teb-kos.com - A year of Sustainable Growth · 2016. 4. 20. · – TEB A.S., a highly reputable and premier financial institution in the Turkish banking sector and BNP Paribas, one

TEB SH.A. Annual Report 2014

A year of Sustainable Growth

CONTENTSABOUT TEB SH.A.2 CORPORATE PROFILE4 OUR VISION, MISSION AND STRATEGY6 OUR CORE VALUES:7 SHAREHOLDER’ S STRUCTURE

2014 OVERVIEW AND 2015 OUTLOOK10 MACROECONOMIC OVERVIEW12 MESSAGE FROM THE CHAIRMAN13 MESSAGE FROM THE CEO

TEB SH.A. IN 201416 2014 AT A GLANCE18 TEB IN FIGURES20 KEY FINANCIAL INDICATORS

ACTIVITIES AND PROJECTIONS22 INDIVIDUAL BANKING24 CARD BUSINESS26 SME BANKING28 COMMERCIAL AND CORPORATE BANKING30 TRADE FINANCE31 CASH MANAGEMENT AND PAYMENT SYSTEMS32 TRADE FINANCE33 TREASURY34 HUMAN RESOURCES36 ORGANIZATION AND PROCESS DEVELOPMENT37 INFORMATION TECHNOLOGY38 INFORMATION SECURITY AND DATA PERSONAL DATA

PROTECTION

MANAGEMENT / CORPORATE GOVERNANCE40 BOARD OF DIRECTORS42 COMMITTEES45 INTERNAL AUDIT46 RISK MANAGEMENT48 COMPLIANCE, INTERNAL CONTROL AND OPERATIONAL RISK

FINANCIAL REPORTS50 FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH

INTERNATIONAL FINANCIAL REPORTING STANDARDS FOR THE YEAR ENDED DECEMBER 31, 2014

BEING A RESPONSIBLE BANKFOCUSING ON THE FUTURE: WE WILL STRIVE TO FURTHER INCREASE OUR CUSTOMERS’ SATISFACTION.

DRIVEN BY A STRONG SERVICE PROVIDED TO INDIVIDUAL PEOPLE AND BUSINESSES ALIKE, TEB SH. A. HAS ALWAYS REGARDED ETHICS AS CENTRAL TO ITS MISSION. THE RELATIONSHIP OF TRUST WITH ITS CLIENTS THAT THE BANK HAS BUILT UP OVER TIME TODAY CONSTITUTES ITS NUMBER ONE ASSET.

OUR VALUES•HONESTANDTRUSTWORTHY•LEADING,PIONEERINGANDINNOVATIVE•CUSTOMERORIENTEDWITHASTRONGFOCUSONHIGH

QUALITY•RESPECTFULTOSOCIETY,HUMANRIGHTSAND

ENVIRONMENT•TRANSPARENT

TEB SH.A. 2014 ANNUAL REPORT 01

Activities and Projections Management / Corporate Governance

Financial Reports

CORPORATE PROFILE

Being a Responsible Bank

Focusing on the future: we will strive to further increase our customers’ satisfaction.

After seven successful years in Kosovo, TEB Sh. A, or TEB as many of our clients call us, has become one of the foremost names in the banking sector, earning a well-deserved reputation for excellent service. We have systematically pioneered meeting the banking and financial needs of individuals and businesses by launching numerous ‘firsts’ for the Kosovo market throughout our seven-year history.

In a rapidly changing world, TEB is there to consistently support customers and employees. This ability is also based on our position as a prominent member of the TEB Group. The Group was formed through a joint venture between one of the world’s strongest financial institutions, BNP Paribas, and one of the most reputable banks in Turkey, Turk Ekonomi Bankasi.

We aim to be a responsible bank. That is why we pursue a range of socially responsible activities that contribute to social development. For TEB, corporate social responsibility is a highly valuable and fundamental tool that complements our economic mission. So, in addition to providing excellent, innovative and responsible service to our customers, we also undertake projects that are designed to make a difference in education, culture and sports. All aimed at positive impacts for the broadest possible number of people in Kosovo.

What we do

For TEB, the customer is at the center of everything we do. Our customers are special and valued. This is expressed in all of the specially-designewd products and services that we offer to different groups of customers, ranging from entrepreneurs to pensioners and from employees to students.

The systematic, year-on-year growth in our service network, number of customers, transaction volumes and human resources is a confirmation that we:

• continuallyexpandtherangeofournon-branchbanking products and services. We offer all manner of quality-focused banking products and services that people need at different stages in their lives - all through our extensive and multi-channel delivery network.

• offeroptimalfinancialsolutionstoprivatebankingcustomers based on a “personalized service” approach.

• outperformtheindustryintermsofgrowthincreditcards, growth that is enhanced continuously by new products and services, as well as through specific card campaigns organized with another customer group, our merchant members.

• maintainourstrongpositioninretailcashmanagementservices.

• providethecommercialbankingsupportthatisakeydriver in the roadmap to future economic growth in Kosovo. Every year, we reinforce our already strong focus on supporting TEB’s hundreds of thousands of commercial and SME customers as they play an increasingly important role in the economic development process.

With these factors in mind, we were the first to introduce:

• aDirectDebitSystemwhichhelpscompaniesmaintaintheir liquidity through a self-monitoring system to decrease their financing costs;

• aninstallment-basedcreditcardcalledtheStarCardwhich had multi-impacts on many levels of society in Kosovo: it helped increase consumption, grew company turnover, and indirectly enabled the further restriction of the country’s informal economy.

• anAgroCreditCardthatenablesfarmerstobuytheirinputs on installment while increasing cash collection for merchants selling those inputs.

TEB SH.A. 2014 ANNUAL REPORT02

About TEB SH.A. 2014 Overview and 2015 Outlook

TEB SH.A. in 2014

How we do it

As a member of two strong international financial groups – TEB A.S., a highly reputable and premier financial institution in the Turkish banking sector and BNP Paribas, one of the eurozone’s top banks with an extensive and international network – TEB benefits from Group experience, solidity and range. This enables us to generate the best outcomes for our clients.

From these sound foundations, TEB continues to progress by enhancing the quality of its services and by developing products tailored to customer’s expectations. In line with rapid advances in technology, we. systematically improve our innovative multi-channel banking network (such as E-banking, Call Center, SMS Services, ATMs, POS) allowing customers to utilize the most suitable distribution channel for their banking transactions - conveniently, quickly and reliably.

What we stand for

Since TEB was established in 2008, we have had a pioneering position. As a strong full-service bank, we have focused on responding to customer demand for financial services. Over the years, we have been able to put our corporate competencies and vision to work effectively, producing added value for both customers and shareholders. In 2014, we continued to pursue our – now expected - balanced and healthy growth, further reinforcing our position as the country’s strongest financial institution. This gives us an even firmer foundation for our future as an important force in Kosovo.

Corporate social responsibility plays a significant role. Our policy is to contribute to Kosovo’s social development. We have created a framework of long-term initiatives based on a range of projects that will create the highest social benefits. These include projects such as the Green

Loan and Green StarCard and the Agro Card. In terms of business support, we are working through the Women’s Entrepreneurship Support Program, the Business Academy and the Business Forum.

Our sports commitments include cooperation with the Basketball Federation of Kosovo and support for the “Dielli TEB Open” tennis tournament. Our parents, TEB AS and BNP Paribas, are already long-standing sponsors of major international tennis tournaments. In the arts, we are supporting philanthropy through sponsorship of the Hand-to-Hand music project. TEB has been associated with the Vihuela Guitar Festival since 2010 and we are providing sponsorship for a prestigious music video festival.

TEB’s working for customers

TEB owes its success story to our people who bring our innovative and proactive approach to customers, work hard to maintain and grow the quality of our services and the assets our brand name represents. Our goals are to help people and businesses build their future, to realize their ambitions and to help them manage their financial risks. We want to be a financial institution our customers feel comfortable with.

With 25 branches, 53 ATMs, 3,500 POS Terminals and our team of relationship managers who provide tailored advice and service to our customers, we believe this extensive domestic service delivery network is what defines TEB’ s scale and service delivery strength.



Financial Reports

Our Vision

Our vision is to be the best bank in Kosovo.

Our Mission

To continually create and increase outstanding value for our customers, shareholders, employees and society.

Our Strategy

In line with our vision and mission, our strategy is to provide an outstanding and efficient banking experience for all our customers. We achieve this by offering innovative and practical products and services to achieve continuous and sustainable growth. TEB’s offering is always founded on our commitment to being a responsible bank. This is embedded in all our values and is reflected in our business, the way we develop products and services and how we deliver on our goals and promises.

OUR VISION, MISSION AND STRATEGY



TEB SH.A. in 2014

We act with integrity, we are open and clear, we respect each other, and we are socially and environmentally responsible. This translates into:

5 Major Strategic Priorities



Financial Reports

Customer-centricity

Our success is based on complete commitment to our customers at all times, earning us the trust and loyalty of our customer base. We maintain that trust by always placing our customers at the heart of everything we do. Customer needs and expectations are our drivers through our fast, proactive approach and response to rapidly-evolving requirements. This enables us to create and deliver true value as we serve our customers with innovative, above-expectation, tailored and trend-setting products and services.

Integrity

We have embraced the highest standards of integrity in everything we say and do and we commit to creating added value for our customers, shareholders and employees by always doing more than just what is right. We communicate openly and honestly, we invite and appreciate challenging views aimed at generating better ideas and reaching more appropriate and balanced decisions.

We generate value for our shareholders through long-term success rather than short-term gain. So our objective is for our core business to deliver sound and strong operating profitability and dividends through an entrepreneurial spirit that balances risks and returns responsibly.

Innovation

We aspire to innovations that matter. TEB values enthusiasm coupled with intellectual curiosity in our people as they continuously seek to create products that will facilitate our customers’ success and provide suitable solutions to their needs.

Operational Efficiency

We build processes and products that are user-friendly, easy to access and designed to add value. We strive to ensure that the services offered to our customers are priced in a way that equates fairly with the actual cost of providing them.

Discipline

We think and act like owners of the Bank, so we protect its resources and focus on shared rather than individual goals. We are proud of TEB’s successes and the value we create for our shareholders and customers. Every one of our 555 employees feels responsible if we fail to meet customer expectations and we are all accountable for delivering on our promises – there are no excuses. We strive for operational excellence by getting it right first time.

OUR CORE VALUES:



TEB SH.A. in 2014

Competent HR

We seek to strengthen our position as an employer of choice and strive to create a culture that attracts talented individuals, fosters diverse yet responsible and agile collaborative teamwork, nurturing and investing in the best talents, and management based on merit and equal opportunities.

Partnership

We pursue lasting and mutually beneficial customer and employee relationships in which the value created is shared fairly. We are responsible partners with all our stakeholders and regulators, and in serving society.

Strong distribution channels

We strive to offer services and support to our customers at their own convenience by providing diverse distribution channels, including our branch offices, call center, direct sales and extensive alternative distribution channels.

The share capital of the Bank is €24,000,000 based on 2,400,000 issued shares each with a par value of €10.

Number of shares relates to ordinary shares with no rights, preferences or restrictions attached to them.

SHAREHOLDER’ S STRUCTURE

Ownership Structure as of December 31, 2014

*50%-50% BNP Paribas Fortis Yatırımlar Holding A.Ş.and Çolakoğlu Group Joint Venture

Shareholder as of December 31, 2014 Share Ownership Paid in Capital (C) ShareTEB HOLDİNG A.Ş.* 24,000,000 100%



Financial Reports

SuccessOUR SUCCESS IS BASED ON COMPLETE COMMITMENT TO OUR CUSTOMERS AT ALL TIMES, EARNING US THE TRUST AND LOYALTY OF OUR CUSTOMER BASE.



TEB SH.A. in 2014



Financial Reports

MACROECONOMIC OVERVIEW

THE MOMENTUM IN US GROWTH, NOTABLY, IS STRONGER THAN ENVISAGED, WHILE THE RECOVERY IN THE REMAINDER OF THE BIG ECONOMIES IS FALLING SHORT OF THE EXPECTATIONS.

Lower oil prices would support global growth in 2015, but growth divergences across major economies would remain evident. The negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies. Sluggish medium-term growth expectations continue in many advanced and emerging market economies.

The momentum in US growth, notably, is stronger than envisaged, while the recovery in the remainder of the big economies is falling short of the

expectations. Against this backdrop, the Fed is expected to embark on a rate-hiking cycle possibly in September but take only gradual steps during the course of policy normalization.

The economic performance in all other major economies, on the other hand, has been falling short of expectations. Economic activity in the euro area would be supported by lower oil prices, the ECB’s sizeable QE program, a weaker euro and a more neutral fiscal stance. The expected fall in inflation from 0.2% y/y in Q4 to -0.6% y/y in Q1 should lead to a 0.8pp gain in real compensation growth in the Eurozone from 2% y/y in H2 2014.



TEB SH.A. in 2014

Oil price-induced purchasing power gains are not permanent income effects, as they will fade when inflation rebounds due to energy base effects, hence would provide only a temporary boost. Rebalancing in the Eurozone also means that not all income gains feed through to consumption. Yet, weaker investment prospects and political risks could offset these factors. The drop in the oil price has been a godsend for Japan. However, for BoJ in its quest to rapidly reach the bank’s 2% inflation target, it has not been so ideal, as the economic stimulus of low oil prices will come at the cost of lower inflation. Stagnation and low

inflation are still concerns in the euro area and in Japan. The slowdown in Chinese growth would also be a drag on emerging markets, particularly in Asia. With further EUR and JPY weakness likely, the tempo of policy easing across Asia is likely to pick up to offset real currency appreciation, falling inflation and slowing growth. Furthermore, as the Fed hikes rates, capital flows into emerging markets of recent years could reverse course, and cause episodes of emerging-market volatility.



Financial Reports

MESSAGE FROM THE CHAIRMAN

TEB SH.A - ONE OF THE MOST DEEP-ROOTED INSTITUTIONS IN KOSOVO’S BANKING SECTOR CONTINUED ITS CONSISTENT CUSTOMER-ORIENTED APPROACH IN 2014.

Dear Customers, Business Partners and Shareholders,

TEB Sh.A has the ambition to be the best bank in Kosovo. In line with this ambition, the Bank has drawn on all the solidity, experience and expertise of its parents to create considerable resources for the Kosovo economy.

The reporting year, 2014, has been an active period in the global economy. Despite challenges, forecasts indicate the European economy will still continue to grow. On the other hand, emerging markets that, following the 2008 global financial crisis, had been drivers of global growth, appear to have lost some dynamic momentum.

According to the European Central Bank (ECB), the average inflation rate in the Eurozone in 2014 declined to 0.4 percent. Throughout 2014 and supported by lower oil prices, consumers regained confidence and the unemployment rate stopped rising in the eurozone. As a result of stronger domestic and external demand, we expect that access to finance will accelerate.

From the perspective of Kosovo, in recent years continuation of economic growth enabled the country to maintain macroeconomic stability and has generated an average GDP growth rate of 3.3%. However, in spite of many investment opportunities, and the lack of strong competition in certain sectors, Kosovo’s business climate remains challenging.

TEB Sh.A was able to sustain its strong performance in 2014 through successful balance sheet management, high-quality asset structure, comfortable liquidity level and strong capital base. We, as TEB Sh.A,

have adopted a balanced approach that always takes into account the interaction of risk, return, capital and liquidity. In terms of its financial structure, TEB Sh.A has avoided aggressive growth policies that would have a leveraged impact on its balance sheet. Instead, the Bank has systematically displayed a more cautious approach than ever in risk management.

In addition to a strong operational and financial performance, in 2014 TEB Sh.A has also continued and scaled up its activities based on our principle of “giving back to society”. We will continue to do our best in line with our motivation and responsibility to contribute to education, the environment, culture, arts and sports to help move our society - in which we live and to which we owe much - a further step forward.

TEB Sh.A also continues to combine competitive edge with corporate capability at an optimum scale to produce added value as we interpret and translate the banking and social needs of the community.

There is no doubt that the most important force behind the successful completion of this year is the competence, loyalty and dedicated efforts of our employees and managers. Finally, I would like to express my gratitude to my colleagues, our shareholders, our precious clients, partners and all stakeholders.

Musa ErdenChairman of the Board of Directors



TEB SH.A. in 2014

TEB SH. A’S “CUSTOMER-ORIENTED APPROACH TO BANKING” CONTINUED AT FULL SPEED DURING 2014; OUR PRODUCT AND SERVICES OFFERING ENABLES THE BANK TO GROW EVER-CLOSER TO OUR CUSTOMERS.

Dear Customers, Business Partners and Shareholders,

This period of the year is the most suitable time to look back to the year we have concluded and all the developments that featured it in local and global terms. The 2014 was undoubtedly a challenging year for us. Oil price volatility and the overall impact it had in global developments brought many economic uncertainties in our local markets as well.

Kosovo’s economy has shown significant progress in transitioning to a market-based system and maintaining macroeconomic stability, but it is also still dependent on the international community financial and technical assistance and the diaspora remittances.

Kosovo has recorded an average GDP growth rate of 3.3% over the last few years, making it one of the few countries in the region with positive growth in spite of the Eurozone crisis. I am delighted to say at this particular moment that in spite of economic uncertainties, TEB SH.A demonstrated an upsurge in its 2014 overall results proving itself as a bank with a sound base for sustainable development. The point that makes me feeling very delighted is that, the bank has achieved its extraordinary financial results not only through its core commercial banking activities, but in addition brought several novelties in the market such as;

• WomenEntrepreneurshipProgramthatpromotes access to finance for women in business,

• BusinessAcademiesforourSMEclientsthat promotes our bank as an only non-financial services provider in the market,

• EnergyEfficiencyProgramthatenabledmany our retail and SME clients renew their energy efficient equipment thus directly impact their energy bills, and many other related activities that directly impact the economic welfare in the market.

TEB Sh.A aims to become one of the most exemplary actors in the banking sector through our successful financial results and healthy growth performance, as well as through our socially responsible activities. TEB Sh.A ranks in the top three in terms of the loan outstanding portfolio. We are one of the best player in retail banking and have many acknowledged achievements in the credit card business. In terms of business innovations, we have pioneered the market with the extensive range of products that have not only enhanced the business potential of SMEs but have also changed the behaviors and purchasing power of individuals, thereby helping to grow Kosovo’s economy. Our corporate governance approach, which we preserve with utmost care, and our prudent risk management policies further contributed to a very successful year.

I would like to thank, first of all, our employees, who are the greatest drivers behind these successes; afterwards, our shareholders and our clients, who have given their trust to TEB Sh.A, and all our social and economic stakeholders. Thank you for an inspiring year.

Ayhan AlbeyogluManaging Director

MESSAGE FROM THE CEO



Financial Reports

InnovationWE ASPIRE TO INNOVATIONS THAT MATTER. TEB VALUES ENTHUSIASM COUPLED WITH INTELLECTUAL CURIOSITY IN OUR PEOPLE AS THEY CONTINUOUSLY SEEK TO CREATE PRODUCTS THAT WILL FACILITATE OUR CUSTOMERS’ SUCCESS.



TEB SH.A. in 2014



Financial Reports

2014 AT A GLANCE

1) Green Loan launched

TEB Sh.A sets high standards when it comes to the impact of its operations on the environment. In 2014, the Bank expanded its cooperation with the European Bank for Reconstruction and Development (EBRD) by introducing the ‘Green Loan’.

TEB’s Green Loan is designed to financially support individual (residential) and business clients in investments that contribute to increased energy efficiency. We were the first to introduce this type of product, in cooperation with the EBRD. Borrowers can use the loan to make energy-saving and environmentally friendly investments that will reduce their energy bills and footprint. The loan can only be used for projects that will contribute to improved energy performance of residential buildings and promote the use of energy from renewable sources. This product also promotes the use of products with low energy consumption that stimulate usage of alternative energy sources. This product is distinctive as it returns up to 20% of the loan amount to all clients that fulfill the criteria of each project.

Through this project, TEB aims to increase the awareness of proper energy usage and at the same time to inform them of the benefits of using eco-friendly products.

2) Agro Card

Kosovo’s first Agro Credit Card

TEB, in partnership with USAID, has launched the first-ever Agro Credit Card, which is the newest banking product for agribusiness purposes.

Agro Card is the most recent bank product that backs Kosovar agribusinesses and purchases by farmers of agricultural inputs and equipment. The card offers interest-free rates and up to a six-month grace period. The Agro Card successfully combines the three points in the sector’s economic triangle: the farmers, the merchants and the Bank. By bringing all three together in a virtuous triangle, all enjoy benefits. At the peak of the season, it also provides farmers with the opportunity to make purchases with a six-month grace period and no interest. On the other side, the merchants guarantee their payments and by the effect of this, they increase sales. As being in the middle of these processes, the Bank manages the cash flow within farmers and merchants.

3) The Bank goes Hand-to-Hand

This project is an initiative of the Kosovo Philanthropists, a non-profit organization dedicated to helping orphans, children with special needs and kids of all nationalities in Kosovo who live in poor economic conditions. The organization aims to act as a voice for social issues in Kosovo. Hand-to-Hand therefore is particularly apt as it is a song that has become the anthem of the summer camp organized for needy children. It is in English in order to reach a larger number of (international) audiences with the aim of setting up exchange programs and joint activities for the kids. Both the song and the accompanying video have been promoted across all media in Kosovo and via social networks.



TEB SH.A. in 2014

4) TEB and the Video Fest - prestigious music video festival

The aim of this festival is to promote and stimulate the development of artists and producers of music videos from all over the Albanian territories – Kosovo, Albania, Macedonia and the diaspora. By sponsoring this prestigious festival, TEB helps to bring together everyone with an interest in the arts and culture.

5) Cooperating with the Basketball Federation of Kosovo (sponsorship for the youth categories)

TEB has signed a Memorandum of Cooperation with the Basketball Federation of Kosovo (FBK), thus becoming its official sponsor for all categories, especially youth. We see this cooperation as a way to invest in the youth of today while enabling the development of basketball programs for new generations. Our goal is to help young players to become leaders on the field and in life. We want to give them models to follow by emphasizing the importance of teamwork and fair play and also to stimulate education, build character and determination to achieve success in life.

6) Serving for the “Dielli TEB Open” tennis tournament

TEB’s commitment to Kosovar youth includes a healthy serving of sports sponsorship. In addition to basketball, TEB is also supporting tennis. There are a lot of talented players in Kosovo and the new tournament gives young people an opportunity to experience a top class event. TEB has been supporting the “Dielli TEB Open” tennis tournament for the last five years. This tournament marked its

13th edition last year, but the incentives by the bank has boosted its value and professionalism.

7) Celebrating international football – TEB hosts teams from France and Switzerland

In June, TEB hosted a reception to welcome French and Swiss national football team players to Kosovo for an international match. Among the guests the General Director of TEB Bank – Mr. Ayhan Albeyoglu; French Ambassador to Kosovo, Ms. Maryse Daviet; and TEB Bank corporate clients.

8) Initiating the Women Entrepreneurship Support Program

TEB strongly believes that valuable business ideas deserve support, especially if they come from Kosovo women. That is why in cooperation with the Gjakova Innovation Center, TEB is supporting women entrepreneurs to implement their business ideas. We will be providing help in organizing events for women with innovative ideas and ambitions to open new businesses. And through the program, women entrepreneurs will have access to Agro cards to help them achieve their goals. This is fully in line with our aim of providing services and products that best suit customer demand and needs.

9) Business Academy

The Business Academy is an all-day event comprised of lectures and workshops for Bank guests. It covered various topics to support corporate growth, with presentations from and interactions with very well-known professionals from Turkey and Kosovo

WITH THE GREEN LOAN PROJECT, TEB AIMS TO INCREASE THE AWARENESS OF PROPER ENERGY USAGE AND INFORM BENEFITS OF USING ECO-FRIENDLY PRODUCTS TO THEIR CUSTOMERS.



Financial Reports

TEB IN FIGURES

TEB in Figures (‘000 Euro)

2014 2013 Increase/ (Decrease)

Percentage

Balance Sheet Indicators

Total Assets 369,343 372,401 (3,058) -0.8%

Total Loans (Gross) 312,421 283,094 29,327 10.4%

Deposits 314,353 327,232 (12,879) -3.9%

Shareholders' Equity 35,655 26,394 9,261 35.1%

NPL / Total Loans 7.3% 6.5% 0.8% 12.1%

Loans / Total Assets 84.6% 76.0% 8.6% 11.3%

NPL Coverage Ratio 93.5% 80.5% 13.1% 16.2%

Income Statement Indicators

Net Interest Income 28,360 20,889 7,471 35.8%

Net Non-Interest Income 5,744 5,099 645 12.6%

Cost / Income Ratio 46.2% 55.1% -8.9% -16.1%

Net Banking Income 34,407 26,295 8,112 30.8%

Net Profit for the Year 9,261 3,786 5,475 144.6%

84.6%LOANS / TOTAL ASSETS in

2014

93.5%NPL COVERAGE RATIO in 2014



TEB SH.A. in 2014

2014 2013 Increase/ (Decrease)

Percentage

Profitability Ratios

Return on Equity 36.2% 17.7% 18.6% 105.1%

Return on Assets 2.5% 1.0% 1.5% 146.6%

Net Interest / Average Interest Earning Assets

9.5% 8.0% 1.5% 18.7%

Solvency & Liquidity Ratios

Capital Adequacy Ratio 15.6% 13.4% 2.2% 16.0%

Liquid Assets / Total Assets 20.4% 26.8% -6.4% -24.0%

Risk Weighted Assets 321,590 287,140 34,450 12.0%

Other Indicators

Branches 25 26 (1) -3.8%

Employees 598 555 43 7.7%

36.2%ROE in 2014

15.6%CAR in 2014



Financial Reports

KEY FINANCIAL INDICATORS

The combination of TEB’s commitment to prudent portfolio management, well-balanced risk management in line with a sound growth strategy, and our ongoing customer satisfaction resulted in exceptional profits, a steady growth in the loan portfolio and a further increase in market share in 2014.

At year-end 2014, the Bank’s total assets reached €369.3 million, decreasing by €3.1 million or 0.8% compared to 2013, but in terms of asset size, remaining at the targeted level. The gross loan portfolio increased to €312.4 million, an increase of 10.4% or a volume increase of €29.3 million on the previous year’s performance and representing the highest loan growth in the banking sector in 2014. Gross loans now comprise 85% of total Bank assets in TEB’s balance sheet.

At the end of 2014, the Non-Performing Loan (NPL) ratio (loans over 90 days in arrears) was 7.3% compared to 6.5% in 2013, an increase of 80 basis points. Total customers’ deposits at the end of 2014 reached €314.4 million, down by €12.9 million or 3.9% compared to the end of 2013.

An agreement with the European Bank for Reconstruction and Development (EBRD) for sub-financing energy efficiency projects in the amount of €5 million was signed during 2013, of which €2.5 million was received from the EBRD during the reporting year.

Shareholders’ equity increased from €26.4 million in 2013 to €35.7 million in 2014, due to increased retained earnings during the year. Altogether this represents a 35.1% increase in shareholders’ equity compared to 2013.

Income statement indicators also show significant improvement in performance compared to the previous year. Net interest income reached €28.4 million, increasing €7.5 million or 35.8% compared to 2013, despite the continuing decreasing trend in average interest rates on loans and deposits during 2014. Net non-interest income amounted to €5.7 million, an increase of €0.6 million or a 12.6% in comparison with 2013.



TEB SH.A. in 2014

The cost-to-income ratio in 2014 decreased further to 46.2% from 55.1% in 2013, showing the Bank’s increased efficiency and continuous prudent management of operating expenses. Net banking income at year-end was €34.4 million compared to the €26.3 million realized in 2013.

The Bank ended the year with €9.3 million profit after tax compared to €3.8million in 2013 or an increase of 144.6%.

In terms of profitability indicators, at the end of 2014 the Bank generated a Return on Equity (ROE) yield of 36.2% compared to 17.7% in 2013, while Return on Assets (ROA) stood at 2.5% compared to 1% in the previous year. The Net Interest over Average Interest Earning Assets ratio was 9.5% compared to 8.0% in the previous year. As for bank capital management at the end of 2014, the Bank’s Capital Adequacy Ratio (CAR) was 15.6%,

comfortably exceeding the Central Bank of Kosovo (CBK) minimum requirement of 12%, and up from 13.44% at the end of 2013 due to increased retained earnings during the year.

The Liquid Assets to Total Assets ratio stood at 20.4% at the end of 2014 compared to 26.8% in 2013, while Risk Weighted Assets (RWA) reached €321.6 million, up from €287.1 million in the previous year following growth in the loan portfolio during 2014.

In 2014, the Bank closed one branch, decreasing the total number to 25 (2013: 26) while the number of employees increased to 598 compared to 555 at the end of 2013.

€9.3 millionTHE BANK ENDED THE YEAR

WITH €9.3 MILLION PROFIT

AFTER TAX IN 2014.



Financial Reports

INDIVIDUAL BANKING

Using our customer-oriented approach, TEB Sh. A offers a full range of services and products that people need at different stages in their lives.

Customers are the drivers behind Retail Banking’s primary mission - to support and finance families and individual clients. We aim to be genuine partners for our retail customers and help them prosper because they are behind future growth and employment. We do that in part by delivering excellent services, both in-branch and via our e-banking channels, and by winning and retaining customer loyalty and trust.

Customer trust – our most valuable asset

Our customers’ trust and loyalty are our most valuable assets. Their trust is not random; we have and continue to invest heavily in building and maintaining that trust over the years. TEB seeks to gain the loyalty of clients who expect a personalized relationship, recognition of their loyalty and optimum access to the Bank. It is also intended for customers who are building up their personal assets and who potentially could become wealth management clients. In the current banking environment, sector jargon and terminology is usually the norm when communicating with a bank. We advocate communicating through dialog based on transparency, honesty, unbiased advice and impartial and candid information. We do that in equally straight forward language, empowering the customer to make informed decisions. This year, new laws and regulations became effective for banking activities. In addition to responding to all new regulations, we have kept our customers informed on changes and the practical consequences for banking activities.

Innovation – meeting real customer needs

Innovation has always played a central role at TEB and this is reflected in our slogan: “The bank for a changing world”. In retail banking activities, innovating means understanding change and customer expectations and finding solutions in the face of new technology and new actors. Innovating also means planning and being proactive. In an environment marked by crisis and growing inequality, companies and financial institutions can help drive progress through their commitment to and role in society. The many initiatives taken by Retail Banking in 2014 show this commitment in action. Throughout the year, we have launched a number of campaigns that offered advantageous and competitive rates, tailor-made for customer needs. In partnership with schools and universities we launched an Education Loan for financing tuition fees at no interest for students. We now offer mortgage loans at very affordable interest rates and with maturities adjusted to customer incomes. This means that repayments do not overburden household budgets. In cooperation with the European Bank for Reconstruction and Development (EBRD) we have introduced a green loan product. The product is tailored to finance projects that will improve energy efficiency. Interest rates are very affordable and customers taking out these loans are eligible for a financial incentive from the EBRD. Retail customers were offered consumer loans starting with no interest and enabling them to finance their personal needs, including home appliances, vehicles and other projects that contribute to their well-being. Moreover, we continue to offer facilities such as repayment holidays to selected customers. We believe all these innovations show we are a resolutely customer-oriented bank.



TEB SH.A. in 2014

Our performance this year

The reporting year, 2014, was another successful period for our Retail Banking activities, with high-quality service playing a key role in attracting new and retaining existing customers. We were able to increase customer loyalty by implementing ground-breaking applications in Kosovo, and by enhancing customer satisfaction with our innovative and dynamic structure.

Our mission in 2014 was to continue to add innovative products and services to the retail banking sector. Our goal was to deliver user-friendly, leading and innovative products to our retail consumers that help them achieve their ambitions – in the right way. Our continued growth shows we have been successful. In 2014, we earned the trust of more than 37,000 new customers, representing 20% growth compared to the previous year. By serving our customers with creative products and ideas, we have achieved an outstanding loan portfolio of €15.9 million or a 21% increase on 2013. The mortgage loan portfolio actually increased by 66% and the Auto Loan portfolio almost doubled (up by 98%). We introduced the Green Loan, Kosovo’s first-ever banking sector offer to enable customers to reduce their energy consumption, and therefore the related costs. In cooperation with the European Bank for Reconstruction and Development (ERBD), TEB has given customers the opportunity to invest in energy efficiency while earning a 20% incentive. In 2014, TEB issued a total of €1.6 million in Green Loans.

The Private Banking program launched in 2014 offers products and services to clients in the upper retail segment and their families based on the concept of ‘privileged’ service. Like all TEB services, the Private Banking program is designed

to meet the specific lifestyle needs of this client segment. We aim always to exceed their service quality expectations.

Personal service, including advice and assistance, is key to building consistent relationships with all our retail clients. We have a network of branches where customers can handle transactions ‘over the counter’. But we also want to make banking and managing finances convenient. We have invested heavily in e-banking options. There is no need to visit a branch or stand in line to carry out daily transactions. And our customers like having choices. Compared to 2013, 43% more customers used our e-banking platform. New users of SMS top-up grew by 7%, and SMS banking users grew by 10%.

What’s next?

In order to serve our customers with innovative and complementary products and services and in order to sustain our growth, in 2015 and beyond, we will continue to systematically reassess digital and mobile banking to utilize potential in Kosovo’ s young demographics. New in our Private Banking services will be our innovative approach in Individual Banking. We will persist in delivering excellent customer experiences and laying the groundwork for the future. We will also continue to ramp up our reliable and innovative alternative distribution channels to serve customers’ day-to-day banking needs. At the same time, we will be allocating more resources to the branch network for superior service quality and value-added advisory support.

TEB - TAKING SOUND STEPS TO INCREASE ITS SHARE FROM THE GROWTH OPPORTUNITIES OFFERED BY THE MARKET.

+37,000IN 2014, WE EARNED THE

TRUST OF MORE THAN

37,000 NEW CUSTOMERS,

REPRESENTING 20% GROWTH

COMPARED TO 2013.



Financial Reports

CARD BUSINESS

We are wherever our customers are

With over 20,000 new cards approved during the 2014, StarCard remains the preferred and most used credit card in the market. Our position as the customer’s first choice gives us an even greater responsibility to be wherever our customers are and to listen actively to their needs.

Unrivalled competence, expertise, active listening, and implementation capabilities have once again proved to be the key to another banner year for our card business. By blending customer needs and new technological developments, we have continued to introduce new products, expanded services and new utilization channels so that our customers can bank at their convenience, wherever they are without the limitations imposed by traditional banking hours.

We introduced ATM Cash-in so that our customers can deposit to their accounts using our ATM network. Rather than queuing at a branch to conduct StarCard payments, customers now can pay their card bills at ATMs from their current accounts or make cash payments directly to repay their own or someone else’s card.

One of our aims is to positively affect our customers’ lives and at the same time protect the environment. So in cooperation with the European Bank for Reconstruction and Development, we have introduced a simple way of financing projects that

will improve energy performance. The fees and charges are the same as for any other purchase of goods and services on an installment payment plan, but the customer also receives a financial incentive if these meet ‘green’ criteria.

As we care about the (financial) well-being of our customers, we want to make sure that they are on top of their outgoings and can monitor their spending and due debts. We do this by enabling versatile channels to access their credit card statements. In addition to monthly statements, access through e-banking and through our call center, we have also introduced the option of printing out their statements through the ATM network.

With a growing customer base, the need to guarantee ever better service is high priority for TEB. So we have expanded our direct sales team and activities. We are now even closer to customers and able to respond faster and even more reliably to their needs. The direct sales team is also available to provide information on special offers to which the customer may be entitled and on new products and services made available by the Bank and which we think may be of interest and benefit to the customer.

Throughout the year and in partnership with merchants, the Bank initiated numerous personalized campaigns, offering various propositions that feature additional installment plans, discounts, grace periods, and bonus products. We are

+140OVER 63% OF STATEMENTS

ARE NOW SENT VIA E-MAIL.

THIS MEANS OVER 140 TREES

WERE SAVED IN 2014.



TEB SH.A. in 2014

grateful for customer loyalty and to thank clients we again distributed over €500,000 in bonus points on cards or as bonuses in other forms. In addition, as of this year, we have also introduced bonuses for payments using debit cards.

During 2014, we provided uninterrupted transaction capability through our national network of 52 ATMs and 3,500 POS terminals, and via all ATM, POS or e-commerce networks worldwide. The number of transactions through POS terminals increased 26% compared to the previous year and total POS turnover increased 25%. We take pride in the fact that customers are very satisfied with our services. This has led to even greater market penetration and as of year-end 2014, our Bank had issued 82% of all active credit cards in Kosovo.

Our fees and commissions associated with the maintenance and use of cards are highly competitive in the market and we also offer a variety of transactions free of charge, such as online payments and international credit-card purchases.

As technology becomes even more sophisticated, card fraud around the world is proliferating at a dynamic pace. TEB has invested heavily in advanced security for our infrastructure network. This is managed by our highly vigilant real-time monitoring team. We believe the security of transactions is one of our undoubted successes, as attempted fraudulent transactions using our cards and in our network remains well under sector trends.

In 2014 and as part of our social responsibility, we continued to highly recommend the e-statement option to customers. This reduces the use of paper and over 63% of statements are now sent electronically via e-mail. This means over 140 trees were saved in 2014.

What’s next?

In 2015, we aim to maintain our position as unrivalled leader in the card business. We will continue to build on our track record of innovation, commitment and partnership with our customers, generating strong financial performance. Our main objective will certainly remain to sustain and facilitate the ways the people wish to make and receive payments by introducing new and enhanced products and services for our business and individual customers.

An innovation planned for 2015 and in appreciation of our women customers, we are in the process of designing the She Card. This is a Visa-licensed revolving credit card created specially and packed with additional conveniences for the woman of today. It will offer dedicated discounts and other special offers in addition to standard credit-card features.

We are also working on an “installment feature” for international payments and e-commerce that will be added to all credit cards in 2015.

AS OF YEAR-END 2014, OUR BANK HAD ISSUED 82% OF ALL ACTIVE CREDIT CARDS IN KOSOVO.



Financial Reports

SME BANKING

TEB facilitates operations for SMEs, farmers and agri-businesses

TEB serves SME (Small and Medium-Sized Enterprise) customers through a tailored approach and broad product offerings. In 2014, our SME team built on years of experience in this crucial economic segment. However, compared to previous years, the team was working in a much more difficult environment as we saw sales and collection rates decline. Moreover, other banks focused more in this segment, making competition even more intense and driving up fluctuations in loan prices. The combination of these factors contributed to a higher than anticipated number of non-performing loans (NPL) and a decreasing trend in loan pricing. Despite this, the SME team managed to perform well and continued its growth and expansion in the segment through innovation and enhanced customer relationships.

The accustomed growth that has become something of a trademark for TEB’s SME banking continued in 2014 as the portfolio increased by an additional €12 million or 12.3% in percentage terms. This growth was achieved through a high level of pro-activity in the market by the Bank’s sales force and through the organization of general and niche campaigns. The Bank’s sales efforts generated new business with existing clients and also managed to attract new clients, an achievement that is

very important for future growth. During 2014, 3,144 clients successfully applied for and received installment loans for the first time. This accounted for a €26.7 million in new limits. This is a strong indicator of the Bank’s sales efficiency and our brand’s value in the market.

We were able to achieve this growth through our core cross-selling approach. This is a client-centric approach that once again proved very effective in offering complete banking services to clients and contributing significantly to the generation of non- interest income. As a result, non–interest income increased by 19.8% during 2014 compared to 2013 or, in real terms, by €448,000. Again, this is an important indicator as it shows that both existing and new clients value our services and are willing to do their banking with TEB.

In terms of innovation, the SME team was highly active in 2014. We added a special focus - ‘’Women’s Entrepreneurship‘’ – that targets both established businesswomen and aspiring female entrepreneurs who face financial constraints when it comes to realizing their ambitions. The program is specifically designed to empower a higher participation of women in business as it comprises financial and non–financial elements, such as training and consultancy. As it currently stands, it is only a matter of time before we sign a cooperation agreement with the European Bank of Reconstruction and Development which

19.8%NON–INTEREST INCOME

INCREASED BY 19.8% DURING

2014 COMPARED TO 2013.



TEB SH.A. in 2014

would further enhance the program and the Bank’s offer to this niche market. By adopting this business development approach, the Bank believes we will encourage the emergence of new business ideas in the market as well as establish a new bankable segment for the future.

A further and significant innovation was introduced to the Bank’s Agro segment clients: the Agro Card. The launch of the Agro Card is something of a momentous event as it is the first credit card introduced specifically for this market segment and its features are tailored to the specifics of this particular business. Due to its tailor-made features, the Agro Card proved an instant breakthrough in the market and the first 1,000 has been issued within three months after the launch. In parallel, with the card the Bank further strengthened its presence in agribusiness and made it clear that TEB intends to become a market leader in this particular segment.

Another important development relating to our SME activities was the organization of a tailored ‘’Business Academy‘’ event. Companies from both the micro and small segment were invited for a day of workshops on topics such as growth strategies and change management.

The event focused on best practices and management insights aimed at optimizing business owners’ decision-making. Our “Business Academy‘’ signals a new approach to our relationship with these clients and the Bank will strive to offer training and consultancy on a regular basis that will equip clients with the knowhow needed to be more competitive.

What’s next?

Following a year of important events and milestones, the SME team aims to carrying forward this momentum into 2015. Even though we anticipate a challenging year and intensified competition, we are confident in our abilities to adapt through innovation and premium customer service. The SME segment holds a special importance for TEB as we consider it has the highest potential for innovation and the creation of the much needed employment. That is why the Bank we continue to work tirelessly for and support SME companies with financial and non–financial solutions to help unlock and advance their potential.

A FURTHER AND SIGNIFICANT INNOVATION WASINTRODUCED TO THE BANK’S AGRO SEGMENT CLIENTS: THE AGRO CARD.



Financial Reports

COMMERCIAL AND CORPORATE BANKING

Whatever your business, close client relationships are important. For our Commercial and Corporate Banking teams, they are vital. That is why we have fully embraced and integrated our customer–centric approach in all our corporate banking activities as we strive to offer the best banking services available to this crucial segment. This translates into the provision of sophisticated services using state-of-the-art technology and close communication through dedicated portfolio officers.

Any review of our Commercial & Corporate teams’ performance in 2014 must provide context, especially on political developments in the country. Following a strong first half, with outstanding loans reaching €77.2 million, and forecasts for the second half showing similar promise, Kosovars went to the polls in June of 2014. After the elections, the political parties were unable to reach consensus on a new

government and the country entered a period of crisis. This unprecedented situation lasted until the beginning of December. Its effects on the economy were significant, especially among leading corporates. Investments were put on hold until the situation stabilized. The year would ultimately end on a positive note and our corporate team was able to close the year with €2.6 million in new loans.

Despite the unsatisfactory performance in terms of credit growth, the Commercial and Corporate teams continued to provide services that are both in demand and valued by the market. In this regard, we achieved an increase in non-interest income of 8.1%, ending the year with €2.7 million in Income.

The Bank is very well aware of the importance of payment systems for corporate clients and cash management and marketing solutions are central to our

€77.2 millionFOLLOWING A STRONG FIRST

HALF, WITH OUTSTANDING

LOANS REACHING €77.2

MILLION.

TEB’S CORPORATE BANKING STRATEGY IS STRUCTURED AROUND BUILDING UP LONG-TERM COOPERATION AND DEEPENING OUR CURRENT RELATIONSHIPS WITH CUSTOMERS.



TEB SH.A. in 2014

Business AcademyA UNIQUE VALUE

PROPOSITION, A DEDICATED

“BUSINESS ACADEMY”

WAS CREATED FOR OUR

CORPORATE CLIENTS.

future strategy and development. Efficient payment transactions and the range of documentary business solutions supported by our comprehensive range of cards and POSs enabled our Commercial and Corporate clients to conduct business with the Bank swiftly and efficiently.

In our efforts to differentiate TEB from the competition and offer a unique value proposition, a dedicated “Business Academy” was created for our corporate clients. Clearly, one aim is to strengthen our business relationships with this crucial segment. But we also want to share knowledge. So this event raised topics such as global business trends, growth and change management. This event marks the beginning of integrating non–financial services into our scope and in future they will play a significant role in the development of market relations.

What’s next?

Looking ahead to 2015, we have taken into account the possibility of short-term legacy fluctuations due to the unprecedented political situation in the reporting year. However, we remain convinced that our approach and business philosophy will keep us on the right track in terms of results. With this in mind, we consider this is the right time to split our Commercial and Corporate department into dedicated units. This change will contribute to a more dynamic approach to client service. At the same time, we aim to initiate the implementation of more intense synergy between sales departments and we believe that the Commercial and Corporate teams need to be at the forefront of this sales strategy. As a Bank we are convinced that these strategic developments in combination with our existing standard of service will enable a return to credit growth in the year ahead.



Financial Reports

TRADE FINANCE

TEB Sh.A understands that international business in a globalized world is a challenge - success demands extensive professional knowledge and an effective network. TEB has both.

In 2014, we continued to support our customers by creating and adapting trade finance solutions for their business needs. Moreover, we worked consistently on expanding our networks, strengthening relationships with other banks, and further enhancing our high standards of professionalism and competence. Supported by the BNP Paribas and TEB A.Ş. global presence and expertise in international trade, we are continually broadening our geographic cover and product range.

Trade Finance products for documentary operations include import and export letters of credit, discount on letters of credit, national and international guarantees, stand-by letters of credit and collections. The agreement signed in 2011 with the International Finance Corporation’s (IFC) trade facility program has provided us with a great opportunity and even more flexibility in responding to demand related to confirmed letters of credit and counter guarantees. During the reporting year, we also further expanded our relationships with new correspondent banks.

Like all TEB personnel, the trade finance team is engaged in permanent education, including the e-learning programs set up by the EBRD and the International Chamber of Commerce (ICC). The aim of these programs is to achieve best international practice in trade finance also through a thorough understanding of ICC trade regulations.

What’s next?

In the coming year, we will continue to support our clients by providing a safe bridge to new opportunities. Professionalism and expertise will be our guidelines as we see these as differentiators in a fast-moving world. We are also aiming to add to our product range new international trade products in 2015.

Professionalism and expertisePROFESSIONALISM AND

EXPERTISE WILL BE OUR

GUIDELINES AS WE SEE THESE

AS DIFFERENTIATORS IN A

FAST-MOVING WORLD.



TEB SH.A. in 2014

CASH MANAGEMENT AND PAYMENT SYSTEMS

DDSTEB PIONEERED THE DIRECT

DEBITING SYSTEM (DDS), IT IS

A UNIQUE PRODUCT IN THE

KOSOVO MARKET THAT IS

DESIGNED TO SUPPORT B2B

COMMERCIAL COOPERATION.

Our vision is to be the best bank in Kosovo. This is why we are investing heavily in alternative distribution channels by developing and upgrading our e-banking platform.

At a time of rapid technological advances, TEB is more than keeping pace with and anticipating progress in cash management and payment systems while continuing to introduce new payment channels and opportunities for better services. Our cash management and payments solutions are tailor-made to offer to our business customers a range of products and services that will enhance liquidity. We provide the appropriate infrastructure for fast and reliable payments processing. Moreover, by utilizing our cutting-edge solutions our customers create cost advantages and benefit from more optimized operational direct and indirect costs.

TEB pioneered the Direct Debiting System (DDS). DDS is a unique product in the Kosovo market that is designed to support B2B commercial cooperation. Its core function is to improve our business customers’ financial liquidity by offering complete management of receivables and payables. It is considered the most effective cash-flow management system as it is supported by cutting-edge technology and interfaces to facilitate complete and automatic invoice payment processing. This allows customers to authorize us to automatically debit (withdraw) funds directly from their

bank account to make various monthly payments to different public and private companies. Only an authorization form (signed by the customer) is needed and the related transaction will be performed automatically. DDS customers are provided with a dedicated credit line that facilitates payments to suppliers and guarantees that invoice payment terms are fully respected. The next logical step was the introduction of DDS discounting that guarantees receivables. By applying DDS discounting, the customer consolidates finances and benefits from early collection of receivables. Our vision is to be the best bank in Kosovo. This is why we are investing heavily in alternative distribution channels by developing and upgrading our e-banking platform. Our ultra-modern online e-banking service employs the most advanced security systems and gives access to secure, convenient and time-saving banking services 24 hours a day and 7 days a week. Our customers can transfer funds electronically to beneficiaries worldwide and process national payments, including utility and other regular debits, such energy, water and telephone). Moreover, customers can also opt to make their Tax Administration of Kosovo (TAK) payments automatically using e-banking.

Today, rapid and safe international money transfers are of paramount importance for customers with cross-border ambitions. That is why we provide a service that is the easiest, fastest and most reliable way to make international payments. Through



Financial Reports

CASH MANAGEMENT AND PAYMENT SYSTEMS

our extensive network of over 150 foreign correspondent relationships and 30 placement banks, outgoing international payments can be executed to foreign beneficiaries worldwide. As a member of SWIFT, the world’s largest payments network, our customers enjoy a clear advantage, especially in international outgoing payments. International incoming payments can be managed using the same system. This means we are able to offer market-leading payment services, also through highly efficient internal operations and the continual expansion of our global network.

In 2014, we again received an award the high quality of our International Outgoing Payments from Deutsche Bank AG Germany. We achieved the extraordinary rate of 100% STP. The award recognized transactions in 2013.

In 2014, we began the implementation of IBAN, completing the process and roll out in February 2015 IBAN – the International Bank Account Number – is a standardized international format for bank account numbers which has been established in accordance with international payment standards. It is used internationally to identify a client’s account at a specific financial institution and to make payments abroad. IBAN speeds up international payment processing and reduces delays in those processes. An IBAN in Kosovo will

consist of 20 alphanumeric characters. By using this system, we – and our customers – will be able to significantly improve the quality of STP payments, especially incoming transactions.

The growth of our business and the speed of developments in cash management led us to create a second Cash In Transit Unit in 2014. Initially, we had worked with one. Now, we believe the range of services our clients need more than justifies the bigger team. In 2014, we launched a new service whereby we collect and deliver cash from and to clients’ premises. We have considerable experience in arranging such collections – the team already takes care of managing and maintaining all off-site ATMs in and around Pristina. During 2014, we managed 1,292 trouble-shooting events successfully without inconveniencing customers.

What’s Next ?

We remain committed to further enhancing the customer experience by delivering superior cash management and payment solutions built on our advanced technological infrastructure. So we will concentrate on developing and upgrading alternative distribution channels as solution-oriented and flexible service platforms that will make life easier for our customers.

THE GROWTH OF OUR

BUSINESS AND THE SPEED

OF DEVELOPMENTS IN CASH

MANAGEMENT LED US TO

CREATE A SECOND CASH IN

TRANSIT UNIT IN 2014.



TEB SH.A. in 2014

Prudent asset and liability management is essential for sustainable and secure financial services to our customers.

At TEB we know only too well the importance of a strong, experienced and full-service Treasury Department. Our primary goal in treasury is to maximize risk-adjusted returns over the longer term. Within treasury, we create investment and funding strategies based on market conditions. The treasurers are also responsible for managing the Bank’s liquidity, operational and structural liquidity risk, foreign-exchange risk and interest-rate risks in the balance sheet. As a part of liquidity management, the bank has defined the key liquidity risk indicators and monitors these consistently.

Moreover, in terms of risk management, our treasurers manage assets and liabilities by continually analyzing potential risks and market opportunities within the framework of rules established by the Central Bank of Kosovo, the Board of Directors and the Asset and Liability Committee (ALCO).

Our Treasury and ALM teams play a significant role in ensuring confidence and enable us to stand strong, even in challenging times. The combined experience, theoretical and technical know-how, the broad range of products, and tailored innovative solutions are its

primary strengths. Furthermore, successful Treasury performance is also due to our advanced technological infrastructure and database.

Once again, this reputation led to TEB’s selection as a primary dealer for the issue of Government Treasury Bills with a two-year tenor. As a result, the Ministry of Finance was able to raise total debt to €259.52 million.

Managing risk

We have strong risk awareness and we constantly monitor and manage liquidity, counterparty, foreign currency, fixed income portfolio and interest-rate risks that could arise from our routine operations. TEB Sh.A works closely with TEB A.Ş., benefiting from accurate market projections, especially in interest-rate and liquidity-gap management. Stringent internal control is key to all our treasury activities. We have developed and put in place prudent practices that reduce and mitigate risk in our asset and liability management activities.

What’s next?

Looking ahead to 2015, the expectation is that the Ministry of Finance will be introducing longer maturity Bonds (from three to five years). TEB aims to participate as a Primary Dealer in these auctions.

TREASURY



Financial Reports

HUMAN RESOURCES

It is all about people

The role of TEB’s human resources team is to attract, retain and motivate the best people while enabling the whole organization to continually adjust and adapt to a rapidly changing economic environment. It is a challenging task as we are looking for the top young and dynamic talents in the markets whose energy and commitment to customer service fits with our business culture. All our people contribute to the Bank’s ongoing growth. So want the best. That is why we offer a competitive benefits package, including health insurance and career opportunities. With this in mind, we have developed a human resources policy based on internal mobility and active development of our people’s skills as we promote and stimulate diversity within the Bank.

At year-end 2014, the full TEB team had grown to 598 employees. This is an increase of 136 banking and financial services professionals. In terms of mobility, 103 TEB people were promoted or given new challenges during 2014. Close to 20 more were able to take up new challenges in different locations.

Open communication

Since TEB opened its doors in 2008, we have pursued an open-door policy designed to create a comfortable working environment. Employees are encouraged

to speak frankly with their managers. Regular meetings are held to communicate on the Bank’s mission, vision, strategies and objectives, and to affirm our people’s importance for achieving our goals. That importance is also expressed in how we invest in training and development.

Training and education

In line with our vision “to be the best bank in Kosovo”, we have established a number of dedicated training programs for different groups within the organization. All are provided by well-known and highly respected external training experts. Our senior managers participate in the Executive Strategic Leadership Program,, receiving individual coaching and working with colleagues using role plays and interactive group studies. Each executive also has an individual development plans. Middle management has its own dedicated Program aimed at improving managerial competencies and leadership skills. This Management and Leadership Development Program include classroom work, interviews, individual coaching sessions, presentations and “homework”. The focus is on Strategic Management, People Management, Operational Excellence and Time Management. Our new and less experienced managers attend the Manager Development Program, focusing on effective people management, situational leadership,

598AT YEAR-END 2014, THE FULL

TEB TEAM HAD GROWN TO

598 EMPLOYEES.



TEB SH.A. in 2014

coaching, delegation performance management and feedback. The Manager Development Program also includes classroom work personal surveys, case studies and “homework”.

In 2014, continuous training programs were organized, both in-house and externally. In total, 85 different courses were organized to train 687 staff (and interns) in-house and 563 staff (and interns) attended external courses. In order to ensure our people’s development is in line with global changes in economics and technology, many of our staff travelled outside the country to different European countries, including Turkey, the Czech Republic, Luxembourg, the United Kingdom, Germany, France, Albania, Macedonia and Montenegro, for courses.

Managing mobility

Internal mobility is a key component of TEB’s HR strategy. In addition to helping our people develop their skills and competences, we aim to give them opportunities to further their career. In 2014, we launched a specifically designed Assessment Centre and Development Centre Program (AC/DC Program) to create a pool of high-potential and high-performing managers with the potential to move up the organization. 17 participants were assessed by the Assessment Center and later joined the Development Center. This Program was developed and is given in cooperation with the TEB Academy in

Istanbul, Turkey. During 2014, our first ‘students’ were admitted to the BNP Paribas Campus in Paris, France. This is a prestigious training institution that benefits from BNPP’s global expertise. Through attendance at the Campus, our people will not only benefit from top level training but will also facilitate synergies between TEB and our parent. Throughout the reporting year we continued our cooperation with the Kosovo and Turkish Banking Associations. This cooperation supports our technical training needs and increases awareness of development, changes and challenges in the banking sector in Kosovo and around the world.

What’s Next?

In 2015, the Human Resources team will continue working on recruiting the best talent. Our training ambitions will remain just as high as in 2014 as we further pursue and create opportunities so that our people can focus on their hands-on skills to equip them for internal mobility.

By living our values and ethics, we recognize that our employees are the foundation on which we build the Bank we want to be, a place where talented and dynamic people want to work in an environment where our colleagues want develop their careers and contribute to TEB’s shared objectives.

IN 2014, IN TOTAL 85 DIFFERENT COURSES WERE ORGANIZED TO TRAIN 687 STAFF IN-HOUSE AND 563 STAFF ATTENDED EXTERNAL COURSES.



Financial Reports

ORGANIZATION AND PROCESS DEVELOPMENT

The world and its dynamics are changing constantly and so are our customers and their ambitions and aspirations. At TEB, we see our role as more than merely an observer or follower in a dynamic world. We are right at the center of that world, as our efforts to meet the challenges of a rapidly shifting environment prove. TEB has been at the forefront through numerous ‘firsts’ and innovative products and services to help our customers manage and take advantage of changes. We do this through smart and dynamic business models that create an organizational structure that is both fit-for-purpose and flexible enough to anticipate change and the ensuing shifts in customer needs. For example, we have significantly improved our process efficiency so that in a world that depends on rapid responses, our customers’ transactions are faster and more efficient.

With a vision to always remain in a pioneering position with innovative products and services, TEB Sh.A. continues to differentiate itself and make a difference in customer experience also with smart and dynamic business models.

Smart and dynamic business models

In another dynamic and productive year, the bank successfully carried out actions and projects aimed at designing the necessary organizational structure, evolving its process infrastructure and increasing efficiency across its business and operational activities.

Building on its core values, the bank has continued to adopt its organizational structure to support its never-ending passion to improve itself. The redesigned organizational structure serves as a cornerstone to further enhance organizational efficiency and growth strategy.

With the process infrastructure developments, the bank is embracing new methods of business conduct aiming to present customers with a swift, easy and effective banking environment designed around their needs in view of the future dynamics and anticipated sector trends.

Paving the way for changes and building for the future, the business processes are continuously analyzed to identify any overburdens, unevenness, cost, and non-value adding tasks. A great importance is given to the increased efficiency of the process which will shorten transaction time and become agile to the customers’ needs.

Understanding and planning for the future

We are visionary believers that we can make our customer’s life easier and be the foundation for their endless endeavor for progress and aspiration to build a brighter future for themselves and for the society. As such, in the coming year, we shall continue to proactively listen to even better understand, think ahead, become leaner, and optimize our business model.

TEB SH.A. CONTINUES TO

DIFFERENTIATE ITSELF AND

MAKE A DIFFERENCE IN

CUSTOMER EXPERIENCE ALSO

WITH SMART AND DYNAMIC

BUSINESS MODELS.



TEB SH.A. in 2014

INFORMATION TECHNOLOGY

Technological Improvements and Enhancements in Security

During 2014, as the leading technology bank in Kosovo, we moved our critical systems to more powerful and secure hardware. In addition to this comprehensive migration project, our systems, capacity and disaster recovery were upgraded. This ensures longer-term, rapid and more reliable, uninterrupted services to our customers.

Security is one of the key features of any information system. That is why we systematically enhance the security of our systems by introducing the latest advances and adopting best-in-class solutions in compliance with international security standards.

A year of innovation

In 2014, we continued to introduce new services to our customers. Now, our cardholders gain bonuses for debit-card payments made using a TEB POS terminal. These clients can also take advantage of the new Cash In feature available at our ATMs. This enables them to make deposits directly into their accounts using an ATM – so no more standing in line at a branch. TEB’s ATMs further offer the option of balancing credit-card accounts through cash deposits. We also implemented a new feature for debit-card holders that enables them to withdraw money quickly using the ‘Fast Funds’ service.



Financial Reports

INFORMATION SECURITY AND DATA PERSONAL DATA PROTECTION

Information security

Today, all business activities are increasingly reliant on the availability of information and the security of information systems to store and process sensitive and valuable data. That is why adequate protection and the accuracy of information owned by or entrusted to the Bank in the normal course of our work is a prerequisite and a top priority for TEB. Bank has implemented a robust and continuously evolving information security program to keep pace with the evolving threats. The Bank continues to actively monitor risks, external threats, internal monitoring, reviewing best practices and implementing additional controls as required, to mitigate security risks. During 2014, several projects were implemented to ensure end-to-end availability, resilience and the ability to restore data with a minimum of disruption to business activities.

The Bank’s training programs include mandatory Information Security training and notifications which ensure employees are aware and equipped to safeguard our customers’ and the Bank’s assets.

Accountability-based information governance

To ensure confidentially, integrity and the availability of information and information systems, the Bank has embraced accountability-based information governance. Under this program, we strive to balance information protection, security and business while conforming with and adhering to all legislative and regulatory requirements and the highest international standards.

We have put in place comprehensive internal regulations to protect information and have embedded information protection in all work processes that directly or indirectly require collection, processing, accessing, parsing, disclosing or destruction of any information. Access to information is strictly on a business need-to-know basis while disclosing and dissemination of data is regulated according to legal requirements and individual consent and authorizations.



TEB SH.A. in 2014

Personal data protection

A vast amount of information in our custody is our customers’ personal data. It is collected, processed and stored as part of the Bank’s contractual agreement with the customer to offer and use banking products and services. We are zealous in protecting all our data and have put in place meticulous controls to protect the individual’s right to privacy, dignity and safety.

We protect personal data with all available means and have every intention to do so as long as data are under our custody. However, we may divulge data if and when required by law, or with the consent of the individual but not beyond what is necessary to provide a product or service. Individual customers can also authorize delegation of information to another individual.

During 2014, we implemented a direct marketing process that empowers customers to reject marketing offers via SMS, if they so desire. This has been implemented under the Electronic Communication Act, Article 92, Unsolicited Communications. The National Agency for Protection of Personal Data concluded that the Bank is in compliance with this legislation.

The Bank’s training programs include mandatory Data Protection training. The aim of the training is to provide a basic understanding of the Data Protection Law so that we can exercise our responsibility in protecting the rights and privacy of individuals when handling personal data. During 2014, 521 employees participated in this training.

WE HAVE PUT IN PLACE METICULOUS CONTROLS TO PROTECT THE INDIVIDUAL’S RIGHT TO PRIVACY, DIGNITY AND SAFETY.



Financial Reports

BOARD OF DIRECTORS

MUSA ERDENChairman

Born in Hatay, Turkey in 1950, Musa Erden graduated from the Ankara Academy of Economic and Commercial Sciences, Banking Department. He started his career at Yapi Kredi Bank in 1972. He joined Osmanli Bank in 1973 where he held various posts until 2001, including Assistant General Manager, Deputy General Manager (BD/CM), and Coordinator. He served as Arbitration Committee Member of the Turkish Banking Association from 2002 to 2003; as Director of MNG Bank in 2003; as Chairman of all four Ottoman Structure Construction Tourism’s companies; and as Director of the Ottoman Fund Ltd between 2006 and 2008. He joined TEB Group in 2005 as Auditor of TEB A.Ş. and TEB Financial Investments and served as consultant from 2006 until his current appointment as Executive Board Member of TEB A.Ş. in 2008. Mr. Erden was appointed Chairman of the Board of Directors of TEB Sh.A in December 2010. From March 2011, he is also Acting Chairman of TEB Factoring and, from 2010, a Board Member of BNP Paribas Leasing.

ALP YILMAZVice-Chairman

Born in Istanbul, Turkey in 1965, Alp Yılmaz graduated from the Business Administration Faculty of Dokuz Eylul University, and received his MA from the Faculty of Administrative Science (Business Administration) at Istanbul University. He started his professional career at the Turkish Industrial Development Bank as financial analyst in 1991. He served as Auditor in Kocbank A.Ş. from 1992 to 1995. He joined TEB A.Ş. in 1997 and worked in various departments, including Sales & Marketing, Budget and Financial Control and Cash Management. From 2007 to 2012, he served as Board member and Chief Executive Officer of TEB Sh.A, and during his tenure was also Deputy-Chairman of the Kosovo & Turkish Chamber of Commerce, Board Member of the Kosovo & French Chamber of Commerce and Board Member of the Kosovo Bankers` Association. In January 2013, he stepped down as CEO of TEB Sh.A to take up an appointment as Advisor to the CEO of TEB A.S (Turkey). As of 11 April 2013, he was appointed as Vice-Chairman of TEB Sh.A and Chairman of the Remuneration Committee of TEB Sh.A.

AYSE ASARDAGBoard Member

Born in Ankara, Turkey in 1964, Ayşe Aşardağ graduated from the Business Administration Department of Bogazici University in 1987. She was certified as a chartered accountant by the Institute of Chartered Accountants of England and Wales, ACCA, in 1992. She started her professional career at Price Waterhouse and worked at the Audit Unit of both the Istanbul and London offices between 1987 and 1994. Ms. Aşardağ was a Lecturer in Accounting at the University of Glamorgan from 1994 to 1995. In 1995, she joined the TEB Budget and Financial Control Unit until 2001. Since then, she has been the TEB Group Chief Financial Officer at TEB Holding. Ms. Aşardağ currently also serves as Board member of TEB A.Ş., Board member and Audit Committee member of TEB NV, TEB Factoring and TEB Investment, and is a Board Member of TEB Asset Management. She was appointed as Vice-Chairman of TEB Sh.A in 2007. From December 2007, Ms. Aşardağ is a Board Member and Chairman of the Audit Committee of TEB Sh.A.

TUGBAY KUMOGLUBoard Member

Born in Antalya, Turkey in 1974, Tugbay Kumoglu graduated from the Economics and Administrative Sciences Faculty of Gazi University. He started his professional career at Garanti Bank as Management Trainee in 1998. After holding several positions in branches and regional organizations at Garanti, he has appointed as SME Banking Strategic Planning Manager. His last position in Garanti Bank was branch manager. He joined the TEB Group in 2006 as Europe 2 Regional Sales Manager. In 2007, he was promoted to TEB Individual Banking Sales Management Director. From 2011, he is also responsible for performance management of Individual and Star Banking, Consumer Finance, the Direct Sales Team and Salary Payments. From February 2013, Mr. Kumoglu was appointed as Board member of TEB Sh.A.



TEB SH.A. in 2014

Dr. MEHMET OZKAYABoard Member

Born in Konya, Turkey in 1969, Dr. Mehmet Ozkaya earned his PhD in International Finance (1999) and MBA degree in Financial Decision Making (1994) from The George Washington University in the US, and his BSc degree in Computer Engineering (1992) from Bogazici University in Turkey.

Mr. Ozkaya spent the early part of his career at the World Bank Treasury in the US. During his tenure there from 1995 to 2006, he held various positions, including Head of Global Fixed Income in Pension Fund Investments (2003-2006), Senior Financial Officer in Capital Markets (2000-2002), Financial Officer in Structured Finance and Derivatives (1998-1999), and financia

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teb-kos.com - A year of Sustainable Growth · 2016. 4. 20. · – TEB A.S., a highly reputable and premier financial institution in the Turkish banking sector and BNP Paribas, one