2Q20 Consolidated Financial Results Content Operating Environment - PowerPoint PPT Presentation

2Q20 Consolidated Financial Results

Content Operating Environment 01 02 Financials 03 Revised Guidance 04 Annex 2

2020 Economic Outlook: Marked by Covid-19 Economic activity Recovery in 2H expected to partially offset negative trend in 2Q Inflation Disinflation trend expected in 2H with lower demand and oil prices Monetary Policy Policy rate to remain at current levels in line with potential disinflation trend Fiscal Policy Additional measures may be expected to enhance functioning of the economy Credit activity Expected to be TL loan driven 3

Economic activity bottoming out Manufacturing PMI Real Sector Confidence & Capacity Utilization Jun’20 60.0 85 130 53.9 55.0 120 July’20 80 110 50.0 99.4 100 75 45.0 90 70.7 70 80 40.0 70 65 35.0 60 33.4 32.6 30.0 50 60 1Q’08 1Q’10 1Q’12 1Q’14 1Q’16 1Q’18 1Q’20 1Q’08 1Q’10 1Q’12 1Q’14 1Q’16 1Q’18 1Q’20 Real Sector Confidence Index (s.a.) Capacity Utilization Rate (%, s.a., rhs) Sectoral Confidence Indices Foreign Trade Statistics (yoy) 120 65% July’20 45% Jun’20 100 94.6 25% 15.8% 87.0 8.2% 80 5% 66.7 -15% 60 -28% -35% -41% 40 -55% 1Q’11 1Q’12 1Q’13 1Q’14 1Q’15 1Q’16 1Q’17 1Q’18 1Q’19 1Q’20 1Q’14 1Q’15 1Q’16 1Q’17 1Q’18 1Q'19 1Q’20 Service Confidence Index (s.a.) Retail Trade Confidence Index (s.a.) Export Import Construction Confidence Index (s.a.) 4 Sources: CBRT, TURKSTAT

Economic activity heat map Q1’20 (1) April'20 May'20 June'20 July’20 0.1 -29.7 14.6 Industrial Production (mom, %) 50.6 33.4 40.9 53.9 Manufacturing PMI 3.3 -15.4 -16.7 -2.2 Electricty Consumption (yoy, %) 11.2 -11.4 -8.5 White Goods Sale (yoy, %) 44.8 -10.6 -7.6 58.4 Automotive Sales (yoy, %) 33.0 -55.5 -44.6 209.7 Home Sales (yoy, %) 103.9 62.3 73.5 89.8 99.4 Real Sector Confidence Index (s.a.) 76.2 61.9 62.7 65.8 70.7 Capacity Utilization Rate (s.a.) 58.1 54.9 59.5 62.6 60.9 Consumer Confidence Index (s.a.) 95.4 46.1 51.1 55.5 66.7 Services Sector Confidence Index (s.a.) 103.2 75.2 79.0 86.4 94.6 Retail Sector Confidence Index (s.a.) 76.9 44.7 58.5 78.0 87.0 Construction Sector Confidence Index (s.a.) 12.8 13.8 Unemployment Rate (s.a.) Negative Neutral Positive 5 Sources: CBRT, Ministry of Treasury and Finance, TURKSTAT (1) Q1’20 data based on quarterly averages

Content 01 Operating Environment 02 Financials 03 Revised Guidance 04 Annex 6

2Q20 in a nutshell: Well positioned to remain healthy & profitable Achievements Despite ‣ Maintained solid core operating performance in a ‣ Prudently increased loan loss provisions challenging environment ‣ Lower fee income impacted by regulatory ‣ Realized loan growth with continued focus on risk changes, Covid-19 related waivers & lower # of transactions management ‣ LYY MtM negative adjustment of TL 412 mn ‣ Leveraged superior digital capabilities to enhance bottom-line impact ‣ Sustained best-in-class CIR ‣ Preserved significant capital buffers 7

Sound core operating performance remains intact Revenue OPEX (TL bn) (TL mn) c. 4% impact -10% -6% from insurance 11.2 penalty & SDIF QoQ QoQ premium 8.9 25.1% YoY increase 15.7% YoY 8.9 6.5 3,898 1H20 RoE 3,368 2.4 2.3 11.4% when adj. for 1H19 1H20 1H19 1H20 TL 250 mn (1) Fee income Swap adj. Net Interest Income free provisions Net Income Pre-provision Income Cost to Income (TL mn) (TL mn) (%) +21% +12% QoQ QoQ 8.2% YoY 28.9% YoY 34.0 33.8 33.8 32.9 31.6 6,639 8,558 2,885 2,667 (2) (2) 1H19 1H20 1H19 1H20 1H19 9M19 2019 1Q20 1H20 (1) Adjusted for 1Q20 free provisions of TL 250 mn 8 (2) CIR calculation excludes FX gain from long FX position related with stage 1&2 provisions as well as insurance penalty of TL 71 mn

Robust NIM performance uplifts margin outlook Quarterly NIM Breakdown (bps) In 2Q20 1H20 NIM 4.63% ‣ Continued rate easing cycle & additional liquidity +18 -71 measures by CBRT supported funding costs +56 +8 483 442 -36 ‣ Securities mix remained supportive of asset yields -16 … as a result FY20 NIM guidance revised up to 4.2%-4.5% 1Q20 Securities Deposit Swap Loan Borrowing Other 2Q20 NIM Cost Yield Cost NIM Quarterly Total Swap Cost (1) CPI Linker Interest Income (TL mn) (TL mn) 741 589 647 (a) 442 403 (b) (c) -656 -765 -746 -738 -590 2Q19 3Q19 4Q19 1Q20 2Q20 Impact of change in CPI estimation: (a) from 14% to 12% is -TL 190 mn (b) from 12% to 10% is -TL 295 mn 2Q19 3Q19 4Q19 1Q20 2Q20 (c) from 10% to 8.58% is -TL 303 mn CPI estimation remains unchanged at 9% in 2Q 9 (1) Includes short and long-term swaps

Fee income performance expected to improve going forward Wealth Management Net Fees & Comm. +122% YoY (TL mn) -21% Product innovation & value added services QoQ Accelerated WM client acquisition driven by digital channels 5.9% YoY Business Loans +15% YoY 2,403 2,262 Strong performance in cash loan fees Bancassurance 1H19 1H20 +19% YoY Supported by both lending & non-lending Fees & Commissions by product Digital premiums/total premiums (1) +12 pp YoY (%) Payment Systems Wealth Management Bancassurance -35% YoY 14 7 Money Transfers 27 Business Loans Impacted by regulatory changes & lower rates 6 4 Money Transfers Other 4 -40% YoY Consumer Loans 38 Payment Systems Impacted by regulatory changes & fee waivers due to Covid-19 10 (1) Based on MIS data

Enhancing bottom-line impact through digital transformation Digital banking in numbers (1) with 5.3 mio customers +16% +10pp +10 pp c.2x Monthly app login Mobile NPS Share of mobile in Digital customer financial cross-sell to transactions non-digitals +11% 65% 70% +34% # of financial Credit cards sold GPLs sold through # of mobile transactions through digital digital channels (2) customers through mobile channels (2) conducting financial transactions (1) Based on bank-only MIS data. Increase figures from Dec’19 to Jun’20 11 (2) Including non-branch channels, year-to-date sales

Strategic asset allocation drives sustainable long-term shareholder value Optimized asset Assets Loan Breakdown composition (TL bn) (net, TL bn) 15% 11% YtD YtD 238.5 443.7 8.9% 214.5 219.0 2.1% Low leverage 421.4 4.1% 387.2 5.3% 6.3% 7.7x 8.8% 5.5% 8.8% 9.7% 6.9% 10.7% 35.7% 10.8% 10.6% 38.9% 37.8% 22.6% 21.2% 21.6% Strong capital 21.0% 21.1% 22.2% 19.0% (2) 55.4% 52.0% 53.8% 41.1% 38.9% 43.3% Unique growth 2019 1Q20 1H20 2019 1Q20 1H20 opportunity with risk & return in focus Loans (net) Securities Other TL Business Banking Consumer incl. Credit Cards (1) Reserve Requirement Liquid assets FX Loans (1) Cash and cash equivalents 12 (2) Excluding forbearances announced by BRSA in 2020

Accelerated TL loan growth while managing risks TL Loans FX Loans (net, TL bn) (net,USD bn) Sector Sector QoQ YtD Market QoQ YtD Market Change Change Share (1) Change Change Share (1) 153.5 +14.7% +15.1% 7.2% -4.6% -9.3% 6.6% 13.7 13.0 14.0 12.4 133.3 133.8 +2.3% +2.5% 10.6% 26% 13.6 13.6 34% 26% 36.2 +3.6% +14.9% 6.6% 31.5 35.0 Multinationals & corporates 21.2% 17.2% 7.0% with FX cash flow generation 74% 66% 103.3 88.2 74% 85.2 2019 1Q20 1H20 2019 1Q20 1H20 TL Business Banking Consumer Credit Card Project Finance & Export Other ‣ Gained c. 100 bps QoQ market share in TL loans vs private banks ‣ 2Q TL loan growth led by business banking (+21.2% QoQ) ๏ Gained QoQ c. 140 bps market share vs private banks ๏ CGF (opex & cheque) utilization at c. TL 3.5 bn ‣ Consumer loan growth +3.6% QoQ, led by +6.7% growth in GPLs ๏ 63% of 2Q20 GPL originations were pre-approved, separately 42% were to salary customers 13 (1) Market share data based on bank only BRSA weekly data as of June 26, 2020

Balanced loan portfolio (% of Total Gross Loans (1) ) Other (2) 14.0 Retail Loans 22.2 Petrochemicals Distribution 2.2 Real Estate 8.8 ‣ LTV c. 80%, with recent valuations & Energy Distribution 2.3 assuming Decree 32 to be implemented perpetually (despite 2 yr limitation) Services 2.3 ‣ c. 20% of total has FX cash collateralization Finance 2.8 Energy Generation 6.1 Metal & Fabricated Metal Products 3.1 ‣ 100% of PF loans since 2016 are renewable ‣ 79% of total energy generation are renewable Tourism 3.2 ‣ 55% are government guaranteed (feed-in tariff) ‣ High room occupancy rate (c.%80) ‣ Well-known brands Conglomerate 5.0 Food 3.4 Transport Vehicles & Sub-industry 4.6 Petrochemicals Production 3.5 Transportation & Logistics 3.8 ‣ Increasing business volume in logistics with changing Retailer 4.5 shopping habits ‣ High capacity docks in different locations ‣ Financially strong sponsors ‣ Financially strong companies with high and stable ‣ Nation-wide supermarket chains with high cash flows business volume Construction 3.9 ‣ 65% in FX Textile & Ready-made 4.3 ‣ 74% of FX loans are government guaranteed (debt assumption) (1) Consists of consolidated performing and non-performing loans & excludes leasing receivables and adjusted for financial assets measured at fair value through P&L 14 (2) Loan concentration below 2%