What major strategic changes has Kuveyt Türk made in recent years to respond to changing customer preferences and market opportunities?
Kuveyt Türk has been serving retail and wholesale customers for 30 years and is the largest participation bank in Turkey in terms of asset size. Kuveyt Türk served mostly corporate customers until around 2008, when it expanded its services to retail, commercial, SME, and corporate segments. In 2009, we laid the foundations of digital banking and established a platform-based structure. We have redesigned personalized customer and employee experiences, taking into account the changing expectations of the digital generation. Thus, we aimed to create a culture of work that is transparent, simple, agile, and prominent. This process gave us the opportunity to switch from a product-oriented structure to a customer-oriented structure, from a process-oriented structure to an experience-oriented structure, and from a transaction-centered structure to an interaction-centered structure. In 2015, we expanded internationally by establishing KT Bank AG as our 100% subsidiary in Germany, becoming the first interest-free bank operating in continental Europe.
How has Kuveyt Türk been impacted by the recent economic instability?
2H2018 was an especially difficult period in terms of fluctuations in exchange rates, interest rates, and inflation, but due to the measures taken by the relevant public authorities we entered the normalization process. The efforts of banks to renew their syndicated loans were significantly successful and as a result the economy has stabilized. In this environment, maintaining the asset quality for banks and minimizing the damage in their balance sheets are extremely vital. We are closely following the risks of our customers and strive to keep our non-performing loans (NPLs) at a minimum level. As a result, as of end-2018, the NPL ratio in the banking sector was 3.7%, and we managed to keep this ratio at 2.47%. Through our early prevention and monitoring committee created solely for this purpose, we ensure that our head office and branches are in close contact with each other to take timely actions. The Central Bank's decision in May 2018 to forbid the use of FX-indexed loans was an apt move. It reduced our need for foreign resources as well as the negative effect of exchange rate volatility on the market.
What are Kuveyt Türk's primary objectives and plans for the next 12 months?
In 2019, we plan to maintain the growth we achieved in the last five years. As of end-2019, we plan to reach asset size of over TRY85 billion, which we have exceeded, and a net profit of more than TRY1 billion. Regarding our priorities for 2019 and beyond, we are aiming to focus more on strategic products such as leasing, foreign trade financing, project financing, and consumer financing. In line with all these targets, we aim to be among the best-performing banks in terms of NPL ratios to sustain our asset quality. As the only bank in Turkey with two R&D centers, we place great importance on digital banking. We are selling products produced at Architecht, a technology firm we established in 2015. We positioned Architecht as one of Turkey's leading technology companies, and it has an agreement with Kuwait-based banking software company ITS. We have exported many technologies, such as branch and mobile branch automation systems. The BOA Banking Platform, developed by Kuveyt Türk, will be used by more than 60 banks in more than 20 countries via ITS. At the end of three years, we will export approximately TRY120 million worth of software. Moving forward, this is one of our most important priorities. Another area we are focusing on is personalized banking experience. We will continue our efforts to bring personalized biometric security solutions to our banking processes. In addition, we will create value for technological solutions such as chatbots and audio technologies.