CORPORATE PRESENTATION NOVEMBER 2019
AGENDA TURKISH ECONOMY & BANKING SECTOR TURKISH ECONOMY & BANKING SECTOR GARANTI BBVA CORPORATE PROFILE & FINANCIAL HIGHLIGHTS CORPORATE GOVERNANCE & RISK MANAGEMENT OUR TRANSFORMATION JOURNEY CORPORATE PRESENTATION 2
AGENDA TURKISH ECONOMY & BANKING SECTOR TURKISH ECONOMY & BANKING SECTOR GARANTI BBVA CORPORATE PROFILE & FINANCIAL HIGHLIGHTS CORPORATE GOVERNANCE & RISK MANAGEMENT OUR TRANSFORMATION JOURNEY CORPORATE PRESENTATION 3
TURKISH ECONOMY (I / II) GROWTH 19 th largest economy in the world 1 6,2% 2019 – Further deceleration in economic activity 2,6% • Negative effects of recent financial shocks 0,3% • Rebound expected in the second half • Net exports will be the key contributor 1H18 2018 2019E CBRT FUNDING INFLATION The CBRT has started the easing cycle with COST the support of faster than expected recovery in inflation and expected easing in external 20,3% 24,0% financial conditions. 14,00% 12,5% 11,9% 12,75% 9,0% 2017 2018 mmm-19 2017 2018 2019E 2020E E: Garanti Estimates as of November 2019 1 IMF’s World Economic Outlook Report dated October 2019. Ranking as of YE 2018 CORPORATE PRESENTATION 4
TURKISH ECONOMY (II / II) Fiscal Discipline BUDGET DEFICIT / GDP EU Defined Government Debt Stock: 30.4% as of 4Q18 vs. Maastricht criteria: 60% -1,1% -1,0% -1,1% -1,5% -2,0% -2,8% Resilient central government debt composition • TL: 51.0%, FC: 49.0% (as of September 2019 vs. TL: 42%, FC: 58% in 2002) • 75.0% fixed, 25.0% floating rate (as of September 2019 vs. 45% fixed, 55% 2014 2015 2016 2017 2018 2019E floating in 2002) The continuation of the adjustment in economic activity with weaker CAD / GDP domestic demand has contributed to a further decline in current 2,5% 1,1% -0,2%-1,2%-0,4% account deficit in 2019 Core CAD /GDP -4,7% -3,7%-3,8% -5,5%-3,5% -0,5% Core current account balance CAD/GDP (excluding energy and gold): US$46.8 bn (12-month sum , as of August 2019) 2014 2015 2016 2017 2018 2019E E: Garanti Estimates as of November 2019 CORPORATE PRESENTATION 5
TURKISH BANKING SECTOR (I / IV) TOP 10 BANKS 1 StateBanks 34% Dominated by top 4 Private Banks & 3 State Banks Assets Market Foreign Ownership Actual Free Float Share Total Assets 14.4%* - - Other US$759bn 30% 10.2% - 31.2% - 48.4% 10.1%* Top 4 BBVA (49.85%) 50.1% Private Banks 8.8% 36% 8.7% UniCredit Group (40.95%) 18.0% 9.0%* Share in Share in Share in - 25.1% # of Banks Assets Loans Deposits 8.2% - 49.6% Top 4 Private Commercial Banks 4 36% 34% 37% 4.1% Qatar National Bank (99.88%) 0.12% State Banks 3 34% 37% 37% 3.5% Emirates NBD Bank PJSC (99.85%) 0.04% Other Private Commercial Banks 25 17% 16% 18% BNP Paribas (72.2%) - 2.4% Development & Inv. Banks 13 7% 8% - Participation Banks 6 6% 5% 8% Total: 51 Note: Sector figures are based on bank-only BRSA monthly data as of September 2019. Top 10 banks make up ~80% of sector’s total asset CORPORATE PRESENTATION * Figures are as of June 2019 6
TURKISH BANKING SECTOR (II / IV) COMFORTABLE LIQUIDITY STRONG SOLVENCY SOLID ASSET QUALITY Customer Deposits fund Basel III CAR NPL Ratio 58% of assets 18.0% 5.3% Sufficient buffers against potential CET-I capital: Stage-3 Coverage Ratio: external liquidity shock 77% of total capital 66% Banks ’ US$84bn ST external dues 1 : Quick FC Liquidity 2 ROAE: 11% RWA/Assets US$65bn sufficient to cover LEVERAGE: 8.2x 78% (39% of total external debt) any liquidity shock ROAA: 1.1% Note: Sector figures are based on BRSA monthly data as of September 2019, for commercial banks only 1 Source: CBRT, as of August 2019. Excludes non-residents ’ FC deposits CORPORATE PRESENTATION 2 Quick Liquidity Buffers FC reserves Under ROM, swaps, money market placements, CBRT eligible unencumbered securities 7
TURKISH BANKING SECTOR (III / IV) TL LENDING GROWTH BANKING SECTOR Y-o-Y LENDING GROWTH TL Loans FC Loans 24,3% 20,1% 8,6% 16,1% 6,5% 5,5% 5,0% 11,0% 2,6% 1,0% 3,0% 2,8% 6,2% -0,2% -0,3% -1,2% -3,5% 3,4% 2,8% -1,2% -0,4% 1Q19 2Q19 3Q19 -3,5% -6,4% -6,9% -8,8% TL Business Consumer Loans Credit Cards Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Sector data is based on BRSA weekly data, for commercial banks only CORPORATE PRESENTATION 8
TURKISH BANKING SECTOR (IV/ V) BANKING SECTOR Y-o-Y CUSTOMER DEPOSIT GROWTH CUSTOMER DEPOSIT GROWTH TL Cust. Deposits FC Cust. Deposits (in USD) TL Cust Deposits FC Cust Deposits 16,4% 9,6% 16,0% 15,3% 13,2% 12,5% 10,6% 12,6% 5,5% 1,9% 1,8% 3,9% 10,0% 0,4% 0,1% 7,3% 3,7% -0,7% 1Q19 2Q19 3Q19 2,6% -2,3% TL LDR 145% 143% 135% -7,6% -10,2% TOTAL LDR 108% 106% 102% Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Sector data is based on BRSA weekly data, for commercial banks only CORPORATE PRESENTATION 9
CHALLENGES & OPPORTUNITIES OF TURKISH BANKING SECTOR UNBANKED POPULATION (>40% of adult HIGH SHORT-TERM population) LIQUIDITY NATURE OF AND STRONG DEPOSITS SOLVENCY (~1 month) PENETRATION PRIVILEGED RATIOS 1 STATUS OF STATE BANKS Cust. Deposits/GDP: 59% YOUNG SOUND SCARCITY OF vs. 111% in Euro Area in collecting deposits POPULATION ASSET LONG-TERM 55% population STRICTLY PENETRATION QUALITY TL FUNDING is under age of 35 DUAL CURRENCY REGULATED RATIOS 1 BALANCE & HIGHLY Loans/GDP: 65% SHEETS BASEL III & vs. 99% in Euro Areas MONITORED IFRS9 FC EXTERNAL COMPLIANCE FUNDING NO FX OPEN SHARE IN POSITION ASSETS: 18% 1 Source: Eurostat (Euro Area for 19 countries), ECB, BRSA monthly data and Turkstat CORPORATE PRESENTATION 10
AGENDA TURKISH ECONOMY & BANKING SECTOR TURKISH ECONOMY & BANKING SECTOR GARANTI BBVA CORPORATE PROFILE & FINANCIAL HIGHLIGHTS CORPORATE GOVERNANCE & RISK MANAGEMENT OUR TRANSFORMATION JOURNEY CORPORATE PRESENTATION 11
OUR PURPOSE OUR STRATEGIC PRIOTITIES TO BRING THE AGE OF OPPORTUNITY TO EVERYONE EMPLOYEE EFFICIENCY DIGITALIZATION OUR VALUES HAPPINESS CUSTOMER OPTIMAL CAPITAL RESPONSIBLE EXPERIENCE UTILIZATION & SUSTAINABLE DEVELOPMENT CUSTOMER COMES WE ARE ONE WE THINK BIG FIRST TEAM CORPORATE PRESENTATION 12
A UNIVERSAL BANK WITH STRONG PRESENCE IN ALL BUSINESS AREAS Asset Contribution: 5.8% RETAIL Asset Contribution: 3.8% PAYMENT CORPORATE Asset Contribution: 1.3% SYSTEMS Asset Contribution: 0.5% DIGITAL Asset Contribution: 0.45% COMMERCIAL BANKING Asset Contribution: 0.2% SME Asset Contribution: 0.03% Note: Asset contributions are calculated based on BRSA Consolidated Financials as of September 30, 2019 CORPORATE PRESENTATION 13
SHAREHOLDING STRUCTURE Shareholders from 37 countries Foreign investors in free float 87% vs. peer avg. of 66% 1 Note: Institutional shareholder and foreign individual shareholder composition data based on IPREO Shareholder ID Analysis dated December 2018; the actual free float ratio and the share of local individual shareholders are all based on Central Agency Registry Agency data. CORPORATE PRESENTATION 1 As of November 1st 2019. 14
GARANTI BBVA AT A GLANCE 2 nd largest private bank per consolidated asset size $73 bn TOTAL ASSETS $7.1bn Largest floating Mcap ( ~$3.6bn ) among banks in BIST MARKET CAPITALIZATION* 9% WEIGHT IN BIST Most invested stock by foreigners 8 mn 47% of all sales are end-to-end digital DIGITAL CUSTOMERS 100% 17.3mn customers, 920 branches GEOGRAPHICAL COVERAGE 13.5% Highest return on capital ROAE 1 Note: Financial figures are per BRSA Consolidated data as of September 2019 * As of November 07, 2019 CORPORATE PRESENTATION 1 Non-recurring items are excluded when annualizing Net Income for the remaining quarters 15
GARANTI BBVA’S CONTRIBUTION TO THE BBVA GROUP While Garanti BBVA has 9% contribution to the Group’s total asset, In Digital Banking, GARANTI BBVA its share in the gross income is 14% . ranks at the top within the group DIGITAL CUSTOMER PENETRATION Rest of 71% Rest of South South Turkey Turkey Eurasia Eurasia America Garanti BBVA America 56% 9% 14% 2% 3% 8% 16% USA USA 56% 13% Group 13% 48% GROSS INCOME TOTAL ASSETS BREAKDOWN BREAKDOWN Jun.18 Sep.19 Mexico Spain 15% DIGITAL SALES 23% Spain Mexico 64% 61% 52% 32% Garanti BBVA Group 45% 33% Jun.18 Sep.19 CORPORATE PRESENTATION 17
PERFORMANCE INDICATORS (I/IV) Note: Please refer to disclaimer page for more information on Net Promoter Score. CORPORATE PRESENTATION 16
PERFORMANCE INDICATORS (II/IV) – 9M19 FINANCIAL PERFORMANCE COMPOSITION OF ASSETS Note: Figures are per September 2019 BRSA Consolidated financials 1 Includes funds borrowed, sub-debt & securities issued. CORPORATE PRESENTATION 2 Neutral impact at bottom line, as provisions due to currency depreciation are 100% hedged (FX gain included in Net trading income line) 18
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