Earnings Presentation 4Q19 BRSA Bank-only Results Macro - PowerPoint PPT Presentation

Earnings Presentation 4Q19 – BRSA Bank-only Results

Macro Environment and 2020 Expectations Economy and Markets Banking Sector • Visible recovery in Turkish economy, accompanied by slow- • Sizeable rate cuts from CBRT, totalling to 1,275 basis points down in inflationary pressures since July • Economic rebalancing led to impressive shrinkage in Turkey’s • Rate cuts, improvement in consumer confidence and CBRT’s external funding requirement reserve ruquirement policy encouraging loan growth led to • Stabilizing foreign currency environment sharp recovery in lending activity • We expect 0.4% and 3.9% GDP growth in 2019 and 2020 • Sector financials resilient, capital adequacy above 18%. respectively. • In line with the positive expectations, sector could lead a • Our inflation estimation for 2020 stands at 10.4%. strong growth in loans and improvement in profitability. BOP (USD bn) 2.7 Loan Growth in 2019 (FX-Adj.) 6.9% -27.2 -47.4 Corporate Loan Growth (FX-Adj.) 4.7 % 2017 2018 Nov 2019* Source: CBRT Consumer Loan Growth 15.5 % Annual Inflation (%) 20.3 FC ** Corporate Loan Growth (FX Adj.) -6.2% 11.9 11.8 Source: BRSA, TSKB 2017 2018 2019 **Foreign Currency Source: Turkstat Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19 2

2019YE Figures are in line with the Management Guidance 2019YE 2019YE vs. Financial Guidance (%) Yearly Net income of TL Guidance Figures Guidance (Bank Only) 702 mio ✓ in 2019YE Flat Flat FX Adjusted Loan Growth ✓ ~75 75 Loans/Assets Ratio ✓ Loans/Long Term Funding Ratio* ~115 125 ✓ >35 57 Fees & Commissions Growth ✓ <25 26 OPEX Growth ROE was met ✓ ~4 4.2 Net Interest Margin (adj.)** when adjusted for the ~ 14-15 13.5 Return On Equity subsidiary valuations ✓ 1.5-1.7 1.8 Return On Assets ✓ 13-14 13.4 Cost/Income Ratio ✓ >15 17.8 Capital Adequacy Ratio ✓ ~5 3.5 NPL Ratio ✓ Net Cost of Risk ~130 bps 126 bps *Long term (LT) funding does not include securities issued (Eurobonds). **Swap adjusted. 3 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Forward Looking Expectations and 2020 Agenda 2020E (%) Financial Guidance (Bank Only) FX Adjusted Loan Growth 3-5 ~75 Growing Loan/Assets Advisory&Investment Banking Revenues >50 Fees & Commissions Growth <20 OPEX Growth Continued IT and Other Internal Investments ~4.0 Net Interest Margin (adj.)* >16 Return On Tangible Equity** Expansion in the Loan Volume 1.7-1.9 Return On Assets <15 Cost/Income Ratio Sound Liquidity >18 Capital Adequacy Ratio >12.5 Tier 1 Ratio Prudent Asset Quality Strong Solvency Metrics Management Flat Stage 2 Loans Ratio <3.5 NPL Ratio Net Cost of Risk <100 bps *Swap adjusted. ** Tangible Equity(TE) = Shareholders’ equity – MtM valuations of FVOCI portfolio 4 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Solid Results boosted by Sustained Core Banking Income TL mn Net Banking Income ROTE 16.1% ROA 1.7% Quarterly Cumulative 1,324 1,343 325 261 Flat NPL 3.5% 890 32% 1,174 292 286 Loan Growth Below Guidance 43 410 44 46 208 -13 -58 -68 4Q-18 4Q-19 Solid Solvency 3Q-19 4Q-19 Strong and Stable CAR @ 17.8% Net Banking Income exc. CPI&Trading NIM 4.2% Trading Gain/Loss Tier 1 @ 12.4% CPI Income Annualized ROE & ROTE* Net Profit Cumulative Quarterly 6% 661 702 17.8% 170 185 195 171 1,343 1,324 407 150 397 16.5% 16.0% 16.1% 14.7% 341 13.5% 325 261 -111 -146 -154 2018 3Q-19 4Q-19 -212 -682 -622 -237 ROE ROTE 4Q-18 1Q-19 2Q-19 3Q-19 4Q-19 4Q-18 4Q-19 *Tangible Equity(TE) = Shareholders’ equity – MtM valuations of FVOCI portfolio Net Banking Income Provisions&Tax 5 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Cumulative and Quarterly Net Income Cumulative Quarterly YoY TL mn 2018 2019 3Q-19 4Q-19 QoQ Supported by declining Net Interest Income 1,435.9 1,523.9 6.1% 371.7 381.5 3% TL funding costs Trading Income 42.7 -57.6 n.m -68.4 -13.3 n.m. Visible pick up in the (Derivative MtM Valuation) 11.1 -61.2 n.m. -45.7 -21.0 -54%) advisory fees Net Commissions 19.0 29.8 56.6% 6.8 10.0 47% Dividend & Other 8.0 32.7 309.2% 1.6 1.0 -36% Steady Banking Income 1,505.6 1,528.8 1.5% 311.7 379.2 22% efficiency metrics OPEX (-) 162.9 204.9 25.8% 50.6 54.1 7% Net Banking Income 1,342.8 1,323.9 -1.4% 261.1 325.1 25% Proactive Provisions (-) 493.5 429.6 -12.9% 68.4 111.2 63% provision policy Tax Provisions (-) 188.3 192.6 2.3% 42.4 42.6 0% Net Profit 660.9 701.6 6.2% 150.3 171.3 14% → Based on MIS data → Swap costs are adjusted to net interest income. → Interest Income from securities includes impairment expenses of marketable securities with provisions. → 4Q19 Provisions include Other Income, Deferred Tax and Expected Credit Losses in the audited P&L excluding impairment expenses of marketable securities 6 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Strong NIM Generation Quarterly NIM NIM NIM exc. CPI&Trading Annualized NIM 5.4% 4.0% 4Q-19 4.5% 4.3% 4.2% 3.9% 3Q-19 4.3% CPI normalized NIM 3.7% 3.7% 3.9% 3.9% 2Q-19 3.3% 4.4% 1Q-19 4.5% 4.1% 4Q-18 4.9% 4Q-18 1Q-19 2Q-19 3Q-19 4Q-19 Quarterly Spread Quarterly Swap Costs TL mn 5.9 -92.9 -97.9 -103.6 -19.2 4.0 -113.9 3.4 3.1 3.1 3.1 3.1 4Q-18 1Q-19 2Q-19 3Q-19 4Q-19 2.8 2.7 0.6 4Q-18 1Q-19 2Q-19 3Q-19 4Q-19 FX Loans TL Loans+LA 7 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Sustainability is embedded in our Business Model Support for employment in Turkey; ▪ Encouraging women participation to the economy Support transition to low carbon economy ▪ Providing financing to operational health and safety ▪ Supporting less developed regions Financing to reduce energy • Environmental & Social Risk dependency in Turkey Evaluation for all investment ▪ Financing renewable energy projects; projects ▪ Energy and resource efficiency • Monitoring social impacts of investments financed investments Sustainability Reporting ▪ Extend resources for UN Sustainable • Integrated Report Development Goals • Impact&Allocation Report ▪ Supporting 14 of Sustainable Develoopment • Carbon Disclosure Project Goals • Communication on Progress 8 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Comfortable FX Liquidity and Maturity Profile Maturity Profile of External Debt USD mn -121 - - -176 -404 -467 -515 -447 -350 Funding / Total Liabilities (exc. equity) USD mn -300 * -300 -350 -2,038 6,540 6,142 6,272 3% 4% 7% 4% 4% 4% 5% 5% 5% -300 21% 22% 17% 1Q-20 2020 2021 2022 2023 >=2024 Syndication DFI Funding Eurobond Tier 2 11% 12% 10% * Tier 2 bond has issuer call in 2022 DFI Funding Agreements in 2019 China Development Bank – USD 200 mn First Treasury Guaranteed CDB loan with long maturity in Turkey 53% 53% 52% Manufacturing sector, SME, Energy, Infrastructure, Health and Education AFD – EUR 85 mn Women Empowerment EBRD – EUR 100 mn – Risk Sharing Agreement 4Q-18 3Q-19 4Q-19 T. Guarenteed DFI Funding Unguarenteed DFI Funding $780 mn Non-Withdrawn DFI Funding Securities Issued Subordinated Debt Syndication & Other Repo &Money Market • Inclusiveness 47% • Climate + Environment 24% • Sustainable Infrastructure 16% • Manufacturing Industry 13% 9 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Outstanding project themes shaping future loan book Environmental Supporting Pollution Innovation Infrastructure Exporters Abatement in Industry Regional Women’s Midcap Development Sustainable Employment Financing & Supporting Agriculture and Equal Employment Opportunity Energy and Industrial SME Support Resource Research & Development Efficiency Development Social Occupational Infrastructure: Sustainable Health and Renewable Energy Tourism Safety Health, Education & Clean Transportation 10 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19

Resilient Balance Sheet Currency Asset Composition Total Loans Breakdown 31.4 TL bn 42.0 TL bn 9% 29.4 40.3 3.0 4% 38.3 6% 5% 27.9 5% 6% 3.2 8% 16% 2.2 15% 14% 4.9$ 91% 4.7$ 5.1$ 4Q-18 3Q-19 4Q-19 75% 73% 73% FX Loans ($) TRY Loans 4Q-19 Loans by Currency & Type Working TL; 10% Capital USD; 48% Investment Loans; 22.4% Loans; 69.3% 2018 3Q-19 4Q-19 APEX; 8.3% EUR; 42% Loans Securities Cash & MM Non IEAs & Other ▪ Top 10 borrower groups account for approximately 28% of the Bank’s cash loan portfolio , as of 2019YE ▪ Average maturity of the loan portfolio is approximately 5.3 years. 11 Investor Relations I BRSA Unconsolidated Earnings Presentation 4Q-19