TURKEY: RECENT DEVELOPMENTS January March 218
3 81 4 698 961 7 34 7 96 9 66 8 98 1 931 1 6 11 2 11 88 11 19 1 883 1 97 12 48 12 112 Per capita GDP tripled while nominal GDP quadrupled in last 1 years 237 311 44 49 Nominal GDP (bn USD) 872 829 762 769 67 643 9 934 88 862 849 3 27 2 22 2 17 1 Real GDP Growth (Index: 22=1) Avg. GDP Growth (23-17),8% Poland 3,9% Romania 3,9% Czechia 2,9% Hungary 1,9% 12 22 2 28 211 214 217 1 22 2 28 211 214 217 22 223 Per capita GDP (usd) Avg. Real GDP Growth (%) 6,6 4,3 3,1 22 2 28 211 214 217 1999-24 2-21 211-217 Source: Turkstat, CBRT 2
Jan 1 Apr 1 Jul 1 Oct 1 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jan 1 Apr 1 Jul 1 Oct 1 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jan 1 Apr 1 Jul 1 Oct 1 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 2-1Q 26-1Q 27-1Q 28-1Q 29-1Q 21-1Q 211-1Q 212-1Q 213-1Q 214-1Q 21-1Q 216-1Q 217-1Q 218-1Q Turkish economy recovered rapidly by V-shape growth 6 PMI Manufacturing Index 13 12 Industrial Production Index (seasonally adjusted, 21 = 1)* 114,3 11 49,6 1 9 48,9 8 4 7 6 8,3 4 Consumer Confidence Index Real Sector Confidence Index 8 11 111,2 7 71,9 11 7 6 6 67,7 1 1 11,7 9 * Monthly data is averaged for each quarter. Latest figure: February 18 Source: Turkstat, CBRT, Bloomberg 3
Favourable Demographics: Half of population under age 3 TURKEY 8-84 7-74 6-64 -4 4-44 3-34 2-24 1-14 -4 -, -,3 -,1,1,3, Females Males EUROPE 1+ 9-94 8-84 7-74 6-64 -4 4-44 3-34 2-24 1-14 -4 -, -,3 -,1,1,3, Males Females 12 11 Working Age Population (1-64) (Index: 214=1) 7 7 Total Dependency Ratio (%, Age: -14 & >64 / Age: 1-64) Europe 11 6 1 6 1 9 9 8 Europe 214 216 218 22 222 224 226 228 23 232 234 4 214 216 218 22 222 224 226 228 23 232 234 Source: Turkstat, Eurostat, UN, 216 4
High potential with young population and improving workforce Employment (mio) 26 27 27 28 28 2 2 21 21 22 23 24 2 217 ~1.k 26 27 28 29 21 211 212 213 214 21 216 217 218 - Jan Unemployment rate (%) 2 Labor Participation Rate (%) 6, 1,3 2, 2,8 2,1 2 44, 44,3 44,9 4,7 46, 47,4 47,6 48,3 1 13,1 4 11,1 1,9 1,9 1, 9,9 1,3 1,8 1 9, 9,2 9,1 8,4 9, 3 26-16 avg. 688k New job creation in 217 is nearly 1,x of previous 1 year average. 2 26 27 28 29 21 211 212 213 214 21 216 217218 - Jan Source: Turkstat
Strong fiscal discipline has been the main pillar of economic policy Budget Deficit (%GDP) 3, Maastricht criterion: 3% 1,3 1,9 1, 1,1 1, 1,1 1, 21 211 212 213 214 21 216 217 * Latest figure: December 217 Peers' Budget Deficit (%GDP) General Government Debt Stock (%GDP) 9 6 83,8 86,1 89,4 91,3 91,8 89,9 88,9 86,6 84,2 Eurozone 3 7,3,3 4,8,2 4,9,2 4,2 4,7 3,7 4,1 3, 2,4 2,4 2, 2,9 9, 9, 8, 3,8 4,1 4,4 2,6 2, 1,7 21 211 212 213 214 21 216 217 Brazil S. Africa Poland Maastricht criterion 4,1 36, 32,7 31,4 28,8 27,6 28,3 28, 27,8 21 211 212 213 214 21 216 217 218 Eurozone Source: Bloomberg, IMF Data Mapper 6
Decreasing trade gap with diversified export markets 's Share in World Total Export Exports (% of total) 1,% 46 39 42 43 44 48 47,8%,8%,8%,9%,9% 1,% 21 28 23 22 22 22 23 211 212 213 214 21 216 217 211 212 213 214 21 216 217 EU Near and Middle Eastern Trade Balance (bn USD) Composition of Imports (%) 4 4 1 83 99 84 63 6 77 1 11,% 27 12,2% 217 3 3 2 2 1 13 241 237 22 242 12 12 18 27 199 144 143 17 234-1,9% 14,2% 1-1 73,1% 73,6% 211 212 213 214 21 216 217-1 * Latest figure: December 217 Source: Bloomberg, Turkstat Total Exports Total Imports Foreign Trade Gap 7
Current account deficit is steadily decreasing Current Account Deficit (% GDP) 9, 1,6% 1,4% 's Share in Global FDI Inflows 3, 4,2,7,4,1 1,8,8, 6,7 4,7 3,7 3,8 4,7 1,2% 1,%,8%,6%,4%,2%,4%,7% 24 2 26 27 28 29 21 211 212 213 214 21 216 217 * Latest figure: Q3, 217,% 24 2 26 27 28 29 21 211 212 213 214 21 216 3 3 2 2 1 1 - -1 Portfolio Inflows (12-month cumulative, bn USD) -1 26 27 28 29 21 211 212 213 214 21 216 217 218 3 3 2 2 1 1 Foreign Direct Investment Inflows (12-month cumulative, bn USD) 24 2 26 27 28 29 21 211 212 213 214 21 216 217 Equity Security Source: Bloomberg, CBRT 8
Central bank is implementing tight monetary policy 14 12 CBRT INTEREST RATE CORRIDOR (%) 13, 16 14 12 1 CBRT Funding Composition (billion TRY) 129 1 8 6 8 6 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Overnight Lending Rate Overnight Borrowing Rate 1-week REPO Rate CBRT Average Funding Rate - day MA Late Liquidity Window Lending Rate 4 2 Jun-16 Dec-16 Jun-17 Dec-17 One Week Repo Late Liquidity Window Overnight Lending Net Open Market Operations The rise in inflation is expected to be temporary 16 14 12 Annual CPI (%) 1 8 6 4 Mar-12 Mar-13 Mar-14 Mar-1 Mar-16 Mar-17 Mar-18,2, 4,8 4,6 4,4 4,2 4, 3,8 3,6 3,4 3,2 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 USD/TRY Basket (. EUR &.USD) EUR/TRY Source: Bloomberg, CBRT 9
Argentina Indonesia Mexico Hungary Brazil Czech Rep. Canada Russia China Poland Ireland Austria Netherlands Belgium Spain France USA Germany Italy India UK Japan Portugal Greece Argentina Canada Hungary Mexico Czech Rep. Indonesia Brazil Netherlands China Austria Belgium Poland Japan Russia France Spain Germany Ireland UK Italy India Portugal USA Greece Ireland Indonesia Netherlands UK Germany China France Belgium Austria Brazil Czech Rep. Poland Greece Japan Hungary Argentina Mexico Spain Italy Portugal Canada USA India Russia Greece Italy Portugal Ireland Russia India Spain Hungary Poland Czech Rep. Brazil France Belgium Indonesia Austria Netherlan Mexico Argentina Germany Japan USA UK China Canada Well capitalized, strong banking sector attracts foreign interest 3 2 2 1 1 27 Capital Adequacy Ratio (CAR) (%) 46 23 22 21 19 19 19 18 18 18 18 18 17 17 17 16 16 16 16 1 1 1 1 13 12 4 4 3 3 2 2 1 1 Non-performing Loans to Total Gross Loans (NPL) (%) 16 13 12 1 1 4 4 4 4 4 3 3 3 3 2 2 2 2 2 1 1 1 1 4 3 2 1-1 4, Return on Assets (ROA) (%) 2,4 2, 2, 1,9 1, 1,1 1,1 1, 1,,8,8,8,7,7,,4,4,4,3,3,3,3,3 -,2 4 4 3 3 2 2 1 1-39 Return on Equity (ROE) (%) 21 2 2 19 17 16 14 13 13 1 1 8 8 8 7 7 7 6 3 3-1 Source: IMF FSI Latest Available Data for Each Country 1
The banking sector grew as a result of its strong asset quality and was able to maintain high profits 6,4, 3,9 3,6 3,8,6 3,8 2,8 2,9 2,8 2,9 3,2 3,4 3,1 3, Non-Performing Loan Ratio (%) 3. Banking Sector Total Asset (billion TL) 3.28 3.37 3. 2.731 2. 2.37 2. 1.732 1.994 1. 1. 1.371 1.218 1.7 21 211 212 213 214 21 216 217 218-Q1 * Latest figure: March 218 18,97 16,6 Capital Adequacy Ratio (%) 17,9 16,3 1,3 1,6 1,6 16,9 16,6 2 16 12 11,28 Profitability Ratio (%) 14,28 16,4 Target Rate of %12 8 Legal limit of %8 21 211 212 213 214 21 216 217 218 * Latest figure: March 218 4 1,16 1, 1,63 Dec-21 Dec-216 Dec-217 Net Income / Average Total Assets (%) Net Income / Average Shareholder's Equity (%) Source: BRSA 11
Tourism revenues and number of visitors doubled between 24-214. Strong recovery has been continuing in 218! 2 17 24 23 2 19 27 21 # of Visitors vs. Revenues 31 32 33 2 2 2 36 36 28 29 39 32 41 42 34 31 31 22 39 4 26 27 6 4 2-2 -4 Foreign Arriving Visitors Change (YoY,%)* 34,8 24 26 28 21 212 214 216 218 L12M Revenue (bn. USD) # of tourists (mio) -6 26 27 28 29 21 211 212 213 214 21 216 217 218 * Latest figure: March 218, Direct Contribution to GDP* (%) 1 Tourism Revenue* 4, 4, 3, 24 27 21 213 216 219 222 22 * Based on WTTC data 24 27 21 213 216 219 222 22 Source: Turkstat, WTTC 12
Air traffic more than tripled in last 1 years 1, billion people and $24T GDP at 4 hour flight-distance mio 2 Passengers Carried () 2 1 1 4 Domestic International Total 7 6 62 79 86 13 118 13 149 166 181 174 193 24 2 26 27 28 29 21 211 212 213 214 21 216 217 Turkish Airlines connects you to 33 destinations in 121 countries Source: Turkstat, Turkish Airlines Investor Presentation 13
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