Public Disclosure Copy

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1 Public Disclosure Authorized EUROPE AND CENTRAL ASIA Turkey Finance & Markets Global Practice IBRD/IDA Investment Project Financing FY 2013 Seq No: 8 ARCHIVED on 16-Oct-2017 ISR29893 Implementing Agencies: T. C. Ziraat Bankasi A.S. (Ziraat Bank), Republic of Turkey, T.C. Ziraat Bankasi A.S. (Ziraat Bank) Public Disclosure Authorized Key Dates Key Project Dates Bank Approval Date:26-Jun-2013 Planned Mid Term Review Date:17-Oct-2016 Original Closing Date:29-Dec-2017 Project Development Objectives Effectiveness Date:13-Dec-2013 Actual Mid-Term Review Date:14-Nov-2016 Revised Closing Date:29-Dec-2018 Public Disclosure Authorized Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to improve access to medium and long-term finance for small and medium enterprises through lease financing. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name A credit line to Ziraat to be on-lent for intermediation through PFIs to SMEs:(Cost $ M) Public Disclosure Authorized Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Satisfactory Overall Risk Rating Low Low Implementation Status and Key Decisions Ziraat Bank has significantly improved implementation and disbursement performance after May 2017 and almost 85 percent of the loan has been 10/16/2017 Page 1 of 10

2 disbursed as of September This is an important achievement compared to only 44 percent disbursement level in February US $ 120 million has been disbursed since May 2017 (60 million in May and September each). There are five leasing companies as Project Financial Institutions (PFIs) which signed a Subsidiary Loan Agreement (SLA) with Ziraat Bank including Garanti Leasing, Finans Leasing, Yapi Kredi Leasing, Burgan Leasing, and Ziraat Leasing. As of September, 2017, Ziraat's withdrawals from the World Bank, commitments to PFIs, and PFIs disbursements to final beneficiaries have increased to 85, 65 and 55 percent of the total Loan amount respectively. Project development objective (PDO) indicators and intermediate results indicators are on track and progressing well towards achievement of the PDO. The project has financed 423 SMEs since its launch. More than 11.8 percent of these SMEs were new clients to the PFIs (compared to 10 percent target) percent of the loans were disbursed in underserved regions (compared to 15 percent target). The weighted average maturity of sub-loans financed under the project has exceeded the average maturity of PFI s own loan portfolio by 75 percent. The leasing sector size in Turkey is below its potential yet on a recent growth path owing to the GDP growth by 5.1 percent Q (yoy) and higher recorded investment. Transaction volume increased by 4 percent in US $ terms in Q1 2017, compared to the same period in 2016, thanks to growing investment demand. Feedback from the sector indicates mild growth expectations in the short run while construction, having experienced a 10 percent growth in Q as the most concentrated sector of the leasing market in Turkey, resumes its role as the driving force. Average leasing volume per transaction decreased in the recent years, explained possibly by a drop in sale-and-leaseback contracts that are low in transaction numbers but high in leasing volumes and/or by a shift in appetite for the leasing sector from larger enterprises to SMEs. Against this cautiously optimistic backdrop, possible higher demand for SME III funds should encourage Ziraat to market the funds more actively to leasing companies and participation banks by leveraging favorable characteristics of SME III funds, in particular those in regard to maturity. 10/16/2017 Page 2 of 10

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4 Risks Systematic Operations Risk-rating Tool 10/16/2017 Page 4 of 10

5 Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Moderate Moderate Macroeconomic -- Substantial Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Low Low Institutional Capacity for Implementation and Sustainability -- Low Low Fiduciary -- Low Low Environment and Social -- Low Low Stakeholders -- Low Low Other -- Low Low Overall -- Low Low Results Project Development Objective Indicators PHINDPDOTBL Ratio of the average maturity of sub-loans financed under the project, over the PFIs average maturity of SME leasing portfolio (Text, Custom) Value >1 Date 01-Jul Dec Jun Dec-2017 PHINDPDOTBL Number of SME beneficiaries financed by PFIs under the project (cumulative) (Number, Custom) Value PHINDPDOTBL Number of new SME beneficiaries financed by PFIs under the project (that have not received financing from the PFI in the past) as apercentage of the total number of SME beneficiaries financed by PFIs (Number, Custom) Value /16/2017 Page 5 of 10

6 PHINDPDOTBL Number of PFIs introducing new leasing products (cumulative) (Number, Custom) Value PHINDPDOTBL Number of new PFIs under the project (that have not received funding from IFIs in the past, cumulative) (Number, Custom) Value Overall Comments Intermediate Results Indicators Number of PFIs under the project (cumulative) (Number, Custom) Value /16/2017 Page 6 of 10

7 Based on Core Indicator: Volume of Bank Support: Lines of Credit - SME (cumulative, US$ million) (Number, Custom) Value Based on Core Indicator: Outstanding SME loan portfolio (US$ million) (Text, Custom) Value n/a 1,687 1,545 n/a Based on Core Indicator: Number of active SME loan accounts (not cumulative) (Text, Custom) Value n/a 19,265 18,944 n/a Based on Core Indicator: Portfolio Quality: Portfolio at risk SME (%) (Text, Custom) Value n/a Date 31-Dec Dec Jun Dec /16/2017 Page 7 of 10

8 Based on Core Indicator: Financial Sustainability: Return on Assets (%) (Text, Custom) Value n/a Date 31-Dec Dec Jun Dec-2017 Based on Core Indicator: Financial Sustainability: Return on Equity (%) (Text, Custom) Value n/a Date 31-Dec Dec Jun Dec-2017 Percent of Loan disbursed financing Sub-projects in priority regions (Percentage, Custom) Value Compliance with prudential regulation (Yes/No, Custom) Value Y Y Y Y Date 31-Dec Dec Jun Dec-2017 Overall Comments 10/16/2017 Page 8 of 10

9 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P IBRD Effective USD % Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P IBRD Effective 26-Jun Aug Dec Dec Dec-2018 Cumulative Disbursements Restructuring History Level 2 Approved on 02-Sep-2015,Level 2 Approved on 31-Mar-2017 Related Project(s) 10/16/2017 Page 9 of 10

10 There are no related projects. 10/16/2017 Page 10 of 10