T rk iye Finans Ka t l m Bankas A. . (TFKB) March 2015 TFKB - - PowerPoint PPT Presentation

▶
t rk iye finans ka t l m bankas a tfkb
SMART_READER_LITE
LIVE PREVIEW

T rk iye Finans Ka t l m Bankas A. . (TFKB) March 2015 TFKB - - PowerPoint PPT Presentation

Mar 25, 2024 581 likes •882 views

25 March 2013 T rk iye Finans Ka t l m Bankas A. . (TFKB) March 2015 TFKB Highlights 14th largest Turkish bank by assets as of 30 Sep 2014 32.1% market share (1) of assets among 4 participation banks (Islamic banks)

slide-1
SLIDE 1

25 March 2013

Türkiye Finans Katılım Bankası A.Ş. (“TFKB”)

March 2015

slide-2
SLIDE 2

Genele Açık / Public

1

Strong Financial Performance Strong and Growing Franchise

  • 14th largest Turkish bank by assets as of 30 Sep 2014
  • 32.1% market share (1) of assets among 4 participation banks (Islamic banks) in Turkey as of 2014 YE
  • World Finance Awards; Best Islamic Bank in Turkey (Turkey’s Best Participation Bank Award) - March 2014

Strong Asset Quality & Risk Management

  • Despite absence of NPL sales until 3Q14, NPL levels consistently below banking sector and participation bank peer

averages (2.5% as of 2014 YE) (1)

  • Increasing NPL coverage ratio in line with that of the participation bank average

Experienced Management Team

  • Highly experienced management team with a proven track record in growing operations and profitability while maintaining

a robust capital structure and a strong risk management culture

  • CEO and EVPs have average 24 years experience in banking and business administration

(1) Comparison based on BRSA financials (2) Cost to income ratio calculated as operating income excluding financial asset impairment (3) Net cost of risk defined as net loan loss provisions over average net loans Source: BRSA

TFKB Highlights

Strong and Supportive Shareholder Base

  • National Commercial Bank, Saudi Arabia’s largest bank by total assets (rated A+/A1 by Fitch, S&P and Moody’s), is the

majority shareholder with a 67.03% stake

  • Share capital increased from TRY 292mn (pre-NCB’s majority stake acquisition in 2008) to TRY 2,600mn in 2014

Favorable Operating Environment

  • Attractive demographics coupled with strong GDP growth
  • Stable political and macro environment, including healthy public debt to GDP ratio and subsiding inflation
  • Strictly regulated, well capitalized, and underpenetrated banking sector (in terms of lending) to underpin continued growth
  • Participation banking growing faster than conventional banks, still represents only 5.2% of total bank sector assets, as of

2014 YE Trade Finance Initiatives

  • Serving to 2,7mn retail, 374k SME and 82k corporate clients, mainly SMEs
  • Offering a wide range of correspondent banking relationships and foreign trade services with a volume of USD 27.5bn as
  • f Q4 2014
  • Net profit growing at 13% CAGR between 2010-2014, outperforming Turkish banking sector and Turkish participation

banking average

  • Outperformed banking sector and participation bank industry averages in terms of asset, loan, deposit and net profit

growth as well as ROAE, as of 2014 YE

  • Low cost to income(2) ratio of 62.8%, outperforming participation bank industry
slide-3
SLIDE 3

25 March 2013

1.Turkey: Country Overview

slide-4
SLIDE 4

Genele Açık / Public

BBB- (Fitch), Baa3 (Moody’s) and BB+ (S&P*) USD 813 billion (2014 IMF Estimates) Turkish Turkish Lira (TRY) 77,695,904 (2014) 783,562 km2 Istanbul Ankara

Turkey: Overview of the Country

3

Background Information Turkey: A Strong Emerging Market with Growth Potential

* Unsolicited Rating ** IMF World Economic Outlook (WEO) October 2014 Forecasts Sources: IMF WOE Database, TURKSTAT

Geographical Location

2010 2011 2012 2013 2014 2015 (P) Population (m) 73.7 74.7 75.6 76.7 77.7 78.2 Gross GDP (in USDbn equivalent) 731.5 774.7 788.6 821.9 813.3** 861.1 Real GDP growth (%) 9.2% 8.8% 2.1% 4.1% 3.0%** 3.0% GDP per capita (in USD,000 equivalent) 10.0 10.4 10.5 10.8 10.5** 11.0 Inflation (CPI) 6.4% 10.4% 6.2% 7.4% 8.2% 7.0% Unemployment (%) 11.1% 9.1% 8.4% 9.0% 9.5%** 9.9%

Rating GDP Official Language Currency Population Area Largest City Capital

slide-5
SLIDE 5

Genele Açık / Public

Turkey: Strong Macro Fundamentals

4

Annual GDP Growth (%) (2003/14 Averages) 2015/19 Average GDP Growth Forecasts (%) Annual CPI Inflation (%) Inflation and Benchmark Bond Yield (%)

Source: TURKSTAT, CBRT, IMF, Bloomberg

3,2 Czech Republic 2,6 Mexico 2,5 Hungary 1,3 Turkey 4,8 Russia 4,1 Poland 4,0 Brazil 3,3 South Africa Mexico 3,7 Poland Russia 1,6 3,5 Turkey 3,5 South Africa 2,6 Brazil 2,5 Czech Republic 2,3 Hungary 1,9 10 20 30 40 50 60 70 2020 2018 2016 2014 2012 2010 2008 2006 2004 2002 5 10 15 20 25 30 2008 2012 2010 2006 2004 2016 2018 2014 Annual CPI Inflation Benchmark Bond Yields Inflation

  • Turkey is the 17th largest economy

in the World as of 2013

  • Consistently outperformed peer

groups in terms of real GDP growth between 2003-2014

  • Real GDP expected to grow at 3.5%

between 2015-2019, and still continue to outperform many emerging market economies

  • The structural reform programs,

recently released by the government, will likely enhance the productivity and boost the potential growth, as well as the favorable demographics

  • Turkey is in a disinflation process in

the long-run

  • Low inflation also had a crucial role

to sustain high growth during the last decade

  • Accordingly, benchmark rates

remained at single digit levels over the past years as the risk premium eased due to improvement in public finance

slide-6
SLIDE 6

Genele Açık / Public

Turkey: Sound Fiscal Management & Financial Markets

Budget and Primary Balances of GDP (%) 2013 Public Debt to GDP vs. Peers Central Bank Policy Rates & Inflation Rates (%) 3M-Implied Volatility in FX Markets

Source: TURKSTAT, CBRT, IMF, Bloomberg

  • 12
  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 2011 2009 2007 2005 2003 2001 2017 2015 2013 Primary Surplus Budget Balance 79 66 57 46 46 45 36 14 Hungary Brazil Poland Mexico Czech Rep. South Africa Turkey Russia Mexico India 13,3 Czech Republic 12,2 Russia 12,1 10,1 15,2 Poland 14,8 Brazil Hungary South Africa 11,8 Turkey 11,4 Indonesia 10,4 15,5 Mexico 4,50 Hungary 2,10 Poland 8,25 Russia 8,25 South Africa 5,75 Brazil 11,75 Turkey 2,00 Czech Republic 0,05 2010-2014 Averages

  • Prudent public spending has

significantly reduced budget deficit for the last ten years

  • The Government’s Medium-Term

Program (MTP) also imply that the tight fiscal policy will maintain in the next three years

  • Furthermore, cautious public

borrowing has diminished Turkey’s risk premium to the historical low levels

  • At 36% Turkey’s public debt to GDP

ratio is significantly lower than the many countries

  • Neutral real interest rates fell globally

after the Global Financial Crisis

  • Turkey can also maintain the low

real rates thanks to the healthy public finance dynamics and growth prospects

  • In addition to the strong

fundamentals, macro prudential measures have lowered the volatility in financial markets

5

CPI Policy Rates

slide-7
SLIDE 7

25 March 2013

2.Turkey: Banking Industry Overview

slide-8
SLIDE 8

Genele Açık / Public

Loan Growth (%)(1) Deposit Growth (%)(1) Loans/Deposits (%)(1)

Growth & Penetration Asset Quality & Capital

NPL (%)(1) Coverage (%)(1) CAR (%)(1)

40.6 29.7 28.8 5.1 34.8 29.7 15.3 31.2 19.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 22.0 15.4 27.3 12.0 19.7 12.4 10.4 22.1 11.6 2006 2007 2008 2009 2010 2011 2012 2013 2014 68.3 76.8 77.6 72.8 82.0 94.7 98.9 106.3 113.3 2006 2007 2008 2009 2010 2011 2012 2013 2014 3.8 3.6 3.7 5.4 3.7 2.7 2.9 2.8 2.8 2006 2007 2008 2009 2010 2011 2012 2013 2014 90.7 88.3 81.2 84.6 84.6 80.4 75.2 77.5 75.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 16.84 17.4 16.6 19.3 17.7 15.5 17.3 14.6 15.7 2006 2007 2008 2009 2010 2011 2012 2013 2014

High Growth Potential

CAR (%)(2) Total Deposits to GDP (%)(2) Total Loans to GDP (%)(2)

12.80% 13.30% 13.70% 14.60% 15.50% 15.50% 15.70% 15.90% 17.00% Russia Spain Italy South Africa Brazil Turkey Poland Mexico Czech Republic 27% 51% 60% 71% 73% 79% 85% 140% 211% Mexico Poland Turkey Russia Brazil Czech Republic South Africa Italy Spain 18% 55% 57% 66% 70% 72% 87% 96% 172% Mexico Russia Poland Czech Republic Turkey Brazil South Africa Italy Spain

(1) BRSA for deposit taking banks Annual growth (2) As of 3Q14:Turkey, 07/14: Mexico, 2Q14: Russia, SA& Czech Rep. ,4Q13: Spain, Italy and Poland Source: BRSA for deposit taking banks only, IMF

Turkey Banking Sector: Robust and Well Positioned for Growth

7

slide-9
SLIDE 9

Genele Açık / Public Total Loans and Industry NPL Ratios

Turkey Banking Sector: Well Regulated and Healthy

8

Total Assets (TRY’000) &Assets to GDP (%) Penetration Ratios as of 3Q14 (%) Tier 1 Capital Adequacy Ratios in G20*

Source: All data sourced from BRSA and ECB

834 733 1.007 2008 2009 2010 1.732 2012 1.371 2013 2014 1.994 1.218 2011 +18% Banking Sector Assets 795 683 526 393 367 2008 1.047 2011 2009 2012 2010 +22% 1.241 2014 2013 Banking Sector Loans 2,8 3,8 5,6 3,8 2,8 2,8 2,9 NPL 60 70 113 166 168 311 Deposits/GDP Loans/GDP Total Assets/GDP Eurozone Turkey 13 15 18 17 14 14 14 14 13 13 12 12 12 12 11 11 10 10 9 United Kingdom Mexico South Africa Germany Turkey Argentina Saudi Arabia United States Indonesia France Brazil Japan Italy Canada Korea Australia China India Russia

* IMF Financial Soundness Indicators (FSI), Latest Data Available

111 94 92 88 77 97 Assets to GDP

  • 51 banks with a combined asset

base of TRY1.99 trillion in 2014 YE

  • Turkish banking sector asset

volume has grown at a CAGR of 19% between 2008-2013 and represents 111% of GDP in 2013, reflecting increasing prominence of Turkish banking sector

  • Sector has low lending penetration

with low loan-to-GDP ratio of 70% as of the third quarter of 2014, despite the fast growth in the last five years

  • Well capitalized sector did not

require government support during 2008-2009 financial crises

  • Strong regulatory environment

ensuring transparency in the sector

  • Strong asset quality, no exposure to

subprime or toxic assets

  • Low NPL ratio of 2.8% as of 2014

YE, reflects the assets quality and soundness, as well as the high Tier 1 ratio

slide-10
SLIDE 10

Genele Açık / Public

Participation Banks in Turkey

9

3Q14 Turkish Banking Sector(1) - Ranking by Asset Size (TRY bn) Participation Bank Industry Evolution (BRSA)

Participation Banks

238 231 215 202 169 150 147 75 70 61 39 33 33 32 22 22 21 16 Ziraat İş Bankası Garanti Akbank Yapi Kredi Halkbank Vakifbank Finansbank Deniz TEB ING HSBC Kuveyt TFKB Odea AlBaraka Seker Asya 56.1 70.3 96.1 104.2 4.6% 5.1% 5.5% 5.2% 2011 2012 2013 2014 Assets Share in Sector CAGR 17% 39.2 47.9 61.3 65.2 5.6% 6.2% 6.5% 6.2% 2011 2012 2013 2014 Deposits Share in Sector CAGR 14% 38.5 48.0 62.0 64.1 5.6% 6.0% 5.9% 5.2% 2011 2012 2013 2014 Loans Share in Sector CAGR 14% 2.9% 11.6% 16.3% 4.7% 1.0% 14.5% NPL ROAE CAR Banking Industry Participation Banking (1) Unconsolidated BRSA numbers (2) Loans currently excludes lease receivables (3) ROAE defined as current period income over average of current and preceding year equity Source: All data sourced from BRSA or respective bank financial statements

Asset Growth (TRY bn) Deposit Growth (TRY bn) Loan(2) Growth (TRY bn) 2014 Key Ratios(3) (%)

  • Participation banks comply with general Islamic

principles, mainly the prohibition of interest and the concept of profit and loss sharing

  • Participation banks are fully authorized to engage in all

banking activities and are subject to all local regulations

  • Currently four participation banks operate in Turkey with

a total asset base of TRY 104.2bn representing 5.2% market share in the banking sector, as of 2014 YE

  • In 2014, participation banks underperformed the sector

because of difficulties faced by one of the participation banks

slide-11
SLIDE 11

25 March 2013

  • 3. Türkiye Finans: Business Overview
slide-12
SLIDE 12

Genele Açık / Public

11

Türkiye Finans At a Glance

Key Financials & Operational Highlights

*Cash Loan includes Net NPL, Leasing and Accruals ** ROAE defined as net income over average of preceding and current year equity *** Rating upgrade occurred as of 13 Nov. 2012 Source: All data sourced from BRSA, Company FIlings

2014 YE Türkiye Finans vs. Bank Sector 15.1% 18.3% 11.6% 33.3% 32.8% 11.8% Asset Growth Cash Loan* Growth ROAE** Bank Sector Turkiye Finans 2011 2012*** 2013 2014 Outlook Stable Stable Stable Stable Long-Term – FC BBB- BBB BBB BBB Short-Term – FC F3 F3 F3 F3 Long-Term – LC BBB BBB+ BBB+ BBB+ Short-Term – LC F3 F2 F2 F2 Viability Rating bb- bb- bb- bb- Support Rating 2 2 2 2 National Rating AAA (tur) AAA (tur) AAA (tur) AAA (tur) Republic of Turkey – FC BB+ BBB- BBB- BBB- Republic of Turkey – LC BB+ BBB BBB BBB

  • Turkish full-service participation bank operating under Islamic banking principles
  • 14th largest bank in the Turkey banking sector and 2nd largest participation bank

among four participation banks by asset size as of 3Q14

  • 32.1% asset market share among participation banks as of 2014 YE
  • Activities focused on core business segments: (i) retail banking (ii) corporate

banking (iii) treasury (iv) international banking

  • Named “Best Islamic Bank in Turkey” by Islamic Finance news magazine in 2014
  • Serving 2,7mn retail, 374k SME and 82k corporate clients. Number of credit cards

are 425k and employing 4,478 people

  • Outperformed banking sector and participation bank industry averages in terms of

asset, loan, deposit and net profit growth as well as ROAE, as of 2014 YE

  • Tier I capital ratio of 12.0% and CAR of 12.5%, well above regulatory

requirements

  • Senior unsecured rating of BBB from Fitch, one notch higher than Turkish

sovereign rating Türkiye Finans - Fitch Ratings

In TRY mn 2012 2013 2014 YoY Growth

Total Assets 17,617 25,127 33,495 33% Total Loans 13,068 18,290 24,292 33% Total Deposits 11,430 15,142 19,113 26% Shareholder’s Equity 2,125 2,522 3,154 25% Net Profit 284 329 334 2% Operational Highlights Number of Branches 220 250 280 12% Number of Employees 3,595 3,990 4,478 12% Key Financial Ratios NPLs / Total Loans 2.8% 2.5% 2.5% ROAA 1.8% 1.5% 1.1% ROAE 15.2% 14.2% 11.8% Tier I Ratio 13.9% 12.3% 12.0% CAR 14.8% 12.8% 12.5%

slide-13
SLIDE 13

Genele Açık / Public

Türkiye Finans Core Segments

12

  • TFKB offers a wide banking platform with a mature

product offering

  • TFKB has established a national footprint, with 10

regional offices; Akdeniz, Ankara, Ege, G.Dogu Anadolu, Istanbul Anatolian, Istanbul European I, Istanbul European II, Karadeniz, Kayseri and Marmara

  • As at 31 Dec 2014, TFKB had 280 branches and 530

ATMs Türkiye Finans Banking Platform National Presence

* Operating income includes net profit share income, net fee and commission income ** Total liabilities exclude equity Source: Company Disclosed BRSA Consolidated Financial Statements, Company sourced information

Consumer Banking

  • Accounts for 28.3% of operating income*, 12.1% of total

assets, and 27.2% of total liabilities** as at 2014 YE

  • Serves approximately 3.2 million customers across

various products including retail accounts, credit/debit cards, consumer loans, mortgages, financings, and investment products

  • Serves through 280 branches as well as alternative

distribution channels including ATMs, internet banking, 24-hr telephone banking, and POS terminal payment locations Corporate Banking

  • Accounts for 72.3% of operating income*, 61.2% of total

assets, and 33.6% of total liabilities ** as at 2014 YE

  • Serves 81,904 commercial businesses and 373,699

SME clients through various products including cash loans, non-cash loans, financial leasing, foreign trade and exchange services Treasury

  • Accounts for 21.9% of total assets, and 27.5% of total

liabilities ** as at 2014 YE

  • Focuses on providing i) treasury products to customers,

ii) proprietary trading, iii) liquidity and market risk management International Banking

  • Correspondent banking relationships with

approximately 1,100 banks in 132 countries

  • Offers a wide range of in-bound and out-bound services

and foreign trade transaction volume was USD 27.5bn as at 2014 YE

slide-14
SLIDE 14

Genele Açık / Public

  • 1991: Anadolu Finans

Kurumu founded

  • 1999: Eight years later,

Boydak Group acquired Anadolu Finans

  • 2001: Ülker Group, acquired

Faisal Finans and changed its name to Family Finans

  • 2005: Türkiye Finans founded

from the merger of Family Finans and Anadolu Finans

History & Vision 2017

13

1991-2005 2008 2009-2014 2014- 2017

Source: Offering circular, company presentation, company annual report, BRSA

  • 2008: The National

Commercial Bank, the largest bank by asset size in Saudi Arabia, acquired an initial 60% stake followed by an additional 4.68%

  • Share capital increased from

TRY 292mn to TRY 800mn

  • Asset base stood at TRY

7.0bn, cash loan book at TRY 5.6bn, and net profit at TRY 165mn, as of 31 Dec 2008

  • As of 31 Dec 2008, Türkiye

Finans had 3,185 employees and operated a national footprint of 174 branches

  • 2009-2014: Asset base grew

at a CAGR of 31% to TRY33,5BN, cash loans grew at a CAGR of 28% to TRY24,3BN, and net profit grew at a CAGR of 14% to TRY334MM

  • Share capital increased to

TRY2,600MM, as of 31 Dec 2014

  • As of 31 Dec 2014 Türkiye

Finans has 4,478 employees and operates 280 branches across a national geographical footprint, reaching 3.2mm customers

  • 2014 and Beyond: Aims to

achieve 2% market share of total financing in Turkey by 2017 up from 1.9%, as of 31 Dec 2014

  • Plans to reach 345 branches

in 2017 to capture market share and regional growth

  • Aims to increase its deposit

base by an average of 22% p.a. until 2017

  • Further penetration into SME

and consumer banking

  • Further diversification of

assets and liabilities to catalyze growth

  • Focus on alternative

distribution channels Founded from Merger of Anadolu and Family Finans NCB Acquires Majority Stake Strong Financial Performance Vision 2017: Executing for Growth

slide-15
SLIDE 15

Genele Açık / Public

  • Total share capital: TRY 2,600mn
  • On March 31, 2008, The National Commercial Bank acquired a

60% share of Türkiye Finans

  • In 2008, Türkiye Finans’ share capital was increased from TRY

292mn to TRY 800mn

  • In 2012, Türkiye Finans’ share capital was increased by TRY

850mn to TRY 1,650mn, of which TRY 150mn was paid-in cash and TRY 700mn of retained earnings

  • Beginning of 2013, share capital was increased to TRY 1,775mn,

through TRY 125mn paid-in cash

  • With the General Assembly dated 29/08/2014, share capital

increased to TRY 2,600mn with TRY 225mn of it being paid in cash and the remaining TRY 600mn coming from retained earnings. (Approved by BRSA at 18/11/2014)

  • Prominent Turkish conglomerate

founded in 1957 carrying out its activities in miscellaneous fields from furniture, textile, chemistry, marketing, iron-steel, logistics, energy to informatics as leader

  • f the industry
  • Consolidated annual turnover of

TRY6.15bn, in 2013

  • Active in 8 sectors, with 45 companies

and staffs c. 14,000 employees

  • 7 of Boydak Group companies ranked

among Top500 industrial firms in Turkey

14

Türkiye Finans Ownership Structure

  • Founded in 1953, is the largest bank in

Saudi Arabia by asset size and the largest bank in the Arab world in terms of capital

  • Majority owned by government of Saudi

Arabia through Ministry of Finance’s Public Investment fund

  • Total asset base of US$116.8bn,

shareholder equity of US$11.9bn, and net income of US$1.852 bn, as of Sept. 30 2014

  • Serves c. 3.5mn clients, operates 329

branches and has 7,119 employees as of 30 Sept. 2014

  • Ratings: Fitch: A+ / S&P: A+ / Moody’s: A1
  • Leading Turkish conglomerate in the food

and beverage sector, founded in 1944

  • Consolidated annual turnover of TRY

15.7bn, in 2013

  • Acquired premium chocolate company,

Godiva in 2007

  • Operates 68 companies, 58 factories,

and staffs c.41,000 employees

  • 13 of Ülker Group companies ranked

among Top500 industrial firms in Turkey

Strong and supportive shareholder base – share capital increased by TRY 2,308mn (of which TRY 750mn has been paid in cash) between 2007 and Sept 2014

Source: Company Disclosed IFRS Consolidated Financial Statements, offering circular, company presentation, company annual reports

67.03% 22.34% 10.57%

National Commercial Bank Boydak Group Ülker Group

slide-16
SLIDE 16

25 March 2013

  • 4. Türkiye Finans: Financial Overview
slide-17
SLIDE 17

Genele Açık / Public

23% 27% 30% 43% 33% 29% 30% 25% 37% 8.5% 21% 20% 11% 25% 15% 2010 2011 2012 2013 2014 TFKB Participation Bank Industry Banking Sector

Loan Evolution (TRY mn) Asset Base Growth vs. Peers(2) (BRSA)

Asset Composition

16

Asset Base(1) Evolution (TRY mn)

  • Consistent higher asset growth than banking sector average
  • Healthy asset growth with 33% CAGR during 2010-14 period
  • Total loans(3) grew at 29% CAGR between 2010 and 2014 period
  • Growth in cash loan book outperforming banking sector for the last 3

years Cash Loan(4) Growth vs. Peers(2) (BRSA)

16.9% 16.2% 18.8% 19.1% 17.1% 74.7% 76.5% 72.5% 69.4% 68.8% 5.7% 4.6% 3.8% 5.6% 5.6% 2.7% 2.8% 5.0% 5.9% 8.5% 10,656 13,528 17,617 25,127 33,490 2010 2011 2012 2013 2014 Cash Cash Loans & Leases Securities Fixed & Other Assets CAGR 33% 35% 39% 36% 34% 32% 65% 61% 64% 66% 68% 12,256 16,886 19,872 26,352 33,705 5000 10000 15000 20000 25000 30000 35000 2010 2011 2012 2013 2014 Non-Cash Loans Cash Loans CAGR 29% 30.2% 40.0% 32.8% 21.2% 35.1% 3.9% 16.1% 32.1% 18.3% 2012 2013 2014 TFKB Participation Bank Industry Banking Sector (1) Reserve deposits at Central Bank of Turkey are included in the cash category for the purpose of this analysis; (2) Comparison based on BRSA financials (3) Total loans defined as cash and non-cash loans; (4) Cash loans includes Net NPL, Leasing and Accruals Source: BRSA Consolidated Financial Statements, BRSA, Company Filings

slide-18
SLIDE 18

Genele Açık / Public

Performing Cash Loans by Customer Segmentation

Loan Portfolio Structure & Quality

17 2Q14 Cash Loan Book – Sector Breakdown

  • Depending on regulatory changes made by the BRSA in 2014, the share of consumer

loans in performing cash loans declined. Non-Performing Loan Ratio vs. Peers(2) (BRSA)

  • Despite absence of NPL sales until 3Q14, NPL levels consistently below

banking sector and participation bank peer averages Non-Performing Loan Coverage(2) vs. Peers(3) (BRSA)

79% 77% 76% 76% 75% 1% 1% 0% 16% 15% 19% 20% 19% 5% 8% 5% 4% 5% 2010 2011 2012 2013 2014 Corporate Foreign Institutions Consumer & Retail Export Other Trade & Commerce 29% Manufacturing 25% Retail 18% Construction 13% Services 5% Transportation & Communication 2% Agriculture & Fishing 1% Other 7% 3.0% 2.3% 2.8% 2.5% 2.5% 3.5% 3.1% 3.1% 3.5% 4.7% 3.7% 2.7% 2.9% 2.8% 2.9% 2010 2011 2012 2013 2014 TFKB Participation Bank Industry Banking Sector 73.0% 73.4% 61.8% 75.1% 63.2% 61.8% 75.2% 76.3% 73.8% 2012 2013 2014 TFKB Participation Bank Banking Sector (1) Gross cost of risk defined as gross loan loss provision over average net loans. Net cost of risk defined as net loan loss provisions over average net loans. (2) Calculated using allowances for individually impaired loans; (3) Comparisons based on BRSA and excludes performing lease receivables Source: IFRS Consolidated Financial Statements, BRSA, offering circular

  • Financing portfolio comprises 16 different industries
slide-19
SLIDE 19

Genele Açık / Public

7.7% 16.9% 16.2% 18.8% 19.1% 82.6% 74.7% 76.8% 74.0% 72.7% 6.9% 5.7% 4.8% 3.9% 5.8% 2.9% 2.7% 2.2% 3.3% 2.4% 9,286 11,915 15,361 22,604 30,340 2010 2011 2012 2013 2014 Deposits Funds Borrowed Provisions Other

Funds Borrowed Highlights 2014 YE Liquidity Ratios(1) (BRSA)

Liability and Liquidity Profile

18 Liabilities Evolution (TRY mn) Maturity of Funds Borrowed (TRY mn)

127 TL 1,178 TL 1,399 TL 2,163 TL 3,701 TL 334 TL 1,105 TL 1,928 TL 1,939 TL 2010 2011 2012 2013 2014 Short-term Long-term 23% 130% 27% 108% 27% 120% Liquid Assets* / Total Assets Loans / Total Deposits** TFKB Participation Bank Industry Banking Sector

  • Deposits continue to be major source of funding, while the share of funds

borrowed within total liabilities has been significantly growing with the intention of diversifying the funding base

  • TFKB borrowed four syndication loans which will mature in June 2015

amounting to USD 593,500,000 and EUR 85,500,000. The portion amounting to USD 340,000,000 and EUR 13,500,000 of syndication loans was borrowed in June 2013 and the remaining portion was borrowed in June 2014.Average maturity of funds borrowed increased from 725 days as

  • f 31 Dec 2012 to 974 days as of 31 Dec 2013
  • Funds borrowed mainly comprise largely bilateral financing agreements

except a syndicated murabaha financing with two tranches (1 year and 2 years)

  • The split of borrowing maturities at 2014 YE was 34% long term and 66%

short term borrowing

(1) Comparison based on BRSA financials; * Liquid assets defined as cash & equivalents, reserve requirements, inter and central bank money market receivables, AFS and trading government securities, and repo receivables ** Total deposits include accruals Source: BRSA Consolidated Financial Statements, BRSA, offering circular CAGR 34%

slide-20
SLIDE 20

Genele Açık / Public

Deposit Structure

19

40.2% 69.0% 62.8% 59.8% 31.0% 37.2% Current Account (Demand Deposit) Profit Sharing Accounts Total Deposits Retail Corporate

Demand 22.5% Up to 1 month 15.8% Up to 3 month 52.3% Up to 6 month 2.9% Up to 1 year 2.6% More than 1 year 3.9%

Turkish Lira 65.1% Foreign Currency 34.9%

  • Türkiye Finans offers two types of deposits

– Current accounts (i.e. demand deposit) – Participation accounts: a profit sharing account where any

profits earned are shared between account holders and Türkiye Finans

  • Returns on participation accounts are linked to the return on the

investment pool; thus no promised rate of return to account holders

  • 52.3% of total deposits have a maturity of 1-3 months

* Excluding precious metal Source: BRSA Consolidated Financial Statements

2014 YE Total Deposits* by Currency 2014 YE Customer Deposits by Account* 2014 YE Total Deposits by Maturity

slide-21
SLIDE 21

Genele Açık / Public

Revenue Structure

20

Operating Income Evolution (TRY mn) NIM(2) vs. Peers(1) (BRSA) Net Profit Share Growth vs. Peers(1) (BRSA) Net Profit Share Evolution (TRY mn)

  • Strong net profit share performance with a 13% CAGR between

2010-2014

  • Lending activity has driven top-line growth with profit share income

accounting for 76% of total income in 2014 YE

  • Türkiye Finans’ NIM outperforming participation banking peer

averages over the past four years

473 574 792 874 1,098 83 96 108 128 149 135 151 149 180 197 691 821 1,049 1,182 1,444 2010 2011 2012 2013 2014 Net Profit Share Income Net Fees and Commissions Other Non-Profit Share CAGR 3 20% 206 232 284 329 334 2010 2011 2012 2013 2014 CAGR 3 13% (1)Comparisons based on BRSA financials; defined as net profit share income before provisions; defined as net interest income before provisions for conventional banks (2) NIM is defined as net profit share (or net interest income for conventional banks) over average earning assets defined as loans and advances to banks and loans, lease receivables and advances to customers and investment and securities (3) CAGR Assumes annualized income figures Source: BRSA, offering circular 22% 16% 2% 14% 15%

  • 92%

19% 5% 0% 2012 2013 2014 TFKB Participation Bank Industry Banking Sector 4.8% 4.9% 5.5% 4.4% 4.1% 4.5% 4.4% 4.8% 4.3% 3.9% 4.7% 4.0% 4.7% 4.4% 4.2% 2010 2011 2012 2013 2014 TFKB Participation Bank Industry Banking Sector

slide-22
SLIDE 22

Genele Açık / Public

Cost Management

21

Cost to Income(1) vs. Peers (BRSA) Operating Expense Evolution (TRY mn) 2014 YE Breakdown of Operating Expenses Operating Expenses to Average Assets

353 392 461 567 719 2010 2011 2012 2013 2014 Personnel 50.6% Administrative 26.6% Depreciation & Amortization 6.8% Other 16.0% 3.6% 3.2% 3.0% 2.7% 2.5% 2010 2011 2012 2013 2014 (1) Comparison based on BRSA financials. TFKB cost to income ratio calculated as operating income excluding financial asset impairment; Participation Bank and Bank sector cost to income nets capital market transactions, nets fx gains/losses, and excludes fees and commissions expenses Source: BRSA Consolidated Financial Statements, BRSA

57.2% 55.9% 54.8% 56.7% 61.9% 58.4% 60.6% 62.9% 64.5% 88.9% 48.1% 52.7% 51.6% 55.1% 58.0%

2010 2011 2012 2013 2014 TFKB Participation Bank Industry Banking Sector

slide-23
SLIDE 23

Genele Açık / Public

Profitability

Net Profit Evolution (TRY mn) ROAA(1) vs. Peers (BRSA) ROAE(2) Relative to Peers (BRSA)

  • Outperformed bank sector and participation bank average in

terms of ROAE for the last 4 years

206 232 284 329 334 2010 2011 2012 2013 2014 CAGR 13% 1.3% 1.3% 1.1% 1.2% Banking Sector ALBRK* TFKB KVYT 15.8% 15.3% 15.2% 14.2% 11.8% 2.1% 1.9% 1.8% 1.5% 1.1% 2010 2011 2012 2013 2014 ROAE ROAA (1) Comparison based on BRSA financials; ROAA defined as net profit over average of preceding and current year-end equity and assets (2) Comparison based on BRSA financials and ROAE calculated as net profit over average of current and preceding year-end equity Source: BRSA 15.8% 15.3% 15.2% 14.2% 11.8% 15.4% 13.8% 13.5% 13.0% 1.0% 18.0% 14.2% 14.4% 13.1% 11.6% 2010 2011 2012 2013 2014 TFKB Participation Bank Industry Banking Sector

ROAE & ROAA Evolution

22

slide-24
SLIDE 24

Genele Açık / Public

Capitalization

23

Capital Adequacy Ratio(2) (BRSA) Shareholder’s Equity(1) Evolution (TRY mn) Evolution of Capital Ratio

13.7% 13.9% 12.3% 12.0% 0.5% 0.9% 0.5% 0.5% 14.2% 14.8% 12.8% 12.5% 2011 2012 2013 2014 Tier 1 Ratio Tier 2 Ratio CAR 50% 79% 65% 56% 49% 4% 4% 5% 5% 4% 46% 17% 30% 39% 47% 1,406 1,611 2,124 2,522 3,154 2010 2011 2012 2013 2014 Share Capital Reserves Retained Earnings 8.0% 12.0% 12.5% Regulatory Minimum BRSA Recommendation TFKB CAGR 22%

In TRY mn 2011 2012 2013 2014 Tier I 1,555 1,980 2,403 3,040 Tier II 63 129 97 127 Adjustments (1) (1) (2) (3) Total Regulatory Capital 1,617 2,108 2,498 3,165 RWA 11,358 14,279 19,499 25,384 Tier I Ratio 13.7% 13.9% 12.3% 12.0% CAR 14.2% 14.8% 12.8% 12.5%

  • Capital ratio above BRSA recommendations

(1) Comparisons based on BRSA financials Source: Consolidated Financial Statements, BRSA

Key Capitalization Ratios

slide-25
SLIDE 25

Genele Açık / Public

Foreign Trade Volumes

24

Non-Cash Loans (USD bl) Foreign Trade Volumes (USD mn) L/C volumes (USD Mn) L/G volumes(USD Mn)

0.3 2011 3.3 2.9 0.4 3.6 0.3 2012 3.8 3.5 +10% +4% +16% 2014 4.4 4.0 0.4 2013 4.0 +21% 22.230 2013 2012 13.588 2014 +54% 26.828 +6% 14.457 2011 755 363 13Q4 306 449 +4% 14Q4 782 419 Unconfirmed L/Cs Confirmed L/Cs 218 13Q4 69 205 148 +27% 71 14Q4 276 Counter L/Gs Direct L/Gs L/Gs L/Cs

slide-26
SLIDE 26

Genele Açık / Public

Awards and Recognition

25

  • World Finance - World Finance 100 – January 2015
  • Islamic Finance News Magazine Awards - Turkey’s Best Participation Bank Award - January 2015
  • Islamic Finance News Awards – The Most successful bank in the category of «Turkey Operations» in
  • 2014. – January 2015
  • Global Financial Market Review Awards - Turkey’s Best Participation Bank Award - December 2014
  • CIO 2014 Award - Agile Transformation Project – November 2014
  • LACP / 2013 Vision Awards - Türkiye Finans’ 2013 Annual Report won 6 awards - August 2014
  • 1. Gold Award and Best Annual Report - Commercial Banks’ Annual Reports
  • 2. Bronze award - financial information presentation
  • 3. One of the Top 20 Annual Report of Turkey
  • 4. One of the 100 Best Annual Report of the World
  • 5. One of the Top 80 Annual Report of the Africa, Central Asia and Europe
  • 6. Gold Award - 2013 Interactive (Web) Annual Report
  • Global Banking and Finance Review Magazine; 4 Awards – July 2014

1.Turkey’s Best Common Brand Credit Card 2.Turkey’s Fastest Growing Retail Bank 3.Turkey’s Fastest Growing Commercial Bank 4.Turkey’s Fastest Growing SME Bank

  • World Finance - World Finance Awards; Best Islamic Bank in Turkey (Turkey’s Best Participation Bank

Award) - March 2014

  • MasterCard - 2013 Fastest Growing Bank – March 2014
slide-27
SLIDE 27

25 March 2013

Appendix

slide-28
SLIDE 28

Genele Açık / Public

BRSA 2010 YE - 2014 YE Balance Sheet

27

Balance Sheet Highlights (TRY'000) 2010 2011 2012 2013 2014 CAGR Cash & CB 1.434.467 1.917.837 2.818.168 3.836.254 5.156.624 38% Due from Banks 363.046 268.400 507.028 954.203 572.606 12% Investments / Securities 603.750 644.494 679.388 1.459.694 2.464.891 42% Loans (Net) 7.999.620 10.402.875 13.067.769 18.289.610 24.396.681 32%

  • Performing Loans

7.913.437 10.327.232 12.971.058 18.172.359 24.168.211 32%

  • NPLs

243.842 245.497 358.259 441.072 597.317 25%

  • Sp. Provisions

157.659 169.854 261.548 323.821 368.847 24% Fixed & Other Assets 290.977 294.747 544.151 586.818 899.108 33% Total Assets 10.691.860 13.528.353 17.616.504 25.126.579 33.489.910 33% Customer Deposits 8.397.896 9.509.165 11.429.536 15.141.680 19.112.390 23% Due to Banks* 126.812 1.511.956 2.503.943 4.813.322 6.292.726 165% Other Liabilities 761.056 893.573 1.557.863 2.649.196 4.934.511 60% Shareholders' Funds 1.406.096 1.613.659 2.125.162 2.522.381 3.150.283 22% Total Liabilities & Equity 10.691.860 13.528.353 17.616.504 25.126.579 33.489.910 33%

*Include Funds Borrowed and Money Market Balances Source: TFKB Consolidated Financial Statements

slide-29
SLIDE 29

Genele Açık / Public

BRSA 2010 YE - 2014 YE Income Statement

28

Income Statement Highlights (TRY'000) 2010 2011 2012 2013 2014 CAGR Profit Share Income 889.675 1.049.201 1.410.356 1.566.233 2.172.475 25% Profit Share Expense 416.692 474.742 618.245 692.151 1.072.132 27% NRFF 472.983 574.459 792.111 874.082 1.100.343 24% Net Fees & Commission Income 83.035 95.939 108.231 128.272 148.597 16% Trading Income 57.239 66.349 56.700 71.677 25.657

  • 18%

NOR 613.257 736.747 957.042 1.074.031 1.274.597 20% OPEX 353.176 392.404 460.645 567.003 720.802 20%

  • Staff Expenses

190.704 210.236 242.839 287.003 350.426 16%

  • Other Operating Expenses

162.472 182.168 217.806 280.000 370.376 23% Net Operating Income (NOI) 260.081 344.343 496.397 507.028 553.795 21% Net Credit Expenses (Provisions) 85.501 135.128 226.379 202.750 299.462 37% Other Income / Expense 78.199 84.206 91.808 108.234 171.201 22% Taxes

  • 47.250
  • 61.834
  • 78.253
  • 83.235
  • 91.107

18% Net Income (NI) 205.529 231.587 283.573 329.277 334.427 13%

Source: TFKB Consolidated Financial Statements