Turkish Banking Sector & Garanti

Turkish Banking Sector & Garanti Ergun Özen CEO & President July 11, 2012

Agenda 1 Turkish Banking Sector: An Attractive Investment Opportunity 2 Looking Ahead -- Sector 3 Garanti Overview and Key Investment Highlights 4 Looking Ahead -- Garanti 2

Real GDP Growth (Rebased) BofA ML Turkey & MENA: Macro & Equity CEO Conference Operating in a large and dynamic economy High and sustainable Real GDP growth 210 EU27 LATAM CEEMEA TURKEY 18 th largest economy in the world 190 170 150 130 110 Avg. GDP growth 1 >5% over 2002-2011 LATAM: 3.7% EU 27: ~1.5% CEEMEA ~4% 2 nd largest banking system in CEE with an asset size of US$640bn 2 2002-2011 CAGR: 21% 2012-2017 expected avg. GDP growth 1 ~4% for TR vs. ~2% for EU27 90 2002 2005 2008 2011 2014 2017 1 Source: IMF. CEEMEA countries include Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, South Africa. LATAM Countries include Argentina, Brazil, Colombia, Ecuador, El Salvador, Mexico, Paraguay, Peru 2 BRSA Monthly data for commercial banks as of March 2012. US$/TL:1.76 3

with young and growing population Total Population by age 1 Turkey Romania 29% 43% 56% 50% 7% 15% 74mn 21mn 60% of the 74mn population < age of 35 Poland 29% 58% 14% 38mn Hungary Czech Republic EU27 27% 27% 28% 56% 58% 55% 17% 16% 17% 10mn 10mn 500mn Population to reach 87mn in 2030 2 vs. no growth in EU and negative growth in CEEMEA 0-25 yrs 25-65 yrs 65+ yrs 1 Source: Eurostat 2 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision 4

Underpenetrated market with strong growth potential BofA ML Turkey & MENA: Macro & Equity CEO Conference 356% 86% 58% 39% 114% 118% 51% 48% 17% Significant long-term growth potential backed by attractive demographics & underpenetrated market Total Assets / GDP Total Cus. Deposits / GDP Total Loans / GDP Turkey - 2002 Turkey - 2011 Euro Area - 2011 Source: ECB, TUIK, BRSA for commercial banks 5

Highly liquid Deposit-heavy funding structure Deposits fund ~60% of assets 1 Comfortable level of Loans/Deposits at 96% 1 Comfortable liquidity levels Liquidity Adequacy Ratios 2 well-above required levels Total Liquidity Ratio -- Weekly: 155%; Monthly: 115% FC Liquidity Ratio -- Weekly: 142%; Monthly: 110% Continuous access to international funding sources Banking Sector External Debt Roll-over Ratio 2 140 100 75.8 60 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 1 BRSA monthly data for commercial banks, as of March 2012 2 CBRT Financial Stability Report, May 2012. Liquidity Ratios are as of March 2012. 6

well-capitalized and underleveraged Tier-I Ratio 1 High solvency ratio 14.9% 13.5% 13.1% 12.4% CAR: 15.5% Basel II impact: - 20 bps Turkey (2011) LATAM (2011) CEEMEA (2011) EU27 (2011) Leverage 1 Low leverage 7.5x 8.1x Turkey (2011) LATAM (2011) 9.5x CEEMEA (2011) 13.4x EU27 (2011) High ROAEs (>17%) despite the low leverage 1 Represents average of countries. Latest data from the IMF-FSI database have been used, most of which are end-2011 figures 7

Austria Netherlands Turkey Belgium Denmark UK Poland S.Africa Spain Czech Rep. Bulgaria Russia Portugal Italy Slovenia Hungary Greece Romania Ireland Ukraine BofA ML Turkey & MENA: Macro & Equity CEO Conference Standing out for its asset quality Non-performing loans/total gross loans 1 15 10 Sustained sound asset quality 5 0 No exposure to any toxic assets or problematic sovereign assets NPL ratio 2 10.5% 9.5% 8.5% 7.5% 6.5% 5.5% 4.5% 3.5% 2.5% 1.5% 2006 2007 2008 2009 2010 2011 9.5% CEEMEA 8.0% EU 27 2.8% LATAM 2.6% Turkey NPL Ratio 2 : 2.6% in Turkey vs. 8.0% in EU 27 9.5% in CEEMEA 2.8% in LATAM High cash coverage @ 82% 3 Established & prudent underwriting procedures 1 CBRT Financial Stability Report, May 2011. Most of figures are as of 2011 2 Represents average of countries. Latest data from the IMF-FSI database have been used, most of which are end-2011 figures 3 BRSA weekly data for commercial banks, as of March 2012 8

Strictly monitored and prudently regulated Main pillars of regulatory environment Strictly regulated & supervised by autonomous and powerful agency (BRSA) since 2000 Independent Central Bank o Financial stability and inflation-targeted framework Deposit Insurance scheme (SDIF) Seperate authority to regulate listed companies (CMB) Authorities highly experienced in crisis management Prudent regulatory actions Conservative provisioning policies Basel II compliance to start Accumulating buffers for possible downturns: o Higher provisioning and capital requirement for unsecured consumer loans o Supportive regulatory actions on credit card asset quality o Active utilization of RR tool to manage liquidity 9

Strictly monitored and prudently regulated Main pillars of regulatory environment Strictly regulated & supervised by autonomous and powerful agency (BRSA) since 2000 Independent Central Bank o Financial stability and inflation-targeted framework Deposit Insurance scheme (SDIF) Seperate authority to regulate listed companies (CMB) Authorities highly experienced in crisis management Prudent regulatory actions Conservative provisioning policies Basel II compliance to start Accumulating buffers for possible downturns: o Higher provisioning and capital requirement for unsecured consumer loans o Supportive regulatory actions on credit card asset quality o Active utilization of RR tool to manage liquidity 10

Supported by initiatives to increase savings BofA ML Turkey & MENA: Macro & Equity CEO Conference Savings / GDP (2006-2010 Average) 1 Incentives through private pensions Encourage more participants through direct government contributions 22.8% 20.1% 21.4% 14.7% Profileration of gold deposits with effective use of RR tools Gold under-the -mattress will be revealed CEEMEA EU27 LATAM Turkey New severance scheme Severance payments will accumulate in a pooled fund, thus act like mandatory savings by government Witholding tax on deposits Lower rates for longer maturities to encourage long term savings Source: IMF, World Economic Outlook Database, April 2012 11

Agenda 1 Turkish Banking Sector: An Attractive Investment Opportunity 2 Looking Ahead -- Sector 3 Garanti Overview and Key Investment Highlights 4 Looking Ahead -- Garanti 12

Half of the Turkish adult population is still not a bank customer Access rate to financial services by adult population 91% 91% 91% 84% 66% 49% 50% of adult population is non-user in financial services; 26 million Spain England USA Portugal Poland Turkey Source: McKinsey 13

10-15 million new customers to enter Turkish banking system by 2020... Expected # of potential customers to join banking system between 2010-2020 (in millions) 10-15 8 3 2 2 1 0 Turkey Russia England France Spain Italy Germany Increase in # of customers in Turkey to be greater than the sum of the increase in England, France, Spain, Italy and Germany together Source: BCG 14

Growth rate in banking will accelerate in smaller cities BofA ML Turkey & MENA: Macro & Equity CEO Conference Average annual loan growth rate between 2007-2011 26% 34% Banking is growing faster in cities outside of Istanbul, Ankara and Izmir 3 Major Cities Other Cities 15

Significant growth rate in SME customers as well BofA ML Turkey & MENA: Macro & Equity CEO Conference SME Customers (in millions) 43% 5.0 3.5 SME segment will play a vital role in the growth 2010 2015 Projected Source: BCG 16

Loan penetration is projected to double Loans/GDP Loan CAGR: 17% 86% Loan penetration will reach developed country levels, as Turkey secures an investment grade by 2020 2010 2011 2020 Source: Merrill Lynch 17

Share of core banking products will increase Interest Income from Loans / Total Interest Income 62% 73% 81% 86% 89% 91% Securities / Assets expected to decline from 30% to 10% by 2020 2010 2012 2014 2016 2018 2020 Source: Merrill Lynch 18

Agenda 1 Turkish Banking Sector: An Attractive Investment Opportunity 2 Looking ahead -- Sector 3 Garanti Overview and Key Investment Highlights 4 Looking ahead -- Garanti 19

Garanti: Pre-eminent Banking Franchise Total Assets US$ 94.1 bn 3M12 Net Income US$ 547 mn ROAE 21% CAR 16% Branch network * 926 # of customers* >11 mn 2 nd largest private bank by asset size Robust balance sheet highly liquid, well-capitalized & low risk #1 in profitability with a proven track record of sustainable banking income generation Focused on relationship banking with broad geographical coverage and wide multi-channel distribution network Most valuable company on the ISE by market capitalization Holds the highest ratings assessed for Turkish Banks Note: BRSA Consolidated Financials as of March 31, 2012 * As of May 2012 US$/ TL = 1.76 as of March 31, 2012 20

How do we differentiate?

1 Well-capitalized balance sheet Tier 1 Ratio and CAR 16.9% 16.9% TIER I 15.0% TIER I 15.7% Recommended 12% Low leverage 7x vs. peer average 1 7.6x Required 8% 2011 1Q12 Selective growth strategy -- capital generative Basel II impact to be negligible Well-positioned for resumed growth Source: All figures are based on bank-only financials, as of March 2012 1 Peers include Akbank, Isbanki YKB, Halkbank and Vakifbank 22

2 Strong liquidity and proven access to diversified funding sources Total Customer Deposit Growth & LOB 1 composition Sector s CAGR: 17% 24.4 14% 28% 14% 44% CAGR: 23% 89.0 14% 21% 16% 49% 2005 1Q12 Corporate Commercial SME Consumer Robust deposit base with further emphasis placed on mass deposits Retail +SME / Total Deposits up to 65% at 1Q12 from 58% at YE 2005 Sustained high weight of demand deposits Demand deposits in total >20% Composition of Liabilities 1Q12 SHE 12% Deposits 56% Other 8% IBL:70% Funds Borrowed 15% Repos 8% Loans/Deposits 98% 77% when mortgages, project finance & investment loans (mat.>4yrs) are excluded TL Bonds 2% 1 LOB figures are based on bank-only MIS data. Growth figures are based on bank-only financials for fair comparison with sector Note: Sector includes commercial banks only 23

3 Robust growth with sustained sound asset quality Loan Growth (TL Billion) NPL Ratio Sector s CAGR: 27% CAGR:29% 90.9 Garanti (Cons.) 3.8% 2.1% 4.1% 3.1% 2.1% 2.1% 18.1 39.7 4.7% 4.1% 3.5% 2.2% 5.2% 4.3% 3.6% 2.9% 2.6% 2.7% 1.8% 1.9% Consumer + SME Credit Cards 2005 2007 1Q12 25% 32% 23% 12% Increasing weight of Retail and SMEs in total lending 2005 2007 2009 2010 2011 1Q12 Garanti Sector Selective growth focus Higher market share gains in lucrative products Disciplined credit approval process NPL ratio is well-below sector average 1 LOB figures are based on bank-only MIS data. Growth figures are based on bank-only financials for fair comparison with sector Note: Sector figures are based on BRSA weekly data, excluding participation banks 24

4a Focus on sustainable income generation Leader in Net Fees & Commissions Robust Fee Base Double digit growth momentum & Well-diversified Leader in interbank money transfer Highest payment systems commissions per volume #1 in bancassurrance Strong presence in brokerage > 60% Fees/OPEX coverage -- Highest among peers + Well-managed margins Sustained focus on lucrative products #1 in mortgages Mortgage CAGR 1 : 34% GPL CAGR 1 : 55% Well-diversified and actively managed funding base to manage costs Leader in Ordinary Banking Income Generation 1 Compounded annual growth rates for the periods 2005 to 1Q 2012 as per consolidated financials, 25

4b and effective utilization of ADCs ~3,500 ATMs facilitating >140 transactions Every 1 out of 4 internet banking user Garanti customer > 140 Mn financial transactions/yr #1 in mobile banking 43% market share in transaction volume Commission income through ADCs doubled in 3-years Total Products sales through ADCs 35% Turkey s Largest Financial Call Center with >57 mn Customer contact/yr

Resulting in best-in class efficiency & Ordinary Banking Income per Avg. Branch (12M 2011) (TL million) Loans 1 per Avg. Branch (12M 2011) (TL million) 7.1 5.3 4.4 4.7 117.5 92.8 100.1 105.3 Garanti Peer 1 Peer 2 Peer 3 Garanti Peer 1 Peer 2 Peer 3 Assets per Avg. Branch (12M 2011) (TL million) 164.8 146.0 137.8 122.2 Customer Deposits per Avg. Branch (12M 2011) (TL million) 92.8 81.9 72.8 71.0 Garanti Peer 1 Peer 2 Peer 3 Garanti Peer 1 Peer 2 Peer 3 1 Total Loans=Cash+non-cash loans Note:Figures are per bank-only financials for fair comparison 27

Sustainable outperformance 2000 2011 Growth CAGR Assets (TL Bn) 6.6 146.6 22x 33% Market Share 6.6% 13.1% +6.5pps Rank (1) #4 #2 Loans (TL Bn) 2.5 83.5 33x 38% Market Share 8.1% 13.4% +5.3pps Rank (1) #5 #2 Customer Deposits (TL Bn) 3.4 82.6 24x 34 % Market Share 5.0% 12.6% +7.6pps Rank (1) #5 #2 Shareholders Equity (TL Bn) 0.6 17.6 29x 36% Net Profit (TL Mn) 205 3,071 15x 28% ROAE 2006-2011 Avg. 25% Note: Figures are based on BRSA Bank-only financials 1 Among private Banks 28

Agenda 1 Turkish Banking Sector: An attractive Investment Opportunity 2 Looking ahead -- Sector 3 Garanti Overview and Key Investment Highlights 4 Looking ahead -- Garanti 29

How do we Paving the way for future

Sustain its value creation focus around customer preferences Customer Preferences Integrated with Life Customized Real-time Interactive 1 Financial health and stability Utilize knowledge 2 economy to provide customized solutions 3 4 Support commerce through customized solutions New solutions to penetrate unbanked population 31

Knowing and understanding customer needs further BofA ML Turkey & MENA: Macro & Equity CEO Conference 1 Financial health and stability Income Loan Expenditure Savings 2 Utilize knowledge economy to provide customized solutions Information Financial relationship analysis Integrated with life Customized In the right place at the right time Advice, Opportunity, Solution 32

Expanding our services in every segment of banking BofA ML Turkey & MENA: Macro & Equity CEO Conference 3 Bank as a part of trade Facilitate Commerce --Garanti Payment Facilitate E-Commerce 4 Offer new solutions to penetrate unbanked population Borrowing Savings Utility Payments Shopping Rental Payments 33

Garanti will continue to pioneer in the new banking era