Investor Presentation Brsa Bank-Only Q108 July 2008
VakifBank at a glance Leading franchise in the fast growing Turkish market; Strong presence in all key growth segments; Extensive nationwide branch and 3rd largest ATM network with particular strengths in Ankara and East region; Retail franchise of over 7,5 mio total customers with leading position among middleclass population segment; Leading long-lasting SME franchise and strong project finance expertise; Unique access and understanding of State and State related companies thanks to long standing relationship and loyalty of the segment; Significant recent investment is unlocking important cross-selling potential in both Retail and SME Banking; Solid balance sheet with diversified sources of funding, strong YTL funding base; Cost conscious culture with focus on profitability instead of market share; Investor-friendly corporate governance fully supported by key shareholders; 2
Ownership Structure Ownership Structure GDF General Directorate of Foundations manages foundations owning 58,45% (43,0% Class A, 15,45% Class B) of the shares in the bank. The GDF was established in 1924 to administer and regulate Turkish charitable foundations as a state entity directly reporting to the Prime Minister. VB Pension Fund* The VakifBank Pension Fund has a 16,10% stake in the Bank s capital as a Class C shareholder. All the Bank s employees contribute to the Vakifbank Pension Fund as opposed to the mandatory social security coverage by the state Social Insurance Institution Free Float Listed in IMKB as VAKBN and mainly held by international institutional investors. Other Non-affiliated foundations with seperate board of trustees & individual or legal entities. *As of, 29.05.2008 the actuarial report indicates that Vakifbank Pension Fund has a surplus with real interest rate of %9,8 3
Subsidiaries & Affiliates Financial Subsidiaries Share (%) Güneş Insurance 36,35 Vakıf Pension Funds 53,90 Vakıf Leasing 58,71 Vakıf Deniz Leasing 68,55 Vakıf Finance Factoring 78,39 Vakıf Investment 99,00 Vakıfbank International AG 90,00 World Vakif Offshore Banking Ltd. 82,00 Vakıf Portfolio Management 99,99 Vakıf Real Estate Investment Fund 28,00 Vakif Investment Fund 12,00 Cyprus Foundations Bank Ltd. 15,00 Other Financial Subsidiaries Share (%) Takasbank 4,90 BKM (Card Centre of Banks) 9,70 KKB (Credit Registration Bureau) 9,10 TSKB 8,40 Non-Financial Subsidiaries Share (%) Vakif System Corp. 73,00 Vakif Energy 66,00 Taksim Hotels 51,00 Ataköy Trade Corp. 46,00 İşkur Corp. 25,00 Vakif Expertise Corp. 20,00 Roketsan Rockets 10,00 4
Work Under Progress steps forward in credit card business New Corporate identity branch network expansion work under progress HQ move to Istanbul IT transform ation Vakifbank expands its geographic presence all over Turkey with focus on Istanbul and Marmara region. Two important projects in credit cards; Vakif World & Vakif Rail&Miles. Upgrade of IT system to support the growth of the Bank in all business lines. HQ will move to capital of financial sector, Istanbul. New corporate identity, new logo & new colours. 5
Vakif World and Vakif Rail&Miles rises Vakif World, the co-branded credit card with leading brand in this business line will be the biggest of its kind in Turkey. Vakif Rail & Miles Card Project, special credit card to be used in intercity railways launched in March 2008. Boost to Net F&C Income and doubling of market share by 2010 Vakif World; As a first step, Vakifbank aims to include its one million inactive credit card customers into active customer pool of one million. Vakif Rail & Miles; Aiming to access upper classes due to implementation of high speed train services. 6
Heavier usage of technology, higher the market share ATM GSM DOKUNMATIK Extensive use of alternative distribution channels contribute strong general purpose consumer loan growth 7
A Technological Step From Vakifbank Restructuring program started in early 2005 with McKinsey IBM & Cisco started to work on IT Transformation project in 2007 Front Office, CRM, MIS and Data Warehouse applications will be implemented Higher cross-selling ratios, fee & commissions & revenues, Increased IT capacity enabling faster and higher quality customer service, necessary database and reporting standards for Vakifbank s roadmap in transition to Basel II. 8
2008 Q1 Highlights Growth in consumer lending, market share increase on both retail and mortgage Higher lending in every segment # 1 in payroll business with increasing market share Accelerated momentum in fees & commissions Sustainable spreads and margins Improving asset quality New products and diversified channels continue to contribute growth 25 new branch openings Operating expenses are under control 9
Diversification of Asset Mix Towards IEA Total Assets (TRY bio) Breakdown of Assets (TRY bio) YoY +22,2% Ytd +10,0 % IEA 33,6 IEA 37,9 IEA 41,4 Asset Growth; Ytd Interest Earning Assets (TRY bio) YoY +22,8 % Ytd +9,2 % %10 10
Expansion of Loan Portfolio Continued Total Loans (TRY bio) Breakdown of Loans (TRY bio) YoY +41,3% Ytd +11,1% 6,7 7,5 Total Loans growth; Ytd 5,2 16,7 18,6 Loan/Deposits (%) YoY +967 bps 13,2 %11,1 FX Loans Growth in USD; Ytd Ytd +4 bps %14,9 *Includes credit cards and overdrafts. 11
Strong Retail Loan Growth General Purpose Consumer Residential Mortgages 1 YoY +73,5% Ytd +10,6% YoY +39,5 Ytd +15,4% Market Share Gain in; Total Retail Total Retail 2 YoY +51,1% Ytd +12,2% Retail Cross-Selling Ratio YoY +37 bps 32 bps, Mortgage 45 bps. 1 Includes TOKI. 2 Excludes credit cards and overdrafts. 12
Commercial, Corporate and SME Evolution Commercial & Corporate YoY +47,1% Ytd +14,5 SME (Commercial Installments) YoY +25,5% Ytd +2,4% Guarantees YoY +42,7% Ytd +21,3% SME Cross-Selling Ratio YoY +61 bps Commercial & Corporate Loan Growth; Ytd %14,5 13
Market Shares (%) Deposits and Funding Loans Payroll 1 Total Deposits YTL Deposits Total Loans Retail Loans 2 SME Installment +2 +0,3 +0,1 +0,3-0,7 Distribution # Branch ATM Debit Card # 1 in payroll +0,1 +0,2 # 1 in debit card # Market shares are calculated using weekly BRSA reports. 1 Vakifbank estimates. 2 Includes home, auto and other, credit card loans and overdrafts not included. 14
Deposit Evolution Loans and Deposits (TRY,bio) Breakdown of Liabilities (%) Total Deposits Growth; Ytd %11 Loan/Deposit 15
Strong Deposit Growth Deposit Composition (TRY,bio)* Breakdown of deposits (%) TRY %75,8 TRY %78,3 TRY %75,5 FX Deposits Growth in USD; Ytd %12,2 *Total deposits do not include interbank deposits and accrued interests for deposits. 1 Represents deposits taken from retail customers. 2 Represents deposits taken from government related companies, SME s and other entities. 16
Focus on Retail Deposits Retail Deposits (TRY, bio) Demand Deposits (%) YoY +14,5 % YoY +10,1% Ytd +11,4 % Ytd +1,5% Retail Deposits Growth; Ytd %11,4 State Deposits (TRY, mio) YoY +38,9% Ytd +9,1% State Deposit Share in Total; %32 in YE05 %24 in Q108 17
Securities Portfolio Evolution Total Securities (TRY, mio) YoY +%1,1 Ytd +%6,0 11520 11641 10986 Portfolio Structure YTL FX FX Securities Fixed Rate share; in Q107, %55,5 in Q108, %73,5 FX margins up thanks to Fed Rate Cuts 18
Asset Quality Continue to Improve NPL Ratio & Provisions Coverage Loan / Assets (%) YoY -88 bps Ytd -20 bps YoY +754 bps Ytd +54 bps No write-offs & No asset sale on NPL 19
Capital Position & CAR (TRY-mio) YE2006 YE2007 Q12008 (TRY-mio) YE2006 YE2007 Q12008 Paid in Capital 2.500 2.500 2.500 Share Premium 724 724 724 Reserves 255 624 1.521 Net Profit 762 1.031 196 Prepaid Expense (-) 49 204 227 Intangible Assets 5 13 16 Core Capital 4.313 4.887 4.941 Supplementary Capital 227 362 313 General Provisions 130 174 224 Bonus Shares of Sub.&Aff. 35 64 64 %45 of Sec.value inc. 61 124 25 Capital 4.540 5.249 5.254 Deductions From Capital Total Shareholders Equity 219 449 420 4.320 4.780 4.834 Total RWA 20.841 31.268 35.899 Total Credit RWA 20.626 26.976 30.361 %20 Risk Weighted 747 913 671 %50 Risk Weighted 2.311 2.605 2.668 %100 Risk Weighted 17.565 23.458 27.002 %150 Risk Weighted 1 N.A. N.A. 20 %200 Risk Weighted 1 N.A. N.A. 0,05 Value at Market Risk 2 215 650 1.407 Value at Operational Risk 3 N.A. 3.642 4.131 CAR %20,73 %15,35 %13,47 TRY 9.572 mio worth AFS Securities are added to Value at Market Risk Computations in 2008 imposed by BRSA 1 New regulation imposed by BRSA for long term credit card exposure. 2 AFS securities portfolio is added to the computations. 3 Added to the CAR calculations fter 2H07. 20
Earnings Summary (TRY-mio, %) Q12007 Q12008 Growth Net Interest Income 407.8 482.2 18.3% Net F&C Income 67.4 107.2 59.0% Net Trading Income 48.7-17.9 n.a. Divident Income 19.9 2.3-88.6% Other Operating Income Total Operating Income Total Operating Expenses (-) 96.5 103.0 6.7% 640.3 676.8 5.7% 241.5 277.5 14.9% Operating Profit 398.9 399.3 0.1% Provisions (-) 125.4 146.4 16.7% Tax Provisions (-) 54.4 56.5 3.8% Income from investments Net Monetary Gain/Loss 0 0 n.a. 0 0 n. a. Net Income 219.0 196.4-10.3% Net Banking Income Composition YoY +8,7 % QoQ +3,8 % New Branch # New Employee # YoY 61 YoY +1000 Ytd 25 Ytd +130 21
P & L Participants Interest Income (TRY, mio) Net Interest Income YoY +14,4% QoQ +5,6% YoY +18,3% QoQ +6,9% Net Interest Income Growth; Ytd %6,9 Net F & C Income (TRY, mio) YoY +59% QoQ -6,4% Net F & C Income/Op. Income YoY +532 bps QoQ +210 bps Net F&C Income Growth; YoY %59 22
Earnings Ratios ROA 1 ROE 1 Cost / Income (%) Earnings Per Share (EPS) Cost / Income ratio % 41 *Tax return of TRY 125 mio in 3Q 2007 and one-off divident of TRY 19,5 mio in Q1 2007 are excluded on 2007 income items. 1 Ratios are calculated on quarterly participants. 23
Yield, spread, cost of deposits, NIM (%) Yield on Loans & Securities YTL Loans -0,4 YTL Securities -0,3 Cost of Deposits YTL Deposits -1,16 Cost of YTL Deposits Decrease; Ytd FX Loans +0,5 FX Securities -0,2 FX Deposits +0,03 116 bps Spreads YTL Loans YTL Securities +0,7 +0,8 NIM yoy +9 bps NIM Increase; Ytd FX Loans +0,5 FX Securities -0,3 9 bps Despite FX assets share increased %2,5 24
APPENDIX 25
Vakif with numbers Distribution Channels & Customer Base (#) Q12008 Branches 385 ATMs 2.041 Personnel 8.833 POS Terminals 90.600 Outstanding Credit Cards Debit Cards Total Customers Total Payroll Customers Internet Banking Customers Active Mutual Fund Customers 1,96 mn 13,0 mn 7,5 mn 2,0 mn 1,0 mn 0,92 mn Efficiency ( 000 TRY) Q12008 Assets per Employee 5.279,8 Assets per Branch 121.133,3 Loans per Employee 2.950,6 Loans per Branch 67.694,7 Deposits per Employee 3.626,6 Deposits per Branch 83.204,4 Most efficient bank in Turkey 26
Off-B.S Liabilities & SHE Assets INVESTOR RELATIONS Balance Sheet (TRY-mio, %) Q12007 YE2007 Q12008 YoY Growth Ytd Growth Cash & Balances with Central Bank 2.548 2.490 3.259 27.9% 30.9% Interbank 3.743 3.462 3.684-1.6% 6.4% Securities 11.520 10.987 11.641 1.1% 6.0% Loans 18.444 23.470 26.062 41.3% 11.1% Subsidiaries & Investments 439 521 423-3.6% -18.8% Property & Equipment 895 906 928 3.7% 2.4% Other 564 573 640 13.4% 11.6% Total Assets 38.151 42.408 46.636 22.2% 10.0% Deposits 25.726 28.863 32.034 24.5% 11.0% Funds Borrowed 4.757 4.693 5.334 12.1% 13.7% Other 2.977 3.128 3.681 23.7% 17.7% Provisions 409 499 527 28.7% 5.6% Shareholders Equity 4.282 5.226 5.061 18.2% -3.2% Guarantees 4.965 5.841 7.085 42.7% 21.3% Commitments 2.920 6.029 6.863 135.1% 13.8% Derivatives 1.226 1.464 816-33.4% -44.3 27
Income Statement (TRY-Thousand, %) Q12007 Q42007 Q12008 {Q108 Q407} {Q108 Q107} Net Interest Income 407.758 451.188 482.156 6.9% 18.3% Net Fee & Com. Income 67.426 114.529 107.234-6.4% 59.0% Divident Income 19.941 0 2.279 - -88.6% Net Trading Income 48.733 33.284-17.895 n.a. n.a. Other Income 96.480 50.924 102.978 102.2% 6.7% Total Revenues 640.338 649.925 676.752 4.1% 5.7% Operating Expense 241.456 275.331 277.497 0.8% 14.9% Provisions 125.429 86.056 146.350 70.1% 16.7% Tax Provisions 54.426 66.519 56.508-15.1% 3.8% Net Income 219.027 222.019 196.397-11.5% -10.3% 28
Investor Relations Çamlık Cad. Çayır Çimen Sok. No:2 Kat:5 34330 1. Levent-İstanbul / Turkey E-mail: investor.relations@vakifbank.com.tr Tel (90-212) 316 7120 Fax (90-212) 316 7126