2016 About us 1 1863 The foundation of Ziraat Bank 1888 First deposits accepted in return for interest 1892 First loan to the Treasury 1916 ID: 1002348
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1. 0TCZB PRESENTATIONMarch 2016
2. About us11863: The foundation of Ziraat Bank1888: First deposits accepted in return for interest1892: First loan to the Treasury1916: First government bond sale made1975: Hamburg agency and branches in Cyprus1983: New York agency became a branch1988: Ranked 452nd in Euromoney’s top 500 banks1989: First consumer loans and credit cards issued1993: Ranked 202nd in Euromoney's top 500 banks2000: Became a joint-stock company2009: Announced the largest profit made by any Turkish company to date2013: 150th anniversary of foundation2015: The front-runner corporate taxpayer in 2014Our VisionTo be a bank that is universal, respected and has high market value; a bank that provides extensive, reliable service everywhere in Turkey and the world at the same quality, and meets the needs of every segment; a bank that sees human resources as its most valuable asset; a bank that continuously makes a difference and creates value in a way that befits its deep-rooted past; a bank that promises more from a bank at every stage and serves as a model for its competitors.
3. GermanySubsidiariesInternational BranchesBosnia & HerzegovinaKazakhstanRussiaAzerbaijan*TurkmenistanUzbekistanMontenegro*UKUSAGeorgiaBulgariaSaudi ArabiaTurkish Rep. of Northern CyprusIraqKosovoGreeceLocal subsidiaries and international networkCommercial bank Sound and improving financial outlookThe BankLocal Subsidiaries Ziraat Sigorta (insurance)Ziraat Hayat ve Emeklilik (pension)Ziraat LeasingZiraat Yatırım (securities brokerage & investment house)Ziraat Portföy (asset management)Ziraat Teknoloji (IT)Ziraat Participation Bank (Islamic Banking)International NetworkOver 150 years of banking legacy Owned by Turkish Undersecretariat of Treasury More than 30 mn customers Appetite to grow locally and globallyInvestment grade ratings since 2012 4Presence in 18 countries, 97 service points*Started its operations as of July 2015Plans to open a new branch in Bahrein, 3rd branch in Georgia and 2nd branch in KosovoPlans to establish Real Estate Investment Trust
4. Key financialsKey Financials 2015 (TL bn / (%) ) ZiraatSector Total Assets 3032,357Cash Loans1871,500Securities65330Total Deposits1871,321*Shareholders’ equity 32262Net Profit5.226.1ROAE 17.311.3ROAA 1.81.2NIM4.54.4Loan/Deposit98**113.6Cost/Income39.546.6NPL1.73.1Tier 1 ratio 14.013.3Capital Adequacy Ratio 15.115.6Market Shares (%)2012201320142015Assets11.912.012.412.8Cash Loans8.810.411.412.5Securities24.221.921.419.7Deposits14.514.213.714.1Non-Cash Loans6.49.010.713.1 Rankings* (among top 7 banks) Total AssetCash LoansEquity1512DepositConsumer Loan12015 201214Non-Cash Loan27241Net ProfitROAENIM41ROAA215CAR112125* As of 15.02.2016
5. Relationships with Central BankCorrespondent Bank Protocol - ISigned between Central Bank and Ziraat Bank.Coordinated among Ziraat Bank, Central Bank, Turkish Treasury, Ministry of Finance.Regulates the process and structure of the relationships between Ziraat Bank and Central Bank.Envisages collection processes of Ziraat Bank both as TL, FX, cash and cheque.Determines the annual fee paid by Treasury to Ziraat Bank via Central Bank for the operations realized by Ziraat Bank under the approval of Treasury.Determines separately the accounting units (tax offices and local accounting units of MoF) of which the collections would be received by the Bank at the units’ location and other units whose collections will be delivered at the Bank’s branches.
6. Relationships with Central BankCorrespondent Bank Protocol - IICollections received until 17:00 via EFT/bank transfer to accounting units’ collection accounts are transferrred to Treasury’s Single Collection account within the same day.Collections received after 17:00 are transferred next morning until 9:30.Collections in the form of cheque are principally subject to be transferred within the same day. However, the deadline for this kind of transfers is 9:30 in the next day.If there are any uncollectable cheques , the information about them is submitted daily to Ministry of Finance and they are sent back to the accounting unit in three days.Foreign axchange collections are transferred to the relevant Treasury foreing exchange account in the next day.
7. Treasury cash management1972-2007 (THH)Payments via Ziraat BankSame deposit accounts for payments and collectionsWeekly reconciliation (on Wednesday) Insufficient reporting 2007-2012 (THCH-SAY2000i)Agreement (31.08.2007), ZB-Treasury-Ministry of Finance Different deposit acoounts for payments and collections (1000-2000)Electronic payment system among ZB-Treasury-Ministry of Finance (say2000i) – written payment ordersEFT and remittences to collection accounts in ZB and cash trasported from accounting units by ZB transfered to Treasury accounts on Central Bank
8. Treasury cash management2012-2016 (THCH-KEOS)Payments via Central Bank Electronic payment system (EFT) among CB-Treasury-Ministry of Finance (KEOS) – electronic payment ordersPayment Accounts in Central BankCollection Accounts in Ziraat Bank (1000)EFT and remittences:17.30 (TL)Cash and cheque: 09.30 (TL)FX on Fridays (daily starting from 2016)
9. ZB Cash Management Cash management solutions for THCHCash Pooling on daily basis for TL (1,500 account) and FX accountsScheduled Electronic Fund Transfers to Central BankElectronic Bank StatementsCash transportation service on daily basis (370 destination)PTT and other banks’ mediation
10. Transaction Data 2014-2015
11. APPENDIX10
12. Branch networkDistribution of new domestic branches (%)Evolving branch efficiency * Source:BRSA6Loan (mn TL)/BranchDeposit (mn TL) /BranchProfit (mn TL) /Branch# of Staff/Branch
13. Market share in # of ATMsAlternative distribution channels (ADCs)Increased integration among distribution channelsMore transactions performed through ADCs (2012: 50% 2015: 94%)Investments for ATMs continueDistinctive sector leadership in number of debit cards with more than 22 mn customers Increasing number and capacity of call centers # of customers using internet banking (mn)Market share in debit card ownership 2015 (%)12 Source: Interbank Card Center6,0436,304# of ATMs5,4094,2336,4436,199
14. 13Successfully diversifying asset base22% asset growth YoY (Currency adjusted growth: 16%)Asset growth mainly driven by business loan growthTL Asset / Total Assets : 66% AssetsComposition of assets 2015 (%)Moderate growth in line with market environment21162%208299248303Asset growthLoan growth32%Loan / Asset More customer driven balance sheet Source: Sector data BRSATL loan growth 28% YoYFX loan growth 17% YoY( in USD terms)
15. Loan BookLoan book by customer segmentation*(%) Currency breakdown of loans 2015 (%)Breakdown of business loan book by sector 2015 (%)14Sector loans among segments (%)
16. CoR* (%)Asset Quality15NPL and coverage ratios * (%)Low stock of NPLs with high provisioningWell-functioning credit evaluation policies & proceduresEffective monitoring & strong collection systems in practice * Gross CoR: (specific provisions expenses+general provisions expenses)/(average loans) Specific CoR:(specific provisions expenses)/(average loans)79%Ziraat Bank Coverage*78%75%NPL ratio by segments (%)*Source: BRSA78%Proactive and prudent approach in risk assessment79%79% RetailCorporateSME 201420152014201520142015Ziraat1.41.41.51.22.42.1Sector*3.44.32.22.03.33.9
17. Composition of liabilities (TL bn)16Liabilities12% YoY TL deposit growth & 16% YoY FX Deposit (in USD terms)Strong funding through depositsComposition of liabilities 2015 (%) 163208Growth (%)QoQYoY2012- 2015Deposits-12257Non-Deposit Funds431261Equity8118422%86%299
18. Deposits & Non-Deposit FundsDeposits by customer segmentation* (%) Demand vs time deposits (% of total)186Total (TL bn)14211915317Granular and diversified deposit portfolioAccounts greater than TL 1 million / total deposits 38% (sector average 52%)Non-retail deposits (excluding the Bank deposits) increased 17% YoY Composition of non-deposit funds* (%)728
19. Capital Structure18Capital adequacy ratio (%)Following cautious leveraging policiesCAR is highly above the regulatory limit under various scenario analysisLeverage(x)*BRSA Target 12%Regulatory 8% * Leverage (x) : (Assets/Shareholders’ Equity) – 1 Tier-114.0Leverage decreased to industry levels
20. Profitability19Return on assets (%)Return on equity (%)Sector leader in profitability (5.162 mn TL)Loan growth and increasing fee income contributing to bottom lineEffective cost management*Source: BRSAMarket share in sector profits* (%)*Profit generated in the period
21. Balance Sheet Summary20TL mn20132014Q1 2015Q22015Q320152015% Change QoQ% ChangeYoYCASH AND BALANCES WITH THE CENTRAL BANK OF TURKEY26,60230,14934,78435,75238,64836,535-5.521.2BANKS 2,4652,1912,4503,8673,8694,44714.9103.0SECURITIES62,79864,56365,83364,50063,82364,8711.60.5LOANS111,048141,915158,353168,315181,381186,8133.031.6 -Gross NPL2,4172,7172,8422,9293,0013,1414.715.6 -Specific Provisions (-)1,6231,9322,0262,1072,1822,2714.117.5OTHERS4,6178,7829,86010,07511,36310,182-10.415.9TOTAL ASSETS207,530247,600271,280282,509299,084302,8481.322.3DEPOSITS141,735153,255162,509171,231187,984186,469-0.821.7FUNDS BORROWED8,55914,60817,33919,18220,13819,543-3.033.8INTERBANK MONEY MARKET24,57131,78141,52141,01339,78943,0868.335.6PROVISIONS3,9584,7584,9005,1135,0575,1612.18.5SHAREHOLDERS’ EQUITY18,36728,54029,83629,69029,24931,5467.910.5OTHERS10,34014,65815,17516,28016,86717,0431.016.3Source: Unconsolidated Financial Statements
22. Income Statement Summary21TL MN Q4 2013Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015% ChangeQoQ% ChangeYoYINTEREST INCOME4,0154,8114,9585,4425,6006,0518.125.8 -From Loans2,6093,4433,7123,9844,3824,5533.932.2 -From Securities1,3541,3061,1881,4291,1751,40419.57.5INTEREST EXPENSE1,9092,4032,5832,8243,0183,1163.229.7 -On Deposits1,5371,8741,9882,1172,2452,3193.323.7NET INTEREST INCOME2,1062,4082,3752,6182,5822,93413.621.8NET FEES & COMMISSIONS26829529331531837417.626.8 -Fees and Commissions Received32136137240540345713.426.6 -Fees and Commissions Paid546679918483-1.225.8OTHER OPERATING INCOME2351923812893293413.677.6OPEX1,0401,1361,1511,2121,4191,4260.525.5NET OPERATING PROFIT1,0131,3341,4521,6731,4551,98736.649.0NET PROFIT7541,0251,1021,3281,1521,58137.254.2Source: Unconsolidated Financial Statements
23. 22Key Financial Ratios(%)2013Q1 2014Q2 2014Q3 20142014Q1 2015Q2 2015Q3 20152015ROAA1.81.81.91.81.81.71.81.71.8ROAE18.519.017.917.316.415.316.716.317.3Cost to Income37.140.038.137.738.237.837.339.939.5NIM (cum.)5.24.54.64.74.74.74.74.54.5Loans/Deposits7885868893979896100Loans/Assets545455565758606162Securities/Assets302928262624232121NPL2.12.02.02.01.91.81.71.61.7Coverage757576767878797979CoR (Gross)1.60.90.90.90.91.21.00.90.8CAR13.217.318.717.618.216.816.014.315.1Leverage10.38.57.88.27.78.18.59.28.6# of Branches1,6611,6671,6741,6861,7071,7261,7601,8021,812Employees24,72524,52824,16124,00223,61724,49624,60924,89225,697ATMs5,4095,5735,7565,9346,0436,1996,3046,4436,566