Şekerbank T.A.Ş. Investor Presentation 9 April 2018 BRSA Consolidated Accounts as of 31.12.2017
Table of content 1. Executive Summary 2 2. Macroeconomic Overview 4 3. Focus on Sekerbank 8 4. Financial Overview 14 2017 Financial Highlights Business Trends Focus on Income Statement Asset Quality, Liquidity and Solvency 15 16 24 30 5. Appendix 34 1
Executive Summary
Executive Summary Exposure to one of the Fastest-Growing Economies in European EMs Established in 1953, Sekerbank is a publicly-listed traditional commercial bank focused exclusively on the Turkish domestic market Providing unique exposure to the growth story underpinning Turkey s recent economic revival 2nd largest and fastest-growing economy in European EMs (2017 GDP 7.4% YoY) Vibrant economy supported by solid demographics: 13.8% population growth over the last 10 years, 22.2% urbanization growth over the same period and median age of Turkish population being 31.7 y/o Supportive expansionary fiscal policy driving strong growth cycle in banking assets Well-tested resilience to political volatility Business Model Centred around SMEs SMEs have been sitting at the core of Turkey s economic revival, accounting approximately for 2/3 of the economy Sekerbank benefits from privileged access into such growth engine with one of the largest SME-exposure ratios in the Turkish banking sector (46% of Total Loans) Ongoing Recovery Story Merging Sound Balance Sheet Management, Financial Innovation and Social Responsibility Following some headwinds in the recent past (Basel III implementation affecting the regulatory recognition on c.$170mm T2; share buy-back in 2016), recovery under way and starting to be well visible in latest set of results, as also evidenced by the recent upgrades in rating outlook by Moody s and JCR Strong asset growth with gross loans up c.22% over 2015-2017 Without compromising asset quality (NPLs ratio down by c.114 bps YoY) nor income (Core Banking Revenues up c.14% YoY in 2017) Earnings up c.19% in 2015-2017 but further calibration in cost base expected to feed into the bottom line and drive up RoAE (currently 4.3%) Improving capital adequacy: CAR at 14.29% as of FY17, up from 12.43% in 2016 on a consolidated basis Introduction of enhanced credit origination and management processes along an increase of collateralization NPLs as % of Total assets down to 1.4% vs. 2.4% in 2016 Diversified funding base (e.g. first-ever covered bond backed by SME loans globally) and regular access to domestic and international markets with strong relationship with IFI s A true promoter of financial innovation (1 st bank to offer credit cards to farmers, 1 st Turkish bank obtaining a corporate governance rating and first energy efficiency loan product - EkoKredi) Source: Company Information, Turkstat, Worldbank, IMF 3
Macroeconomic Overview
Solid Macro Backdrop Turkey is one of the most attractive emerging economies with unique growth profile and sound fiscal and debt policies Turkey 2 nd Largest Economy of CEE / CIS Real GDP PPP vs. Peers (US$bn) (1) Economic Growth Benefitting from Strong Momentum Real GDP Growth Rate (%) - Turkey 3.862 11,2% 1.208 979 328 8,5% 4,9% 8,5% 5,2% 6,0% 3,3% 7,4% 5,5% 5,5% 5,5% Russia Turkey Poland Czech Republic Low Indebtedness vs. CEE / CIS peers Enduring Fiscal Discipline 2017 Debt to GDP vs. Peers (%) Maastricht Budget Deficit (2) to GDP - Turkey Criteria: 60% 50,4% 8,6% 33,6% 35,8% 28,5% 11,5% Poland Czech Republic Romania Turkey Russia 5,3% 1,2% 0,6% 1,8% 1,6% 5,3% 3,5% 1,3% 1,9% 1,0% 1,2% 1,0% 1,1% 1,5% Source: TURKSTAT, IMF, EIU, Turkey Government Mid Term Plan 1. 2016 Figures 2. Budget deficit defined as government receipts minus government outlays as a percentage of nominal GDP 5
Recent Turkish Market Performance Sovereign credit performance over the past year shows a marked improvement in sentiment, driven by outstanding market growth, strong fiscal stimulus and export market recovery Turkey 5-year USD CDS Tightening Bps Last 12 Months 300 Change in L12M: (44bps) 250 195 200 150 Turkish Market Performance BIST 100 Index Last 12 Months 130.000 % Change in L12M: +29% 120.000 100 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 USD/TRY Cross Currency 110.000 114,930 USD/TRY (x) 4,50 4,00 3,50 3,00 % Change in L12M: (9%) 3.96x 100.000 90.000 2,50 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 80.000 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Source: Bloomberg as of March 2018 6
Turkish Banking Sector Overview Turkey s Banking Industry growing at double digits with stable NPL ratios SME Loans represent c. 25% of Total Loans with growth of c. 21% per annum since 2012 Asset and Loans in Continuous Expansion With Asset Quality Showing a Positive Inversion in 2017 Banking Sector Assets and Loans (TRY Bn) (1) Loans Assets YoY% (2) +15.1% +26.3% +12.6% +18.5% +31.7% +16.4% 1.994 1.732 1.218 1.371 1.241 683 795 1.047 +18.2% +19.7% 2.357 1.485 1.734 +11.8% +15.9% +15.0% +16.8% 3.054 2.731 1.994 NPL Ratio (%) 2,7% 2,9% 2,8% 2,9% 3,1% 3,2% 3,1% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 3Q 2017 YE 2011 YE 2012 YE 2013 YE 2014 YE 2015 YE 2016 3Q 2017 Banking Sector Key Metrics (1) Ratios (%) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 3Q2017 (2) Loans / Deposits 98.9% 106.3% 113.3% 114.3% 119.3% 121.3% Net Interest Margin 4.7% 4.4% 4.2% 4.2% 3.7% 3.6% SME Loans % Total Loans 25.2% 25.9% 26.8% 26.2% 24.3% 25.0% 7 Source: BRSA (Banking Sector),TURKSTAT, ECB, Fitch Solutions 1. Bank-only figures 2. 3Q 2017 % Change related to Last 9 months
Focus on Sekerbank
Key Investment Highlights Strong Underlying Business Local Banking Competency with Unique SMEs Positioning Loyal and Solid Customer Funding Base Proven Capital Generation Capacity Prudent Balance Sheet Management Continuous Focus on NPLs Reduction and Increasing Collateral Access to Diversified Sources of Funding Constant Focus on Financial Innovation and Social Responsibility Core business continues to increase total revenues (7.7% CAGR between 2015-2017) as well as net interest income (8.5% CAGR for 2015-2017 period) Well-established geographic coverage provides a competitive edge with SMEs (46% of total loans) and agriculture businesses based in peripheral towns Focus on SMEs allowing for higher NIM vs. Turkish Banking Sector Over 50-year loyal relationships with clients lead to a solid, stable and granular deposit base, given high deposits rollover ratio (Loan to Deposits Ratio stable at c. 110% ) CET1 ratio is constantly growing and the Bank demonstrated the ability to generate core equity, even in the context of a challenging environment (c. 186 bps generated in 2017) The Bank has rationalized its balance sheet, which in turn resulted in the growth of both loans and shareholder equity Introduced new credit scoring method, centralized credit approvals and a material effort to increase collateral Balanced mix between retail and institutional funding through covered bonds, loans from IFIs, subordinated loans, trade finance and syndicated borrowing First-time milestones include: first covered bond backed by SME loans; first institution to offer credit cards to farmers; first Turkish bank to obtain Corporate Governance rating, first Turkish bank to launch Family Farming Banking program; first bank to implement cash flow-based micro business lending 9
Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Bank 7 Bank 8 Bank 9 Bank 10 Bank 11 Bank 12 Bank 13 Bank 14. Bank 16 Bank 17 Bank 18 Bank 19 Bank 20 Sekerbank at a glance Sekerbank is a publicly listed traditional commercial bank focused on its domestic market Principal shareholders are Bank s pension fund, Samruk-Kazyna and the IFC Sekerbank was founded in 1953 with current HQ in Istanbul, Turkey Listed on Istanbul Stock Exchange with market cap of c. TRY 1,980 MM (1) and Rated B2 by Moody s and B+ by Fitch Business focused primarily on Small and Medium Enterprises ( SMEs ) Sekerbank has 273 branches in Turkey, 2 regional offices in Istanbul and 7 regional offices throughout Anatolia (2) Sekerbank has 3,591 employees (2) Overview Top 20 Turkish Banks by Assets Total Assets as of Dec-17 (TRY Bn) 451 435 353 339 317 310 279 159 130 87 61 57 39 36 33 33 24 21 20 19 Government banks Key Financial Highlights Shareholder Base Consolidated Figures - FY2017 (TRY MM unless otherwise stated) Total assets 33,130 Net Loans (3) 21,201 Deposits 19,884 Shareholders equity 2,791 Net attributable income 114 NPL ratio 4.9% NPL coverage ratio 54.9% Tier 1 11.2% CAR 14.3% (%) Free Floats 34,2% Şekerbank T.A.Ş. 9,4% Other 1,6% Şekerbank T.A.Ş. Voluntary Pension Fund 35.4% Samruk-Kazyna 19,4% Source: Company Information, SNL Financial 1. As of 30/03/2018 2. As of December 2017 3. Exc. Leasing and Factoring Receivables 10
Attractive Franchise with over 60 years of History Founded as the Sugar Beet Cooperative Bank in Eskişehir Initial Public Offering First Bank to receive Corporate Governance Rating in Turkey Transfer of BTA Group shares to Samruk Kazyna, the Sovereign Wealth Fund of Kazakhstan Turkey s first 5-year syndicated loan facility Signed the Declaration on Sustainable Finance İssued a 10-year, variablerate, lira-denominated domestic subordinated (Tier II) debt security Finalised Tier II transaction of 85 million USD 1953 1956 1997 2002 2007 2010 2011 2011-12 2014 2015 2016 2017 Moved to Ankara and renamed as Şekerbank Initiation of Restructuring: Change from a traditional commercial bank to a multi channel, diversified financial institution based on customer and segment focused practices Partnership with international investor: (BTA Group, Kazakhstan became 33.9% shareholder) Equity investment of IFC: Personnel Social Security Foundation of Şekerbank and IFC signed an option agreement for IFC purchasing Şekerbank shares up to 5% First SME backed Covered Bond issuance in the world Launched Family Farming Banking Wins Leaders in Water Management Award Given the Best Syndication Loan Supporting Energy Efficiency prize Source: Company Information 11
Business Structure and Focus Sekerbank s strategic focus on SMEs allows for exposure to one of the fastest growing segments in the Turkish Banking Industry Efficiency improvement initiatives with branches decreasing from 312 in 2014 to 273 in 2017 Business Segments SME and Agricultural Banking: Focused on segments with annual sales of up to TRY 40 million; especially on micro and small businesses including farmers Corporate Structure Sekerbank Bank Only Represents c. 95% of Consolidated Group (1) Corporate and Commercial Banking: Services clients with revenues above TRY 40 million offering product development, cash management, trade and project finance Şeker Leasing Şeker Factoring Şekerbank (Kıbrıs) Şekerbank International Banking Unit Retail Banking: Provides a broad range of products including deposits, loans, credit and debit cards, investment accounts, utility payment services, gold accounts and payroll services Şeker Finance Zahlungsdienste GmbH Şeker Securities Broad-based Branch Network (Turkey) >10 Branches 6-10 Branches Istanbul 273 Branches in 71 cities and 97 rural districts 2-5 Branches Single Branch No Branch Izmir Ankara 69% of branches are located outside the three big cities 9 regional offices Antalya 12 Source: Company Information 1. Based on Total Assets as of December 2017
Sekerbank vs. Sector (Based on BRSA Definitions) Sekerbank s focus on SMEs allows for higher NIM vs. Turkish Banking Sector Conservative Risk Management allows for sound Asset Quality Higher focus on SME 3Q17 - SME Loans as % of Total Loans - (%) (1) Leads to a Superior Topline and 9M17 Annualised - NII as % of Assets (%) (1) Based on BRSA Definition of SME Loans: Excluding loans of commercial segment (3) 47% 25% 4,7% 3,6% Sector Sector a More Conservative Cost of Risk 9M17 Annualised - Loan Provisions as % of Loans - (%) (1) 3Q17 - NPLs as % of Loans - (%) (1) with a Sound NPL Ratio 2.56% 1,34% 5,5% 4,8% 13 Source: Company Information, BRSA 1. Based on bank-only figures as per BRSA 2. SME NPLs as % of SME Loans Sector 3. Commercial segment defined as (annual turnover between TRY 40 to 100 millions) Sector SME NPL Ratio (2)
Financial Overview
2017 Key Financial Highlights Business Trends Profitability High growth profile with c.17% increase in Net Loans in 2017 Continuous focus on SME segment representing c. 46.1% of loans (1) Securities portfolio increase of c. 12% yoy Diversified Funding Base with Stable Loan to Deposits Ratio at c. 107% Stable Net Interest Income growth (15-17 CAGR of 9%) Consistent and sector-leading NIM of 4.6% Good performance in fee related income Fees Income CAGR of c.7% (15-17 period) Net Fees as % of Total Average Assets of 1.18% vs. peers at 0.68% (2) Costs growth maintained below inflation coupled with efficiency enhancing initiatives allow for stable cost to income and cost to assets ratios Stable Cost of Risk due to conservative risk management Attributable Net Income of TRY 114 MM for FY2017 (15-17 CAGR of c. 9%) Asset Quality, Liquidity and Solvency NPLs exposure down by TRY 62 MM with NPL Ratio decreasing to 4.9% (decrease in c. 114 bps) whilst maintaining coverage ratio at c. 54.9% Net NPLs as % of Total Assets down to 1.4% (vs. 2.4% in 2016) Gross NPLs reduction of 5.5% (3) vs. increase of 10% of peers (2) Enhanced liquidity coverage levels above regulatory requirements Total LCR of c.104% (vs. c.92% in 2016) and FC LCR of c.341% Strong organic capital generation of c. 186 bps CAR ratio of 14.29% and Tier 1 ratio of 11.22% Source: Company Information, SNL Financial 1. SME segment covers clients with annual turnover below 40 million TL; whereas commercial segment s turnover definition is maximum 100 million TL and minimum 40 million TL and Corporate segment includes clients which have turnover above 100 million TL 2. Median of Top 19 Turkish Banks (excl. Sekerbank) 3. Excludes leasing and factoring receivables 15
Business Trends
Balance Sheet Analysis Total Assets Liabilities and Equity Total Assets (TRY Bn) Liabilities and Equity (TRY Bn) 10,7% 7,4% Loans Breakdown (1) 33.1 33.1 7,1% 3,2% 8,4% Deposits Breakdown 10,7% 8,5% 9,4% 46,1% 46,8% 28,4% 89,3% 64,0% Corporate + Commercial SME Retail 60,0% Time Demand Loans Securities Other FY2017 Cash Money Market Placements Deposits Equity FY2017 Borrowing Other Source: Company Information, SNL Financial 1. Excludes leasing and factoring receivables 17
Loan Structure Loan Type Evolution - TRY Bn Steady Loan Growth with Focus on SME & Corporates Cash Loan Breakdown by Segments (TRY Bn / %) 17,3 18,1 21,2 5,8 4,6 5,3 100% 100% 100% 12,1% 9,7% 7,1% 34,9% 47,2% 46,1% 53,0% 43,1% 46,8% 92.9% Cash Non-Cash Highly Diversified Loan Book FY2017 Cash Loans Breakdown by Sector (%) (1) Corporate + Commercial SME Retail Constantly Increasing Branch Efficiency Loans per Branch Evolution (TRY MM / # Branch) 17% 5% 5% 4% Wholesale & Retail Trade Manufact. Industry Construction 7% Other Agriculture 17% 12% Tourism Financial Institutions Health & Social Serv. 16% 17% Transport. & Comm. 78 57 66 Source: Company Information 1. Bank only figures 18
Securities Portfolio Breakdown of Securities Portfolio FY2017 - Breakdown by Classification (%) FY2017 - Breakdown by Instrument Type (%) FY2017 - Breakdown by Coupon Type (%) (1) 18% 1% 34% 48% 49% 59% 3% 81% 7% AFS Trading HTM Equity Debt Other CPI Linked Floating Fixed Source: Company Information 1. Bank only figures 19
Funding Overview Total Liabilities Evolution (TRY Bn / %) Diversified Funding Source Base Deposit Evolution (TRY Bn / %) Healthy Growth of Deposits 25.7 25.1 33.1 10,2% 10,4% 8,4% 4,1% 3,2% 4,6% 14.9 16.1 19.9 14% 13% 11% 86% 87% 89% 27,7% 21,1% 28,4% Time Demand Borrowings Breakdown 58,0% 64,0% 60,0% FY2017 - (%) 7% 6% 7% 14% 37% Funds borrowed Interbank money market takings Funds provided under repurchase agreements ABS / SME-backed covered bond Subordinated loans Deposits Borrowings Other Liabilities Total Equity 29% Local bonds Source: Company Information 20
Deposit Structure SME banking franchise with high deposits rollover ratio allows for a stable and granular source of funding Total Loans / Deposits Ratio Total Loans / Total Deposits (%) TRY Loans / Deposits Ratio TRY Loans / TRY Deposits (%) FC Loans / Deposits Ratio FC Loans / FC Deposits (%) 116 113 107 160 140 130 46 62 67 Stable Exposure to Turkish Lira Constantly Increasing Branch Activity Deposits by Currency (%) Deposits per Branch (TRY MM / # Branches) 100,0% 100,0% 100,0% 61,6% 64,9% 62,5% 49 59 73 38,4% 35,1% 37,5% Foreign Currency Local Currency Source: Company Information 21
Borrowings Balanced mix between retail and institutional funding through covered bonds, loans from IFIs, subordinated loans, trade finance and syndicated borrowings Proven Access to Diversified Sources of Funding Recent Issuances Summary June 2017: USD 85MM Tier 2 Private Placement December 2017: TRY 300MM Tier 2 Domestic Issuance December 2017: TRY 192MM SME Backed Covered Bond transaction with FMO Entity Ratings Overview Moody s Covered Bond Program Highlights The first ever Turkish covered bond transaction The first SME backed covered bond in the world The highest rating ever assigned to any Turkish transaction to date (Baa1) (International Scale Rating from Moody s) Designed as a program to create a sustainable longer term funding source for the SME portfolio SKBNK Covered Bond Programme Turkey Sovereign Şekerbank Baa2 Ba2 B2 Foreign Borrowings Breakdown Bank Only Figures - FY2017 - (USD MM) Borrowings Breakdown by Purpose Bank Only Figures - FY2017 - (%) Type of Funding Outstanding Amount Covered Bond (EIB, IFC, FMO) 182.4 Tier 2 Bond + Subloan (KfW) 89.8 Syndication 159.9 International l Trade 184.2 18% 3% 1% 39% MSME Foreign Trade Energy Efficiency IFI's (OeEB, EBRD, ETDB, AFD, IFC) 185.0 Women in Business Funds (Responsability, GGF, GCPF) 30.0 TOTAL 831.3 39% Micro Finance Source: Company Information 22
Borrowing Structure Well Diversified Borrowing Base Borrowings Breakdown (TRY MM / %) 7,106 5,294 9,407 7,0% 0,3% 5,9% 6,8% 7,7% 5,6% 16,4% 7,5% 10,8% 10,6% 14,6% 1,0% 26,5% 2,5% 28,6% 65,8% Borrowings (TRY MM ) FY 2015 FY 2016 FY 2017 Funds borrowed 3,237 3,486 3,473 Interbank money market takings Funds provided under repurchase agreements ABS / SME-backed covered bond 175 53 2,691 1,885 561 1,373 764 868 701 Local bonds 546 311 526 45,6% 36,9% Subordinated loans 498 15 641 Total 7,106 5,294 9,407 Funds borrowed Funds provided under Repo Local bonds Interbank money market takings ABS / SME-backed covered bond Subordinated loans Source: Company Information 23
Focus on Income Statement
Profit and Loss TRY MM 15-17 CAGR Net Interest Income 1,130 1,162 1,330 8.5% Net Fees 300 303 344 7.1% Dividends 2 0 2 8.4% Trading Income (231) (125) (241) 2.3% Other Revenues 249 316 246 (0.6%) Net Operating Income 1,450 1,656 1,681 7.7% Operating Expenses (916) (958) (1,061) 7.7% Personnel Expenses (389) (386) (408) 2.4% Other Admin. Expenses (477) (512) (591) 11.2% D&A (1) (49) (60) (63) 13.1% Pre Provision Profit 535 698 620 7.7% Provisions and Other (454) (561) (485) 3.3% Loans and other receivables (384) (517) (439) 6.9% Other Provisions (70) (44) (45) (19.7%) Pre Tax Profit 80 137 136 30.0% Tax 17 (11) (23) n.m. Net Income 98 126 112 7.2% Non-controlling interest 2 3 (2) 0.0% Attributable Net Income 96 123 114 9.1% Source: Company Information 1. Depreciation and amortisation 25
Revenues in Detail (TRY MM) Net Operating Income Split +14.3% Excluding Other Income (1) 1.656 1.681 A Stable Net Interest Income Despite Rates Environment Net Interest Income (TRY MM) 2.428 4.7% 2.661 4.6% 3.007 4.6% 1.130 1.162 1.330 (1.298) (1.499) (1.677) 1.162 1.330 A B Interest Income Interest Expense Net Interest Income Net Interest Margin (NII / ATA) Leading in Fee Revenues with Strong and Consistent Growth Fees Received Split (TRY MM) 2017 - Net Fees / Avg. Total Assets (%) +1.74x 303 191 7 FY2016 344 FY2017 (1) Other Fees NII B 363 64 381 63 299 319 423 68 355 Banking Services Non-Banking Services 1,18% 0,68% Peers (2) Source: Company Information, SNL Financial 1. Other includes trading income, dividends and other operating income 2. Median of Top 19 Turkish Banks (excl. Sekerbank) 26
Costs in Detail TTY MM Operating Costs Growth kept below Inflation 8.8% 8.5% 11.9% Continuous Efficiency Improvement Number of Branches (#) Number of Employees (#) 6.5% 4.6% 10.8% 312-4.4% -7.0% 916 958 1.061 49 60 63 477 512 591 301 273 273 4.460 4.078 3.611 3.591 389 386 408 Personnel Expenses Other Admin. Expenses D&A % Y-o-Y Growth CPI Turkey (1) FY2014 14-17 CAGR FY2014 Stable Cost to Income Ratio Operating Expenses as % of Net Operating Income Stable Cost to Assets Ratio Operating Expenses as % of Average Total Assets 63,14% 63,11% 3,82% 3,64% FY2015 FY2017 FY2015 FY2017 Source: Company Information, Central Bank of Turkey 1. Depreciation and amortisation 27
Risk Management Provisions for loan losses and other receivables TRY MM 454 70 561 44 485 45 384 517 439 Loans and Other Receivables Other Provisions Cost of Risk NPL Coverage Cost of Risk (%) NPL Coverage (%) 2,29 2.83 2,17 53,9% 46,0% 54,9% Source: Company Information 28
Bottom Line Analysis Profit Before Tax Attributable Net Income TRY MM TRY MM 80 137 136 96 123 114 RoAE / RoATE RoAA RoRWA RoAE / RoATE (%) RoAA (%) RoRWA (%) 4,0% 3,8% 5,0% 4,8% 4,4% 4,3% 0,40% 0,49% 0,39% 0,42% 0,61% 0,51% RoAE RoATE Source: Company Information 29
Asset Quality, Liquidity and Solvency
Asset Quality NPL Exposure Maintained Stable Gross NPLs (TRY MM) Net NPLs as % of Total Assets 1.045 1.123 1.061 1,9% 2,4% 1,4% FY2017 Gross NPLs Evolution - (%) NPL Reduction in Perspective NPLs Ratio - (%) Improving NPL Ratio 10,0% 5,5% 5,8% 6,0% 4,9% (5,5%) Peers (1) FY2014 Source: Company Information, SNL Financial 1. Median of Top 19 Turkish Banks (excl. Sekerbank) 31
Liquidity Overview Total Loan to Deposit Ratio Liquidity Coverage Ratio Total (1)(2) Liquidity Coverage Ratio FC (1)(2) (%) (%) (%) 10% 22% 24% 214% 294% 281% 116 113 107 92 104 344 341 70 @70 @80 254 @60 @40 @50 @60 Source: Company Information Requirement Buffer vs. Requirement 1. Liquidity Coverage Ratio has been enacted as of 01.01.2015 and the minimum required LCR limit or Total LCR was 60%, FC LCR was 40%, the minimum limit has been increased by 10% each year 2. The average of last three months liquidity coverage ratio calculated by monthly simple averages 32
Capital Adequacy Overview Consolidated Level Bank Level Capital Adequacy Ratios (%) Capital Adequacy Ratios (%) 7.24% 7.66% 6.39% 22.6 20.4 22.3 13,06% 12,43% 1,90% 0,44% 14,29% 3,07% Min 12% CAR Recommendation 7.37% 7.94% 6.63 19.8 20.5 19.0 13,66% 13,11% 2,35% 0,48% 15,40% 3,33% Min 12% CAR Recommendation Min. 8% CAR Requirement Min. 8% CAR Requirement 11,16% 11,99% 11,22% 11,32% 12,63% 12,07% Tier I Ratio Tier II Ratio Tier I Ratio Tier II Ratio Leverage Ratio (%) RWA (TRY Bn) Leverage Ratio (%) RWA (TRY Bn) Source: Company Information 33
Appendix
Ratings Upgraded on 9th March 2018 Outlook STABLE Long-term Foreign Currency IDR B+ Short-term Foreign Currency B National Long-term Rating A (tur) Long-term Local Currency IDR B+ Short-term Local Currency B Viability Rating B+ Outlook Bank Deposits LT / ST NCR Bank Deposits LT / ST Baseline Credit Assessment Adjusted Baseline Credit Assessment Counterparty Risk Assessment LT / ST STABLE B2 / NP Baa3.tr / TR-3 b2 b2 Ba1 (cr) / NP (cr) Upgraded in September 2017 Outlook Long-term National Scale STABLE AA- (Trk) Short-term National Scale Long-term International Foreign Currency and Local Currency Short-term International Foreign Currency and Local Currency Long-term International Local Currency A -1+ (Trk) BBB- BBB- BBB- (Trk) Corporate Governance Rating (%) 2007 2008 2009 2010 2011 2012 2012 2013 2014 2015 2016 2017 70.16 81.36 86.64 87.60 88.21 90.95 90.74 90.91 91.10 91.70 91.90 92.70 Source: Company Information, Rating Agencies 35
Detailed Income Statement TRY MM CAGR (15-17) Interest income 2,428 2,661 3,007 11.3% Interest expense 1,298 1,499 1,677 13.7% Net interest income 1,130 1,162 1,330 8.5% Fee and commission income 363 381 423 7.9% Fee and commission expense 63 78 80 12.0% Net fee and commission income 300 303 344 7.1% Dividend income 2 0 2 8.4% Trading income (net) (231) (125) (241) 2.3% Total other operating income 249 316 246 (0.6%) Provisions for loan losses and other receivables 454 561 485 3.3% Total other operating expense 916 958 1,061 7.7% Net operating income 80 137 136 30.0% Tax provisions 17 (11) (23) n.m. Net period profit/loss 98 126 112 7.2% Non-controlling interest 2 3 (2) n.m. Attributable Net period profit/loss 96 123 114 9.1% Source: Company Information 36
Detailed Balance Sheet TRY MM CAGR (15-17) Cash and balances with Central Bank 2.838 1.541 3.108 4,7% Money market placements 7 4 2.448 n.m. Securities 3.023 2.518 2.827 (3,3%) Net Loans and receivables (1) 17.304 18.150 21.201 10,7% Tangible assets 900 1.082 399 (33,4%) Intangible assets 101 95 88 (6,6%) Tax assets 19 26 88 115,4% Other assets 1.487 1.731 2.971 41,4% Total assets 25,679 25,147 33,130 13.6% Deposits 14,894 16,092 19,884 15.5% Derivative financial liabilities held for trading 57 157 133 52.6% Funds borrowed 3,237 3,486 3,473 3.6% Money market funds 2,060 614 4,064 40.4% Marketable securities issued 1,311 1,179 1,228 (3.2%) Provisions 385 361 399 1.9% Tax liabilities 45 36 66 21.2% Subordinated loans 498 15 641 13.5% Other liabilities 578 594 450 (11.7%) Total liabilities 23,064 22,533 30,339 14.7% Paid-in capital 1,158 1,158 1,158 0.0% Supplementary capital 179 (1) (169) n.m Profit reserves 1,123 1,235 1,414 12.2% Profit 110 176 347 77.4% Total equity attributable to equity holders of the Bank 2,570 2,568 2,750 3.4% Non-controlling interest 44 45 41 (4.0%) Total equity 2,614 2,614 2,791 3.3% Total liabilities and equity 25,679 25,147 33,130 13.6% Source: Company Information 1. Exc. Leasing and Factoring Receivables 37
Contact Details Sekerbank T.A.Ş. Zeki Önder Executive Vice President Tel: +90 212 344 07 36 zeki.onder@sekerbank.com.tr Ali Kemal Küçükcan Head of Financial Institutions Tel: +90 212 319 71 59 ali.kucukcan@sekerbank.com.tr Berrak Baharoǧlu Senior Area Manager Tel: +90 212 319 73 08 berrak.baharoglu@sekerbank.com.tr Financial Institutions Structured Finance & Investor Relations Oya Sarı Head of Structured Finance and Investor Relations Tel: +90 212 319 71 58 oya.sari@sekerbank.com.tr Hasan Sütmen Structured Finance and Investor Relations Manager Tel: +90 212 319 71 46 hasan.sutmen@sekerbank.com.tr İnci Kutsar Structured Finance and Investor Relations Junior Associate Tel: +90 212 319 71 57 inci.kutsar@sekerbank.com.tr 38
Legal Notice For Investors The information in this document has been obtained by Sekerbank T.A.Ş. ( Sekerbank ) from sources believed to be reliable. However, Sekerbank cannot guarantee the accuracy, completeness or correctness of such information. This document has been issued for information purposes only. The financial reports and statements announced by Sekerbank to the public and the relevant corporations are accepted to be the sole material. Sekerbank does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents due to the misleading information in this document. All estimations contained in this document are the opinions of Sekerbank and can be subject to change without notice. This document can not be interpreted as an advice to the investors and Sekerbank can not be held responsible for the results of investment decisions made on account of this document. This document has been issued specially to the person, whom the document is concerned and may not be reproduced, distributed or shared with third parties for any purpose. 39