SLIDE 1
1Q17 Investor Presentation Albaraka Trk Non-Deal Roadshow 11-12 - - PowerPoint PPT Presentation
1Q17 Investor Presentation Albaraka Trk Non-Deal Roadshow 11-12 - - PowerPoint PPT Presentation
1Q17 Investor Presentation Albaraka Trk Non-Deal Roadshow 11-12 July 2017 Agenda 1 Introduction 2 Turkish Economy & Banking Sector Financial Highlights 3 Market Comparison 4 Strategy Overview 5 Turkish Debt Markets 6 Appendix
SLIDE 2
SLIDE 3
Albaraka Türk Representatives
SLIDE 4
Melikşah UTKU – Board Member & General Manager Malek Khodr TEMSAH– Assistant General Manager (Treasury, FI & IR)
- Mr. Utku was born in Ankara in 1968. He graduated from Mechanical Engineering Department of
Boğaziçi University (Istanbul, 1990). He completed his graduate studies in London School of Economics (1990-1992) and Master’s Degree on economic development in Marmara University (Istanbul, 1998). In 2004, he served as consultant to General Manager of Albaraka Turk. In 2006- 2007, he was head economist in Albaraka Turk. In addition, he was an economics columnist for Yeni Şafak newspaper for
- ver 10 years (1995-2009). He later worked as Investor Relations Manager from 2007-2009. He
continued as CIO-Assistant General Manager in December 2009 and was appointed as CFO-primarily responsible for Financial Affairs, Budget and Financial Reporting and Corporate Communication
- Departments. He was a board member of Borsa Istanbul from 2013 to 2016. As the General Manager
- f Albaraka Türk as of October 2016 Utku continued his duty, as well as Chairman of the Board of
directors of Turkey Union of Participation Banks (TKBB), Bereket Varlık Kiralama A.Ş. Albaraka Gayrimenkul Portföy Yönetimi A.Ş., Katılım Emeklilik ve Hayat A.Ş. He is member of Credit Committee, Remuneration Committee, and Executive Committee of Albaraka Türk.
- Mr. Temsah was born in Beirut, Lebanon in 1981. He received his Bachelor of Business Administration
from The George Washington University (Washington D.C., 2003). He completed his Master’s Degree in Business Administration from Thunderbird, the Garvin School of International Management (Arizona, 2006). In 2003, Mr. Temsah began his career with Bank of America Business Banking in Washington DC followed by his tenure at the London-based European Islamic Investment Bank between 2007 and 2009. In 2010 he joined leading global Islamic bank Albaraka Banking Group, Bahrain as Vice President of Treasury where he established & oversaw the sukuk desk until 2014. Since 2014, Mr. Temsah has been working with Albaraka Türk Katılım Bankası and is also currently a member of the board of directors for one of Morocco’s first Islamic banks where he serves on both the audit and remuneration committees. He is also a member of the ALCO and FTP Committees of Albaraka Türk.
3
SLIDE 5
2 Turkish Economy & Banking Sector 3 Financial Highlights Market Comparison 4
Agenda
1 Introduction Strategy Overview 5 Turkish Debt Markets 6 Appendix 7
SLIDE 6
Turkey Macroeconomic Developments
SLIDE 7
Turkey still serves many advantages for investors
6
Source: IMF, UN, TURKSTAT, Albaraka Turk Research&Strategy 1.18 1.66
1.1 1.3 1.5 1.7
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 Turkey's share within the world GDP (PPP, %)
20% 70% 120%
2001 2003 2005 2007 2009 2011 2013 2015 2017F 2019F 2021F General Government Debt Stock/GDP Advanced economies Emerging and developing economies Turkey
27 32 37 42 47 Turkey Brazil China USA Russia Poland UK Europe Netherlands Greece Switzerland Germany Japan
Median Age Following failed coup attempt on July 2016, Turkish economy has been gaining momentum thanks to strong expansionary fiscal measures and macroprudential easing incentives as well as strong
- fundamentals. GDP growth rate estimates has been continuously
revising upwards. Despite heavy global and geopolitical issues, Turkey’s strong macrofundemantals still serves great advantages for its investors compared to its peer countries thanks to young population, well- capitalized banking sector and existing cheap valuations. The Government has focused to ease downside pressures on domestic demand while trying to pick contribution of net external demand to GDP growth rate up via implementing crucial structural reforms. As a result, Turkey’s total debt to GDP ratio is likely to increase moderately due to widening in budget deficit, although it still remains significantly below than the peers. Moreover, as a ratio of both short-term private sector’s external debt stock and public debt stock has continuously fallen during 2015, contrary to advanced and emerging countries’ averages.
SLIDE 8
Robust Growth and Attractive Valuations
7
REER (Deviation from 15 Year Av. as of May ‘17) Source: TURKSTAT, WTO, BIS, Albaraka Turk Research&Strategy
2.5% 3.8% 4.0% 5.7% 4.5% 5.3%
- 1.3%
3.5%
5.0%
Q1 Q2 Q3 Q4
YoY GDP Growth Rates
2015 2016 2017
- 30.4%
- 29.7%
- 17.6%
- 17.5%
- 14.3%
- 10.6%
- 8.2%
2.2% 5.8% 7.5% 7.7% 8.6% 9.4% 10.8% 19.6% 21.3%
- 32%
- 21%
- 10%
1% 12% 23% Argentina Mexico Turkey Japan UK Euro area South Africa Russia India Indonesia Thailand Switzerland Brazil US UAE China Undervalued Overvalued
Turkish economy continues to record one of the strongest growth among G20 countries, with 5.0% (YoY) growth in 1Q2017 thanks to strong domestic demand, acceleration in public spending and double- digit increase in exports. Moreover, early indicators for the rest of the year are pointing further acceleration in the economy and to converge 5% throughout 2017. On the other hand, as a result of the Transition Program to Sustainable Growth, which implemented starting from the end of 2010, Turkey’s exports share within the world reached its record level in 2017. Under current circumstances, main challenge for Turkish economy is pulling inflation to low-single digit levels again. However year-on- year inflation fell from 11.9% in April to 10.9% in June and is likely to ease to 10.0% in July, market expects a volatile path around 10% during the rest of the year, due to high food prices and still undervalued TL. Looking ahead, considering sustainable current account deficit path, significantly undervalued TL and recently emerging market friendly environment, TL denominated assets are expected to diverge positively from its peers. 0.78% 0.82% 0.96% 0.75% 0.88% 1.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Turkey's Exports Share Within The World
SLIDE 9
Turkey Macroeconomic Developments
9.22% 8.78% 7.46% 6.57% 6.58% 7.64% 8.79% 8.05% 7.28% 7.16% 7.00% 8.53% 9.58% 10.53% 11.29% 11.87% 11.72%
- Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
Inflation
2016 2017
8
GDP Growth
GDP growth was 5.0% y-o-y in 1Q2017 and this is mainly due to a pick up in domestic demand. Increases in export growth and construction investment also impacted economic growth positively. Moving forward, MTP target for 2017 year-end GDP growth is 4.4% y-o-y due to the strong expectation for the receding
- f
uncertainty, resiliency in public consumption and further strengthening in economic activity driven by a recovery in tourism.
2.5% 3.8% 4.0% 5.7% 4.5% 5.3%
- 1.3%
3.5%
5.0%
Q1 Q2 Q3 Q4
GDP Growth
2015 2016 2017
Inflation
Annual inflation decreased from 11.87% to 11.72% in May and this is the first decrease of headline inflation since Nov’16. The lagged effects of the cumulative Turkish lira depreciation continued to weigh upon core goods whereas annual core goods inflation declined. Inflation is expected to stay in the high single digits with the Central Bank expecting a year-end inflation of 8.5%.
Source: CBRT, Turkstat Turkish Lira
The Turkish lira rebounded 1.2% versus the USD in the first quarter and 1.4% versus the EURO; Lira appreciation also continues after first quarter mainly due to further tightining monetary stance of the central bank, domestic political developments after referandum in April and also USD depreciation. The euro,
- n the other hand, found support for the declining uncertainties about the
future of the EU. USD/TRY has been lingering near 3.50 level and EURO/TRY is also at 4.00 level on June. In the June Expectation Survey of the Central Bank, USD/TRY expectation of 2017 year-end is 3.76.
2.4 2.9 3.4 3.9 4.4 Jan-16 May-16 Sep-16 Jan-17 May-17
FX Rates
USD/TRY EUR/TRY
SLIDE 10
Turkey Macroeconomic Developments
9
Central Bank Monetary Policy
The Central Bank maintains its tight monetary policy stance and continues to keep its main policy rate window, the weekly repo shut. The O/N lending window and the O/N borrowing have remained as is since 1Q2017. The Late liquidity window rate was increased from 11.75% to 12.25% (+50bps) in April. The rate hike decision of the CB is linked to the deteriorating Lira movement in addition to the worsening core inflation outlook. The average weighted cost of funding for Turkish banks now stands at 11.96%, an increase from 8.31% at the end of December 2016
Rates (%) Q1’16 Q4’16 Q1’17 June’17 Overnight borrowing rate 7.25 7.25 7.25 7.25 One-week repo (policy) rate 7.5 8.00 8.00 8.00 Overnight lending rate 10.75 8.50 9.25 9.25 Late liquidity window rate 12.25 10.00 11.25 12.25
Foreign Trade and Current Account Balance
In April, exports increased by 7.4% and imports picked up by 9.9% compared to the same month of the previous year, which resulted in the foreign trade deficit expanding by 16.7% y-o-y to USD 4.9 bio. Energy imports have been the main factor behind the higher foreign trade deficit. On the other hand, the current account deficit increased by 17.6% compared to the same month of the previous year and reached USD 3.6 bio in April. A jump in Gold imports in April fed into the higher current account deficit, while the gradual recovery of tourism revenues has started to improve the outlook on the current account deficit.
- 12.1
- 15.9
- 14.0
- 13.9
- 12.5
- 4.9
- 7.8
- 11.2
- 5.4
- 8.1
- 7.9
- 3.6
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Apr'17 Foreign Trade Balance Current Account Balance
Balances (billion USD) Budget Balance
Budget expenditures increased by 11.4% y-o-y and budget revenues rose by 16.1% y-o-y according to May data. The rapid growth in budget expenditures in 1Q2017 has receded in May. Budget revenues recovered on the back of strong tax revenues. Also, current transfers made the highest contribution to the increase in budget expenditures. Thus, the central government budget, which posted a surplus of 3.7 billion TRY in May 2016, showed a surplus of 6.4 billion TRY in May 2017.
Budget Balance (billion TRY) Source: CBRT, Turkstat, Ministry of Finance
0.0 1.1
- 12.0
- 29.3
- 14.9
- 11.5
SLIDE 11
Economic Activity Growth Incentives
10
Credit Guarantee Fund Incentive
- CGF provides strategic support to SMEs
and non-SMEs by facilitating the access financing since 1994
- The
protocol signed between the Undersecretariat of Treasury and the CGF at the beginning of 2017 expanded the scope of Treasury bail provided by the Credit Guarantee Fund from 20 billion TRY to 250 billion TRY and have facilitated access to financing for enterprises outside the definition of SMEs
- In the first stage of the TRY 250 billion
source, TRY 100 billion was distributed among the banks. Thus, the protocol showed its rapid effect on the market and SME and non-SME has showed strong demand. Also, the number
- f
SMEs reached 37.180 by the end of 2016 and the loan volume was TRY 16.3 billion. As of April 30, 225.358 companies were granted loans of TRY 160 billion, with an increase of 881 %
Tax Discount
1- In February, encouragement package prepared for SMEs related tax exemptions and discounts
- In case of the merger of the production
SMEs, the corporation's tax rate will be reduced to 75% for the profits obtained from the production activity exclusively during the accounting period ending at the date of the merger and the profits
- btained from the production activity
exclusively during the 3 accounting periods of the merged entity. Thus, this incentive is expected to be reflected also CGF source. 2- VAT and SCT reduction for white goods and furniture is also another incentive for economic activity pickup. It is expected to have positive impact of about TRY 800 million on tax revenues and tax reduction will continue up to September 30,2017.
SMEs
KOSGEB Supports
KOSGEB, which has a special law to support SMEs, have the purpose
- f
ensuring that SMEs and entrepreneurs exhibit a more effective and efficient activity within the quality service provision frame. Resources will be used in order to convert SMEs, which are the aorta of real economy, into enterprises having a high competitive power in the global market. KOSGEB continues providing its resources to enterprises and entrepreneurs as much as permitted by the budget, for the purpose
- f
increasing the share and effectiveness
- f SMEs in meeting the economic and
social needs of our country, increasing their competitive powers and levels and realizing integration in industry in compliance with the economic developments.
Source: CGF, Ministry of Finance, BIST
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Turkey Banking Sector vs Participation Banking Sector
SLIDE 13
Banking Sector vs Participation Banking Sector
In 1Q2017 the net profit of the banking sector rose 65% compared to 1Q2016. Year to Date, loan growth rate reached 5,5% while NPL ratio increased to 4,6%. Loan growth is stronger than in previous years owing to expansionary fiscal policies in place and macroprudential policies supportive of the financial system (ex: Credit Guarantee Fund). Commercial loan growth continued to grow at a higher rate than consumer loans.
Banking Sector highlights
The sector continued to grow in asset and profitability terms during 1Q2017. Participation banking rose 2,6% q-q asset growth Capital Adequacy figures continued to increase, from 16.17% to 16.63% Remarkable net profit increase, 371 % yoy Number of total branches increased to 973 at the end of 2017 Q1
Participation Banking highlights
Key Financial Indicators (mn TRL) Q1’16 Q4’16 Q1’17 Y-Y (%) Q-Q (%) Total Assets
2.407.551 2.730.942 2.866.047 19,0 4,9
Loans
1.511.537 1.734.342 1.830.284 21,1 5,5
Deposits
1.274.180 1.453.660 1.518.009 19,1 4,4
Shareholder’s Equity
273.022 300.172 317.593 16,3 5,8
Total revenues
57.863 62.915 68.710 18,7 9,2
Net profits
8.192 8.494 13.517 65,0 59,1
Key Financial Indicators (mn TRL) Q1’16 Q4’16 Q1’17 Y-Y (%) Q-Q (%) Total Assets
121.385 132.874 136.309
12,3 2,6 Loans*
77.926 80.018 83.798
7,5 4,7 Deposits
72.977 81.301 86.180
18,1 6,0 Shareholder’s Equity
11.507 11.494 11.817
2,7 2,8 Total revenues
3.517 3.579 3.763
6,99 5,14 Net profits
70 217 330
371,43 52,07
*Financial leasing receivables included.
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SLIDE 14
Albaraka Türk Snapshot
SLIDE 15
Albaraka Türk at a glance
Ratings
Long Term Short Term Outlook
BB- B Stable BBB- A-3 Stable BB+ A3 Stable Stoc
- ck
k Inf nfo (Price and nd Ratio io as of f 31 31 Mar arch ch 201 2017
Market Cap. 1,152 bn PE Ratio 0.51 Price / Book Ratio 6.05 Free float shares 224,6 mn 24 80 137 202 213 461 3796
2002 2007 2012 2014 2016
1st
st Parti
tici cipation Bank of
- f Tur
urkey 1st
st & only Publicl
cly Liste ted Parti tici cipati tion Bank on
- n
Bor
- rsa Ista
tanbul Stock ck Ex Exch change (BI BIST)
# of employees 8x # of branches 9x
14
Albaraka Türk established and started operations A total of 24,000 investors submit more than USD 7 billion of demands in Albaraka Türk’s IPO, valued at USD 170 million First foreign branch opened in Arbil, Iraq Albaraka Türk achieves the sector’s highest volume syndicated loan with a USD 350 million murabaha syndication The Bank issued its first Basel 2 Tier 2 200 million USD subordinated loans with the murabaha sukuk method for the first time in Turkey Albaraka Türk second international Sukuk and the first Senior Sukuk issuance amounted 350 million USD The first Tier 2 subordinated sukuk complying with Basel III criteria are issued in Turkey Turkey the first conversion of Basel II to Basel III compliant Sukuk amounted 200 million USD
1985 2007 2011 2011 2013 2014 2015 2017
SLIDE 16
Albaraka Türk at a glance
Albaraka Banking Group 54.06% Publicly Listed 24.93% Local Shareholders 9.07% Islamic Development Bank 7.84% Alharthy Family 3.46% Others 0.64%
Shareholders Information as of March 31,2017
The Albaraka Banking Group (Abg) is
- ne
- f
the prominent groups of the Middle East and operates also the region Middle East and Africa. ABG shares are traded
- n the Bahrain and NASDAQ Dubai stock exchanges.
The Islamic Development Bank (IDB), an multinational financial institution, focuses on economic development and social progress of member countries and Muslim communities in non-member countries in accordance with the principles
- f
Shari'ah. It has 57 member countries from the Middle East, North Africa, Asia, countries in transition (CIT), and Sub-Saharan Africa.
Subsidiaries Information
- Katılım Emeklilik ve Hayat A.Ş.– a private pension and insurance company- equal partnership
with Kuveyt Turk Katılım Bankası A.Ş. in the form of joint venture- established in 2013
- The Bank has %50 shareholding percentage
- Albaraka Gayrimenkul Portföy Yönetimi A.Ş. – a real estate portfolio management company -
established in 2015
- The Bank has %100 shareholding percentage
- Bereket Varlık Kiralama A.Ş. – a special purpose vehicle company for lease certificate/sukuk
issuance - established in 2011
- The Bank has %100 shareholding percentage
IPO in 2007 and publicly listed shares are 24,93% as of March 31,2017
15
SLIDE 17
Albaraka Banking Group at a glance
Overview of Albaraka Banking Group
Al Baraka Banking Group B.S.C. (“ABG” or the “Group”) was incorporated in Bahrain on 27 June 2002. While the Group was initially incorporated for the purpose of holding the interests of its two shareholders in, at the time, ten Islamic banks, the Group is now the parent company of 11 Islamic banks and one Islamic investment company (each, a “Unit”) and two representative offices. The total assets of the Group have grown from USD 4.1bn in 2003 to USD 23.4bn, as at 31 December 2016. In addition, the Group’s total income has grown from USD 43mn in 2003 to USD 268mn in 2016. The Group conducts business through 697 branches and offices, as at 31 December 2016, spread through out 15 countries. The Group is rated BB+ (long-term) by S&P (negative outlook) and BBB+ (long term) by each of the Islamic International Rating Agency and Dagong Global Credit Company Limited. The Group’s credit rating by S&P was affirmed on 18 April 2017.
Shareholding (2016 Year-End)
ABG’s shares are listed on the Bahrain Bourse and on NASDAQ Dubai. As at 31 December 2016, the Kamel family’s total direct and indirect shareholding in the Group Saleh Abdullah Kamel 30.11% Dallah Albaraka Holding Altawfeek Company for Investment Funds 19.32% Abdulla Al Rajhi Others 18.90%
Albaraka Banking Group - Global Presence Albaraka Turk Contribution to ABG Balance Sheet & Profitability
39.3%
24.2% 9.3% 7.9% 5.2% 5.1% 1.6% 2.3% 2.0% 1.6% 1.3% 0.1%
Turkey Jordan Egypt Algeria Bahrain Pakistan Tunisia Syria Sudan South Africa Lebanon Itqan Capital
32.7%
23.9% 6.0% 10.2% 8.4% 5.0% 2.8% 3.4% 2.7% 2.2% 1.1% 1.5%
26.4%
25.7% 16.0% 1.5% 8.4% 7.4% 1.0%
Total Assets Total Equity Net Income
Contribution of each Unit (as at 31 December 2016)
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SLIDE 18
Market Comparison 4 3 Financial Highlights 2 Turkish Macroeconomy & Banking Sector
Agenda
1 Introduction Strategy Overview 5 Turkish Debt Markets 6 Appendix 7
SLIDE 19
6 Albaraka Türk Snapshot (1/2)
*USD equivalent of total assets
12,328 17,217 23,046 29,562 32,851 33,021 6,926 8,045 9,870 10,265 9,359 9,097 2012 2013 2014 2015 2016 Q1'17
TRL USD*
Total Assets (million TRL) 9,100 12,060 16,184 19,505 22,158 22,892 5,112 5,636 6,931 6,773 6,313 6,306 2012 2013 2014 2015 2016 Q1'17
TRL USD**
9,225 12,526 16,643 20,346 23,151 23,668 6,926 5,853 7,128 7,065 6,596 6,520 2012 2013 2014 2015 2016 Q1'17
TRL USD*
Total Funded Credits* (million TRL) Total Funds Collected (million TRL)
* Financial leasing receivables included **USD equivalent of total funded credits *USD equivalent of total collected funds *USD equivalent of equity
1,218 1,497 1,790 2,104 2,273 2,417 684 700 767 731 648 666 2012 2013 2014 2015 2016 Q1'17
TRL USD*
*USD equivalent of net profit share income
486 625 699 886 1,023 278 273 292 299 308 291 77 2012 2013 2014 2015 2016 Q1'17
TRL USD*
*USD equivalent of net profit
192 241 253 303 218 36 108 113 108 105 62 10 2012 2013 2014 2015 2016 Q1'17
TRL USD*
Equity (million TRL) Net Profit Share Income (million TRL) Net Profit (million TRL)
18
SLIDE 20
6 Albaraka Türk Snapshot (2/2)
17.22% 17.85% 15.82% 15.57% 9.91% 8.51%
2012 2013 2014 2015 2016 Q1'17 Return on Avg Shareholders’ Equity Funded Credits* to Funds Collected Return on Avg Assets Capital Adequacy Ratio Provisioning Ratio NPL Ratio 2.19% 1.99% 1.59% 1.39% 0.88% 0.73% 2012 2013 2014 2015 2016 Q1'17 98.64% 96.28% 97.24% 95.87% 95.71% 96.72% 2012 2013 2014 2015 2016 Q1'17
13.03% 14.86% 14.16% 15.27% 13.46% 16.53%
2012 2013 2014 2015 2016 Q1'17
88.82% 90.62% 87.85% 59.95% 52.31% 51.93%
2012 2013 2014 2015 2016 Q1'17 2.45% 2.32% 2.02% 2.37% 4.75% 5.61% 2012 2013 2014 2015 2016 Q1'17
* Financial leasing receivables included
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SLIDE 21
Albaraka Türk Q1 – Key Financial Highlights
SLIDE 22
6 Albaraka Turk - Q1 Main Highlights (Balance Sheet)
TRL million Q1’16 Q4’16 Q1’17 Y-Y (%) Q-Q (%)
Total Assets
28.811 32.851 33.021 14,61 0,52
Total Funded Credits
19.891 22.722 22.892 15,09 0,75
Deposits
19.493 23.151 23.668 21,42 2,23
Shareholder’s Equity
2.113 2.279 2.278 7,81
- 0,04
28,811 29,364 28,633 32,851 33,021 19,891 20,059 20,331 22,722 22,892 19,493 19,766 20,109 23,151 23,668 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Total Assets Total Funded Credits Total Collected Funds Funded Credits, 69% Securities Portfolio, 6% Liquid Assets*, 22% Other Assets, 3%
Asset Segmentation (Q1’17)
21
*Liquid Assets includes Cash and Balances with the Central Bank, Financial Assets at Fair Value Through Profit and Loss(net) and Banks
SLIDE 23
6
Albaraka Turk - Q1 Main Highlights (Income Statement)
TRL million Q1’16 Q4’16 Q1’17 Y-Y (%) Q-Q (%)
Profit Share Income
564 583 633 12,2 8,6
Net Profit Share Income
278 266 318 14,4 19,5
Total Operating Profits
366 376 379 3,6 0,8
Net Operating Profits
86 42 46
- 46,5
9,5
Tax Provision
23 3 10
- 56,5
233,3
Spesific Provisions for NPL
317 579 687 116,7 18,7
Net Profit
63 39 36
- 42,9
- 7,7
278 266 318
Q1'16 Q4'16 Q1'17
Net Profit Share Income 63 39 36 Q1'16 Q4'16 Q1'17 Net Profit 4.12 4.12 4.18 4.14 4.17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Net Profit Share Margin*
14,4%
* Trailing for last four quarters
22
SLIDE 24
6
Albaraka Turk - Critical Financial Ratios(%)
Indicator Q1’16 Q4’16 Q1’17 Liquidity
Loan to Assets
69,04 69,17 69,33
Loan to Deposits
102,04 98,13 96,72
Liquid Assets to Total Assets
25,48 26,20 26,01 Efficiency
Return to Average Equity
14,96 9,91 8,51
Net Profit Share Margin
4,12 4,14 4,17
Cost to Income Ratio
56,56 53,65 49,30 Solvency
CAR
12,22 13,46 16,53
Tier 1 Ratio
9,08 9,81 9,75
Tier 2 Ratio
3,14 3,65 6,78
Total Equity to Total Assets
7,34 6,94 6,90 Asset Quality
NPL Ratio
2,78 4,75 5,61
Provision Coverage Ratio
57,34 52,31 51,92
23
SLIDE 25
6
Albaraka Turk - Operating Performance Breakdown
Income (million TRL)
564 583 631
- 286
- 317
- 319
Profit Share Expense Profit Share Income
Net Profit Share Income (million TRL) Key Movements in Income (million TRL) Yield Movement (%)
9.87% 9.90% 9.95% 9.82% 9.73% 4.12% 4.12% 4.18% 4.14% 4.17% 5.42% 5.… 5.36% 5.20% 5.52%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Credit Yield Net Profit Share margin Cost of Risk
86.42% 84.19% 91.33% 13.58% 15.81% 8.67%
Q1'16 Q4'16 Q1'17
Fees, commission and others Net Profit Share Income
693 693 653 Q1’16 Q4’16 Q1’17 278 266 318
24
Q1'16 Profit Share Income Fees & Comm Trading Income Others Q1'17
653 693
- 4
- 30
+5 +69
Total Profit Share Income up 12% Profit Share Expense increased 10% Net Profit Share Income increased 14% Net Trading Income declined 43% Total Operating Profit increased 12% Provisions increased 100% Net Profits declined 44%
Highlights
SLIDE 26
7,162 7,223 5,748 6,377 6,270
21.69% 21.99% 20.08% 21.72% 21.76%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Liquid Assets % of Total Assets
7
Albaraka Turk - Asset Composition
Funded Credits, 69% Securities Portfolio, 6% Liquid Assets*, 22% Other Assets, 3%
Composition of Total Assets (TRL mn) Liquid Assets (TRL mn)
25
*Liquid Assets includes Cash and Balances with the Central Bank, Financial Assets at Fair Value Through Profit and Loss(net) and Banks 1,072 1,182 1,251 1,383 1,428 746 763 580 669 612
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Available for sale Held to Maturity 1.831 1.818 1.945
Total Securities Portfolio (TRL mn) Securities Yield (%)
8.84 8.39 8.40 8.05 8.13
Q1'17 Q4'16 Q3'16 Q2'16 Q1'16
(*) Profit share income received from securities for the last 4Q/4Q average securities
SLIDE 27
9.73 9.82 9.95 9.90 9.87 Q1'17 Q4'16 Q3'16 Q2'16 Q1'16
*USD equivalent of total funded credits
Total Funded Credits (including financial leasing, million)
QoQ Growth: 0,7% in TRL terms YoY growth: 15,1% in TRL terms
19,891 20,059 20,331 22,722 22,892 7,155 7,088 6,795 6,474 6,306
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
TRL USD*
Credit Yields(1) (%)
(1) Profit share income received from credits for the last 4Q/4Q average credits
Albaraka Turk - Funded Credits Portfolio
Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Corporate Credits 38,7 41,7 41,9 41,9 41,6 SME Credits 46,5 43,2 43,5 43,9 43,6 Retail Credits 14,7 15,1 14,6 14,2 14,8 Total 100.0 100.0 100.0 100.0 100.0
TRL 53.6% USD* 32.1% EUR* 14.3%
Composition of Total Funded Credits* (%) Currency Composition of Total Funded Credits* (Q1’17)
*Including USD & EUR indexed credits *According to BRSA definition
26
SLIDE 28
57.3 52.3 49.4 52.3 51.9
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 2.74 3.46 4.53 4.75 5.61 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
553 707 941 1,106 1323 317 369 465 578 687 568 653 932 1,106 1323
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
NPA Spesific Provisions Collateral
Non-performing Loans (TRL million) 79 92 122 147 175 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Cost of Risk** (bps) NPL Ratio*
** Spesific provisions for credits for last 4Q/ 4Q average credits *Including financial leasing & accruals and rediscounts
Provisioning Ratio (%)
Albaraka Turk - Asset Quality
27
SLIDE 29
24% 24% 21% 22% 20% 16% 16% 16% 18% 19% 61% 61% 63% 60% 61% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Fund Borrowed* Current Accounts Participation accounts
Composition of Total Liabilities (Q1’17, %) Composition of Funding Base (TRL million) 72 18 7 3
Funds Collected Wholesale Funding Shareholders' Equity Others
25.394
15,8%
25.517 25.875 29.583 29.548
Albaraka Turk - Funding Profile
28
*Fund Borrowed includes Funds Borrowed , Borrowings from Money Market and Subordinated Loans
SLIDE 30
5.21% 5.26% 5.47% 5.42% 5.43% 7.90% 8.10% 8.30% 8.23% 8.15% 1.69% 1.61% 1.63% 1.70% 1.76% 0.80% 1.08% 1.84% 2.22% 2.55%
Q1'17 Q4'16 Q3'16 Q2'16 Q1'16
Average TL FC Precious Metal
19,494 19,767 20,109 23,155 23,668 7,012 6,985 6,721 6,597 6,520 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
TRL USD*
Total Funds Collected (TRL million) Cost of Funds Collected**
*USD equivalent of total collected funds **Profit share expense to depositors for the last 4Q/4Q average participation accounts
53 28 16 3
TRL USD EUR Others
Currency Composition of Funds Collected (Q1’17, %) Maturity Composition of Funds Collected (Q1’17, %) 24 21 46 3 1 5
Current Acc. Up to 1 month Up to 3 months Up to 6 months Up to 1 year >1year 21,4%
Albaraka Turk - Funding Profile (Collected Funds)
29
SLIDE 31
6
Albaraka Turk - Funding Profile (Syndication & Sukuk) Syndications
Date Type Amount Maturity Cost September 2015 Murabaha Syndication USD 195,5 mio EUR 56,25 mio 2-year & 3-day LIBOR/EURIBOR+125 bps April 2017 Murabaha Syndication
USD 213 mio
367 days LIBOR+125 bps
30 Sukuks
Date Type Amount Maturity Coupon rate May 2013 Murabaha Sukuk (Subordinated Loan) USD 200 mio 10-year 7,75 % June 2014 Wakala Sukuk (Subordinated Loan) USD 350 mio 5-year 6,25 % November 2015 Wakala Sukuk (Subordinated Loan) USD 250 mio 10-year 10,50 % March 2017 TRY Lease Certificate TL 110 mio 179-day 5,6397 % May 2017 TRY Lease Certificate TL 100 mio 97-day 3,1890 % June 2017 TRY Lease Certificate TL 115 mio 179-day 5,8849 %
Total volume of Syndications is USD 2,6 bio and active outstanding ones are as follows: Total volume of USD Sukuks is USD 800 mio and total volume of TRY Sukuks is TRY 675 mio and active outstanding ones are as follows:
SLIDE 32
Off Balance Sheet Composition (%) 69 71 71 71 72 6 6 5 7 7 26 23 24 22 21 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
LG LC Others
LGs*-to-Total Assets
27.8% 26.9% 27.1% 23.8% 23%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Off Balance Sheet (TRL million)
*Revocable credit limits not included. Q1’16 Q2’16 Q3’16 Q4’16 Q1’17
Growth (%)
Y-Y YtD
Letter of Guarantee
8.011 7.899 7.746 7.810 7.593
- 5,22
- 2,78
Letter of Credit
681 611 583 753 714 4,85
- 5,18
Others*
3.001 2.551 2.648 2.389 2.169
- 27,72
- 9,21
Total:
11.693 11.061 10.977 10.951 10.476
- 10,41
- 4,34
Albaraka Turk - Off balance sheet growth
31
*Below 20% of LGs to Total Risk is targeted
SLIDE 33
14
(000 TRL) Year on Year Change Quarterly Change
Notes
2016 Q1 2017 Q1 % Q4’16 Q1’17 % Net Profit Share Income
277.599 318.384 14,69 266.568 318.384 19,44
Profit share expense increased by 9,7% while PSI raised by 12,2% YoY basis. Joint venture projects returns reached to TL 38.802 in Q1’2017 (Q1’ 2016: TL 51.890)
Net Fee Income
32.354 37.798 16,83 40.744 37.798
- 7,23
Higher Net Fee income in 2017 (YoY)
Net Trading Income
22.768
- 7.147
- 131,39
- 6.611
- 7.147
8,11
Positions due to FX indexed Loans in Volatile FX enviroment.
Other Income
33.532 29.434
- 12,22
75.391 29.434
- 60,96
Reversal of prior year provisions inline with 2016 Q1
Provisioning
73.626 138.029 87,47 145.033 138.029
- 4,83
Higher provisions in 2017
Other Costs
207.139 194.220
- 6,24
188.790 194.220 2,88
YoY decrease in OPEX
Tax
22.405 10.427
- 53,46
3.527 10.427 195,63
- Net Profits
63.075 35.793
- 43,25
38.742
35.793
- 7,61
- Income- Cost Dynamics
32
SLIDE 34
Market Comparison 4 3 Financial Highlights 2 Turkish Economy & Banking Sector
Agenda
1 Introduction Strategy Overview 5 Turkish Debt Markets 6 Appendix 7
SLIDE 35
Percent 2016 Q1 2017 Q1
Albaraka Türk Participation Banks* Banking Sector* Albaraka Türk Participation Banks* Banking Sector* Asset Size
- 2,5
0,9 2,1 0,5 2,6 4,9
Total Credits**
2,1 2,7 1,8 0,7 3,4 5,5
Deposits/Collected Funds***
- 2,5
- 1,7
2,8 2,2 5,2 4,3
* According to BRSA data ** Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks *** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks
21.0% 12.6% 26.4% 15.1% 18.2% 15.8% 24.4% 17.8% 39.7% 33.9% 28.3% 11.1%
2011 2012 2013 2014 2015 2016
Asset Size Growth
Banking Sector Albaraka Türk
Albaraka Turk - Total Growth 2017 Q1
34
SLIDE 36
Percent 2016 Q1 2017 Q1
Albaraka Türk/ Participation Banks Albaraka Türk/ Banking Sector Participation Banks/ Banking Sector Albaraka Türk/ Participation Banks Albaraka Türk/ Banking Sector Participation Banks/ Banking Sector
Asset Size
23,7 1,2 5,0 24,2 1,2 4,8
Total Credits*
23,5 1,3 5,4 25,0 1,2 4,8
Deposits/Collected Funds**
26,7 1,5 5,5 26,5 1,5 5,5
* Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks ** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks
Albaraka Türk; 24,2%
Participation Banking; 4,8%
Banking Sector Participation Banking Sector
Albaraka Turk - Market Share 2017 Q1
35
SLIDE 37
Percent 2016 2017-Q1
Albaraka Türk Participation Banks Banking Sector Albaraka Türk Participation Banks Banking Sector CAR
13,46 16,17 15,57 16,53 16,63 16,05
NPL Ratio
4,75 3,58 3,22 5,61 3,95 3,19
Provisioning Ratio
52,31 61,00 77,39 51,92 62,94 77,90
Loan/Deposits
98,13 110,61 117,23 96,72 102,53 117,96
ROAA (IBT)
0,88 1,10 1,89 0,73 0,76 1,52
ROAE (NI)
9,91 9,71 13,26 8,51 11,88 14,56
Asset Yield
8,97 8,87 8,37 8,95 8,03 7,13
Asset Spread
4,53 4,45 3,39 5,12 4,11 3,01
Net Profit Share Margin
4,14 4,54 4,01 4,17 4,19 3,52
Net Fee Income / Avg. Assets
1,18 0,80 0,96 1,04 0,86 0,90
Op Costs / Avg. Assets
2,47 2,33 2,34 2,38 2,34 2,06
Cost/Income*
53,65 46,37 40,68 49,30 44,00 35,86
Credits / Branches (000‘TRL)
106.676 92.074 153.632 107.474 94.017 162.385
Staff / Branches
17,82 15,04 17,70 17,86 14,97 18,00
CA / Deposits
23,44 28,35 20,33 23,58 28,15 20,94
*Cost: Operating Costs, Income: NII/NPSI, Net Fees and Commissions Income, Other Income
Financial Ratios - Sector Comparison
36
SLIDE 38
Market Comparison 4 3 Financial Highlights 2 Turkish Economy & Banking Sector
Agenda
1 Introduction Strategy Overview 5 Turkish Debt Markets 6 Appendix 7
SLIDE 39
6
Albaraka Türk Strategy
38
Growth Diversification Funding IntraGroup Business Social Responsibility Employees
Grow revenue and profit and ensure sustainability of our balance sheet and bottom line growth Prioritize technological improvement and devote resources towards developing digitalization
- f the business
Capitalize on the Group’s substantial customer base across 15 growing economies aiming to increase inter-Unit business volumes with the objective to expand market share, fee income and profitability. Determined to investing in the education and self improvement of our employees Determined to being a key supporter of socially responsible projects and initiatives to support start-ups Diversify funding sources (including customer base) and decrease the overall cost of funding – increase low cost deposits and current accounts and strengthen our international funding relationships Expand share of our SME portfolio and increase the breadth and depth of our customer base and loan portfolio diversification
Digitalization
SLIDE 40
Market Comparison 4 3 Financial Highlights 2 Turkish Economy & Banking Sector
Agenda
1 Introduction Strategy Overview 5 Turkish Debt Markets 6 Appendix 7
SLIDE 41
6
Turkish Debt Capital Markets – 1H Review
40
Noteworthy Highlights Total of USD 13 bio in 1H new issues represents a record half dating back to H12014 (USD 10.5 bio) Turkish sovereign issued USD 6.2 bio of this with the remaining trades coming mainly from the financial sector Gradual receding of uncertainty in the wake of the referendum, record 1H earnings from Turkish banks, strengthening in Turkish economic growth have all helped to firm up investor appetite and support record issuances The DCM space in Turkey increased in breadth and depth as evidenced by the following transactions: First bond exchange with Vakifbank pioneering the exchange of its old-style Tier 2 into Basel 3 compliant securities in January First liability management on a Sukuk in Turkey with Albaraka Turk successfully closing its consent on the old- style Tier 2, switching them to Basel 3 compliant securities in January Fibabanka becoming the first Turkish FI to issue a Tier 2 without having a senior security as reference
- utstanding in May
Isbank successfully pushing the tenor on Tier 2 instruments from Turkey to 11NC6 in June with a minimal NIP Turkish FIs also benefited from the return of some key real money investors to Turkish markets
SLIDE 42
6
Peer Comparables – Turkish Bonds/Sukuk
41
SLIDE 43
Market Comparison
4 3
Financial Highlights
2
Turkish Economy & Banking Sector Agenda
1
Introduction Strategy Overview
5
Turkish Debt Markets
6
Appendix
7
SLIDE 44
(Thousand TRL)
Dec’16 Mar‘17
Growth (%)
Cash and Banks
7.157.229 6.604.865
- 7,72%
Financial Assets
1.448.786 1.985.459 37,04%
Funded Credits
22.722.054 23.891.892 5,15%
Cash Credits
21.843.075 21.418.382
- 1,94%
NPL
1.105.954 1.322.771 19,60%
Provisions
578.505 686.792 18,72%
Net Financial Leasing Receivables
878.979 837.531
- 4,72%
Investments Held to Maturity (Net)
668.582 612.319
- 8,42%
Associates
30.119 30.119 0,00%
Fixed Assets
517.131 512.658
- 0,86%
Assets Held For Sale and Investment
92.317 96.271 4,28%
Other Assets (inc. Tax Assets)
214.520 287.733 34,13%
Total Assets
32.850.738 33.021.316 0,52%
Funds Collected
23.151.164 23.667.806 2,23%
Funds Borrowed
4.424.195 4.281.171
- 3,23%
Debts
1.247.030 943.504
- 24,34%
Provisions (inc. Taxes)
233.849 251.411 7,51%
Tier II Sukuk
1.510.937 1.598.144 5,77%
Shareholders’ Equity
2.279.593 2.277.745
- 0,08%
Capital
900.000 900.000
Capital Reserves (inc. Premium)
211.876 217.614
Profit Reserves
946.757 1.119.156
Profits
221.560 40.975
Prior Periods
3,951 5,182
Current Year
217,609 35,793
Total Liabilities
32.850.738 33.021.316 0,52%
Albaraka Turk- Summary Balance Sheet
43
SLIDE 45
(Thousand TRL) Mar’16 Mar’17 Growth (%)
Profit Share Income 564.024 632.748
12,18%
Profit Share Expense 286.425 314.364
9,75%
Net Profit Share Income 277.599 318.384
14,69%
Net Fees and Commissions Income 32.354 37.798
16,83%
Fees and Commissions Received 46.345 53.274
14,95%
Fees and Commissions Paid 13.991 15.476
10,61%
Net Trading Income 22.768
- 7.147
- 131,39%
Other Operating Income 33.532 66.606
98,63%
Total Operating Profit 366.253 415.641
13,48%
Provisions for Loan Losses 73.626 175.201
137,96%
Other Operating Expenses 207.139 194.220
- 6,24%
Net Operating Profit 85.488 46.220
- 45,93%
Tax Provision
- 22.413
- 10.427
- 53,48%
Net Profits
63.075 35.793
- 43,25%
Albaraka Turk – Summary Income Statement
44
SLIDE 46
THANK YOU
SLIDE 47
Disclaime laimer
THIS PRESENTATION AND THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL AND MAY NOT BE REPRODUCED, CIRCULATED, DISTRIBUTED OR PUBLISHED (IN WHOLE OR IN PART) OR DISCLOSED BY RECIPIENTS TO ANY OTHER PARTY. BY VIEWING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase any securities of Albaraka Türk Katılım Bankası A.Ş., nor shall any part of it form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities
- f the Bank. The information contained in this document is published for the assistance of recipients, but is not to be relied upon authoritative or taken in substitution for the exercise of
judgment by any recipient. The Bank does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its content. Any purchase of shares of the Bank should be made solely on the basis of sound financial analysis on the part of the investor, with no liabilities arising against the Bank. The information used in preparing these materials was obtained from or through the Bank or the Bank’s representatives or from public sources. Although prepared in good faith and from sources believed to be reliable, no reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its accuracy, completeness or fairness. The information in this presentation is subject to verification, completion and change. The projections, forecasts and estimates of the Bank contained herein are for illustrative purposes only and are based on management’s current views and assumptions. Such projections, forecasts and estimates involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those anticipated in this
- presentation. The Bank expressly disclaims any obligation or undertaking to update or revise any projections, forecasts or estimates contained in this presentation to reflect any change in
events, conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law. Investors should note many different risk factors could adversely affect the outcome and financial effects of the plans and projections described herein. As a result, you are cautioned not to place undue reliance on any forward-looking
- statements. The Bank, its advisers and each of their respective members, directors, officers and employees disclaim any liability in case projections and plans given in this document are not
realised.
SLIDE 48