ISLAMIC TRADE FINANCE & TRADE PROMOTION PROVIDER

ISLAMIC TRADE FINANCE & TRADE PROMOTION PROVIDER

SOMETHING ABOUT US SERVING MEMBER AND NON-MEMBER COUNTRIES ITFC became operational in January, 2008 with the purpose of advancing trade to improve the economic condition and livelihood of people across the world As a leader in Shari ah-compliant trade finance, ITFC deploys its expertise and funds to businesses and governments in its member countries. Our primary focus is to encourage and act as a catalyst for intra-trade among OIC Member Countries 1

OUR VISION ITFC is the leading provider of trade solutions for OIC member countries' needs 2

OUR MISSION ITFC is a catalyst for trade development among OIC member countries and beyond 3

WHERE WE OPERATE 4

OUR CORE COMPETENCIES RICH HERITAGE TECHNICAL EXPERTISE GEOGRAPHIC PRESENCE Over 30 years of experience in trade finance/promotion & cooperation Originator, Structurer & Arranger, Implementer 56 member countries in 4 continents SOLUTIONS FOR IMPACT PREFERRED CREDITOR STATUS AAA RATING Structured Trade Finance SMEs/LDMCs: Facilitation, Capacity Building, and Promotion 57 member countries Member of IDB Group 5

TRADE APPROVALS BY REGION 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Asia/CIS MENA Sub-Saharan Africa 2.5 2.17 2.55 3.03 9% 6% 6% 7% 24% 39.5% 24% 33% 51% 68% 60% 64.5% 4.47 (US$ billion) 6.05 5.05 5.16 9% 4% 8% 4% 36% 27% 26% 44% 4.48 17% 35% 69% 67.5% 53% 47% 48% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total approvals in 2016 are US$4.48 billion down Since inception in 2008, ITFC s cumulative funded financing reached to US$35 billion In 2016, total number of operations = 58

1437H-2016 TRADE ACTIVITIES IN NUMBERS 21% Other 11% Bank Guaranteed 1% Credit Insured 2% Minerals and Chemicals 12% Food & Agriculture 60% Crude and Petroleum Products 12% Structured 11% Unsecured 65% Sovereign Approvals by Sector (1437H- 2016) Approvals by Instrument (1437H-2016) 9

FINANCING MECHANISMS 1. Direct Financing: Financing is extended directly from ITFC through a Murabaha Agreement between ITFC and the Beneficiary 2. Line of Financing: ITFC provides lines of financing to local Financial Institutions which act as Intermediary (Lines Agents) between ITFC and the end beneficiaries for the Trade Finance Operations upon signing a Line Master Agreement 3. Two-Step Murabaha: ITFC provides Two-Step Murabaha Financing to local Financial Institutions or commercial banks to be extended to SMEs 4. Co-Financing & Syndication: In this mode of financing, ITFC, acting as a Mudarib (lead arranger or co-arranger), invites one or more Financial Institutions to participate in the financing ITFC may also participate in syndications arranged by other institutions 10

ITFC PORTFOLIO IN TURKEY - Turkey has been one of the largest recipients of the IDB Group as well as ITFC s trade financing facilities (Total financing reached USD 6.68 billion). - Throughout 2008-2017, ITFC has approved 75 financing operations for a total amount of USD 3.9 billion in Turkey. - ITFC has been very active in Turkey especially during the last 3 years in terms of trade finance approval size (2.07 billion) thanks to the openning of IDBG Istanbul Office. 9

ITFC PORTFOLIO IN TURKEY - ITFC has a diversified portfolio in Turkey through local banks- mainly the Participation Banks, Turk Exim Bank and Investment Banks- for line of financing made available for the benefit of SME size Turkish exporters and importers. - On the other hand large corporates are benefiting from direct lines especially under the structured trade finance facilities which provide tailor made solutions for the import or pre export financing needs. - In order to reach SMEs in these different sectors, ITFC will increase its financing through local banks. The development impact is expected to be enhanced through these bank lines. 9

ITFC PORTFOLIO IN TURKEY ITFC Approvals in Turkey (usd million) 900 800 810 700 600 640 620 500 400 300 200 100 102 204 124 125 312 415 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 9

ITFC PORTFOLIO IN TURKEY Clean, 240, 6% LG, 343, 9% ITFC Turkey 2008-2017 ($3,9b) STF, 737, 19% 2SMF, 2581, 66% 9

1- DIRECT FINANCING (1) A Murabaha financing agreement is signed between ITFC and the beneficiary. - Other parties may co-sign the agreement (2) The supplier ships the goods to the beneficiary. (3) ITFC makes payment of purchase price directly to the Supplier. (4) ITFC sells the goods to the beneficiary (5) The beneficiary repays the sale price directly to ITFC. ITFC takes the direct credit risk of the beneficiary. Beneficiary (5) Repayment of Sale Price at Maturity (2) Shipment (3) Payment of Purchase Price 11

2-2 STEP MURABAHA FINANCING (1) A Line of Financing agreement is signed between ITFC and the local Bank (5) Payment of Purchase Price (2) Local Bank requests Sub-Murabaha Agreements to be signed between ITFC and the beneficiary (3) Local bank provides bank guarantee for the beneficiary (4) Payment under the financing is disbursed directly by ITFC (4) Advise of Shipment (6) 1 st Sale (8a) Repayment of 1 st Sale Price at Maturity (7) 2 nd Sale (8b) Repayment of 2 nd Sale Price at Maturity (3) Shipment Beneficiary (5) The beneficiary repays the sale price directly to ITFC ITFC takes the risk of the local bank Local Bank takes the credit risk of the beneficiary (1) 1 st Murabaha Agreement (2) 2 nd Murabaha Agreement 12

3- CO-FINANCING & SYNDICATION Beneficiary (2) Murabaha Agreement (3) Shipment (7) Repayment of Sale Price at Maturity (6) Sale of Shipment (5) Payment of Purchase Price (4) Payment of Purchase Price (8a) (4a) (8b) (4b) (4c) (8c) (8) Repayment of Sale Price (1) Mudaraba Agreement 13

4-LINE OF FINANCING (1) A Line Agreement is first concluded between ITFC (as Fund Provider) and a Financial Institution (as Guarantor of underlying Murabaha Transactions). (2) Subsequent Murabaha Agreements are then concluded between ITFC and End Beneficiaries (SMEs). (3) Bank Guarantees are issued by the Financial Institution in favor of ITFC covering the risk of End Beneficiaries. (4) The Supplier ships the goods directly to the End Beneficiaries. (1) Line of financing agreement (3) Issuance of bank guarantee (5) Payment of purchase price (5) ITFC shall make the payment of Purchase Price directly to the Supplier. (6) ITFC will then sell the goods to the End Beneficiaries on Murabaha basis (Sale Price). (7) At maturity, the End Beneficiaries shall pay the Sale Price to ITFC. In case of non-payment, the Financial Institution shall cover the unpaid amounts. (2)Murabaha Agreement (6) Sale of Goods (7) Payment of sale price at maturity (4) Shipment Beneficiary 14

WHAT IS STRUCTURED TRADE FINANCE Alternative to conventional payment guarantee (Gov t/bank/corp) Innovative Asset Backed financing More Secure Source of Repayment Transaction Cash Flow (Self-Liquidating Transaction) Transferring Credit Default Risk Performance Risk (Collateral, Market Risk, Documentation & Business Operational Risk) 15

STRUCTURED TRADE FINANCE 1. Client pays DEPOSIT (Security Margin) 2. Goods shipped and docs. are presented 4. WR Warehouse 7 3. ITFC pays the supplier for the Goods 4. Goods delivered to Warehouse, CM issues WR to ITFC 6. Release Order Collateral Manager Beneficiary 5. Client pays for delivery of portion of the shipment 2. 1. Security Margin 6. ITFC sends release instruction to CM 3. 100% Payment 7. Client takes delivery of the Goods Documents presented 5. Payment 16

STF BENEFITS CUSTOMER BENEFITS Improves Liquidity Cycle Financing Accessibility to Farmers Increasing Export Size Hard Currency Beneficiary s Off-Balance Sheet Better Financial Position Customized Solutions ITFC BENEFITS Financing Accessibility to Farmers Development Mandate Transforming Credit Risk into Performance Risk Higher Limits Asset Backed Transaction Risk Mitigated Structure Self Liquidating Transaction Accessing Difficult Markets STF is a Perfect Match for Islamic Finance (Murabaha) 17

THANK YOU