one of the
world’s fastest-growing economies in 2010
with a growth rate of approximately 8%.
The components of growth in Turkey indicate
that growth is driven by domestic demand,
whereas it is pulled down by net foreign
demand. In the January-September period,
domestic demand contributed 13 points
towards growth as foreign demand pushed
it downward by 4.1 points. Net foreign
demand remained limited due to the effect
of the problems that were partially unsolved
in European countries which make up an
important part of Turkey’s export market.
16 GARANTI BANK ANNUAL REPORT 2010
Ongoing debt issues in the Euro Area and
uncertainties about the future give rise to
concerns about the coming year’s export level.
As much as Turkey succeeds in increasing
her share in various export destinations,
recuperation in exports remains restricted due
to the magnitude of the European market.
In 2010, exports went up 11.5% on an annual
basis and reached US$ 113.9 billion. The
moderate increase in exports was outpaced
in 2010 by imports owing to vibrant domestic
demand and the Turkish lira that continued
to gain value in real terms. In 2010, exports
grew 31.6% year-on-year to US$ 185.5 billion.
During the same period, foreign trade deficit
reached US$ 71.6 billion by 84.6% increase.
The expansion in foreign trade deficit brought
along increased current account deficit.
Corresponding to 2.3% of the GDP with US$
14.0 billion in 2009, current account deficit
amounted to US$ 48.6 billion in 2010. The
current account deficit is estimated to account
for nearly 6.5% of the GDP at the end of the
year.
Deteriorated quality of the financing of the
current account deficit was striking in the
reporting period, as well as the rapid expansion
therein. In 2010 that was characterized by high
liquidity across the globe, low interest rates in
developed countries led to accelerated money
flow in the form of portfolio investments, in
particular, into emerging countries where
interest rates were relatively higher. Thus, the
share of short-term investment inflows climbed
high in external financing. Local currencies
that gained value as a result of the accelerated
capital movements ignited the so-called
currency wars debate in the world. While some
emerging countries adopted measures against
investment inflows, some others introduced
decisions to cool down the economy.
Certain measures were introduced also in
Turkey by the end of the year due to the
increased pace of the current account deficit
expansion and deteriorated financing quality.
While tax rates were differentiated depending
on maturity in overseas bond issue in an
effort to promote longer terms in capital
inflows, major changes were made to the
monetary policy of the Central Bank of the
Republic of Turkey (CBRT). The CBRT stated
that the expansion in the current account
deficit constitutes a risk element for financial
stability and took steps to mitigate that risk.
Upon disclosing its exit strategy from the
countermeasures adopted during the crisis by
mid-2010, the CBRT put these changes into
life by taking the relevant steps throughout the
year. In May, the CBRT announced that the
policy rate was converted into one-week repo
rate, 7%, given the fact that the liquidity level
in the market turned from surplus to deficit. In
addition, the margin was augmented between
overnight borrowing and overnight lending
rates so as to reduce short-term capital inflow.
In the last month of the year, policy rates were
slashed by 50 basis points to 6.5% in an
attempt to slow down the flow of short-term
capital into Turkey. The CBRT first pulled the
required reserve ratios imposed on TL and
US$ assets during the crisis up to pre-crisis
levels, and then announced different required
reserves for different maturities in TL required
reserves in December 2010 aimed at securing
longer maturities in TL deposits. Targeting
decelerated credit expansion on the back of
the decisions adopted, the CBRT expressed
that the net impact of the latest measures
introduced contributed towards tightening.
Underlining that financial stability gained
increased importance, the CBRT stated that
price stability continued to be critical. The
inflation in consumer prices went over 10%
in April owing to the price increases effected
in tobacco, fuel oil and alcoholic beverages
and high food prices that prevailed in 2010,
and dropped to 6.4% at the end of the year
as a result of the normalized food prices.
Consequently, annual inflation remained below
the CBRT’s inflation target of 6.5%.
In 2010, central budget deficit were under
Medium Term Fiscal Plan estimates. According
to the estimated GDP for 2010, central budget
deficit over GDP seem to remain approximately
at 3.5%, below the government’s projection
of 4%.
Superior tax income on the back of aboveexpected recovery in economy and expenses
realized in-line with projections had an effect
on budget performance.
8.9%
Among European & OECD countries
first three quarters
The hIghest
growth rate
$ 48.6 billion
2010 current account deficit
measures Introduced
to slow down economy
6.4%
2010 CPI inflation
In lIne wIth the CBRT
InflatIon target
GARANTI BANK ANNUAL REPORT 2010 17