Presentations - Türkiye Finans

25 March 2013
Türkiye Finans Katılım Bankası A.Ş.
(“TFKB”)
March 2015
TFKB Highlights
Strong and Growing
Franchise
Strong and Supportive
Shareholder Base
Favorable Operating
Environment
 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
 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




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
 Net profit growing at 13% CAGR between 2010-2014, outperforming Turkish banking sector and Turkish participation
banking average
Strong Financial
Performance
 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
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
of Q4 2014
Strong Asset Quality & Risk
Management
Experienced Management
Team
 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
 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
Genele Açık / Public
1
25 March 2013
1.Turkey: Country Overview
Turkey: Overview of the Country
Geographical Location
Background Information
Capital
Ankara
Largest City
Istanbul
Area
783,562 km2
Population
77,695,904 (2014)
Currency
Turkish Lira (TRY)
Official Language
Turkish
GDP
USD 813 billion (2014 IMF Estimates)
Rating
BBB- (Fitch), Baa3 (Moody’s) and BB+ (S&P*)
Turkey: A Strong Emerging Market with Growth Potential
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%
* Unsolicited Rating
** IMF World Economic Outlook (WEO) October 2014 Forecasts
Sources: IMF WOE Database, TURKSTAT
Genele Açık / Public
3
Turkey: Strong Macro Fundamentals
Annual GDP Growth (%) (2003/14 Averages)
2015/19 Average GDP Growth Forecasts (%)
4,8
 Turkey is the 17th largest economy
3,7
in the World as of 2013
4,0
 Consistently outperformed peer
2,5
4,1
3,3
3,2
groups in terms of real GDP growth
between 2003-2014
2,6
 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
2,5
2,3
2,6
1,9
1,6
 Real GDP expected to grow at 3.5%
between 2015-2019, and still
continue to outperform many
emerging market economies
3,5
3,5
1,3
Hungary Mexico Czech South
Republic Africa
Brazil Poland Russia Turkey
Russia Hungary Czech Brazil
Republic
Annual CPI Inflation (%)
70
South Turkey Poland Mexico
Africa
Inflation and Benchmark Bond Yield (%)
30
Benchmark Bond Yields
Annual CPI Inflation
60
Inflation
25
50
20
40
15
30
20
10
0
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
10
5
0
2004
2006
2008
2010
2012
2014
2016
2018
Source: TURKSTAT, CBRT, IMF, Bloomberg
Genele Açık / Public
4
Turkey: Sound Fiscal Management & Financial Markets
Budget and Primary Balances of GDP (%)
 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
2013 Public Debt to GDP vs. Peers
6
79
4
66
2
57
0
46
45
-2
46
36
-4
-6
 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
Budget Balance
-8
14
Primary Surplus
-10
-12
2001 2003 2005 2007 2009 2011 2013 2015 2017
Central Bank Policy Rates & Inflation Rates (%)
Russia Turkey South Czech Mexico Poland Brazil Hungary
Africa Rep.
3M-Implied Volatility in FX Markets
11,75
 Neutral real interest rates fell globally
after the Global Financial Crisis
India
CPI
8,25
 Turkey can also maintain the low
8,25
Indonesia
Turkey
real rates thanks to the healthy
public finance dynamics and growth
prospects
5,75
4,50
 In addition to the strong
fundamentals, macro prudential
measures have lowered the volatility
in financial markets
2010-2014 Averages
10,1
Policy Rates
2,00
2,10
Mexico
10,4
11,4
11,8
Russia
12,1
Czech Republic
12,2
Brazil
Poland
13,3
14,8
0,05
South Africa
Czech Poland Hungary Mexico South Russia Turkey Brazil
Republic
Africa
Hungary
15,2
15,5
Source: TURKSTAT, CBRT, IMF, Bloomberg
Genele Açık / Public
5
25 March 2013
2.Turkey: Banking Industry Overview
Turkey Banking Sector: Robust and Well Positioned for Growth
Loan Growth (%)(1)
Deposit Growth (%)(1)
27.3
40.6
22.0
Growth &
Penetration
34.8
29.7
Asset Quality
& Capital
94.7
22.1
19.7
31.2
29.7
28.8
68.3
15.4
19.1
12.4
12.0
15.3
76.8
77.6
72.8
98.9
106.3 113.3
82.0
11.6
10.4
5.1
2006 2007 2008 2009 2010 2011 2012 2013 2014
2006 2007 2008 2009 2010 2011 2012 2013 2014
2006 2007 2008 2009 2010 2011 2012 2013 2014
NPL (%)(1)
Coverage (%)(1)
CAR (%)(1)
5.4
High Growth
Potential
Loans/Deposits (%)(1)
3.8
3.6
3.7
90.7
88.3
81.2
84.6
84.6
80.4
75.2
77.5
75.1
3.7
2.7
2.9
2.8
16.84
17.4
19.3
16.6
17.7
15.5
17.3
14.6
15.7
2.8
2006 2007 2008 2009 2010 2011 2012 2013 2014
2006 2007 2008 2009 2010 2011 2012 2013 2014
2006 2007 2008 2009 2010 2011 2012 2013 2014
CAR (%)(2)
Total Deposits to GDP (%)(2)
Total Loans to GDP (%)(2)
Czech Republic
Mexico
Poland
Turkey
Brazil
South Africa
Italy
Spain
Russia
17.00%
15.90%
15.70%
15.50%
15.50%
14.60%
13.70%
13.30%
12.80%
Spain
Italy
South Africa
Czech Republic
Brazil
Russia
Turkey
Poland
Mexico
211%
140%
85%
79%
73%
71%
60%
51%
27%
Spain
Italy
South Africa
Brazil
Turkey
Czech Republic
Poland
Russia
Mexico
172%
96%
87%
72%
70%
66%
57%
55%
18%
(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
Genele Açık / Public
7
Turkey Banking Sector: Well Regulated and Healthy
Total Assets (TRY’000) &Assets to GDP (%)
 51 banks with a combined asset
Total Loans and Industry NPL Ratios
base of TRY1.99 trillion in 2014 YE
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
1.732
+18%
1.371
795
683
1.007
733
77
834
97
94
92
111
526
2009
3,8
2010
2011
2012
Banking Sector Assets
2013
 Strong asset quality, no exposure to
166
 Low NPL ratio of 2.8% as of 2014
113
70
Total Assets/GDP
Turkey
Genele Açık / Public
60
Loans/GDP
Eurozone
2,8
2,8
2011
2012
2013
2014
NPL
Tier 1 Capital Adequacy Ratios in G20*
ensuring transparency in the sector
168
2010
2,9
Banking Sector Loans
Assets to GDP
311
subprime or toxic assets
2009
2,8
2014
Penetration Ratios as of 3Q14 (%)
 Strong regulatory environment
3,8
5,6
2008
require government support during
2008-2009 financial crises
Source: All data sourced from BRSA and ECB
393
367
88
2008
1.047
+22%
1.218
 Well capitalized sector did not
YE, reflects the assets quality and
soundness, as well as the high Tier
1 ratio
1.241
1.994
 Turkish banking sector asset
Deposits/GDP
Russia
India
China
Australia
Korea
Canada
Italy
Japan
Brazil
Argentina
United States
France
South Africa
Mexico
Turkey
United Kingdom
Germany
Saudi Arabia
Indonesia
9
10
10
11
11
12
12
12
12
13
13
13
14
14
14
14
15
17
18
* IMF Financial Soundness Indicators (FSI), Latest Data Available
8
Participation Banks in Turkey
3Q14 Turkish Banking Sector(1) - Ranking by Asset Size (TRY bn)
 Participation banks comply with general Islamic
Participation Banks
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
202
39
33
33
32
22
22
21
16
Asya
61
Seker
70
AlBaraka
Vakifbank
Halkbank
Yapi Kredi
Akbank
Garanti
İş Bankası
Ziraat
because of difficulties faced by one of the participation
banks
Finansbank
75
 In 2014, participation banks underperformed the sector
Odea
147
TFKB
150
Kuveyt
169
HSBC
a total asset base of TRY 104.2bn representing 5.2%
market share in the banking sector, as of 2014 YE
ING
215
TEB
231
Deniz
238
 Currently four participation banks operate in Turkey with
Participation Bank Industry Evolution (BRSA)
Asset Growth (TRY bn)
Deposit Growth (TRY bn)
Loan(2) Growth (TRY bn)
CAGR
14%
CAGR
14%
CAGR
17%
2014 Key Ratios(3) (%)
16.3%
96.1
104.2
61.3
70.3
56.1
39.2
38.5
4.6%
5.1%
5.5%
5.2%
5.6%
6.2%
2011
2012
2013
2014
2011
2012
2013
Share in Sector
62.0
47.9
6.5%
Assets
65.2
Deposits
64.1
48.0
4.7%
6.2%
5.6%
6.0%
5.9%
5.2%
2014
2011
2012
2013
2014
Share in Sector
14.5%
11.6%
Loans
Share in Sector
2.9%
NPL
Banking Industry
1.0%
ROAE
CAR
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
Genele Açık / Public
9
25 March 2013
3. Türkiye Finans: Business Overview
Türkiye Finans At a Glance
2014 YE Türkiye Finans vs. Bank Sector
 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
33.3%
32.8%
18.3%
15.1%
Asset Growth
11.6% 11.8%
Cash Loan* Growth
Bank Sector
Türkiye Finans - Fitch Ratings
Key Financials & Operational Highlights
In TRY mn
Total Assets
Total Loans
Total Deposits
Shareholder’s Equity
Net Profit
Operational
Highlights
Number of Branches
Number of Employees
Key Financial Ratios
NPLs / Total Loans
ROAA
ROAE
Tier I Ratio
CAR
2012
2013
2014
YoY Growth
17,617
13,068
11,430
2,125
284
25,127
18,290
15,142
2,522
329
33,495
24,292
19,113
3,154
334
33%
33%
26%
25%
2%
220
3,595
250
3,990
280
4,478
2.8%
1.8%
15.2%
13.9%
14.8%
2.5%
1.5%
14.2%
12.3%
12.8%
2.5%
1.1%
11.8%
12.0%
12.5%
ROAE**
Turkiye Finans
12%
12%
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)
BB+
BBB-
BBB-
BBB-
BB+
BBB
BBB
BBB
Republic of
Turkey – FC
Republic of
Turkey – LC
*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
Genele Açık / Public
11
Türkiye Finans Core Segments
Türkiye Finans Banking Platform
National Presence
 Accounts for 28.3% of operating income*, 12.1% of total
Consumer
Banking
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
 Accounts for 72.3% of operating income*, 61.2% of total
Corporate
Banking
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
 Accounts for 21.9% of total assets, and 27.5% of total
Treasury
liabilities ** as at 2014 YE
 Focuses on providing i) treasury products to customers,
ii) proprietary trading, iii) liquidity and market risk
management
 Correspondent banking relationships with
International
Banking
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
 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
* 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
Genele Açık / Public
12
History & Vision 2017
1991-2005
2008
2009-2014
2014- 2017
Founded from Merger of
Anadolu and Family Finans
NCB Acquires Majority Stake
Strong Financial Performance
Vision 2017: Executing for
Growth
 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
 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
Source: Offering circular, company presentation, company annual report, BRSA
Genele Açık / Public
13
Türkiye Finans Ownership Structure
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
10.57%
National
Commercial
Bank
Boydak Group
22.34%
Ülker Group
67.03%
 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
 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
of 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
 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
Source: Company Disclosed IFRS Consolidated Financial Statements, offering circular, company presentation, company annual reports
Genele Açık / Public
14
25 March 2013
4. Türkiye Finans: Financial Overview
Asset Composition
Asset Base(1) Evolution (TRY mn)
Asset Base Growth vs. Peers(2) (BRSA)
 Healthy asset growth with 33% CAGR during 2010-14 period
 Consistent higher asset growth than banking sector average
33,490
8.5%
CAGR
33%
5.6%
5.6%
10,656
5.7% 2.7%
13,528
4.6% 2.8%
43%
25,127
5.9%
30%
17,617
5.0%
3.8%
68.8%
27%
23%
21%
69.4%
72.5%
37%
30%
29%
25%
33%
25%
20%
15%
76.5%
74.7%
16.2%
18.8%
19.1%
17.1%
16.9%
2010
2011
2012
2013
2014
Cash
Cash Loans & Leases
Securities
8.5%
11%
2010
Fixed & Other Assets
2011
TFKB
2012
2013
2014
Participation Bank Industry
Banking Sector
Cash Loan(4) Growth vs. Peers(2) (BRSA)
Loan Evolution (TRY mn)
 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
33,705
35000
CAGR
29%
30000
26,352
25000
68%
19,872
20000
15000
16,886
66%
40.0%
12,256
35.1%
64%
61%
30.2%
10000
65%
39%
36%
2011
2012
34%
18.3%
16.1%
32%
3.9%
0
2010
2013
2014
Non-Cash Loans
Cash Loans
(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
Genele Açık / Public
32.8%
21.2%
5000
35%
32.1%
2012
TFKB
2013
Participation Bank Industry
2014
Banking Sector
16
Loan Portfolio Structure & Quality
2Q14 Cash Loan Book – Sector Breakdown
Performing Cash Loans by Customer Segmentation
• Depending on regulatory changes made by the BRSA in 2014, the share of consumer
loans in performing cash loans declined.
5%
16%
1%
8%
5%
4%
5%
15%
19%
20%
19%
1%
0%
•
Financing portfolio comprises 16 different industries
Agriculture & Other
Fishing
7%
Transportation & 1%
Communication
2%
Services
5%
Trade &
Commerce
29%
Construction
13%
79%
77%
76%
76%
75%
Retail
18%
2010
2011
Corporate
2012
Foreign Institutions
2013
Consumer & Retail
Manufacturing
25%
2014
Export
Other
Non-Performing Loan Ratio vs. Peers(2) (BRSA)
Non-Performing Loan Coverage(2) vs. Peers(3) (BRSA)
• Despite absence of NPL sales until 3Q14, NPL levels consistently below
banking sector and participation bank peer averages
4.7%
3.5%
3.7%
3.5%
3.1%
3.0%
2.7%
3.1%
2.9%
2.8%
73.0%
75.1%
75.2%
76.3%
73.4%
63.2%
2.8%
2.9%
2.5%
73.8%
61.8%
61.8%
2.5%
2.3%
2010
TFKB
2011
2012
Participation Bank Industry
2013
2014
Banking Sector
2012
2013
TFKB
Participation Bank
2014
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
Genele Açık / Public
17
Liability and Liquidity Profile
Liabilities Evolution (TRY mn)
Maturity of Funds Borrowed (TRY mn)
3,701 TL
30,340
5.8%
CAGR
34%
2.4%
22,604
19.1%
3.9%
15,361
11,915
5.7% 2.7%
16.9%
9,286
7.7% 6.9%2.9%
2,163 TL
3.3%
18.8%
1,928 TL
4.8%
2.2%
16.2%
72.7%
1,939 TL
1,399 TL
1,178 TL
74.0%
1,105 TL
76.8%
74.7%
334 TL
82.6%
127 TL
2010
2011
Deposits
2012
Funds Borrowed
2013
2014
Provisions
2010
2011
Other
2012
Short-term
2014 YE Liquidity Ratios(1) (BRSA)
2013
2014
Long-term
Funds Borrowed Highlights
 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
130%
120%
108%
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
of 31 Dec 2012 to 974 days as of 31 Dec 2013
 Funds borrowed mainly comprise largely bilateral financing agreements
23%
27%
27%
Liquid Assets* / Total Assets
TFKB
except a syndicated murabaha financing with two tranches (1 year and 2
years)
Participation Bank Industry
 The split of borrowing maturities at 2014 YE was 34% long term and 66%
Loans / Total Deposits**
short term borrowing
Banking Sector
(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
Genele Açık / Public
18
Deposit Structure
 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
2014 YE Total Deposits by Maturity
Up to 1 year
2.6%
Up to 6 month
2.9%
More than 1 year
3.9%
Demand
22.5%
 Returns on participation accounts are linked to the return on the
investment pool; thus no promised rate of return to account
holders
Up to 1 month
15.8%
 52.3% of total deposits have a maturity of 1-3 months
2014 YE Customer Deposits by Account*
31.0%
37.2%
Up to 3 month
52.3%
2014 YE Total Deposits* by Currency
Foreign Currency
34.9%
59.8%
69.0%
62.8%
40.2%
Turkish Lira
65.1%
Current Account (Demand
Deposit)
Profit Sharing Accounts
Retail
Total Deposits
Corporate
* Excluding precious metal
Source: BRSA Consolidated Financial Statements
Genele Açık / Public
19
Revenue Structure
Operating Income Evolution (TRY mn)
Net Profit Share Evolution (TRY mn)
 Lending activity has driven top-line growth with profit share income
accounting for 76% of total income in 2014 YE
 Strong net profit share performance with a 13% CAGR between
2010-2014
1,444
CAGR 3
20%
1,182
149
1,049
691
180
149
821
CAGR 3
13%
197
128
108
151
135
83
96
874
792
329
334
2013
2014
284
1,098
206
232
574
473
2010
2011
Net Profit Share Income
2012
2013
Net Fees and Commissions
2014
2010
2011
2012
Other Non-Profit Share
Net Profit Share Growth vs. Peers(1) (BRSA)
NIM(2) vs. Peers(1) (BRSA)
 Türkiye Finans’ NIM outperforming participation banking peer
averages over the past four years
22%
14%
2012
19%
16%
15%
5%
2013
0%
2%
5.5%
2014
4.9%
4.8%
4.7%
-92%
4.8%
4.4%
4.4% 4.4%
4.7%
4.5%
4.3%
4.0%
TFKB
Participation Bank Industry
Banking Sector
2010
TFKB
2011
2012
Participation Bank Industry
2013
4.2%
4.1%
3.9%
2014
Banking Sector
(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
Genele Açık / Public
20
Cost Management
Cost to Income(1) vs. Peers (BRSA)
Operating Expense Evolution (TRY mn)
88.9%
719
64.5%
62.9%
57.2%
61.9%
567
58.0%
60.6%
58.4%
48.1%
52.7%
55.9%
2010
2011
TFKB
54.8%
51.6%
2012
Participation Bank Industry
56.7%
55.1%
2013
2014
353
392
2010
2011
461
2012
2013
2014
Banking Sector
2014 YE Breakdown of Operating Expenses
Operating Expenses to Average Assets
Other
16.0%
Depreciation &
Amortization
6.8%
3.6%
3.2%
Personnel
50.6%
Administrative
26.6%
2010
2011
3.0%
2012
2.7%
2013
2.5%
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
Genele Açık / Public
21
Profitability
ROAA(1) vs. Peers (BRSA)
Net Profit Evolution (TRY mn)
CAGR
13%
334
329
284
1.3%
1.3%
Banking Sector
ALBRK*
232
206
2010
2011
2012
2013
2014
1.1%
1.2%
TFKB
KVYT
ROAE(2) Relative to Peers (BRSA)
ROAE & ROAA Evolution
 Outperformed bank sector and participation bank average in
terms of ROAE for the last 4 years
15.8%
15.3%
15.2%
18.0%
15.8%15.4%
14.2%
11.8%
2.1%
2010
1.9%
1.8%
2011
1.5%
2012
ROAE
2013
15.3%
13.8%14.2%
15.2%
13.5%14.4%
14.2%
13.0%13.1%
1.1%
2014
11.8%
11.6%
1.0%
2010
ROAA
2011
TFKB
2012
Participation Bank Industry
2013
2014
Banking Sector
(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
Genele Açık / Public
22
Capitalization
Shareholder’s Equity(1) Evolution (TRY mn)
Capital Adequacy Ratio(2) (BRSA)
 Capital ratio above BRSA recommendations
3,154
CAGR
22%
47%
2,522
4%
2,124
39%
30%
5%
1,611
1,406
46%
4%
50%
79%
2011
2012
Reserves
2013
2014
Regulatory Minimum
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)
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%
14.8%
0.9%
12.8%
0.5%
2011
TFKB
Key Capitalization Ratios
In TRY mn
13.7%
BRSA Recommendation
Retained Earnings
Evolution of Capital Ratio
0.5%
12.5%
8.0%
56%
65%
Share Capital
14.2%
12.0%
49%
17%
4%
2010
5%
13.9%
2012
Tier 1 Ratio
12.3%
2013
Tier 2 Ratio
CAR
12.5%
0.5%
Total Regulatory
Capital
12.0%
2014
(1) Comparisons based on BRSA financials
Source: Consolidated Financial Statements, BRSA
Genele Açık / Public
23
Foreign Trade Volumes
Foreign Trade Volumes (USD mn)
Non-Cash Loans (USD bl)
+21%
+10%
+16%
26.828
+54%
+4%
4.4
4.0
3.8
22.230
3.3
+6%
0.4
0.3
0.3
L/Cs
L/Gs
0.4
14.457
13.588
4.0
3.5
3.6
2012
2013
2.9
2011
2012
2013
2014
2011
L/C volumes (USD Mn)
2014
L/G volumes(USD Mn)
+4%
+27%
755
782
276
Confirmed L/Cs
Direct L/Gs
Unconfirmed L/Cs
306
363
Counter L/Gs
218
205
148
449
13Q4
Genele Açık / Public
419
69
71
13Q4
14Q4
14Q4
24
Awards and Recognition
 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
Genele Açık / Public
25
25 March 2013
Appendix
BRSA 2010 YE - 2014 YE Balance Sheet
Balance Sheet Highlights (TRY'000)
2010
2011
2012
2013
2014
CAGR
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%
Cash & CB
*Include Funds Borrowed and Money Market Balances
Source: TFKB Consolidated Financial Statements
Genele Açık / Public
27
BRSA 2010 YE - 2014 YE Income Statement
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
Genele Açık / Public
28