HİZMETE ÖZEL

2016 Q1Earnings Presentation

Albaraka Türk

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 Q1 Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Macroeconomic Outlook

Turkey grew by 4.0% in 2015

Remaining current account deficit at a sustainable levels.

Exports continued to fall less than the decline in imports.

Current account deficit decreased to below USD 30 billion.

Consumer inflation dropped to 7.46 percent in Q1.

Domestic demand is expected to be stronger in 2016

1

World GDP growth rate was forecasted 3.2% by the IMF.

Postponing rate hike by the Fed.

Ultra-loose monetary policy incentives mainly by the ECB

Uncertainties related to the Chinese economy lessened recently.

Downtrend in international commodity prices continued.

Global Economy

Turkish Economy

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Banking Industry and Participation Banks

2

In 2016 Q1, net profit of banking sector raised 12% comparing to 2015 Q1

Year to Date, credit growth rate reached 1,8% while NPL amount raised 14,2%.

The loan growth lost some pace

Commercial loans continued to grow at a higher rate than consumer loans

Uptrend in the amount of NPL continues and the NPL ratios are increasing.

Banking Industry

In the first Quarter of 2016, continued to grew under the banking sector.

The plan to establish new publicly owned participation banks has been realizing andcontinuing branch network expansion.

Vakıf Katılım started to operate in 26th Feb.

Number of total branches reached to 1.095

Participation Banks

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 Q1 Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Net Profit63,1 mn TRL

Total Assets28,8 bn TRL

Total Credits19,9 bn TRL

Equity2,1 bn TRL

ROAE: %14,96NPSM: %4,12

NPL: %2,78

Loan/Deposits: %102,04

CAR: %12,22

Albaraka Türk 2016 Q1 Snapshot3

HİZMETE ÖZEL

24.817

27.046

29.213 29.562 28.811

9.627 10.206 9.738 10.265 10.364

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

TRL USD*

Growth in Total Assets

Funded Credits; 69%

Securities Portfolio; 6%

Liquid Assets; 22%

Other Assets; 3%

*USD equivalent of total assets

YoY Growth: 16,1 in TRL terms QoQ Growth: -2,5 % in TRL terms

Total Assets (million TRL) Asset Segmentation (Q1’16)

4

+16,1%

8,138,04

7,96

7,79

7,61

Q1'16Q4'15Q3'15Q2'15Q1'15

9,87

9,539,47

9,54

9,85

Q1'16Q4'15Q3'15Q2'15Q1'15

+9 bps

Growth in Funded Credits

861 926 971 1.052 1.072

705703

746763 746

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Available for sale Held to Maturity

1.5651.630 1.717

1.814 1.818

*USD equivalent of total funded credits

Total Funded Credits (including financial leasing, million)

Total Securities Porfolio ( TRL million)

5

Ytd Growth: 2,0% in TRL terms YoY growth: 14,3% in USD terms

17.39818.730 19.399 19.505 19.891

6.749 7.068 6.466 6.773 7.155

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

TRL USD*

Credit Yields(1) (%)

(1) Profit share income received from credits for the last 4Q/4Q average credits

Securities Yield(2) (%)

(2) Profit share income received from securities for the last 4Q/4Q average securities

16,2%

52 bpsYoY Growth

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Funded Credits PortfolioComposition of Total Funded Credits* (%)

Q1’15 Q2’15 Q3’15 Q4’15 Q1’16

Corporate Credits 36,3 38,7 39,8 38,9 38,7

SME Credits 50,1 46,6 45,9 46,7 46,5

Retail Credits 13,8 14,6 14,2 14,3 14,7

Total 100.0 100.0 100.0 100.0 100.0

*According to BRSA definition

Currency Composition of Total Funded Credits* (Q1’16)

58%28%

14%

TRL

USD*

EUR*

*Including USD & EUR indexed credits

58 62 62 62 60

1.9

65

2.3

90

2.3

82

2.4

31

25

83

120

130 124 124124

146

158 173 171167

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Credit Cards

Housing

Vehicle

Consumer

Total Retail Credits* (%)

Retail credits (excluding installment based

commercial credits and corporate credit cards)

grew to 2.934 million TRL in Q1 2016 up from

2.788 million TRL in Q4 2015

Housing finance is primary segment among retail

credits

6

+28,2%

*Excluding installment based commercial credits and corporate credit cards

HİZMETE ÖZEL

80,075,4

70,5

60,057,3

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

2,202,33

2,60

2,40

2,78

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

383

437

503468

553

306330

356

281317311 330

438 439

568

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

NPA Spesific Provisions Collateral

Asset Quality

Non-performing Loans (TRL million)

6760 63

7079

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Cost of Risk** (bps)

NPL Ratio*

** Spesific provisions for credits for last 4Q/ 4Q average credits

*Including financial leasing & accruals and rediscounts

Provisioning Ratio (%)

7

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21% 23% 21% 23% 24%

15% 15% 14% 16% 16%

65% 62% 64% 61% 61%

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Fund Borrowed Current Accounts Participation accounts

Composition of Total Liabilities (Q1’16, %) Composition of Funding Base (TRL million)

68

18

7

7

Funds Collected

Wholesale Funding

Shareholders' Equity

Other Liabilities

22.146 23.937 25.967

+15,3%

26.461

Total Liabilities8

25.526

HİZMETE ÖZEL

5,42%5,34%5,33%5,53%5,61%

8,15%7,84%7,66%7,77%7,74%

1,76%1,89%1,94%2,10%

2,30% 2,55%2,51%2,43%2,47%

2,49%

Q1'16Q4'15Q3'15Q2'15Q1'15

Average TL FC Precious Metal

Total Funds Collected

17.544 18.34820.438 20.346

19.494

6.805 6.924 6.813 7.065 7.012

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

TRL USD*

Total Funds Collected (million)

Cost of Funds Collected**

*USD equivalent of total collected funds

**Profit share expense to depositors for the last 4Q/4Q average participation accounts

5631

122

TRL

USD

EUR

Others

Currency Composition of Funds Collected (Q1’16, %)

Maturity Composition of Funds Collected (Q1’16, %)

21

16

53

227 Current Acc.

Up to 1 month

Up to 3 months

Up to 6 months

Up to 1 year

>1year

9

+11,1%

HİZMETE ÖZEL

Off balance sheet growth10

Off Balance Sheet Composition (%)

76 74 74 74 69

6 5 6 66

18 21 20 20 26

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

LG LC Others

LGs-to-Total Assets

29,3%28,2%

26,8%26,1%

27,8%

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

Off Balance Sheet (TRL million)

Q1’15 Q2’15 Q3’15 Q4’15 Q1’16

Growth (%)

Q-Q Y-Y

Letter of Guarantee 7.276 7.617 7.844 7.730 8.011 3,6 10,1

Letter of Credit 548 520 626 640 681 6,4 24,3

Others* 1.713 2.150 2.101 2.041 3.001 47,0 75,2

Total: 9.536 10.288 10.570 10.411 11.693 12,3 22,6

*Revocable credit limits not included.

HİZMETE ÖZEL

Income- Cost Dynamics11

(000 TRL)

Year on Year Change Quarterly Change Notes

Q1’15 Q1’16 % Q4’15 Q1’16 %

Net Profit

Share Income191.331 277.516 45,04 243.055 277.516 14,18

Profit share expense increased by 21,3% while PSI

raised by 31,9% YoY basis. Joint venture projects

returns reached to TL 51.890 in Q1 2016 (Q1 2015:

TL 7.526)

Net Fee

Income34.534 32.354 -6,31 41.799 32.354 -22,60 Lower Net Fee income in Q1’16

Net Trading

Income21.538 22.768 5,71 11.618 22.768 95,97

Higher FX trading income due to Lower volatility in

exchange rates

Other Income 27.219 33.532 23,19 34.001 33.532 -1,38Reversal of prior year provisions in Q1 2016 is higher

than Q1 2015

Provisioning 39.783 73.626 85,07 35.098 73.626 109,77 Higher provisions in 2016

Other Costs 154.905 207.139 33,72 154.559 207.139 34,02YoY increase in other costs due to increase in

Personnel Expenses, FX rates and transformation

project.

Tax 16.202 22.405 38,29 20.600 16.109 -21,80 -

Net Profits 63.732 63.075 -1,03 91.002 63.075 -30,69 -

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 Q1 Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Total Growth – 2016 Q112

Percent 2016 Q1 2015 Q1

Albaraka

Türk

Participation

Banks

Banking

Sector

Albaraka

Türk

Participation

BanksBanking Sector

Asset Size -2,5 0,9 2,1 7,7 5,0 6,7

Total Credits* 2,0 2,7 1,8 7,5 5,6 6,9

Deposits/Collected Funds** -4,2 -1,7 2,8 9,3 2,8 6,0

18,2%

15,1%

26,4%

12,6%

21,0%

28,3%

33,9%

39,7%

17,8%

24,4%

20152014201320122011

Asset Size GrowthBanking Sector

Albaraka Türk

* Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks

** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks

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Market Share– 2016 Q113

Percent 2016 Q1 2015 Q1

Albaraka

Türk/

Participation

Banks

Albaraka

Türk/ Banking

Sector

Participation

Banks/ Banking

Sector

Albaraka

Türk/

Participation

Banks

Albaraka

Türk/ Banking

Sector

Participation

Banks/ Banking

Sector

Asset Size 23,7 1,2 5,0 22,7 1,2 5,1

Total Credits* 23,5 1,3 5,4 23,1 1,3 5,5

Deposits/Collected Funds** 26,2 1,4 5,5 26,5 1,5 5,8

* Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks

** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks

Albaraka Türk; 23,7%

Participation Banking;

5,0%

Banking Sector Participation Banking Sector

HİZMETE ÖZEL

Capitalization

10

9,52

9,58

9,8

9,08

12,8

12,17

12,11

15,27

12,22

Q1'15

Q2'15

Q3'15

Q4'15

Q1'16

CAR Tier I

Capital Adequacy Ratio (%)

14

-58 bps

+3,16 bps250 million USD Basel 3 complied

Tier 2 Sukuk Issued

200 million USD Basel 2 complied Sukuk

removed from CAR calculations.

-3,05 bps

HİZMETE ÖZEL

Profitability & Efficiency

14,8515,57

14,96

Q1'15 Q4'15 Q1'16

Net Profit Share Margin(%) ROAE(NI) (%)

4,033,93

4,12

Q1'15 Q4'15 Q1'16

Cost/Income (%)

56,4155,06

56,56

Q1'15 Q4'15 Q1'16

Loan/ Deposits (%)

97,24 95,87

102,04

Q1'15 Q4'15 Q1'16

15

HİZMETE ÖZEL

Ratios16

Percent 2016 Q1 2015 Q1

Albaraka Türk Participation

BanksBanking Sector Albaraka Türk

Participation

Banks

Banking

Sector

CAR 12,22 14,94 15,49 12,80 14,10 15,51

NPL Ratio 2,78 6,63 3,28 2,20 4,66 2,82

Provisioning Ratio 57,34 63,76 75,17 80,00 61,22 73,03

Loan/Deposits 102,04 114,06 115,25 97,24 109,56 114,95

ROAA (IBT) 1,33 0,45 1,50 1,47 1,28 1,67

ROAE (NI) 14,96 2,14 10,88 14,85 10,73 11,36

Asset Yield 8,79 8,72 8,00 8,82 8,46 8,84

Asset Spread 4,47 4,56 3,26 4,04 4,26 4,13

Net Profit Share Margin 4,12 4,63 3,85 4,03 4,41 4,31

Net Fee Income / Avg. Assets 1,00 0,92 0,91 1,18 1,14 1,10

Op Costs / Avg. Assets 2,39 2,66 2,23 2,53 2,84 2,36

Cost/Income* 56,56 44,50 43,07 56,41 51,26 44,74

Credits / Branches (000‘TRL) 91.575 76.444 125.645 84.457 74.450 111.920

Staff / Branches 17,57 14,75 17,64 17,52 16,36 17,79

CA / Deposits 20,67 27,19 19,44 18,39 23,77 18,40

*Cost: Operating Costs, Income: NII/NPSI, Net Fees and Commissions Income, Other Income

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 Q1 Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Summary Balance Sheet17

(Thousand TRL) Mar’16 Dec'15 Growth (%)

Cash and Banks 6.268.666 7.387.412 -15,14%

Financial Assets 1.073.154 1.073.849 -0,06%

Funded Credits 19.891.184 19.505.392 1,98%

Cash Credits 18.964.536 18.370.399 3,23%

NPL 552.702 468.413 17,99%

Provisions 316.922 280.847 12,85%

Net Financial Leasing Receivables 926.648 947.427 -2,19%

Investments Held to Maturity (Net) 745.769 762.890 -2,24%

Associates 25.469 25.469 0,00%

Fixed Assets 493.428 545.411 -9,53%

Assets Held For Sale and Investment 37.407 22.819 63,93%

Other Assets (inc. Tax Assets) 211.607 238.757 -11,37%

Total Assets 28.810.563 29.561.999 -2,54%

Funds Collected 19.493.743 20.346.178 -4,19%

Funds Borrowed 4.018.692 4.104.688 -2,10%

Debts 1.620.024 1.457.345 11,16%

Provisions (inc. Taxes) 331.346 310.317 6,78%

Tier II Sukuk 1.224.048 1.239.557 -1,25%

Shareholders’ Equity 2.113.283 2.103.914 0,45%

Capital 900.000 900.000

Capital Reserves (inc. Premium) 202.810 200.910

Profit Reserves 946.332 696.531

Profits 64.141 306.473

Prior Periods 1.066 3.610

Current Year 63.075 302.863

Total Liabilities 28.810.563 29.561.999 -2,54%

HİZMETE ÖZEL

Summary Income Statement18

(Thousand TRL) Mar’16 Mar‘15 Growth (%)

Profit Share Income 564.024 427.477 31,94%

Profit Share Expense 286.425 236.146 21,29%

Net Profit Share Income 277.599 191.331 45,09%

Net Fees and Commissions Income 32.354 34.534 -6,31%

Fees and Commissions Received 46.345 43.773 5,88%

Fees and Commissions Paid 13.991 9.239 51,43%

Net Trading Income 22.768 21.538 5,71%

Other Operating Income 33.532 27.219 23,19%

Total Operating Profit 366.253 274.622 33,37%

Provisions for Loan Losses 73.626 39.783 85,07%

Other Operating Expenses 207.139 154.905 33,72%

Net Operating Profit 85.488 79.934 6,95%

Tax Provision -22.413 -16.389 36,76%

Net Profits 63.075 63.732 -1.03%

HİZMETE ÖZEL

THANK YOU

HİZMETE ÖZEL

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