The world's favorite bank in Turkey

Transcription

1 The world's favorite bank in Turkey Profile 2017

2 Turkey in Brief 17 th largest economy in the world 1 Large and Dynamic Economy Average GDP Growth ~5% over (LATAM: 2.8%, EU: 1.2%; EM Europe: 3.9%) expected average GDP growth 1 : 4% for TR vs. 2% for EU Successful switch from hyperinflationary economy to price stability Young and growing population 55.1% of the 80 million population under the age of 35 2 Population to reach 88.4 million in vs. negative growth in EU and CEEMEA Macro-Economic Indicators Real GDP Growth 8.5% 11.1% 4.8% 8.5% 5.2% 6.1% 3.2% 7.4% 4 Current Account Deficit / GDP 5.9% 9.0% 5.6% 6.8% 4.7% 3.7% 3.8% 5.5% 5 Current Account Deficit (US$ billion) Net FDI (US$ billion) EU Defined Public Debt Stock / GDP 40.0% 36.4% 32.6% 31.3% 28.6% 27.5% 28.1% 28.2% 4 CBRT Weighted Average Funding Cost 6,7 5.6% 6.3% 7.5% 5.8% 9.0% 8.4% 8.3% 12.75% 8 Inflation (CPI) 6.4% 10.4% 6.2% 7.4% 8.2% 8.8% 8.5% 10.3% 8 Source: CBRT, Turkstat, Turkish Treasury, IMF WEO (January 2018) 1 IMF s World Economic Outlook Report dated October Ranking as of YE TurkStat - December 31, 2017 Address Based Population Registration System (ABPRS) 3 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2017 Revision 4 Latest data avaliable, as of 3Q17 5 As of December, In 2009 and 2010, weighted average funding cost refer to the CBRT O/N borrowing repo rate 7 From 2011 onwards, the CBRT utilizes an interest rate corridor by means of liquity management 8 As of February, 2018 Cumulative Shareholder Return (US$) Garanti* BIST Banks Index BIST 100 Index Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Dec 17 Note: Garanti stock price and the indices are rebased since 2008YE. * Garanti stock price converted to US$ by using daily US$/TL ask rate of Central Bank of Republic of Turkey (CBRT)

3 Turkish Banking Sector in Brief Turkish banking sector is the second largest banking system 1 in Emerging Europe after Russia with an asset size of US$ 863 billion. Turkish banking sector is well-regulated, monitored and governed by two primary regulatory authorities; the Banking Regulation and Supervision Agency (BRSA) and the Central Bank of Republic of Turkey (CBRT). Total Assets Top 10 Private Banks: 54% US$ 863 bn Other 15% State Banks 31% Share Share Share # of Banks in Assets in Loans in Deposits Private Commercial Banks 28 59% 57% 60% State Banks 3 31% 32% 34% Development & Inv. Banks 13 5% 6% - Participation Banks 5 5% 5% 6% Total Number of Banks 49 Main strengths include; Well-capitalized and underleveraged Sound solvency with Basel III CAR of 16.9% Common Equity Tier-I capital constitutes 84% of total capital Low leverage 2 : 8.3x compared to 11.8x in EU27 Underpenetrated market with strong growth potential Total Assets/GDP 3 : 93% vs. 279% in Euro Area Total Loans/GDP 3 : 60% vs. 98% in Euro Area Total Customer Deposits/GDP 3 : 52% vs. 108% in Euro Area Highly liquid Deposits fund 55% of assets Loans/Deposits ratio: 117% Solid asset quality NPL ratio 2 : 3.0% compared to 5.9% in CEEMEA and 7.8% in EU27 Closely monitored, well-hedged and low open position FX Net Position/Regulatory Capital Standard Ratio: 0.5% vs. required level of (+/-) 20% Source: BRSA monthly data for commercial banks only as of December Figures are based on BRSA unconsolidated data. 1 EBF Facts&Figures 2015, ranking per total assets. 2 Source: Latest data from the IMF-FSI database. Most figures are based on 2Q17 figures. 3 ECB, TurkStat and BRSA for commercial banks only, as of 3Q17 Top Private Banks by Asset Size Top 10 Private Banks by Asset Size ($ bn) Asset Market Share 1 Foreign Shareholder % Ownership İşbank % - Garanti % 49.85% Akbank % - YKB % 40.90% QNB Finansbank % 99.88% DenizBank % 99.85% TEB % 72.50% ING % 100.0% Odeabank 9 1.1% 100.0% Sekerbank 8 1.1% 20.80% * 1 Market shares among commercial banks only. Sector figures are based on bank-only BRSA monthly data as of December Note: Exchange rate used for currency conversion is based on banks December 31, 2017 dated financials * Samruk-Kazyna and BTA Securities hold 19.37% and 1.48%, respectively.

4 About Garanti In Brief Established in 1946, Garanti Bank is Turkey s second largest private bank with consolidated assets of TL billion (USD 94.4 billion) as of December 31, Garanti is an integrated financial services group operating in every segment of the banking sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with its subsidiaries in pension and life insurance, leasing, factoring, brokerage and asset management, besides international subsidiaries in the Netherlands and Romania. As of December 31, 2017, Garanti provides a wide range of financial services to its more than 15 million customers with 19 thousand employees through an extensive distribution network of 937 domestic branches, 7 foreign branches in Cyprus and one in Malta, and 3 international representative offices in London, Düsseldorf and Shanghai. Garanti offers an omni-channel convenience with seamless experience across all channels with more than 5,000 ATMs, an award-winning Call Center, internet, mobile and social banking platforms, all built on cutting-edge technological infrastructure. Moving forward to maintain sustainable growth by creating value for all its stakeholders, Garanti builds its strategy on the principles of always approaching its customers in a transparent, clear and responsible manner, improving customer experience continuously by offering products and services that are tailored to their needs. *Source: Central Registry Agency, as of December 31, Garanti Share Garanti is the leading stock in Borsa Istanbul with ~10% weight in BIST 100 and most valuable company with US$ 11.9 billion market capitalization as of Garanti is the most invested stock by foreigners in Turkey with its ~95% foreign ownership ratio. Garanti Bank initially offered its shares to public in 1990 and has become the first company from Turkey to offer its shares on international markets in Garanti s Depository Receipts are listed on the London Stock Exchange Main Market and OTC (Over-The-Counter) Markets in the USA. In 2012, Garanti was entitled to join OTCQX International Premier, where companies traded must meet high financial standards and an effective disclosure process. Having qualified in 2014 to join OTCQX ADR 30 Index, Garanti has established itself among the top 30 DRs traded on the OTCQX marketplace. Our Strategic Priorities Offer an excellent customer experience by placing them at the center of all our activities and efforts Optimal capital utilization Key Strengths Sound financial structure through dynamic asset liability management Solid capital adequacy ratios with optimal utilization of capital Comfortable liquidity backed by well diversified funding mix heavy with low cost and sticky deposits Sustainable growth strategy with preserved risk-reward priorities & rational pricing focus Solid track record of management for execution and credibility Effective risk management through world-class integrated management of financial and nonfinancial risks Commitment to the principles of trust, integrity, accountability and transparency towards all stakeholders Efficiency focus Digitalization Efficient risk management Employee happiness Empowered human capital with HR policy focused on development, satisfaction and wellbeing Excellence in customer experience throughout all the channels Strong brand and reputation as an enabler, innovator and leader in technology Leading digital transformation with the aim of unrivaled customer experience, transaction convenience and pioneering customer solutions State of the art technology, secure and uninterrupted service Leading responsible and sustainable development through creating shared value, driving positive change and investing in impactful community programs

5 Key Performance Indicators Total Assets US$ 94.4 Billion Total Performing Loans US$ 60.4 Billion Total Deposits US$ 53.2 Billion 2017 Net Income US$ 1.7 Billion Return on Average Equity (ROAE)* 16.6% Return on Average Assets (ROAA)* 1.9% Non Performing Loans (NPL) Ratio 2.6% Capital Adequacy Ratio (CAR) 16.8% Figures are based on BRSA consolidated financials as of December 31, * Non-recurring items are excluded from the calculations. Market Position Market Share Credit Ratings (Moody's/S&P/Fitch) Ba3/BB/BBB- Corporate Governance Rating Score (JCR) 9.51 Total Branches 948 Personnel 18,851 ATM 5,003 POS* 670,259 Total Customers** 15,143,274 Digital Banking Customers** 5,956,609 Mobile Banking Customers** 5,086,833 Credit Card Customers 6,808,211 Credit Cards 10,213,151 Debit Cards 9,796,696 * Includes virtual and shared POS ** Active customers only with min. 1 login per quarter Ranking 1 Total Assets Total Performing Loans TL Loans 11.1% 11.1% 10.9% FC Loans (in US$) 11.4% Consumer Loans % Consumer Mortgage Loans 13.1% C.C. Issuing (Cumulative) 19.3% C.C. Acquiring (Cumulative) 19.2% Credit Card Customers 14.9% Total Customer Deposits 11.2% Customer Demand Deposits 13.4% Electronic Fund Transfers (EFT) 14.7% Bancassurance - Non-Life Insurance 13.3% Bancassurance - Life Insurance 8.8% #3 #3 Assets #3 in 2006 Consumer Loans #3 in 2006 Customer Deposits #4 in 2006 Mortgage Loans #3 in 2006 in 2017 in 2017 in 2017 in 2017 Note: Based on BRSA unconsolidated financials as of December 31, 2017 for fair comparison with the sector. Sector figures are per BRSA monthly and weekly data, commercial banks only Select Awards 2017 Named as the Bank of the Year in Turkey by The Banker. The assesment, based on the objective views of expert bankers and analysts, weighs fiscal performance, risk management, use of new technologies and strategies that differentiate the Bank from its competitors. Awarded for Project Finance Bank of the Year in EMEA and Turkey, Acquisition Finance Bank of the Year in Turkey, Syndication Bank of the Year in Turkey, Bank of the Year (Sustainability) in Turkey and in EMEA by ACQ5 Magazine, one of the leading corporate finance magazines. Ali Fuat Erbil was named the Best Sustainable Banking CEO of the Year 2017 in Turkey at the European Business and Finance Awards Listed in Dow Jones Sustainability Index for the third consecutive year, where sustainability performance of companies is evaluated at world-wide scale. 1 Rankings are among private banks, as of December Excluding credit cards Chosen the Best Corporate for Investor Relations in Turkey per 2017 Extel Survey results with 3 IR professionals among the Top 10 and the CFO, Mr. Aydın Güler among the Top 3 CFOs. In addition, Garanti Bank s CEO, Mr. Fuat Erbil, was named the Best CEO for Investor Relations and Garanti Bank s SVP in charge of IR, Ms. Handan Saygın, was named the Best IR Professional in Turkey per 2017 Extel Survey where over 15,500 investment professionals participated. Selected Turkey's Best Digital Bank and Turkey's Best Mobile Application with Garanti Mobile, by World Finance magazine. Named second best in Europe, right after BBVA, in 2017 Online Banking Functionality Benchmark report by Forrester Research, one of the most influential research and advisory firms in the world.

6 Financial Subsidiaries Mid-sized European bank based in Amsterdam, the Netherlands since 1990 Specialized in providing simple yet customized transaction banking products through business lines of trade and commodity finance, cash management, global markets sales and structured finance Retail deposits from the Netherlands and Germany as the main source of funding, balanced with wholesale funding Long-term deposit rating: A3 by Moody s (fifth best credit rating in the Netherlands issued by Moody s to a commercial bank) Asset Size: US$ 5.1 billion (Dutch GAAP) 20 years of presence in the country 10 th Largest Bank in Romania in terms of asset size 78 branches, over 1,000 employees, 418k customers, 300k plastic cards Operating in all business lines (Retail, SME, Corporate) Only bank in the country with a whole network of cash in-cash out ATMs Bonus Card, Romania s first international chip-based credit card with a reward program Consolidated Assets: US$ 2.56 billion Turkey s first asset management company established in 1997 Strong position in the sector with 11.6% market share and a total assets under management of USD 4.8 billion. Management of Garanti pension funds, mutual funds and discretionary portfolios A sustainable and leading position in pension and mutual fund performances Access to Garanti Bank s vast and powerful distribution network Third party fund distribution through the Public Fund Platform (TEFAS) Leading brokerage house with 8.1% market share in BIST trading volume in 2017 Major investment banking institution active in M&As, equity offerings, debt offerings, with a total transaction size of US$ 58 billion. Bookrunner in 139 public offerings and led 43 of them Equity model portfolio outperformed BIST-100 by 30.7% since 2016 Executed M&A Transactions, with a total size of US$ 8.0 billion in number of pension participants with 17.3% market share #3 in pension fund size with 15.2% market share #3 in life insurance premium production among private banks and #7 in number of insured Effective use of bancassurance via Garanti s extensive distribution network in Auto-Enrolment 346 thousand participants among private companies Total Funds: US$ 3 billion 25+ years of presence in the sector Its shares are publicly traded in BIST with an actual free float ratio of 8.4% Highest rated factoring company in the BIST Corporate Governance Index with 9,32 score Factoring Volume: US$ 4.2 billion 28 years of presence in Turkey Presence in operational leasing sector with Garanti Fleet since 2007 Innovative, customer oriented products and services, best customer relationship management solutions Diversification in terms of equipment types and industries is the key strategy of the company Strong funding portfolio with different type of transactions from local and international creditors Consolidated Assets: TL 7.2 billion

7 Sustainability & Corporate Governance Garanti defines sustainability as a commitment to build a strong and successful business for the future, while minimizing negative environmental and social impacts, and sharing long-term values with its stakeholders and the communities it operates in. Garanti aspires to achieve its aim of sustainable banking through technological innovations, managing the environmental footprint of its operations and developing sound environmental & social risk assessment as part of its risk management framework. The Bank also recognizes the importance of an effective organizational structure and strong corporate governance to maintain ongoing development and successfully deliver its sustainability objectives. Garanti is aware of the need to collaborate and engage with its peers and suppliers on a global level to identify new opportunities, capture emerging best practices 2017 Highlights Organized Remarkable Women Trainings for its middle and senior women managers in collaboration with McKinsey & Company. Delivered several presentations at COP23 regarding its climate change strategy and activities. Led the efforts to develop and publish a joint pledge in Turkey called Declaration of Sustainable Finance through Global Compact Türkiye Sustainable Banking and Finance Working Group. Became the only financial institution worldwide to be included in the 2017 CDP Water A List and received CDP Global 2017 Water Leadership Award. Retained its score at the CDP Climate Change Program and maintained its position among CDP Turkey Climate Leaders. Won Crystal Apple Award in the Communication Design Category for its 2016 Sustainability Report. Received the Sustainable Business Award in the Reporting category. Broadcasted a video on gender equality delivered by the EVPs. Organized the 3 rd Sustainability and Risk Management Workshop where corporate customers from energy and infrastructure industries were informed. Became the only company in Turkey to be listed the third time in a row in the Dow Jones Sustainability Index. Became the first and only company from Turkey to be listed in the Bloomberg Financial Services Gender Equality Index. Qualified for the FTSE4Good Emerging Index in its first year. Became a member of IFC s Carbon Pricing Leadership Coalition, and presented as a case study on their website. Attended the Carbon Pricing Leadership Coalition (CPLC) High Level Assembly. and products and remain a sustainability leader in Turkey. Garanti is committed to corporate governance as a principal component of its strategy to maintain long-term sustainable growth by continuously creating value for all its stakeholders. For Garanti, the essentials of a good corporate governance practice are transparency, accountability, straightforwardness, fairness, integrity and ethical values. These essentials allow the Bank to implement an effective risk management system and play a key role for the Bank to demonstrate full compliance with the law and regulations, and to establish open and transparent communication with its stakeholders. The Remuneration Committee, the Audit Committee and the Corporate Governance Committee are the corner stones of the Bank s corporate governance structure. Released its 2016 Sustainability Report and received limited assurance for selected non-financial data. Released its 2017 CDP Climate Change and 2017 CDP Water Reports in June. Declared its support to Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) and its Recommendation Report. Received The European Business and Finance Awards Ali Fuat Erbil, Best Sustainable Banking CEO of the Year 2017, Turkey. Released its first Green Mortgage product in collaboration with IFC, which is also Turkey's first mortgage covered bond in local currency. US$ 150 million in the equivalent of Turkish Lira in covered bonds issued by Garanti, half of which to be used to provide Green Mortgages. Signed an agreement with the European Bank for Reconstruction and Development (EBRD) for 5-year term funding in the amount of Euro 75 million equivalent under the Covered Bond Programme to be entirely allocated to Green Mortgage. Delivered a presentation on materiality and ESG trends at BNY Mellon s Making the Match event in London. Integrated Reporting Turkey Network of which Garanti is a Founding Member was launched in February Selected as one of the companies to participate in UN WEPs Gender Gap Tool Pilot Study. Developed and implemented Female Leadership Trainings in partnership with UN Women. Changed the name of the Women Steering Committee to Gender Equality Committee and expanded its scope accordingly. Developed a Gender Equality Training and assigned it to all employees as a mandatory training. 30% Club Turkey was launched in March 2017 where our CEO, Mr. Ali Fuat Erbil is one of the founding members. For more information, please visit

8 For further information please contact Garanti Investor Relations. Address: Levent, Nispetiye Mah. Aytar Cad. No: 2, 34340, Beşiktaş, Istanbul-Turkey Tel: +90 (212) Fax: +90 (212) Web: Garanti_IR Disclaimer: This report has been prepared by Garanti Bank Investor Relations Department and is provided for information purpose only. Although the information on which the report is based has been obtained from sources which we believe to be reliable, no representation or warranty is made by Garanti Bank for the accuracy or completeness of the information contained herein. Information contained herein is subject to change without notice. Garanti Bank and/or any person connected with it accepts no liability whatsoever for any direct or consequential loss of any kind arising out of the use of this document or any part of its contents.