2018 Q3 Investor Presentation Albaraka Trk Participation Bank 20 - PowerPoint PPT Presentation

2018 Q3 Investor Presentation Albaraka Türk Participation Bank 20 November 2018

Agenda 1 Introduction 2 Financial Highlights Market Comparison 3 Appendix 4

3 Albaraka Turk – 2018 Q3 At a Glance (Million TRL) Q3’17 Q3’18 Q3’17 Q3’18 Y-Y (%) Y-Y (bps) Balance Sheet Key Ratios CAR 17,37 17,53 16 Total Assets 33.827 44.712 32,18% excluding BRSA’s 15,38 Total Funded Credits 23.711 29.797 25,67% forbearance Tier 1 10,36 12,01 165 Total NPLs 1.309 1.944 48,50% excluding BRSA’s 10,53 Deposits (incl. Interbank) 24.109 29.330 21,65% forbearance Shareholder’s Equity 2.383 3.500 46,86% 86 NPL 5,36 6,22 Provisioning 55,3 75,8 205 (Million TRL) Q3’17 Q3’18 Y-Y (%) Net Profit 3,46 3,48 2 Income Net Profit Share Income* 757 861 13,80% Share Margin* Statement Net Fees & Commissions 109 128 17,54% 47,03% Provisions for Loan Loss 359 528 ROAE 7,72 15,80 808 588 695 18.20% Operating Expenses Cost/Income 52,42 40,80 1162 Net Profit 141 372 163,6% *Excluding profit share income from JV Projects in 9m2018 financials

4 Turkey Macroeconomic Developments GDP Growth (%) Inflation (%) 33,41 7,4 23,2 15,74 14,7 3,2 11,92 9,94 2,1 8,53 8,3 1,1 2016 2017 2018E 2019E 2016 2017 2018E 2019E CPI PPI C/A Deficit to GDP (%) FX Rates 6,33 4,92 5,55 3,65 3,02 4,3 6,58 4,2 5,68 3,84 3,77 3,52 2016 2017 2018E 2019E 2016 2017 2018E 2019E $/₺, Period End $/₺, Period Avg Source: CBRT, Turkstat, Albaraka Turk

5 Macroeconomic Outlook Area Component Recent Indicators Expectation Indications from policymakers is that fiscal policy will be Public Expenditures tighter moving forward and that public expenditure will be reined in and monitored in a more coordinated manner Fiscal Policy Restructuring of past due tax receivables, some industry Revenue Collection specific supports may be supportive but declining domestic demand and imports may bring difficulties. We expect the CBRT to stay on HOLD for a while till the Monetary Policy Policy Rate(s) bank sees a real signal for CPI to be heading south. Weak sentiment and high interest rates are impacting the Domestic Demand domestic demand negatively by the end of 2018 and in 1H19. Policymakers have stated that there will be tangible public Government Spending expenditure cuts which should mean lower government spending than previous periods Economic Growth Weaker Lira helps for stronger demand for Turkey's exports. Exports EU's growth pace will be a major determinant given that it is our major export market. Turkey witnessed the highest drop in imports during the 3Q Imports in all the G20 and this will likely continue on the back of slowing domestic demand Producer Prices came in c. 45% y-o-y showing a buildup in PPI producer costs which will likely diminish in the coming months due to high base. Inflation Inflationary pressures mainly stemmed from cost-side CPI pressures. Weak sentiment and tight Lira liquidity may help to reduce CPI going forward. Foreign trade balance ran a $1.87 billion deficit in Trade Balance September, marking a sharp year-on-year fall of 77.1 percent (import contraction and export growth) Current Account While the 2Q and 3Q witnessed capital outflows, overall net Balance of Payments capital outflow may be balanced by the end of 2018. Note: Green arrows should be perceived as positive while red arrows should be perceived negative Source: Albaraka Turk

6 Banking Sector vs Participation Banking Sector Banking Sector Highlights Participation Banking Highlights � In 3Q 2018 the total revenues of the banking sector rose � The sector continued to grow in asset and profitability in the 41,7% compared to 3Q 2017. 3Q of 2018.Participation banking noted 32,7% ytd asset growth. � Loan growth rate reached 25,7 % ytd while NPL amount � Significant net profit increase, 62,3 % yoy increased by 34,8 % ytd. � Number of total branches increased to 1.091. � Net Profit increased by 13,4% Key Financial Key Financial Indicators 3Q’17 2017YE 3Q’18 YtD (%) Y-Y (%) Indicators 3Q’17 2017YE 3Q’18 YtD (%) Y-Y (%) (mn TRL) (mn TRL) Total Assets Total Assets 3.053.882 3.257.819 4.210.793 29,25% 37,88% 148.377 160.136 212.607 32,77% 43,29% Loans* Loans* 2.073.813 2.183.990 2.744.430 25,66% 32,34% 102.562 111.071 147.590 32,88% 43,90% Non-Performing Non- Performing 62.718 63.907 86.167 34,83% 37,39% 3.720 3.391 4.738 39,68% 27,36% Loans Loans Deposits Deposits 1.723.113 1.804.766 2.278.504 26,25% 32,23% 99.883 107.311 143.088 33,34% 43,26% Shareholder’s Shareholder’s 344.968 359.091 408.943 13,88% 18,55% 13.198 13.645 15.918 16,66% 20,61% Equity Equity Total revenues Total revenues 218.151 303.148 309.160 - 41,72% 9.260 12.901 14.155 - 52,86% Net profits Net profits 37.180 49.122 42.175 - 13,43% 1.165 1.583 1.890 - 62,29% *Financial leasing receivables included. *Financial leasing receivables included.

Agenda 1 Introduction 2 Financial Highlights Market Comparison 3 Appendix 4

8 6 Albaraka Turk – Q3’18 Main Highlights (TRL Million) Total Assets Total Funded Credits Total Collected Funds NPSM (Exc. JV Projects)* Net Profit Share Margin* 44.712 4,02 40.456 3,87 37.084 36.229 29.330 33.827 3,71 27.711 26.099 25.310 29.797 24.109 27.689 3,48 25.938 25.193 23.711 3,35 3,46 3,37 3,35 3,19 3,14 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 * Trailing for last 4 quarters Net Profit Net Profit Share Income JV 176 88 98 98 19 96 366 363 262 250 249 10 Q3'17 Q4'17 Q1’18 Q2'18 Q3’18 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18

9 7 Albaraka Turk - Asset Composition Liquid Assets (TRL mn) Composition of Total Assets (Q3’18) Liquid Assets % of Total Assets Other Assets; 4,0% 28,22% 27,01% 26,53% 25,97% 25,34% Other Liquid Assets*; 22,8% Funded Credits; 66,6% 8.783 9.611 9.398 10.928 12.618 Securities Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Portfolio; 6,5% * Other Liquid Assets includes Cash and Cash Equivalents and Derivative Financial Assets *Liquid Assets includes Cash and Cash Equivalents, Financial Assets Measured at Fair Value through Profit/Loss, Financial Assets Measured at Fair Value through Other Comprehensive Income. Total Securities Portfolio (TRL mn) Securities Yield (%) Available for sale Held to Maturity Other Marketable Securities 11,12 2.934 2.827 2.875 2.648 2.714 927 993 988 995 941 10,02 515 9,77 9,78 533 509 564 629 9,20 1.492 1349 1330 1.144 1090 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 (*) Profit share income received from securities for the last 4Q/5Q average securities

10 6 Albaraka Turk - Operating Performance Breakdown Income (million TRL) Key Movements in Income (million TRL) 1.194 %3,1 15 17,2% 957 18 192 6,2% 3,7% 12,0% 276 692 3,1% 4,8% 1,2% 1194 7,6% 76,0% 77,0% 692 88,2% Q3'17 Q2'18 Q3'18 Q3'17 Profit Share Fees & Trading Others Q3'18 Income Comm Income Others Trading Income Fees & Comm Profit Share Income Cost & Yield Movement (%) Net Profit Share Income (million TRL) Credit Yield Net Profit Share margin Profit Share Income Profit Share Expense Cost of Collected Funds 363 10,47% 249 10,33% 10,05% 10,18% 10,04% 262 886 720 5,83% 610 5,41% 5,59% 6,41% 6,08% 3,71% 3,48% 3,35% -348 3,87% 4,02% -471 -523 Q2’18 Q3’17 Q3’18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18

11 Albaraka Turk - Funded Credits Portfolio Yield on Performing Credits (%) Total Funded Credits (including financial leasing, million) 13,3% 14,0% Q3’17 Q4’17 Q2’18 Q3’18 QoQ Ytd YoY TL Credits, TL 12.434 13.151 13.599 13.069 -3,90% -0,63% 5,11% 10,5% 9,8% FC Credits, $* 1.574 1.623 1.771 1.813 2,37% 11,69% 15,16% 7,2% FC Indexed, $* 1.601 1.570 1.319 980 -25,69% -37,57% 3,24% 6,3% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Total Credits, TL 23.711 25.193 27.689 29.797 7,62% 18,27% 25,67% Yield on FX Denominated Loans, trailing Yield on TL Loans, adjusted, trailing *USD equivalent Blended Yield, adjusted Profit share income received from credits for the last 4Q/4Q average credits Currency Composition of Total Funded Credits* (Q3’18) Composition of Total Funded Credits* (%) Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 20% Corporate Credits 40,4 40,3 40,2 39,6 41,4 44% TRL SME Credits 45,4 46,2 46,9 49,2 48,9 USD* EUR* Retail Credits 14,2 13,5 12,8 11,2 9,7 36% Total 100.0 100.0 100.0 100.0 100.0 *Including USD & EUR indexed credits *According to BRSA definition

12 Albaraka Turk - Asset Quality Gross Funded Credits by Groups (including financial leasing, million) NPL Ratio* Group I Group II Group III *Including financial leasing & accruals and rediscounts 31.272 28.887 6,2% 27.048 5,6% 25.878 17,6% 5,3% 24.416 14,2% 4,8% 10,7% 3,6% 5,4% 4,9% 6,22 5,57 5,36 5,34 4,68 76,2% 91,6% 80,3% 84,0% 89,6% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Cost of Risk** (bps) Provisioning (Stage III) 243 232 227 198 189 60,1% 58,7% 57,7% 57,7% 55,3% 1.168 929 848 725 699 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 ** Specific provisions for credits for last 4Q/ 5Q average credits Lifetime ECL Impaired Credits (Stage 3) Provisioning Ratio (%)