Islamic Structured Finance Seminar Cases of Infrastructure Finance with IsDB financing 12 November 2019 1
TSKB at a Glance 01 2
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases First Privately Owned Development and Investment Bank Long lasting relationship with ▪ Established in 1950 further to World War II & Marshall Aid Development Privately Finance Programme with the support of World Bank. owned Institutions (DFIs ) Development ▪ 1 st CEO was from World Bank. and Investment Bank ▪ Between 1963 and 1979, IFC was a shareholder. ▪ TSKB has been involved in promoting the development of the Access to TR Ministry of Turkish economy by providing LT investments for Turkish Treasury companies. and Finance ▪ Independent project appraisal process comprising of separate guaranteed funding disciplines. ▪ Non-deposit taking institution, which primarily funds its lending from DFI’s guaranteed by the TR Ministry of Treasury and Finance. Integrated Multi- Business Model disciplinary ▪ 52% of non-equity liability is state guaranteed. with credit evaluation, Sustainability principles appraisal and monitoring
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Main Stakeholders A trustworthy partner in; • Large Corporates, MidCap Companies & • its field experience SME’s • its capacity to introduce innovative • Cooperation in various areas such as; themes w.r.t. investment projects corporate loans, investment banking • documentation & negotiation activities and advisory services MINISTRY of • monitoring existing projects TREASURY CLIENTS and FINANCE • Theme generation • ADFIMI • LTIC • Fast utilization MISSION • ELTI • Add-value generation DFIs & FIs CLUBS • IDFC • Capacity building • IIF NGOs REGULATORY BODIES • UNEP FI • Long-lasting relationship with • UN Global Compact policy makers and public • Global Reporting Initiative institutions • TUSIAD • Opinion provider •DEİK (Foreign Economic Relations Board) • Consultancy services 4
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Overview ▪ TRY 41.6 bn asset size İs Bank Group 40.7% ▪ 13th bank in terms of asset size Shareholder Vakifbank 50.9% Structure ▪ 58.4% of free float belongs to foreign investors Free Float and Other ▪ 369 employees, 1 branch 8.4% Ratings TSKB Turkey Subsidiaries Fitch LTFC B+ BB- Moody’s LTIR B3 B1 SAHA 9.56/10 5
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Main Business Lines supporting the Bank’s mission Advisory Services Corporate Banking Investment Banking ▪ Direct loan financing – industrial ▪ Advisory services: ▪ Manages own securities portfolio ▪ Economic Research ▪ Structured risk management and investments, energy and resource ▪ Industrial Research efficiency, renewable energy, funding solutions, including currency ▪ Financial Advisory inclusiveness, women and interest rate derivatives ▪ Customized corporate finance ▪ Engineering & Technical Advisory empowerment, education and health ▪ Industrial Strategy Development investments solutions: ▪ Real estate appraisals ▪ Project finance solutions – ▪ Equity and bond issuances ▪ Sustainability and environmental ▪ M&A advisory Renewable energy, PPPs, energy, ▪ Strategic consultancy infrastructure and logistic consulting: ▪ Asset purchase and sales advisory ▪ ESMS investments ▪ On-lending of multilateral APEX ▪ Technical consulting ▪ Privatization activities ▪ Climate change management funds for SME and Export Finance ▪ Renewable energy consulting secured from: ▪ Investment monitoring for FIs ▪ IBRD ▪ CEB ▪ EIB % of Assets (2019 Q2) 72% 23% 5% *Advisory services & Other operations 6
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Banking Sector vs TSKB CAR Loans/Assets 18.4% 74.0% 17.8% 62.3% Banking Sector TSKB Banking Sector TSKB NPL Cost to Income 4.7% 35.8% 3.2% 13.1% Banking Sector TSKB Banking Sector TSKB * Sector data as of June 30, 2019 7
Funding Structure 02 8
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Funding Diversification Important Milestones 2012 2014 2016 2017 2018 2019 1951 1967 1969 2000 2004 2005 2011 FIRST FIRST GREEN SUSTAINABLE BOND TIER II BOND 9
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Funding Structure (2019 Q3) Funding / Total Liabilities (exc. equity) Strong multilateral funding base (% of DFI Funding) 37% 6,383 6,272 6,540 IBRD 38% 3% 3% 4% 28% 4% 4% 4% EIB 28% 5% 5% 5% 12% KFW 12% 21% 21% 22% 7% IDB 7% 5% CEB 11% 11% 5% 10% %80 of DFI Funding 4% AFD 5% 2% IFC guaranteed by Turkish 2018 2% Ministry of Treasury and 2% EBRD Finance. 1% 3Q-19 53% 53% 52% 2% JBIC 2% 1% OEB 1% 1% AIIB 1% 4Q-18 2Q-19 3Q-19 DFI Funding Agreements in 2019 T. Guarenteed DFI Funding Unguarenteed DFI Funding China Development Bank – USD 200 mn Securities Issued Subordinated Debt Syndication & Other Repo &Money Market First Treasury Guaranteed CDB loan with long maturity in Turkey Manufacturing sector, SME, Energy, Infrastructure, Health and Education DFI Funding Agreements in 2018 ▪ 92% of the Total Funding is long term. World Bank – USD 400 mn ▪ Long term funding comprises funds obtained from Inclusive Access to Finance Project DFIs and Eurobond Issuances. AIIB – USD 200 mn Sustainable Energy and Infrastructure 10
Corporate Banking 03 11
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Outstanding Project Themes Environmental Supporting Pollution Innovation Infrastructure Exporters Abatement in Industry Regional Women’s Midcap Development Sustainable Employment Financing & Support 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 12
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Loan Portfolio Loans by sector (Q3 19) Medium term focus Electricity Generation 37% Supporting medium-size infrastructure projects, acting as Finance 13% pioneering institution in renewable energy, energy and resource Telecom/Logistics 9% efficiency investments, R&D, gender equality, innovation, Electricity/Gas Distribution 7% healthcare and education projects and investments that will Metal and Machinery 4% support sustainable development such as Midcap and SME Construction 4% financing. Chemistry and Plastics 4% Loans by category (% in loan book) Non-residential Real Estate 4% Tourism 3% APEX, 9% Investment, 71% Health & Education 3% Textile 2% Working Capital, Other 10% 20% Other: %4 Food&Beverage, %2 Automative ,%1 Packaging, %3 Other Loans by currency (Q2 19) ▪ 73% is attributable to the sustainable investments. TRY, 8.7% ▪ 147 Projects in Energy & Resource efficiency, contributing to 6% of the portfolio in the sectors ranging from metal to chemistry. FX, 91.3% Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19 13
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Renewable Energy and Energy&Resource Efficiency Renewable Energy Portfolio (Outstanding) 1.8 bn 1.9 bn 1.9 bn Within 289 REL projects, 90% is in operation. 1.5 bn 1.6 bn 1.4 bn 1.3 bn 6% 4% 2% 7% 7% 7% 6% 6% 5% 5% 5% With respect to their installed capacity 18% 22% 34% 32% (MW), 87% of them are operative. 35% 37% 3% 33% 9% 14% 17% 19% 18% In terms of MW power, 97% of the operating 75% 69% 51% 46% 37% 35% 35% energy projects are backed by Feed-in Tariff Mechanism (Yekdem). 2013 2014 2015 2016 2017 2018 2019 Q3 Renewable Energy Portfolio (Outstanding) Hydro Geothermal Wind Biomass Solar Energy Efficiency Resource Efficiency 147 Projects in Energy & 62 projects 85 projects Resource Efficiency Sectors: Tourism, Chemistry, Automotive, Steel, Cement, Textile Sectors: Chemistry, Automotive, Cement, Steel, Cement, Textile Minery, Energy, Steel, Textile 14
TSKB at a Glance Funding Structure Corporate Banking Sustainability and TSKB TSKB - IsDB Relationship Cases Supporting SMEs While responding working capital needs of SMEs, TSKB also finances the investments of the firms in a variety of fields : technology update investments, capacity development, energy efficiency, environmental projects. The financing could be either a direct facility or an APEX loan. The share of SME loans within the total loan portfolio is circa 18%. An innovative facility: The first Turkish InnovFin SME Guarantee Agreement signed with the EIF to support innovative investments by SMEs. 15
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