ISBANK INVESTOR PRESENTATION 2017 Q3
Contents Isbank at a Glance 3 Financial Highlights 7 Retail Banking 26 Major Equity Participations 29 2
Isbank at a Glance 3 Financial Highlights 7 Retail Banking 26 Major Equity Participations 29 3
Isbank in Brief Widespread shareholder base Isbank Pension Fund 39.95% Free Float 31.96% Ataturk Shares 28.09% Stocks are quoted at BIST and also traded at LSE in the form of GDRs. Largest stake owned by employees via pension fund 1,348 domestic branches country-wide (largest among private banks), and 22 foreign branches 6,572 ATMs (largest ATM network among private banks) Nationwide coverage International coverage 7 4 6 5 17 354 9 5 16 8 31 5 13 3 5 2 6 5 7 6 11 49 4 7 2 18 5 1 1 3 134 3 21 8 1 13 8 4 6 3 6 3 1 1 1 24 6 8 7 21 9 5 2 6 109 4 19 19 7 32 11 3 10 6 2 1 3 33 6 3 3 22 10 51 5 25 27 1 3 17 15 Isbank Branches in Northern Cyprus HO + 10 Isbank AG Branches in Germany Bank Subsidiary HO + 3 Isbank Russia Branches in Russia Bank Subsidiary 2 6 2 Isbank Branches in London, UK. 1 Isbank AG Branch in Amsterdam, the Netherlands HO+2 Isbank Georgia Branches in Georgia - Bank Subsidiary Number of Branches 1,309 1 Branch in Manama, Bahrain 1 Isbank AG Branch in Paris, France 1 Representative Office in Shang-hai, China 1,358 1,377 1,374 1,370 2013 2014 2015 2016 2017 Q3 2 Branches in Arbil and Baghdad, Iraq 1 Isbank AG Branch in Zurich, Switzerland 1 Representative Office in Cairo, Egypt 2 Branches in Pristine and Prizren, Kosovo 1 Isbank AG Branch in Sofia, Bulgaria 4
Main Business Lines Banking Services Other Financial Services Corporate Banking Commercial Banking Retail Banking Private Banking Capital Market Operations Other Banking Services Insurance Private Pension Asset Management Venture Capital Investment Banking REIT Leasing & Factoring Brokerage & Custody 5
The Largest Private Bank Market Share (%) 2017 Q3 Rank (2) Main Balance Sheet Items (1) Total Assets 11.9 1 st Total Loans 11.9 1 st TL Loans 11.1 1 st FX Loans 13.5 1 st Consumer Loans (3) 11.8 2 nd Non-Retail Loans 11.8 1 st Total Deposits 12.0 1 st TL Deposits 10.5 1 st FX Deposits 13.7 1 st Demand Deposits 15.3 1 st Other Products & Distribution Network Volume of Debit Cards (4) 10.1 2 nd Number of POS (4) 13.0 3 rd Acquiring Volume (4) 16.8 3 rd Number of Credit Cards (4) 11.9 3 rd Issuing Volume (4) 14.2 3 rd Number of Branches 12.9 1 st Number of ATMs 13.4 1 st (1) Market share calculations are based on weekly BRSA data excluding participation banks. Total assets market share is based on monthly BRSA data. (2) Ranking among private-sector banks (3) Including retail overdraft accounts (4) Market share calculations are based on Interbank Card Center (BKM) data. 6
Isbank at a Glance 3 Financial Highlights 7 Retail Banking 26 Major Equity Participations 29 7
Growth Performance Total Assets (TL mn.) Loans (TL mn.) 11.2% 12.5% 210,500 237,772 275,718 311,626 346,439 134,843 155,315 177,037 203,144 228,631 2013 2014 2015 2016 2017 Q3 Deposits (TL mn.) 2013 2014 2015 2016 2017 Q3 Shareholders Equity (TL mn.) 9.4% 13.9% 120,975 133,551 153,802 177,360 193,966 23,579 29,311 32,035 35,961 40,942 2013 2014 2015 2016 2017 Q3 2013 2014 2015 2016 2017 Q3 8
Asset Structure Main Balance Sheet Items (TL mn.) 2016 2017 Q3 Change Cash & Banks 34,656 36,304 4.8% Securities (Net) 51,310 56,643 10.4% Loans 203,144 228,631 12.5% Participations (Net) 10,442 12,183 16.7% Fixed Assets (Net) 4,838 5,136 6.1% Other Assets 7,236 7,543 4.3% Total Assets 311,626 346,439 11.2% Interest Earning Assets / Total Assets Asset Composition 11.1% 10.5% 16.5% 16.4% 65.2% 66.0% 3.4% 3.9% 3.5% 3.7% 2016 2017 Q3 Loans / Assets Cash & Banks Securities Loans Participations Fixed & Other Assets 92.2% 92.3% 91.3% 91.5% 91.6% 64.1% 65.3% 64.2% 65.2% 66.0% 2013 2014 2015 2016 2017 Q3 2013 2014 2015 2016 2017 Q3 9
Solid Lending Franchise Loan Portfolio QoQ (TL mn.) Loans / Deposits 2.3% 1.8% 3.1% 223,566 228,631 114.5% 117.9% 111.3% 115.5% 139,653 142,140 83,914 86,491 TL FX * Total 2017 Q2 2017 Q3 * 1.8% change in FX loans when adjusted for the change in exchange rate. Loan Portfolio YtD (TL mn.) 2016 2017 Q3 Loans/Deposits Loans/Deposits (Adj.)* * TL securities issued added to deposits. TL / FX Mix of Loans 16.2% 7.0% 12.5% 228,631 203,144 35.4% 35.4% 36.1% 39.8% 37.8% 142,140 122,340 80,804 86,491 64.6% 64.6% 63.9% 60.2% 62.2% TL FX * Total 2016 2017 Q3 * 6.1% change in FX loans when adjusted for the change in exchange rate. 2013 2014 2015 2016 2017 Q3 TL FX 10
Retail Oriented and Diversified Loan Portfolio 47% comprised of retail and SME loans. Total Loans (TL mn.) Consumer Loans (TL mn.) 203,144 228,631 39,895 43,559 19.6% 19.1% 5.3% 5.2% 21.8% 23.0% Retail Loans 24.2% Consumer (1) 52.4% 50.9% General Purpose Consumer Loans Auto Loans Credit Cards (2) 1.7% 1.5% Housing Loans 53.3% 52.8% SME (3) Commercial & Corporate 44.4% 46.0% Retail Overdraft 1.5% 1.6% 2016 2017 Q3 2016 2017 Q3 (1) Includes retail overdraft accounts. (2) Includes retail credit card balances only. (3) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. 11
Loan Quality 857 386 471 918 558 360 774 422 352 661 415 247 626 471 155 NPL Ratio NPL Ratio by Loan Categories (17 Q3) 3.1% 3.3% 3.2% 3.1% 3.0% 2.6% 2.4% 2.4% 2.4% 2.4% 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 Isbank Sector * Consumer Credit Cards SME (1) (2) 2,1% 2,9% 5,0% 6,4% 3,6% 4,7% 1,7% Corp. And Comm. 1,7% 2,4% Total Loans 3,0% Isbank Sector * * BRSA weekly data, excluding participation banks. * BRSA weekly data, excluding participation banks. NPL Trends* (TL mn.) 1.02% 0.74% 0.67% 0.45% 0.27% Other Indicators (2017 9M) Collection Rate 20.1% Gross CoR (4) (3) 118 bps Coverage Ratio 84.4% 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 Additions to NPLs Recoveries Net NPL Formation - Net NPL Formation Rate** (1) Includes retail overdraft accounts. (2) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. (3) Collections / (Prior period ending balance NPL + Additions) (4) (Specific Loan Loss Provisions + General Loan Loss Provisions ) / Average Performing Loans * Quarterly 12 ** Net NPL Formation (annualized) / Average Loans
Securities Portfolio Breakdown of Securities (2017 Q3) Total Portfolio TL Floating 48,6% TL Fixed 32,8% 39.7 51.3 46.1 56.6 FX Fixed 18,6% 11.7 10.6 3.3 3.0 2016 2017 Q3 TL Securities (TRY bn.) FX Securities* (USD bn.) * USD equivalent. FX Securities (TRY bn.) Total Securities (TRY bn.) Government bonds and treasury bills constitute 98% of total portfolio. 31.9% share of CPI linkers in total portfolio 469 mn. TL interest revenue and 10.5% quarterly yield on CPI linkers portfolio. Yields of TL and FX securities are 10.15% and 4.28%, respectively in 2017 Q3. Average durations are 1.66 years for TL Securities 6.40 years for FX Securities 13
Strong Fund Generation Capability Main Balance Sheet Items Liabilities Composition (TL mn.) 2016 2017 Q3 Change Deposits 177,360 193,966 9.4% REPOs & Money Market 20,593 25,079 21.8% Funds Borrowed 30,885 32,673 5.8% Securities Issued 22,465 24,460 8.9% Other* 24,362 29,320 20.3% Equity 35,961 40,942 13.9% Total Liabilities & Equity 311,626 346,439 11.2% 11.5% 11.8% 7.8% 8.5% 7.2% 7.1% 9.9% 9.4% 6.6% 7.2% Equity Other* Securities Issued Funds Borrowed Largest TL funding base among private-sector banks 56.9% 56.0% REPOs&Money Market Deposits 2016 2017 Q3 * Includes subordinated debt of USD 1.4 bn as of 2016 and USD 1.9 bn plus TL 1.1 bn as of 2017 Q3. 14
Largest Deposits Franchise a clear indicator of customer trust. Deposits QoQ (TL mn.) Market Shares 1.4% 2.4% 0.5% 191,289193,966 14.0% 13.7% 12.2% 12.0% 10.8% 10.5% 90,955 93,152 100,334100,814 TL FX * Total 2017 Q2 2017 Q3 * -0.7% change in FX deposits when adjusted for the change in exchange rate. Deposits YtD (TL mn.) 9.4% 2016 2017 Q3 TL Deposits FX Deposits Total Deposits Largest market share in TL, FX, demand, savings and total deposits among private sector banks 4.9% 13.8% 193,966 177,360 TL savings deposits account for deposits. 33% of total 88,765 93,152 88,595 100,814 TL FX * Total 2016 2017 Q3 * 12.8% change in FX deposits when adjusted for the change in exchange rate. 15
Demand Deposits 22.8% 23.1% 22.6% 23.9% 23.9% 24.6% 25.6% 24.8% 26.4% 25.0% 27.2% 25.8% 25.4% 28.1% 26.4% make significant contribution to lower cost of funding. Demand Deposits (TL mn.) Share of Demand Deposits 17.7% 51,297 43,599 25,623 57% 29,431 54% 34,683 50% 49% 46% 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 * Excluding interbank deposits TL* FX* Total 43% 46% 50% 51% 54% 15.3% market share in demand deposits (largest among private-sector banks) 2013 2014 2015 2016 2017 Q3 TL FX 16
Sufficient Capitalization 270,199 40,996 282,138 42,138 280,496 46,377 286,600 48,672 Comfortable level of capital Capital Adequacy Ratio RWAs & Regulatory Capital (TL mn.) 16.53% 16.98% 15.17% 14.94% 13.14% 13.01% 14.01% 14.06% 16 Q4 17 Q1 17 Q2 17 Q3 CAR Tier I Ratio Equity Growth (TL mn.) 25.0% 25.0% 20.3% 20.1% 17.5% 20.7% 16 Q4 17 Q1 17 Q2 17 Q3 RWAs Regulatory Capital Capital adequacy ratio is well above the regulatory limit. 47,180 40,461 6,238 35,244 31,535 4,500 3,209 23,329 25.006 2,224 17,921 610 1,427 40,942 29,311 32,035 35,961 22,719 23,579 17,921 2011 2012 2013 2014 2015 2016 2017 Q3 Shareholders' Equity Cash Dividends Reinvested at ROE Payout Ratio Buffers (%) 2017 2018 2019 Capital Conservation Buffer 1.25 1.875 2.5 Counter Cyclical Buffer (1) 0.022 SIFI Buffer (2) 1 1.5 2 (1) To be determined in the relevant years (2) Taken into consideration only on a consolidated basis 17
Income Statement Highlights (QoQ) Main Income Statement Items (TL mn.) 2017 Q2 2017 Q3 QoQ Net Interest Income 3,205 3,220 0.4% (1) (-) SWAP Cost 414 467 12.8% Net Interest Income Incl. Swap Cost 2,791 2,753-1.4% Net Fees & Commissions 817 821 0.5% Net Trading Gains/Losses Excl. Swap Cost -101 15 NM Dividends Received 225 94-58.5% Released Provisions 185 234 26.4% Other Operating Income 76 50-34.3% Total Operating Income 3,993 3,967-0.7% HR Expenses 923 830-10.0% Non-HR Expenses 1,000 998-0.2% Total Operating Expenses 1,923 1,828-4.9% (2) Total Operating Expenses - Adj. 1,857 1,765-5.0% Operating Profit 2,070 2,138 3.3% Operating Profit - Adj. (2) 2,136 2,202 3.1% Specific Loan Loss Provisions 488 501 2.6% General Provisions 49 61 25.1% Other Provision Charges 22 50 124.0% Total Provision Charges 559 612 9.4% Tax Provisions 267 310 16.3% Net Income 1,245 1,216-2.3% NM: Not meaningful (1) Based on MIS data (2) Adjusted for one-off and non recurring items. Please see Appendices 1 and 2 on pages 35 and 36. Operating Income Composition 80.3% 81.2% 20.5% 20.7% 12.2% 9.5% -12.9% -11.4% 2017 Q2 2017 Q3 31.2% 30.7% 20.7% 23.2% 14.4% 14.7% 23.1% 20.9% 10.6% 10.5% 2017 Q2 2017 Q3 NII Net Commissions Other Income Net Trading Income Allocation of Operating Income Net Profit Total Provision Charges Adm. Expenses Personnel Expenses Other Operating Expenses 18
Income Statement Highlights (YoY) Main Income Statement Items (TL mn.) 2016 9M 2017 9M YoY Net Interest Income 7,806 9,653 23.7% (1) (-) SWAP Cost 686 1,095 59.7% Net Interest Income Incl. Swap Cost 7,121 8,558 20.2% Net Fees & Commissions 2,046 2,439 19.2% Net Trading Gains/Losses Excl. Swap Cost -244-133 45.3% Dividends Received 682 718 5.2% Released Provisions 551 672 21.9% Other Operating Income 548 232-57.7% Total Operating Income 10,705 12,486 16.6% Total Operating Income - Adj. (2) 10,405 12,486 20.0% HR Expenses 2,165 2,511 16.0% Non-HR Expenses 2,512 2,882 14.7% Total Operating Expenses 4,677 5,393 15.3% Total Operating Expenses - Adj. (2) 4,475 5,198 16.2% Operating Profit 6,027 7,092 17.7% Operating Profit - Adj. (2) 5,930 7,287 22.9% Specific Loan Loss Provisions 1,586 1,610 1.5% General Provisions 209 325 55.9% Other Provision Charges 195 106-45.6% Total Provision Charges 1,990 2,041 2.6% Total Provision Charges - Adj. (2) 1,852 2,041 10.2% Tax Provisions 701 948 35.2% Net Income 3,337 4,103 23.0% NM: Not meaningful (1) Based on MIS data (2) Adjusted for one-off and non recurring items. Please see Appendices 1 and 2 on pages 35 and 36. Operating Income Composition 72.9% 77.3% 19.1% 19.5% 16.6% 13.0% -8.7% -9.8% 2016 9M 2017 9M 31.2% 32.9% 25.1% 23.9% 13.3% 13.0% 20.2% 20.1% 10.2% 10.1% 2016 9M 2017 9M NII Net Commissions Other Income Net Trading Income Allocation of Operating Income Net Profit Total Provision Charges Adm. Expenses Personnel Expenses Other Operating Expenses 19
Commissions Income Performance Fees and Comm. Income (Net) Gross Fees & Comm. Income (TL mn.) (TL thousand) 2016 9M 2017 9M YoY Non-Cash Loans 319,697 420,505 31.5% Cash Loans 274,279 307,431 12.1% Mutual Fund Man. & Other Inv. Acc. Fees 163,296 199,117 21.9% Credit Cards (Net) 846,221 921,417 8.9% Fund Transfer (Net) 224,464 305,914 36.3% Insurance 124,305 165,619 33.2% Account Keeping Fees (*) 48,423 49,310 1.8% Other 45,062 69,723 54.7% Net Fees & Commissions 2,045,746 2,439,036 19.2% Composition of Net Comm. Income 21.6% 2,926 2,406 2016 9M 2017 9M Commission Income Coverage 29.0% 29.8% 8.0% 8.2% 41.4% 37.8% Lending Related Fees Mutual Fund Man. And Other Inv.Acc.Fees Credit Cards (*) 94.5% 97.1% 43.7% 45.2% 21.6% 24.2% 2016 9M 2017 9M Other 2016 9M 2017 9M Net Comm.Income/Operating Expenses Net Comm.Income/Personnel Expenses (*) Retail account keeping fees have been suspended since the end of January 2016. 20
Margin & Spreads (1) NIM (Cumulative) (2) TL Loan-Deposit Spread (Quarterly) NIM NIM - Swap Adjusted 4.27% 4.37% 3.93% 3.87% 14.07% 14.31% 8.54% 9.22% 5.53% 5.09% Loan Yield Deposit Cost TL Spread 2016 2017 9M 2017 Q2 2017 Q3 NIM (Quarterly) (2) FX Loan-Deposit Spread (Quarterly) NIM NIM - Swap Adjusted 4.33% 4.24% 3.77% 3.63% 5.26% 5.52% 1.34% 1.36% 3.92% 4.16% Loan Yield Deposit Cost FX Spread 2017 Q2 2017 Q3 2017 Q2 2017 Q3 (1) Based on MIS data (2) Interest earning assets include Central Bank reserves. 21
Effective Cost Management Cost / Income (1) Employees per Branch 46.2% 43.7% 43.4% 41.4% 19.5 18.4 17.9 18.3 18.8 19.1 17.1 17.3 17.6 18.0 18.0 18.0 2016 Q3 2017 Q3 Cost / Income Cost / Income (Adjusted) (2) 2012 2013 2014 2015 2016 2017 Q3 İşbank Peer Average Cost vs. Assets 2.29% 2.22% 2.09% 2.12% 2016 Q3 2017 Q3 Cost/Av. Assets (1) Cost/Av. Assets (Adjusted) (3) Cost Structure 11.6% 10.5% 4.5% 4.5% 7.1% 8.3% 30.5% 30.2% 46.3% 46.6% 2016 9M 2017 9M Other SDIF Fees Depreciation Other Op. Expenses Personnel Expenses (1) Calculations are based on trailing four quarters data (2) Cost and income figures are adjusted for non-recurring and other items given in Appendix on page 36. (3) Adjusted for non-recurring and other items given in Appendix-2 on page 36. (4) Peer banks are defined as the closest 3 private sector banks. 22
Profitability Ratios ROAA ROAE 15.63% 14.83% 16.59% 17.46% 13.70% 13.15% 12.14% 13.75% 14.45% 1.66% 1.64% 1.52% 1.54% 1.19% 1.63% 1.66% 1.68% 1.72% 10.40% 1.17% 2013 2014 2015 2016 2017 Q3 (1) (1) 2013 2014 2015 2016 2017 Q3 ROAA ROATA (2) ROAE ROATE (2) (1) Calculations are based on trailing four quarters data. (2) Tangible Equity (TE) and Tangible Assets (TA) are calculated by the deduction of M-t-M valuation differences regarding AFS portfolio, listed participations and real estate portfolio from shareholders equity and total assets. 23
Digitalisation Share of Transactions per Channel Number of Customers ( 000) 23X 1,7X 74.8% 37.6% 30.3% 2.2% 83.8% 85.9% 31.9% 37.8% 25.1% 22.8% 22.9% 21.5% 207 3,633 4,739 2,768 2,809 1,620 5.6 mn Digital Customers (*) 2011 2012 2013 2014 2015 2016 2017 Q3 Internet Banking ATM Mobile Banking Total Non-Branch Digital Banking Market Shares (*) Mobile Banking Internet Banking 2011 2016 2017 Q3 (*) As of October 2017 Share of Digital Channels in Sales (*) # Transactions Mobile Internet Banking Banking Investment 27.0% 17.7% Credit Cards 19.7% 21.3% Money Transfer 20.3% 15.7% Payments 21.8% 13.8% 57.0% Time Deposits 35.0% GPLs (*) Source: TBA, as of 2017 Q2 (*) Unit retail sales in 2017 9M 24
Ratings FC Issuer Credit LC Issuer Credit Turkish National Scale Rating* BB / Negative / B BB / Negative / B traa- / tra-1 Rating* FC Issuer Default Rating BB+ / Stable / B LC Issuer Default Rating BB+ / Stable / B National Long Term Rating AA+(tur) / Stable Viability Rating bb+ Support Rating 4 Support Rating Floor B+ FC Bank Deposit LC Bank Deposit FC Issuer FC Subordinated Debt Rating* Ba2 / Negative / Not-Prime Ba1 /Negative / Not-Prime Ba1 / Negative Ba3 / B1 (hyb) * Long term / Outlook (if exists) / Short term 25
Isbank at a Glance 3 Financial Highlights 7 Retail Banking 26 Major Equity Participations 29 26
Credit Card Business Over 325,000 Maximum Sales Points and over 322,000 chains are included in loyalty programme. The number of cards reached 11.5 million, 7.3 million of which are issued to Bank s own customers. Largest e-commerce acquirer in Turkey. 13 alternative payment methods (Ideal, Giropay, EPS, Alipay, QIWI, Mybank, Sofort, Entercash, Bancontact, Multibanco, P24, Trustpay, Safetypay) in e-commerce. Online merchants are able to accept these payment methods thanks to Isbank s strong e-commerce API. Acceptance of Visa, Mastercard, American Express, JCB and Union Pay branded cards. Merchant acquiring in UK, Iraq and Georgia in addition to Turkey. Issuing debit cards in Iraq, UK, Georgia and Kosovo in addition to Turkey. (TL million) (*) 2016 9M 2017 9M Change Issuing Volume 60,526 70,290 16% Issuing Volume Market Share 13.6% 14.2% 0,5 pp Acquiring Volume 68,730 84,581 23% Acquiring Volume Market Share 15.8% 16.8% 1,1 pp Balance 12,623 14,355 14% Number of Credit Cards (000) 6,932 7,310 5% Number of P.O.S. Terminals 487,845 467,754-4% * According to Interbank Card Center data 27
Strong Retail Customer Base supported by payroll accounts and bill payment agreements. Payroll Accounts (TL mn) (Total amount of wages paid in the period) Automated Bill Payments (TL mn) 39,102 40,793 30,271 28,624 6,694,922 7,003,586 2016 9M 2017 9M Amount (TL mn) 2016 9M 2017 9M Amount (TL mn) Number of Active Payments Automated bill payments and payroll accounts are important sources for low cost demand deposits. Payroll accounts create significant cross selling opportunities. 28
Isbank at a Glance 3 Financial Highlights 7 Retail Banking 26 Major Equity Participations 29 29
Isbank and Its Participations as one of the biggest conglomerates in Turkey. Isbank Banking Services Corporate Banking Commercial Banking Retail Banking Private Banking Capital Market Operations Other Banking Services Core Business Financial Participations Insurance Private Pension Asset Management Venture Capital Investment Banking REIT Leasing & Factoring Non-core Business Non-financial Participations Glass Others Brokerage & Custody 30
A Diversified Equity Participation Portfolio Sectoral Breakdown Glass 49.4% Other 5.3% Banks 16.7% Insurance 9.8% 18.8% Financial Ins. Non-Financial 54.7% Financial 45.3% As of 30 September 2017, Isbank has 19 participations. Since 2002, a total of 41 participations has been divested. Share of participations in total assets is 3.5% as of the end of 2017 Q3. Non - Listed 14.9% Listed 85.1% 31
Glass General Information Market/Production Shares (%)* Turkey Europe 2,3 World 3 A leading flat glass, glassware, glass packaging, glass fibre, soda ash and chromium chemicals producer in the domestic market. Backed by its vision, Şişecam expands its production operations into neighbouring countries. 65.47% share of Şişecam is held by İşbank. Flat Glass 66.0 20.3 3.6 Glassware 69.0 17.0 11.0 Glass Packaging 62.8 6.3 2.5 Soda Ash 4 47.0 15.4 3.3 Chromium Chemicals 5 85.0 47.0 27.0 Financial Information (Con., IFRS) USD (Million) 2017/6 2016/12 Total Assets 5,688 5,488 Shareholders Equity 3,426 3,246 Net Sales 1,537 2,413 International Sales 1 885 1,268 Gross Profit 475 725 1. Includes exports and sales from production abroad. 2. Market shares including Turkey. For Soda Ash and Flat Glass, European market does not include Russia and Ukraine. 3. Production/capacity shares. 4. Soda products are based on heavy soda ash and light soda ash in the domestic, European and Global market. Soda ash sales within Turkey and BiH are considered in European market share. 5. Chromium chemicals are based on Basic Chromium Sulphate. *market share in production capacity as of 06.2017 EBITDA 428 607 32
Production Plants of Şişecam Flat glass Glassware Glass packaging Chemicals The Group enlarges its business area by expanding its operations to the fastest-growing countries in its region 33
List of Financial Participations Company Name Field of Activity Bank s Direct Share(%) Risk Group Share (%) Shareholders Assets (USD Market 000) (3) Equity (USD 000) (3) Share (%) (3) Basis for Market Share Türkiye Sınai Kalkınma Bankası A.Ş. Investment Bank 40.52 50.00 7,417,296 914,900 17.1 Total Assets İşbank AG Banking 100.00 100.00 1,526,789 145,150 N/A JSC İşbank Banking 100.00 100.00 225,896 66,885 N/A JSC Isbank Georgia Banking 100.00 100.00 119,340 12,677 N/A Total Assets Anadolu Anonim Türk Sigorta Şirketi Insurance - 64.31 1,876,907 382,944 11.8 Premium Income Anadolu Hayat Emeklilik A.Ş. Life Insurance & Private Pension 62.00 83.00 4,630,544 241,674 18.7/ 8.5 (1) Management / Life Premium Private Pension Funds Under Income Milli Reasürans T.A.Ş. Reinsurance 76.64 77.06 953,397 446,992 8.3 (2) Premium Income İş Yatırım Menkul Değerler A.Ş. (4) Brokerage House 65.65 70.69 2,213,302 254,420 8.1 Transaction Volume Yatırım Finansman Menkul Değerler A.Ş. (4) Brokerage House - 98.42 210,134 22,023 4.4 Transaction Volume İş Yatırım Ortaklığı A.Ş. Trust Company - 38.66 66,514 65,534 51.0 NAV İş Portföy Yönetimi A.Ş. Portfolio Mngt. - 100.00 26,473 25,261 20.9 Funds Under Management İş Finansal Kiralama A.Ş. (4) Leasing 27.79 57.39 2,475,482 258,164 8.9 Lease Receivables İş Faktoring A.Ş. Factoring - 100.00 1,115,294 44,171 11.6 Factoring Receivables İş Gayrimenkul Yatırım Ortaklığı A.Ş. REIT 42.23 58.04 1,472,629 905,747 5.1 Market Value İş Girişim Sermayesi Yatırım Ortaklığı A.Ş. Risk Venture - 57.67 74,694 74,066 - Efes Varlık Yönetim A.Ş. Asset Management - 100.00 50,882 5,546 - TOTAL 24,455,573 3,866,154 (1) As of June 30, 2017; total amount of funds (including state contribution) managed within private pension system is TL 69.7 billion while Anadolu Hayat Emeklilik accounts for 18.7% of this figure. The company s market share in life insurance market is 8.5% as of the same date. (2) Milli Reasürans T.A.Ş. is the only reinsurance company backed by national capital operating in Turkey with a market share of 8.3%. The rest 91.7% is shared by foreign reinsurance companies. (3) As of 30.06. 2017 (4) Consolidated amount 34
Appendix 1 Income Statement Highlights (TL mn.) 2017 Q2 2017 Q3 QoQ 2016 9M 2017 9M YoY Net Interest Income 3,205 3,220 0.4% 7,806 9,653 23.7% (-) SWAP Cost(*) 414 467 12.8% 686 1,095 59.7% Net Interest Income Incl. Swap Cost 2,791 2,753-1.4% 7,121 8,558 20.2% Net Fees & Commissions 817 821 0.5% 2,046 2,439 19.2% Net Trading Gains/Losses Excl. Swap Cost -101 15 NM -244-133 45.3% Dividends Received 225 94-58.5% 682 718 5.2% Released Provisions 185 234 26.4% 551 672 21.9% Other Operating Income 76 50-34.3% 548 232-57.7% Total Operating Income 3,993 3,967-0.7% 10,705 12,486 16.6% (-) Payment from Visa 0 0 NM 300 0 NM Total Operating Income - Adj. 3,993 3,967-0.7% 10,405 12,486 20.0% HR Expenses 923 830-10.0% 2,165 2,511 16.0% Non-HR Expenses 1,000 998-0.2% 2,512 2,882 14.7% Total Operating Expenses 1,923 1,828-4.9% 4,677 5,393 15.3% (-) Fee Rebates 6 3-45.7% 77 15-80.7% (-) Pre-Provision for Pension Fund 60 60 0.0% 125 180 44.0% Total Operating Expenses - Adj. 1,857 1,765-5.0% 4,475 5,198 16.2% Operating Profit 2,070 2,138 3.3% 6,027 7,092 17.7% Operating Profit - Adj. 2,136 2,202 3.1% 5,930 7,287 22.9% Specific Loan Loss Provisions 488 501 2.6% 1,586 1,610 1.5% General Provisions 49 61 25.1% 209 325 55.9% Other Provision Charges 22 50 124.0% 195 106-45.6% Total Provision Charges 559 612 9.4% 1,990 2,041 2.6% (-) Provisions for Payment to SDIF 0 0 NM 138 0 NM Total Provision Charges - Adj. 559 612 9.4% 1,852 2,041 10.2% Tax Provisions 267 310 16.3% 701 948 35.2% Net Income 1,245 1,216-2.3% 3,337 4,103 23.0% NM: Not meaningful (*) Based on MIS data 35
Appendix 2 Non-recurring and Other Items (TL mn.) 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 Other Operating Income Payment from Visa 300 Total Operating Income 300 Non-HR Expenses Fee rebates 26 12 9 6 6 3 Provision expenses related to pension fund 125 88 60 60 60 Provision for pension fund 213 Pre-provision for pension fund 125-125 60 60 60 Other Provision Charges Provisions for payment to SDIF Impairment charge for an unlisted participation 149 Total Expenses 26 137 247 66 66 63 36
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Investor Relations Contact Details Süleyman H. Özcan Head of Investor Relations Division Phone : + 90 212 316 16 02 E-mail : Suleyman.Ozcan@isbank.com.tr Alper Turgal Unit Manager of Investor Relations Division Phone : + 90 212 316 16 10 E-mail : Alper.Turgal@isbank.com.tr 38