25 March 2013 T ürk iye Finans Ka tı l ım Bankası A. Ş . (“TFKB”) March 2015
TFKB Highlights 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 Strong and Growing Franchise - World Finance Awards; Best Islamic Bank in Turkey (Turkey’s Best Participation Bank Award) - March 2014 National Commercial Bank, Saudi Arabia’s largest bank by total assets (rated A+/A1 by Fitch, S&P and Moody’s), is the Strong and Supportive majority shareholder with a 67.03% stake Shareholder Base Share capital increased from TRY 292mn (pre- NCB’s majority stake acquisition in 2008 ) to TRY 2,600mn in 2014 Attractive demographics coupled with strong GDP growth Stable political and macro environment, including healthy public debt to GDP ratio and subsiding inflation Favorable Operating Strictly regulated, well capitalized, and underpenetrated banking sector (in terms of lending) to underpin continued growth Environment Participation banking growing faster than conventional banks, still represents only 5.2% of total bank sector assets, as of 2014 YE 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 Strong Financial growth as well as ROAE, as of 2014 YE Performance Low cost to income (2) ratio of 62.8%, outperforming participation bank industry 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 Trade Finance Initiatives of Q4 2014 Despite absence of NPL sales until 3Q14, NPL levels consistently below banking sector and participation bank peer Strong Asset Quality & Risk averages (2.5% as of 2014 YE) (1) Management Increasing NPL coverage ratio in line with that of the participation bank average Highly experienced management team with a proven track record in growing operations and profitability while maintaining Experienced Management a robust capital structure and a strong risk management culture Team 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 Genele Açık / Public 1
25 March 2013 1.Turkey: Country Overview
Turkey: Overview of the Country Geographical Location Background Information Capital Ankara Istanbul Largest City Area 783,562 km2 Population 77,695,904 (2014) Turkish Lira (TRY) Currency Official Language Turkish GDP USD 813 billion (2014 IMF Estimates) BBB- (Fitch), Baa3 (Moody’s) and BB+ (S&P*) Rating Turkey: A Strong Emerging Market with Growth Potential 2010 2011 2012 2013 2014 2015 (P) Population (m) 73.7 74.7 75.6 76.7 77.7 78.2 Gross GDP (in USDbn equivalent) 731.5 774.7 788.6 821.9 813.3** 861.1 Real GDP growth (%) 9.2% 8.8% 2.1% 4.1% 3.0%** 3.0% GDP per capita (in USD,000 equivalent) 10.0 10.4 10.5 10.8 10.5** 11.0 Inflation (CPI) 6.4% 10.4% 6.2% 7.4% 8.2% 7.0% Unemployment (%) 11.1% 9.1% 8.4% 9.0% 9.5%** 9.9% * Unsolicited Rating ** IMF World Economic Outlook (WEO) October 2014 Forecasts Sources: IMF WOE Database, TURKSTAT Genele Açık / Public 3
Turkey: Strong Macro Fundamentals Annual GDP Growth (%) (2003/14 Averages) 2015/19 Average GDP Growth Forecasts (%) 4,8 Turkey is the 17th largest economy 3,7 3,5 3,5 in the World as of 2013 4,1 4,0 Consistently outperformed peer 3,3 2,6 3,2 2,5 groups in terms of real GDP growth 2,3 2,6 between 2003-2014 2,5 1,9 1,6 Real GDP expected to grow at 3.5% between 2015-2019, and still 1,3 continue to outperform many emerging market economies The structural reform programs, Hungary Mexico Czech South Brazil Poland Russia Turkey Russia Hungary Czech Brazil South Turkey Poland Mexico recently released by the government, Republic Africa Republic Africa will likely enhance the productivity and boost the potential growth, as Annual CPI Inflation (%) Inflation and Benchmark Bond Yield (%) well as the favorable demographics Turkey is in a disinflation process in 70 30 Benchmark Bond Yields Annual CPI Inflation the long-run 60 Inflation 25 Low inflation also had a crucial role 50 to sustain high growth during the last 20 decade 40 15 Accordingly, benchmark rates 30 remained at single digit levels over 10 20 the past years as the risk premium eased due to improvement in public 5 10 finance 0 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2004 2006 2008 2010 2012 2014 2016 2018 Source: TURKSTAT, CBRT, IMF, Bloomberg Genele Açık / Public 4
Turkey: Sound Fiscal Management & Financial Markets Budget and Primary Balances of GDP (%) 2013 Public Debt to GDP vs. Peers 6 Prudent public spending has 79 4 significantly reduced budget deficit 66 for the last ten years 2 57 0 The Government’s Medium -Term 46 46 45 Program (MTP) also imply that the -2 36 tight fiscal policy will maintain in the -4 next three years -6 Furthermore, cautious public 14 Budget Balance -8 borrowing has diminished Turkey’s Primary Surplus -10 risk premium to the historical low levels Russia Turkey South Czech Mexico Poland Brazil Hungary -12 Africa Rep. 2001 2003 2005 2007 2009 2011 2013 2015 2017 At 36% Turkey’s public debt to GDP ratio is significantly lower than the Central Bank Policy Rates & Inflation Rates (%) 3M-Implied Volatility in FX Markets many countries 11,75 Neutral real interest rates fell globally 2010-2014 Averages India 10,1 after the Global Financial Crisis Policy Rates Indonesia 10,4 CPI 8,25 8,25 Turkey can also maintain the low Turkey 11,4 real rates thanks to the healthy Mexico 11,8 5,75 public finance dynamics and growth Russia 12,1 4,50 prospects Czech Republic 12,2 In addition to the strong 2,10 Brazil 13,3 2,00 fundamentals, macro prudential Poland 14,8 measures have lowered the volatility 0,05 South Africa 15,2 in financial markets Hungary 15,5 Czech Poland Hungary Mexico South Russia Turkey Brazil Republic Africa Source: TURKSTAT, CBRT, IMF, Bloomberg Genele Açık / Public 5
25 March 2013 2.Turkey: Banking Industry Overview
Turkey Banking Sector: Robust and Well Positioned for Growth Loan Growth (%) (1) Deposit Growth (%) (1) Loans/Deposits (%) (1) 27.3 106.3 113.3 98.9 40.6 94.7 22.0 22.1 34.8 82.0 Penetration 19.7 Growth & 77.6 76.8 31.2 72.8 29.7 29.7 28.8 68.3 15.4 12.4 19.1 12.0 11.6 10.4 15.3 5.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 NPL (%) (1) Coverage (%) (1) CAR (%) (1) 5.4 90.7 88.3 84.6 84.6 81.2 80.4 16.84 Asset Quality 77.5 19.3 75.2 75.1 17.7 17.4 17.3 16.6 3.8 3.7 3.7 15.5 15.7 & Capital 3.6 14.6 2.9 2.8 2.8 2.7 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 CAR (%) (2) Total Deposits to GDP (%) (2) Total Loans to GDP (%) (2) Czech Republic 17.00% Spain 211% Spain 172% High Growth Mexico Italy Italy 15.90% 140% 96% Potential Poland 15.70% South Africa 85% South Africa 87% Turkey 15.50% Czech Republic 79% Brazil 72% Brazil 15.50% Brazil 73% Turkey 70% South Africa 14.60% Russia 71% Czech Republic 66% Italy Turkey Poland 13.70% 60% 57% Spain 13.30% Poland 51% Russia 55% Russia 12.80% Mexico 27% Mexico 18% (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 Genele Açık / Public 7
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