Financial Presentation March 2020
Ziraat Bank – Highlights Largest Bank in Turkey with TL 695bn ~ USD 107 bn. asset size Widest local and international geographic footprint with 1,733 branches 1,733 • Only bank in more than 400 points in Turkey • Operating in 18 countries Extensive Customer Base > 36 mn Market Leadership #1 • Total Assets • Total Loans • Equity • High level of funding intermediation Deposits 94.3% through moderate LtD level Robust Asset Quality maintained 2.7% Prudent risk management approach for future NPL inflows Sound CAR 16.4% Above regulatory limits w/o forberance Tier 1 capital ratio 15.3% The largest deposit base in the sector TL 490 bn Core deposit ratio 96% Undisputed Agricultural Loans Leader in Terms of Market Share • High market penetration 60% • Only bank authorised for government subsidised agro-lending 1
Ziraat Bank – Assets/Liabilities ASSETS LIABILITIES TL bn Q1 20 70.5% 14.0% 695 6.0% 21.3% 67.3% 9.7% 695 QoQ 7.0% 2019 650 68.8% 14.9% 6.0% 21.2% 67.1% 10.8% 650 YoY 20.0% 9.0% Q1 19 66.0% 19.3% 579 17.2% 67.5% 9.6% 579 8.6% 10.7% 2018 537 17.8% 68.9% 61.6% 22.0% 537 10.2% 12.1% 2017* 16.2% 68.7% 434 61.3% 24.1% 434 Loans Securities Deposits Non Deposit Funds Equity Other Reserve Req. & Liquid Assets Other Assets (1) Performing loans only 2 * All 2017 figures in the presentation are calculated over 01.01.2018 numbers for comparison purposes
Ziraat Bank – Lending Total Loans (TL bn, % share in total) SME 6% 468 QoQ ∆ YoY ∆ 435 403 Total Loans 7.5% 16.3% 372 26% 27% 27% Total Loans (FX adj.) 4.8% 11.9% 299 32% 31% 32% TL 8.8% 25.0% Corporate 94% 26% 26% FX($) -6.0% -16.6% Corporate 24% Retail 9.8% 32.3% Retail 34% 74% 73% 73% 68% 69% Housing 6.1% 31.6% 68% 74% 74% SME 7.4% 18.5% Corporate 5.7% 6.3% SME 42% Corp. FX Adj . -5.1% -1.8% FX Loans/Total Loans 2017 2018 Q1 19 2019 Q1 2020 26% vs. sector`s 38% TL FX Sector Breakdown of Cash Business Loans Cash Loans by Customer Segment Cash Loans by Product Other; 6% Project Finance Tourism 3% Agriculture Corporate Retail SME Agriculture Energy 12% 21% 15% 8% Credit Cards & Other Retail Construction 2% 26% 34% 8% 40% 10% 47% GPL 22% 7% Finance 15% 10% Manufacturing Other Business Loans 15% Housing Service • Based on customer segmentation data, totals may differ from product classification • Accruals, intermediated loans of public funds and overseas branch lending are excluded from segment distribution Trade 3
– Lending Ziraat Bank Retail Loans (1) (TL bn, % share in total) 84 91 97 117 123 Payroll 7% 6% 7% 7% Market Share NPL 5.3 million 8% GPL Cust. & Pensioners 15% 1.8% pensioners 50% of GPL 49% 54% 56% 58% 56% Inflation LTV (2) Housing Market Share NPL Indexed 62% 0.1% Loans 32% Loans Young Subsidized Agricultural NPL 44% Focus on 39% 37% 36% 36% Loans Farmers 2.1% Loans Agro-Industry Academy 79% 2017 2018 Q1 19 2019 Q1 20 GPL Housing Credit Card and Other Project Finance Loans Agricultural Loans (TL bn) TL Market Share (3) (%) 5% USD 8.8 bn cash 61 61 61 60 60 20% USD 0.2 bn non-cash EUR 23% 28% Share of Renewables 70.5 13% 66.2 in energy loans: 57% 63.4 60.7 USD Share of Infrastructure 45% 51.9 67% projects with debt assumption: 91.5% Energy Infrastructure Telecom Other 2017 2018 Q1 19 2019 Q1 20 (1) Accruals are excluded (2) Marginal LTV 4 (3) Among sector deposit banks
– Funding Ziraat Bank Total Deposits (TL bn, % share in total) Retail 58% SME 20% 490 Corporate 447 QoQ YoY ∆ ∆ 22% 382 Total Deposits 9.6% 28.1% 331 Total Deposit (FX adj.) 4.7% 19.8% 12% 70% 266 Public 72% TL 9.9% 38.5% Deposits 75% FX($) -1.3% 1.0% Other 74% Deposits 75% Customer Deposit 88% 9.7% 26.1% Demand 16.8% 49.1% 30% 28% 25% Time 26% 6.8% 21.0% 25% 54% TL 2017 2018 Q1 19 2019 Q1 20 FX Demand Time 46% Granular and sticky deposit base with c. 60% share of retail segment in total deposits 57% of demand deposits comprised of retail deposits Sector Core deposit ratio Demand/Total Deposits 96% 27% 5
– Funding Ziraat Bank Non-Deposit Funds (TL bn,% share in total) Total Amount (USD bn) 11.8 11.9 10.6 10.1 9.6 98 118 112 97 97 2,4 2,4 Bonds Issued 13% 13% 14% 1,7 15% 14% 1,7 1,0 1,0 1,6 0,4 Post Finance 0,4 0,3 1,4 1,4 1,4 29% 30% 1,4 32% 36% 1,4 34% Syndicated 2,1 2,0 2,0 TL FX 1,9 Loans 1,9 35% 65% IFI Loans 1,5 1,6 1,5 1,3 1,1 58% 57% Bilateral Loans 53% 51% 51% 3,5 3,4 3,4 3,4 3,3 Repo Q119 Q219 Q319 Q419 Q120 2017 2018 Q1 19 2019 Q1 20 Money Markets Funds borrowed Bonds issued Cost oriented, adaptive wholesale • More than adequate FX liquidity, funding management ST liability coverage ~ 200% • 461.9% FX LCR, 141.1% Total LCR (2) Sector Loan to Deposit (1) Ziraat • USD 1.1 bn syndicated loan in April (%) with 38 banks from 22 countries 112,9 130,1 131,4 110,6 129,2 121,3 109,7 104,2 106,9 57,5 54,8 65,8 64,3 103,7 97.2 94,3 96.0 92,2 2019 Q1 20 2017 2018 Q1 19 2019 Q1 20 Q1 20 2019 (2) Ziraat Sector TL FX (1)Performing Loans/Total Deposit Intermediated loans of public funds are excluded 6 (2)Sector: Deposit banks
– Asset Quality Ziraat Bank Around 35 % of loan portfolio allocated to structurally low NPL NPL Ratios (%) generating products/segments 5,3 Comparably lower NPL formation and high collection performance No NPL Sale 5,0 in Q1 2020. 4,0 3,9 Limited impact of ~ 15 bps from change in NPL and Stage 2 3,0 2,8 2,7 recognition periods 2,0 2,0 1,6 YtD denominator impact on NPL ratio ~ 20 bps NPL Ratios by Segment (%) 2017 2018 Q1 19 2019 Q1 20 4,6 4,4 Sector Ziraat 3,3 3,2 2,8 2,5 New NPL & Collections (TL mn) 2,2 1,5 1,5 Net NPL 1,4 Formation (TL bn) 4.8 1,1 2.4 1,0 1,0 1,0 1,0 2017 2018 Q1 19 2019 Q1 20 Corporate SME Retail 2.5 1.2 Retail NPL Ratios by Product (%) 7.147 3.318 0.6 0.5 0.3 0.6 2,9 3.677 1.773 2,5 2,5 2,7 2,5 1.099 982 956 1.409 1,8 -836 2,0 -1.227 -469 -470 -897 -539 1,8 1,9 1,8 -693 -2.375 0,2 0,2 0,2 0,1 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 0,1 2017 2018 2019 New NPL Collections 2017 2018 Q1 19 2019 Q1 20 Housing Loans GPL Credit Cards 7
– Asset Quality Ziraat Bank Share in Stage II Loans (TL bn) Loan Classification (TL bn) Restructured Loans (2) total (%) in Total Loans: 4.8% 6.2% 1.7% 4.9% 5.1% 6.7% Coverage Share inStage II 22.2 29,6 12.9 Stage III Construction: 17% 69.7% (3) Energy: 8% 20,5 Agriculture: 11% 18,2 Stage II 12.5% 29,6 Total Coverage (3) 105.7% 5,3 Cash Coverage (3) 119.5% Stage I 0.3% 438.3 2017* 2018 Q1 19 2019 Q1 20 TL 910 mn free provision *01 Jan 2018 financial figures for comparison purposes in Q1 20 Q1 20 Reaching a strong buffer of TL 1.7 bn Total NPL by Segment Cost of Risk (1) (%) SME Corporate 50% 35% 8% 7% Retail 1,3 (4) Other 1,2 1,1 Retail Business Loans Other (inc. energy) Other % 0,7 Service (incl. Real Estate) Credit Card Construction 8% 22% 16% 14% Housing 11% 12% Agriculture 19% 2017 2018 2019 Q1 20* 66% GPL 26% Manufacturing Trade (1) CoR: Expected Credit Loss-Reversals /Average Loan Amount (4) Includes loans excluded from segment classification, (2) Total figure including restructured loan amount before BRSA regulation published on 2 March 2019. According to regulation intermediated loans from public funds and overseas branch lending defining restructured loans, restructured loan amount between March 2018 to March 2020 is TL 6,589 mn * Annualized figure 8 (3) Excluding intermediated loans for public funds
Ziraat – Capitalization [Forbearance Effect] CAR Tier-1 CET-1 16.4 17,0 15.3 16,0 15,2 13.5 14,7 14,8 14,1 14,1 14,1 13,8 13,8 13,7 11,9 Basel III Leverage 8.9% vs regulatory min of 3.0% BRSA Target 12.0% Regulatory Minimum 8.0% 2017 2018 2019 Q1 20* TL 7 bn. core capital injection by TWF in progress, Change in CAR (QoQ bps) 110-115 bps positive impact on CET 1 expected TL 23.2 bn. excess capital* +9 -14 -75 +33 +60 -182 +105 17.0% 16.4% Solo Cons. CET1 Capital Ratio 4.5% 4.5% Capital Conservation Buffer 2.5% 2.5% D-SIB Buffer* - 2.0% Countercyclical Buffer 0.07% 0.07% TOTAL** 7.1% 9.1% 2019 BRSA BRSA Forb. Profit Provisions Operational Interest Balance Q1 20 Forbearance (FX Rate) Risk Rates Sheet *Calculated over solo Basel III requirement of 12,07% (MtM) Growth **D-SIB Buffer is applied only to consolidated ratios Total buffers including AT1 and Tier-2 buckets is 9 12.5% in consolidated basis
Ziraat Bank – Profitability Net Profit (TL mn) 7,961 Higher profitability due to better NII which compansates higher OPEX and lower net fee and 6,187 1,871 comisssion income Continuation of the positive impact of decreasing 1,102 funding costs Q1 19 Q1 20 2018 2019 Return on Assets (2) (%) Return on Equity (1) (%) 18,4 2,0 15,2 12,8 1,6 16,7 11,4 11,1 14,8 1,4 1,7 1,2 1,2 10,1 10,5 1,4 7,7 1,1 1,1 0,8 2017 2018 Q1 19 2019 Q1 20 2017 2018 Q1 19 2019 Q1 20 (3) (3) Ziraat Sector Ziraat Sector (1) Average shareholders ’ equity represent monthly averages until 2017 and weekly averages since Q1 18 10 (2) Average total assets represent monthly averages until 2017 and weekly averages since Q1 18 (3) Sector: Deposit Banks
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