t iye finans ka lım bankası a.Ş · serving to 2,7mn retail, 374k sme and 82k corporate clients,...

25 March 2013

Türkiye Finans Katılım Bankası A.Ş.

(“TFKB”)

March 2015

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

of 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

25 March 2013

1.Turkey: Country Overview

Genele Açık / Public

BBB- (Fitch), Baa3 (Moody’s) and BB+ (S&P*)

USD 800.1 billion

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 ** 2016**

Population (m) 73.7 74.7 75.6 76.7 77.7 78.2 79.0

Gross GDP (Billion US$) 731.5 774.7 788.6 821.9 800.1 861.1 910.9

Real GDP growth (%) 9.2% 8.8% 2.1% 4.1% 2.9% 3.0% 3.7%

GDP per capita (Thousand US$) 10.0 10.4 10.5 10.8 10.4 11.0 11.5

Inflation (CPI) 6.4% 10.4% 6.2% 7.4% 8.2% 7.0% 6.4%

Unemployment (%) 11.1% 9.1% 8.4% 9.0% 9.9 9.9% 9.9%

Rating

GDP

Official Language

Currency

Population

Area

Largest City

Capital


Turkey: Strong Macro Fundamentals

4

Real GDP (2001=100) Median Age of Population (Years)

Debt – to – GDP (%, As of 2Q2014)* Budget Deficit of GDP (%)

Source: TURKSTAT, CBRT, IMF, Bloomberg, *Mckinsey Global Debt Report February 2015

Turkey consistently outperformed

peer groups in terms of real GDP

growth between 2002-2014

Real GDP expected to grow almost

by 4% between 2015-2019, and still

continue to outperform many

emerging market economies

Accordingly, GDP per capita has

tripled between 2002 and 2012

period. Despite the recent slowdown,

it is above 10.000$ as of 2014

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

Although Turkey’s total debt to GDP

ratio has risen in recent years, the

leverage ratio is relatively low

compared to the peers

While the private sector has raised

its the debt in order to fund this rapid

growth public debt to GDP has

generally fallen for the last decade

Fiscal discipline, which is Turkey’s

well-known strength, remains strong

in coming years

0 5 10 15 20 25 30 35 40 45 50

GermanyItaly

BulgariaPortugal

Serbia

EstoniaRomania

FranceCzech Rep.

UKPoland

SlovakiaMacedonia

Turkey

AustriaCroatia

SloveniaFinland

LithuaniaLatvia

GreeceSwitzerlandNetherlands

SpainHungary

0 50 100 150 200 250 300 350 400

IrelandPortugalGreece

SpainFrance

ItalyUKUS

South KoreaHungaryMalaysia

MexicoRussia

Japan

ChinaGermany

PolandSouth AfricaCzech Rep.

BrazilIndia

TurkeyRomania

IndonesiaColombia

2000 2002 2004 2006 2008 2010 2012 2014 2016

0

150

200

110

130

120

140

160

170

180

190EMEs Excluding China

Turkey

3,5

0,0

1,0

0,5

1,5

2,0

2,5

3,0

TurkeyOECD EU-28

0,5

2,0

EMEs

3,4

2,5


Turkey: Short-Term Outlook Will Likely to Improve Further

Annual Real GDP Growth Rates (%) Year-On-Year Changes (%)

External Balances (12-Month Trailing, Billion US$) REER (Deviation from 10 Year Av. as of Feb. 15)

Source: TURKSTAT, CBRT, IMF, Bloomberg

Turkish economy grew by 2.9% in

2014 thanks to foreign demand and

public expenditures, whereas

domestic demand was muted

Recent short-term indicators implied

that the slowdown in economic

activity has been resuming

Recovery in our main trade partners

will probably help the improvement in

growth outlook as well as the easier

domestic financial conditions

While weak commodity prices and

the base effects will bring the

inflation down further, volatility in the

exchange rates may be main

obstacle in the coming periods

In addition to moderate domestic

demand, recent decline in energy

prices reinforce the improvement in

external imbalances

Compared to other EMEs’

currencies, Turkish Lira has been

remaining strong on real terms

As well as the strong long – term

macroeconomic fundamentals, short

– term global dynamics will likely to

support the Turkey

5

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

10

2002 2004 2006 2008 2010 2012 2014 2016

Eurozone

Turkey

-10

-5

0

5

10

15

20

25

30

11

10

4

5

6

7

8

9

0

Jul.15Oct.14Jan.14Apr.13Jul.12Oct.11Jan.11

12CPI Core CPI TRY Basket (RHS)

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

2014 2015 20162012 201320112010

CA Excl. EnergyCurrent Account

2921

1154

0-1-2-2-2

-4-6-6-6-6

-8-9

-11-11

-18-26Russia

Hungary

Poland

Mexico

Chile

Brazil

Czech Rep.

Argentina

South AfricaColombia

India

China

Thailand

Turkey

Bulgaria

Philippine

Peru

MalaysiaIndonesia

South Korea

Romania

Undervalued

Overvalued

25 March 2013

2.Turkey: Banking Industry Overview


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

Gro

wth

&

Pe

ne

tra

tio

nA

sse

t Q

uali

ty

& C

ap

ita

l

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

40.6

29.7 28.8

5.1

34.829.7

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

12.410.4

22.1

11.6

2006 2007 2008 2009 2010 2011 2012 2013 2014

68.376.8 77.6 72.8

82.094.7 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 88.381.2 84.6 84.6 80.4

75.2 77.5 75.1

2006 2007 2008 2009 2010 2011 2012 2013 2014

16.8417.4 16.6

19.317.7

15.517.3

14.6 15.7

2006 2007 2008 2009 2010 2011 2012 2013 2014

Hig

h G

row

th

Po

ten

tia

l

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


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 2014 Year-End (%) Tier 1 Capital Adequacy Ratios in G20*

Source: All data sourced from BRSA and ECB

834733

+18%

2014

1.994

2013

1.732

2012

1.371

2011

1.218

2010

1.007

20092008

Banking Sector Assets

795

683

526

393367

+22%

2008 2014

1.241

2013

1.047

2012201120102009

Banking Sector Loans

2,82,82,92,83,8

5,63,8

NPL

6071

114

167168

310

Deposits/GDPLoans/GDPTotal Assets/GDP

EurozoneTurkey

15

18

17

14

14

14

14

13

13

13

13

12

12

12

11

11

10

10

9

S. Arabia

Indonesia

US

Brazil

Argentina

Japan

Canada

Italy

Korea

Australia

China

India

Russia

Germany

UK

Mexico

Turkey

S. Africa

France

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

114111979492

8877

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 114% of GDP in 2014,

reflecting increasing prominence of

Turkish banking sector

Sector has low lending penetration

with low loan-to-GDP ratio of 71%

as of the end 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 2.9% as of 2014

YE, reflects the assets quality and

soundness, as well as the high Tier

1 ratio


248 238219 205

181158 155

75 69 6338 34 34 33 26 23 21 14

Ziraa

t

İş B

ankası

Ga

ranti

Akb

ank

Yap

i K

redi

Vakifba

nk

Ha

lkba

nk

Fin

ansb

an

k

De

niz

TE

B

ING

Kuveyt

HS

BC

TF

KB

Od

ea

Alb

ara

ka

Şeker

Asya

Participation Banks in Turkey

9

2014 YE Turkish Banking Sector(1) - Ranking by Asset Size (TRY bn)

Participation Bank Industry Evolution (BRSA)

Participation Banks

56.170.3

96.1104.2

4.6% 5.1% 5.5% 5.2%

2011 2012 2013 2014

Assets Share in Sector

CAGR

17%

39.247.9

61.3 65.2

5.6% 6.2% 6.5% 6.2%

2011 2012 2013 2014

Deposits Share in Sector

CAGR

14%

38.548.0

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

25 March 2013

3. Türkiye Finans: Business Overview


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 – FCBB+ BBB- BBB- BBB-

Republic of

Turkey – LCBB+ 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 2014 YE

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%


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


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 FinansNCB Acquires Majority Stake Strong Financial Performance

Vision 2017: Executing for

Growth


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:A+ / S&P: A+ / Moody’s: A1

Leading Turkish conglomerate in the food and beverage sector,

founded in 1944

Acquired premium chocolate company, Godiva in 2007

The acquisition of British food giant United Biscuits in 2014

Operates 77 factories, and staffs c.48,000 employees

Has 7 publicly traded companies

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

The National Commercial Bank

67%

Ülker Group

11%

Others

22%

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)

25 March 2013

4. Türkiye Finans: Financial Overview


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

0

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


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%

Manufacturing25%

Retail18%

Construction13%

Services5%

Transportation & Communication

2%

Agriculture & Fishing

1%

Other7%

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


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


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 Highlights2014 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**


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

of 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%


Deposit Structure

19

40.2%

69.0%62.8%

59.8%

31.0%37.2%

Current Account (DemandDeposit)

Profit Sharing Accounts Total Deposits

Retail Corporate

Demand22.5%

Up to 1 month15.8%

Up to 3 month52.3%

Up to 6 month2.9%

Up to 1 year2.6%

More than 1 year3.9%

Turkish Lira65.1%

Foreign Currency34.9%

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 Currency2014 YE Customer Deposits by Account*

2014 YE Total Deposits by Maturity


Revenue Structure

20

Operating Income Evolution (TRY mn)

NIM(1) vs. Peers (BRSA) Net Profit Growth vs. Peers (BRSA)

Net Profit 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

473574

792874

1,09883

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 2

20%

206232

284

329 334

2010 2011 2012 2013 2014

CAGR 2

13%

(1) 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

(2) CAGR Assumes annualized income figures

Source: BRSA, offering circular

22%16%

2%14% 15%

-92%

19%5% 0%

2012 2013 2014


HIGHLY RESTRICTED

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



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

Personnel50.6%

Administrative26.6%

Depreciation & Amortization

6.8%

Other16.0%

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



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

206232

284329 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


ROAE & ROAA Evolution

22


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

Capital1,617 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


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

20132012

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


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

25 March 2013

Appendix


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


BRSA 2010 YE - 2014 YE Income Statement

28

Income Statement Highlights (TRY'000) 2010 2011 2012 2013 2014 CAGR

Special Commission Income 889.675 1.049.201 1.410.356 1.566.233 2.172.475 25%

Special Commission 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

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