Financial Services AKBANK

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1 sabanc hold ng 2006 annual report 32 Financial Services AKBANK As of the end of 2006, Akbank not only ranked as Turkey s most valuable company but also was the most profitable private sector bank. With its extensive branch network, Akbank is one of the largest banks in Turkey in terms of loans volume. In addition to its core banking activities, Akbank offers a wide range of retail, commercial, corporate, private banking and international trade finance services. Non-banking financial services, as well as capital market and investment services, are provided by the Bank s subsidiaries. Equipped with state-ofthe-art IT systems and a staff of experienced bankers, Akbank focuses on providing top quality services to a wide range of retail and corporate customers. Akbank operates from its headquarters in Istanbul and thirteen regional directorates around Turkey. With a strong and extensive domestic distribution network that includes 682 branches and 12,333 employees, Akbank provides services not only through traditional delivery channels at its branches, which include special service points exclusively offering consumer loans and housing credits, but also through Retail and Corporate Internet Branches, the Telephone Banking Center, 1615 ATMs, 641 BTMs, 233,520 POS terminals and, most recently, new high-tech channels such as cell phones and web-based platforms. Additionally, Free Banking Areas have been set up inside branches where customers have access to both Internet and telephone banking services. Two subsidiaries, Akbank AG in Germany and Akbank NV in the Netherlands, as well as a branch in Malta, carry out Akbank s overseas operations. Citigroup, looking to expand its presence in Turkey, considered Akbank to be a premier institution in the market and chose it as a partner for long-term strategic collaboration. A definitive agreement between these institutions was signed on October 17, 2006; following the completion of regulatory approvals, the partnership became a reality on January 9, According to the agreement, Citigroup purchased 20% interest in Akbank for approximately US$ 3.1 billion (YTL per share). This strategic partnership with Citigroup marked the beginning of a new era characterized by further growth and expansion for Akbank. Its strong capital and stable deposit structure, combined with robust asset growth and the ability to procure low-cost funding have made Akbank Turkey s most profitable private bank. As of the end of 2006, the Bank s net profit reached YTL 1,600 million (approximately US$ 1,131 million), while total assets reached YTL 57,273 million (approximately US$ 40,476 million). The capital adequacy ratio of the Bank is one of the highest in the sector, at 20.7%. Its loans-to-assets ratio has arisen from its 2005 level of 42.6% to 49.5% in Despite this growth, the share of NPL in total loans remained at a relatively low level of 2.1%. As of the end of 2006, Akbank s total deposit volume increased 8%, to YTL 34.2 billion, with Turkish lira deposits growing 9%. This trend is a clear manifestation of customers confidence in the Bank. Akbank s performance in 2006 was further supported by its strong CRM system.

Last year, Akbank s loan volume increased 27%, to YTL 28.3 billion. This growth came mainly as a result of the increase in consumer loans and loans offered to small and medium-size enterprises (SMEs).

2 Last year, Akbank s loan volume increased 27%, to YTL 28.3 billion. This growth came mainly as a result of the increase in consumer loans and loans offered to small and medium-size enterprises (SMEs). In 2006, Akbank s SME loan volume increased 47%, to YTL 11.3 billion, bringing the share of consumer and SME loans in the Bank s total loan portfolio to 73%. Having strong confidence in the growth potential of these enterprises within Turkey s fast growing economy, Akbank combines its customer-focused philosophy with a corporate banking strategy to produce new loan and cash management solutions aimed at satisfying the needs of SMEs. In 2006, Akbank continued to raise funds from foreign markets at favorable terms; the total of these resources rose to US$ 6,422 million. 25.6% of Akbank s shares are traded on the Istanbul Stock Exchange. The bank s Level 1 ADRs are traded on the IOB in London and the OTC in the United States. As of April 16, 2007, Akbank s market capitalization stood at US$ 17.4 billion, making it the most valuable company on the Istanbul Stock Exchange. Making rapid progress toward becoming the most valuable, stable and innovative bank in Turkey, Akbank continued to develop new products and delivery channels that addressed customers needs. These include Mobile Phone Credit, loan approval in just 3 minutes via mobile phones; Big Red House branches specializing in mortgage loans, Credit Express branches selling only consumer loans and the new debit card Neo, the first of its kind in the sector with the qualities it possesses. Note: Unless otherwise stated, all financial information presented above has been extracted from the unconsolidated financial statements based on Turkish Accounting Principles and Turkish Financial Reporting Standards and their annexes and comments.

3 sabanc hold ng 2006 annual report 34 In March 2007, a Memorandum of Understanding was signed, where the British Insurance Company Aviva s Turkish life and pensions business, Aviva Hayat ve Emeklilik, would be merged with Ak Emeklilik to form a new leading Turkish life and pensions business as a 50/50 joint venture. AKS GORTA Established in 1960, Aksigorta is one of the leading non-life insurance companies in Turkey in terms of premium generation, shareholders equity, and financial strength. Headquartered in Istanbul, Aksigorta offers fire, accident, marine, engineering, agriculture and health insurance coverage to its clients. It operates ten regional offices located in Istanbul (4), Izmir, Adana, Ankara, Trabzon, Bursa and Antalya (Akdeniz). Aksigorta has an additional three representative offices throughout Turkey. To provide better quality service for its corporate and individual customers, the Company s insurance products are marketed and distributed through a wide network consisting of 1,243 agents, 36 brokers and 688 Akbank branches. These channels are supported by the Aksigorta Service Center and website, which provide various services 24/7 ranging especially from claims follow-up to other insurance services. Aksigorta, with its customer-focused service philosophy, has increased service quality and customer satisfaction, as it continued to service in auto, household, business, and health products. Aksigorta offers the best quality service in the shortest time with its contracted auto repair services and contracted health associations. For Aksigorta and for insurers, these assistance services are an integral part of the insurance business. Until the beginning of 1996, Aksigorta operated in both life and non-life insurance segments. It has since transferred its life insurance operations to Akhayat, a life insurance subsidiary of the Sabanc Group. Within this new structure, Akhayat was converted into a pension fund company and renamed Ak Emeklilik A.fi. Currently, Aksigorta owns % of Ak Emeklilik. Aksigorta modelled the ISO 9001: 1994 Standards and established its Quality Control System which was certified by BVQI with Quality Standards BS EN ISO 9001: 1994 in On July 12, 2004, this certificate was renewed in accordance with the ISO 9000: 2000 and on September 22, 2004, Aksigorta extended the validity of the certificate until July 2, Aksigorta continues to deliver its part in social consciousness. Within the framework of Investing in the Future Project, YADEM (The Fire and Earthquake Simulation Center) became operational in YADEM has since received over 42,000 visitors. Aksigorta has been named The Most Trustworthy Insurance Company in Terms of Quality and was awarded the Consumer 2007 Quality Prize in the annual competition held by Tüketici Dergisi (Consumer Magazine). Aksigorta s shares are listed on the Istanbul Stock Exchange with a free float of 38%.

4 AK EMEKL L K Ak Emeklilik dealt exclusively in life and health insurance provision until 2002 under the name of Akhayat Sigorta A.fi. Following authorization from the Treasury in December 2002, the Company changed its name to Ak Emeklilik A.fi. and started to operate in the field of private pension systems. After extensive preparations for the advent of private pension systems, which Ak Emeklilik sees as the most effective solution for the social security problem in Turkey, the Company was among the first in Turkey to receive an operating permit from the Treasury in this field. Ak Emeklilik operates in both life insurance and private pensions provision. In March 2007, a Memorandum of Understanding was signed, where the British Insurance Company Aviva s Turkish life and pensions business, Aviva Hayat ve Emeklilik, would be merged with Ak Emeklilik to form a new leading Turkish life and pensions business as a 50/50 joint venture. This transaction will come to a conclusion after legal, financial and commercial analyses are done by parties, and after signing of the relevant agreement, as well as after all necessary permissions and approvals are obtained from competition authorities. Ak Emeklilik has a wide service network with more than 600 Akbank branches, approximately 450 financial counselors and 58 free agents, through three regional representatives in Istanbul, and regional representatives in Aegean, Middle Anatolian, Black Sea, South Anatolian and Western Mediterranean Regions. The Ak Emeklilik funds are managed by Ak Portföy, one of the three major asset management companies in Turkey. According to the Capital Markets Board as of December 12, 2006, Ak Emeklilik has 14.28% market share with a total fund size of 393 million YTL (approximately US$ 280 million). According to the Retirement Watch Center as of December 25, 2006, Ak Emeklilik has 121,042 contracts in a total of 1,128,280. Ak Emeklilik, having achieved a very successful itinerary in the field of institutional participation since the commencement of the system, has reached 33,207 institutional contracts. Ak Emeklilik, by keeping a close eye on the trends of the sector in the field of technological infrastructure, is realizing the most successful CRM projects, providing its customers with a wide spectrum of the fastest and most qualified communication opportunities through diverse channels, via either its website or its sales automation system or call center services.

5 sabanc hold ng 2006 annual report 36 With approximately 200,000 investor accounts and a 5.5% market share on the ISE, Ak Securities has become one of the leading brokerage houses in Turkey. AKLEASING Akleasing is one of the first leasing companies established in Turkey and has become a leading player in the sector with an equity of YTL 135 million and total assets of YTL 533 million. In 2005, Akbank increased its ownership in the Company to 100% up from 40% and changed its name to Akleasing. Previously the Company served large-scale companies. After Akbank s takeover of the entire ownership, the Company focused more on small and medium-size enterprises, offering them leasing services through nine recently established regional representative offices and Akbank s widespread branch network in Turkey. Beginning from 2005, Akleasing entered a period of high growth achieving a 73% annual average growth rate in Net Lease Receivables for the last two years, which is more than the sector growth. In 2006, Akleasing reached YTL 523 million (approximately US$ 361 million) of Net Lease Receivables with an annual increase of 100%. AK SECURITIES Since the establishment of Ak Securities in 1996 as an investment brokerage company, its mission has been to provide the most comprehensive portfolio of services possible. Ak Securities has achieved rapid and steady growth. With approximately 200,000 investor accounts and a 5.5% market share on the ISE, Ak Securities has become one of the leading brokerage houses in Turkey. In addition to serving its customers in all basic stock, bond trading and repo transactions, Ak Securities also provides portfolio management, investment advisory services and Amex mutual funds trading. The Institutional Sales Department caters to the overseas corporate clients interested in the Turkish capital markets by offering a full range of trading services. The Research Department s periodicals along with event-specific publications in Turkish and English cater to the domestic and foreign clients alike, playing a key role in their investment decisions. Ak Securities offers the trading of fixed income securities to its clients through the Treasury and Derivatives Department. It assists the clients in determining the investment strategy most suitable to their investment needs. Since the derivatives market is fairly new, the Treasury and Derivatives Department informs investors with regard to instruments traded in this market, develops profit and loss scenarios, and advises them on the use of futures contracts for hedging and speculation purposes. The Corporate Finance Department offers consultation services to local and foreign companies for public offerings, mergers and acquisitions, and provide buyer and seller consultations for privatization projects. Ak Securities, with its widespread investor network, offers these services through its Istanbul headquarters, 13 Ak Securities Branches established in Istanbul (5), Ankara (1) Izmir, Adana, G.Antep, Antalya, Bursa, Denizli, Kayseri and through 633 Akbank branches, 24 dealing rooms located in Akbank branches which also serve as Ak Securities agencies. In addition, these services are available to the customers on a 24/7 basis via the Internet. From its website ( Ak Securities reaches many investors by publishing daily and weekly reports, industry and company reports, and quarterly reports as well as macro notes and daily technical analysis comments.

6 AK ASSET MANAGEMENT Ak Asset Management was established in June 2000 as a wholly owned subsidiary of Akbank, with YTL 1 million paid-in capital. Ak Asset Management provides asset management services, for 27 funds from four different promoters, including 15 mutual funds from Akbank, one from Ak Securities, 10 pension funds from Ak Emeklilik and one from Ak Investment Trust. Additionally, Ak Asset Management manages portfolios for high net-worth individuals and institutions according to their financial expectations and risk profiles. Ak Asset Management is the second largest mutual fund management company in Turkey in terms of the yearly average assets under management which reached US$ 2.4 billion by the end of As of 2006 year end, Ak Asset Management has a 12.8% market share in the Turkish mutual fund market. The Company holds the 3rd place in the pension fund market with a 14.3% share. Ak Asset Management s share in the individual and institutional portfolio management business line reached 8.3% by year s end. Ak Asset Management emphasizes the importance of risk management in meeting client expectations, and employs a clearly defined and well-disciplined investment strategy. The Company s general approach in asset management is to achieve above-benchmark returns for each portfolio on a risk-adjusted basis, considering the liquidity and diversification needs of its clients. Ak Asset Management strives to be the leader in the Turkish asset management industry, both in performance and investment product innovation. AK INVESTMENT FUND Ak Investment Fund is the second largest fund in terms of assets among 28 investment funds in Turkey. Ak Investment Fund had a 9.55% market share in terms of investment portfolio size at the end of The Fund yielded a 4.07% rate of return in 2006 and its stock traded at an average discount rate of 31.63%. The Fund s strategy is to diversify its investment portfolio to minimize risk and maximize return. It specializes in domestic markets and seeks long-term capital appreciation by investing in equities.

INVESTOR PRESENTATION 2015Q2

INVESTOR PRESENTATION 2015Q2 Contents Non-life Sector Profile 3 Outline of the Company 11 Financial Highlights 25 Appendix 33 2 Non-life Sector Profile Outline of the company Financial highlights 3 Number