Financial Presentation June 2020
Ziraat Bank – Highlights Largest bank in Turkey with TL 797bn ~ USD 117 bn. asset size Widest local and international geographic footprint with 1,758 branches 1,758 • Only bank in more than 400 points in Turkey • Operating in 18 countries Extensive customer base > 36 mn Market leadership #1 • Total Assets • Total Loans • Equity High level of funding intermediation • Deposits 95.5% through moderate LtD level Robust asset quality maintained 2.3% • BRSA forbearance measures and loan growth impacting NPL • Sound CAR Prudent risk management approach for future • TL 7 bn. capital increase in May 2020 NPL inflows 18.5% • CET 1 capital ratio 15.6% The largest deposit base in the sector TL 564 bn • Core deposit ratio 95.8% Undisputed agricultural loans leader in terms of market share • High market penetration ~ 60% • Only bank authorised for government subsidised agro-lending 1
Ziraat Bank – Assets/Liabilities ASSETS LIABILITIES TL bn 8.8% 797 Q2 20 70.8% 12.6% 797 21.3% 68.4% 10.8% QoQ 14.5% 5.9% Q1 20 70.5% 14.0% 695 695 21.3% 67.3% 9.7% Ytd 22.6% 6.0% 2019 650 21.2% 67.1% 68.8% 14.9% 10.8% 650 8.6% 10.7% 2018 537 17.8% 68.9% 61.6% 22.0% 537 10.2% 12.1% 2017* 16.2% 68.7% 434 61.3% 24.1% 434 Loans Securities Deposits Non Deposit Funds Equity Other Reserve Req. & Liquid Assets Other Assets (1) Performing loans only 2 * All 2017 figures in the presentation are calculated over 01.01.2018 numbers for comparison purposes
Ziraat Bank – Lending Total Loans (1) (TL bn, % share in total) SME 5% QoQ ∆ YtD ∆ 545 Total Loans 16.5% 25.2% 468 435 23% 27% Total Loans (FX adj.) 15.4% 21.4% 372 26% TL 21.9% 32.6% 27% 299 31% Corporate 95% 26% 32% FX($) -2.8% -8.6% 26% Corporate 21% Retail 23.2% 30.0% Retail 34% 73% Housing 13.2% 20.1% 68% 69% 77% 74% 73% 74% 74% SME 28.5% 38.0% Corporate 3.9% 9.2% SME 45% Corp. FX Adj . -2.1% 2.2% FX Loans/Total Loans 2017 2018 2019 Q1 2020 Q2 2020 23% vs. sector`s 35% (2) TL FX Sector Breakdown of Cash Business Loans (3) Cash Loans by Customer Segment (3) Cash Loans by Product Other; 7% Project Finance Tourism 3% Agriculture Corporate Retail SME Agriculture 11% Energy 19% 14% Credit 7% Cards & Other Retail 2% Construction 28% 37% 8% 35% 12% 47% GPL 22% 7% Finance 14% Manufacturing 9% Other Business Loans Service 18% Housing • Based on customer segmentation data, totals may differ from product classification Trade (1) Performing loans (2) According to BRSA Q2 2020 data (3) Accruals, intermediated loans of public funds and overseas branch lending are excluded from segment distribution 3
– Lending Ziraat Bank Retail Loans (1) (TL bn, % share in total) Payroll Market Share NPL 5.1 million GPL Cust. & Pensioners 19% (3) 1.2% pensioners 43% of GPL 91 84 117 123 152 6 7 7 7 8 LTV (2) NPL Housing Market Share New Loan 33% (3) 0.2% 70% Loans Packages 49 51 56 57 55 Subsidized Young Agricultural NPL Focus on Farmers Loans Agro-Industry 1.9% Loans Academy 77% 44 43 37 36 36 - Rise in the share of CGF guaranteed lending enabled by increasing size of the facility 2017 2018 2019 Q1 20 Q2 20 - Retail loans included in CGF scheme - Loan growth driven by thematic loan packages aimed at GPL Housing Credit Card and Other increasing economic resilience during the pandemic Project Finance Loans Agricultural Loans (TL bn) TL Market Share (4) (%) 8% USD 9.1 bn cash 61 61 60 60 59 19% USD 0.4 bn non-cash EUR 24% 28% 74,3 Share of Renewables 13% 70,5 66,2 in energy loans: 59% 60,7 USD Share of Infrastructure 51,9 45% 64% projects with debt assumption: 86% Energy Infrastructure Telecom Other 2017 2018 2019 Q1 20 Q2 20 (1) Accruals are excluded (2) Marginal LTV 4 (3) According to Q2 2020 BRSA data (4) Among sector banks according to Q2 2020 BRSA data
– Funding Ziraat Bank Total Deposits (TL bn, % share in total) Retail 55% 564 SME 22% 490 QoQ ∆ YtD ∆ Corporate 447 23% Total Deposits 15.2% 26.2% 68% 331 Total Deposit (FX adj.) 13.1% 18.6% 10% 70% TL 16.1% 27.6% 266 Public 72% Deposits FX($) 9.5% 8.0% Other 74% Customer Deposit 29.5% 18.0% Deposits 75% 90% Demand 26.5% 47.8% 32% 30% Time 10.4% 17.9% 28% 26% 25% 55% TL 2017 2018 2019 Q1 20 Q2 20 FX Demand Time 45% Granular and sticky deposit base with c. 55 % share of retail segment in total deposits 57% of demand deposits comprised of retail deposits Higher share of demand deposits reflects positively on P&L and margins Sector Core deposit ratio Demand/Total Deposits 95.8% 31.7% (1) 5 (1) According to Q2 2020 BRSA data
– Funding Ziraat Bank Non-Deposit Funds (TL bn,% share in total) Total Amount (USD bn) 11.8 11.8 100 10.4 98 118 97 97 10.1 9.6 9.6 2,4 2,4 Bonds Issued 13% 13% 14% 15% 1,7 15% 1,7 1,0 1,0 1,6 1,6 0,4 Post Finance 0,4 0,3 0,1 1,4 1,4 1,4 29% 30% 1,4 1,1 36% 33% 1,4 34% Syndicated 2,1 2,0 2,0 TL FX 1,8 1,9 Loans 1,9 35% 65% IFI Loans 1,5 1,6 1,5 1,6 1,3 1,1 58% 57% Loans Received 53% 51% 51% 3,5 3,4 3,4 3,4 3,3 3,3 Repo Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 2017 2018 2019 Q1 20 Q2 20 • More than adequate FX liquidity, Money Markets Funds borrowed Bonds issued • Cost oriented, adaptive wholesale ST liability coverage ~ 200% funding management • 322.7% FX LCR, 127.0% Total LCR • Limited decrease and composition change in non-deposit funding mix • USD 1.1 bn syndicated loan in April Loan to Deposit (1) (%) with 38 banks from 22 countries 112,9 (2) 110,6 Ziraat Sector 136,5 136,7 109,7 131,4 129,2 106,9 97,2 97,6 100,5 95,5 96,0 65,8 94,3 63,5 57,5 48,7 2017 2018 2019 Q1 20 Q2 20 2019 Q2 20 2019 Q2 20 (2) TL FX Ziraat Sector (1)Performing Loans/Total Deposit Intermediated loans of public funds are excluded (2)Sector: Deposit banks, according to Q2 2020 BRSA data 6
– Asset Quality Ziraat Bank Around 35 % of loan portfolio allocated to structurally low NPL NPL Ratios (1) (%) generating products/segments No Write Off 5,3 High loan growth and BRSA forbearance measures to affect NPLs 5,0 or NPL Sale 4,4 in Q2 (YtD denominator impact on NPL ratio ~ 70 bps) 3,9 Moderate impact of ~ 40 bps on NPL and Stage 2 recognition period 3,0 2,8 2,7 changes installed by BRSA 2,3 2,0 1,6 Increased restructuring due to payment holidays Increased provisioning as part of a prudent risk management approach 2017 2018 2019 Q1 20 Q2 20 Sector Ziraat NPL Ratios by Segment (%) New NPL & Collections (TL mn) 4,6 4,4 3,5 Net NPL 3,2 Formation 2,8 2,5 2,4 (TL bn) 4.8 2,2 2.4 1,5 1,4 1,1 1,0 1,0 1,0 0,8 2.5 2017 2018 2019 Q1 20 Q2 20 1.2 Corporate SME Retail 7.147 3.318 0.6 Retail NPL Ratios by Product (%) 0.5 0.3 0.6 3.677 1.773 2,7 2,9 0.1 2,5 1.099 982 956 2,5 1.409 2,6 373 1,8 -836 -317 -1.227 -469 -470 -897 -539 -2.375 -693 2,0 1,9 1,8 1,2 Q1 19Q2 19 Q3 19Q4 19 Q1 20Q2 20 2017 2018 2019 0,2 0,2 0,1 0,1 New NPL Collections 0,2 2017 2018 2019 Q1 20 Q2 20 (1) Sector banks, Q2 2020 BRSA data 7 Housing Loans GPL Credit Cards
– Asset Quality Ziraat Bank Share in Stage II Loans (TL bn) Loan Classification (TL bn) Restructured Loans (2) total (%) 6.6% in Total Loans: 8.7% 35.8 Coverage 6.7% 6.3% Share inStage II 29.8 29.6 13.0 Stage III Construction: 20% 72.9% (3) Energy: 8% 4.9% Real Estate: 2% 18.2 35.8 Stage II 15.1% Total Coverage (3) 131.6% 1.7% 5.3 Cash Coverage (3) 153.9% Stage I 0.4% 496.1 TL 1,100 mn free provision 2017* 2018 2019 Q1 20 Q2 20 in Q2 20 *01 Jan 2018 financial figures for comparison purposes Reaching a strong buffer of Q2 20 TL 2.8 bn Total NPL by Segment Cost of Risk (1) (%) SME 1.5 Corporate 52% 33% 8% 7% Retail 1.3 (4) Other 1.2 1.1 Retail Business Loans Other (inc. energy) Other 6% 0.7 Service (incl. Real Estate) Credit Card Construction 8% 21% 16% 14% Housing 10% 12% Agriculture 19% 2017 2018 2019 Q1 20* Q2 20* 67% GPL 25% Manufacturing Trade (1) CoR: Expected Credit Loss-Reversals /Average Loan Amount (4) Includes loans excluded from segment classification, (2) Includes payment holidays during the COVID 19 outbreak. intermediated loans from public funds and overseas branch lending (3) Excluding intermediated loans for public funds * Annualized figure 8
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