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Investor Presentation, September 2019
2
• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Transformation and business model
• Key financial indicators
• Appendix
Ziraat Finance Group
3
4
T.C. Ziraat Bankasi A.S. - More Than a Bank
(1) Loans include accruals and the loans granted to banks, Deposits include accruals, and the banks’ deposits, securities include accruals. (2) Rankings are among top 7 Banks. The banks are determined as of unconsolidated assets for September 2019 and include: Ziraat Bank, İş Bank, Garanti Bank, Akbank, Yapı Kredi, Halkbank and Vakıfbank Source: BRSA, Publicly available Earnings Reports for peer banks
Rankings
1 1 1 1 1
Total Assets Cash Loans Non-cashLoans
Deposits Equtiy
Q3 2019
5
• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Transformation and business model
• Key financial indicators
• Appendix
Ziraatbank at a glance with map of network
Commercialbank
The Bank
Our Network
First domestic bank with
foreign equity
Owned by 100 % of Turkish
state owned bank T.C.Ziraat Bankasi
A.Ş.More than
60Kcustomers
Appetite to
grow locallyOwner of 32branches and intention to grow further
6
Federation of Bosina and
Herzegovina
Republika Srpska
Brčko Distrikt
Corporate Branch
Sarajevo Branch
Ferhadija Branch
Butmir Branch
Tuzla Branch
Lukavac Branch
Gračanica Branch
Srebrenik Branch
Centar Tuzla Branch
Goražde Branch
Zenica Branch
Jelah Branch
Kakanj Branch
Maglaj Branch
Visoko Branch
D.Moštre Branch
Ilidža Branch
Novi Grad Branch
Vogošća Branch
Hadžići Branch
Dobrinja Branch
Mostar Branch
Konjic Branch
Bihać Branch
Cazin Branch
S. Most Branch
Travnik Branch
I.Š. Mostar Branch
Banja Luka Branch
Srebrenica Branch
Bijeljina Branch
Brčko Branch
7
Financial
Bridge with
Turkey
32 Branches
308 Employees
100 K
customers
First domestic
bank with
foreign capital
(1996)
Credit line
supporting
the Bosnian
economy
Strong
Share Capital
ZiraatBank BH d.d.
Assets 23,742
Loan 14,907
Deposits 18,965
Capital 3,159
Capital Adequacy 18,0%
ROA 1,47%
ROE 10,80%
Branches (number) 539
Employees (number) 6,745
Rankings
Banking Sektor (FBiH) Q3 2019 (M BAM)
Assets
4%
Loan
5%
Deposits
4%
Branches
6%
8. 8. 10. 12. 9.
Assets Loan Deposits Profit Employees
Q3 2019
Participation in the banking sector
8
Over 22 Years of Banking Legacy
1996Oct.
1997Mar.
Date of Entity incorporation
/establishment
The first bank in
BiH with foreign
capital. The
bank's core
capital was 10M
BAM.
Becomes a member
of the SWIFT group
and also member
of BAMCARD Sarajevo.
1997Aug.
The Bank
issues the
first Maestro
card in BiH.
2000Aug.
2001Oct.
Ziraat Bank
Bosnia dd
becomes
member of
Deposit Insurance
Agency
2018Aug.
Current
capital 200 M
BAM
2015Feb.
2016Oct.
Investment
in new
banking
software
Investment in
New Head
Office
building,
Increase in
capital for
40M BAM
The bank has
passed a billion
in assets and
takes
significant part
in the market
2017Dec.
2005Feb.
2013Oct.
First
implemented
chip credit
card in BiH
Implementation
of GPRS
wireless POS
terminals
Bosnia and Herzegovina
Macro Economic Indicators 2017 2018 2019*
GDP (M BAM) 31.376 32.954 33.828
GDP per capita (BAM) 8.886 9.415 9.580
Average Net Wage (BAM) 851 879 928
Foreign Direct Investment ( M BAM) 780 784 861
Growth (%) 3,2 3,2 2,7
Inflation (%) 1,2 1,4 -
Unemployment (%) 20,5 18,4 15,7
Current account deficit ( B BAM) 1.48 1.37 1.16
Current account deficit of % GDP 4,7 4,2 -
Foreign trade(milyon BAM) 29.832 31.852 18.811
Export 11.385 12.258 10.976
Import 18.447 19.594 18.255
Public debt ( M BAM) 11.009 11.120 -
External debt 7.853 8.205 8.222
Internal debt 3.156 2.915 3.002
CAPITAL CITY Sarajevo
AREA 51.197 km2
POPULATION 3,5 million
LOCAL CURRENCY Konvertibl Mark (KM)
1 EUR=1,96 KM (Fixed)
1 USD=1,71 KM (2018)
ADMINISTRATIVE STRUCTURE Bosnia and Herzegovina consists of two entities:
• Federation of Bosnia and Herzegovina (10 Cantons )
• Republika Srpska
RATING B Positive (Standard & Poors)
AIRPORTS Sarajevo, Banja Luka, Tuzla, Mostar
Ports Ploce Croatia ports
NATURAL RESOURCES Steel, coal, lead, manganese, bauxite
MAJOR INDUSTRIAL AREAS Installation of motor vehicles, tanks and aircraft, Textiles, Tobacco products, Furniture made of wood, Small household appliances
Year 1991 2013
Total population 4.377.033 3.531.159
Bosnians 1.902.956 (43,5 %) 1.769.592 (50,1 %)
Croats 760.852 (17,4 %) 544.780 (15,4 %)
Serbs 1.366.104 (31,2 %) 1.086.733 (30,8 %)
Other 347.121 (7,9 %) 130.054 (3,7 %)
Urban Population 1.729.768 (39,5 %) 1.506.691 (42,7 %)
Rural Population 2.647.265 (60,5 %) 2.024.468 (57,3 %)
Average age - 39,5
Urban - 39,7
Rural - 39,4
Population density 85 /km² 69 /km²
Urban 1.138 /km² 991/km²
Rural 53 /km² 41 /km²
Area 51.222,84 km² 51.222,84 km²
Residential area by ethnic majority
Bosnian 14.600,82 km² (28,5 %) 15.171,49 km² (29,6 %)
Croatian 9.093,51 km² (17,8 %) 8.212,42 km² (16,0 %)
Serbian 26.742,12 km² (52,2 %) 25.019,34 km² (48,8 %)
Other 786,39 km² (1,5 %) 2.819,59 km² (5,5 %)
Number of municipalities by ethnic m 142 142
Bosnian 63 54
Croatian 25 24
Serbian 54 64
Labor force (2017 forecast) - 1.500.000
Service - 765.000 (51 %)
Industry - 450.000 (30 %)
Agriculture - 285.000 (19 %)
92019* - 3rd quarter of 2019
Federation of Bosnia and Herzegovina - Employment and Wage Distribution (31.12.2018)
Federal Bureau of Statistics www.fzs.ba
TOTAL WOMEN TOTAL WOMEN
TOTAL ( FBiH) 519.800 215.317 329.907 188.503 889 1.365
Sarajevo canton 154.041 67.500 62.561 38.973 1.096 1.702
Tuzlanski canton 96.461 35.701 79.378 46.982 797 1.215
Zeničko-dobojski canton 82.688 32.572 58.577 33.396 763 1.164
Hercegovačko-neretvanski canton 54.133 24.729 30.703 16.858 970 1.495
Srednjobosanski canton 50.957 20.576 34.777 17.847 723 1.091
Unsko-sanski canton 37.687 15.992 38.172 20.429 840 1.286
Zapadnohercegovački canton 19.322 7.776 10.820 6.136 796 1.216
Livanjski canton 10.723 4.470 7.388 3.926 884 1.350
Bosansko-podrinjski canton 7.291 3.281 3.169 1.836 796 1.220
Posavski canton 6.497 2.720 4.362 2.120 773 1.180
Number of
employment
Number of
unemployed Net fee
(BAM)
Gross fee
(BAM)Canton Name
10
Bosnia and Herzegovina - Foreign Trade
EXPORT - Bosnia and Herzegovina 11/2019 M BAM TURKEY Export Products 11/2019 M BAM
Name of country Volume Share Name of country Volume Share
Germany 1,580 14% Animal and vegetable fats and oils 95 0.9%
Croatia 1,344 12% Iron and steel 47 0.4%
Serbia 1,257 11% Furniture, mattress, bed carrier 37 0.3%
Italy 1,229 11% Inorganic chemical products 21 0.2%
Austria 1,030 9% Explosives 7 0.1%
Slovenia 951 9% Weapons and ammunition; Fittings & Accessories 7 0.1%
Montenegro 411 4% Paper and cardboard; paper, paper products 7 0.1%
Turkey 267 2% Nuclear reactors, boilers, machinery, mechanical watches 6 0.1%
Hungary 258 2% Iron and steel products 5 0.0%
France 243 2% Cereals 5 0.0%
Top 10 Total 8,570 78% Top 10 Total 237 2.2%
Total 10,976 100% Total 267 2.4%
IMPORT - Bosnia and Herzegovina 11/2019 M BAM Imports from Turkey Products 11/2019 M BAM
Name of country Volume Share Name of country Volume Share
Croatia 3,241 18% Nuclear reactors, boilers, machinery and mechanical 71 0.4%
Serbia 2,544 14% Articles of apparel and clothing accessories, knitted or crocheted 71 0.4%
Slovenia 1,639 9% Plastics and articles thereof 71 0.4%
Germany 1,636 9% Articles of apparel and clothing accessories, except knitted crochets 66 0.4%
Italy 1,552 9% Iron and steel 41 0.2%
Austria 972 5% Electrical equipment for ignition and starting of engines 34 0.2%
Turkey 753 4% Iron and steel products 29 0.2%
Hungary 699 4% Furniture, mattress, bed carrier 25 0.1%
SDA 506 3% Aluminum and aluminum products 25 0.1%
China 504 3% Fruit for eating; citrus peel or melon and watermelon 24 0.1%
İlk 10 Toplam 14,046 77% Top 10 Total 456 2.5%
Toplam 18,255 100% Total 753 4.1%
FOREIGN TRADE BALANCE -7,279
Foreign Trade 29.231
• Export 10.976• Import 18.255
Foreign Trade with Turkey 1.020
• Export 267• Import 753
Sector
11
Bosnia and Herzegovina - Foreign Investment
38.8
18.014.6
6.8 6.8 5.4 4.7 4.50.2 0.2
41.0
13.4 15.5
7.3 6.8 5.7 5.0 4.80.3 0.2
Austria Turkey Italy Russia Germany B.A.E. Slovenia Saudi Arabia Croatia Other
FBiH Banking Sector Foreign Capital Distribution (%)
31.12.2018 31.12.2017
12
13
2018Total Assets
4,6%
FBiH Sector ZiraatBank BH
Banking Sector Position
Q3 2019Total Assets
4,3%
FBiH Sector ZiraatBank BH
Market Share
2018Total Loans
5,1%
Q3 2019Total Loans
4,9%
Market Share
Assets, M BAM Loans, M BAM
2016 2017 2018 Q12019
Q22019
Q32019
850
1,020 1,015
973990
1,017
2016 2017 2018 Q12019
Q22019
Q32019
18,38220,210
22,094 22,456 23,082 23,742
2016 2017 2018 Q12019
Q22019
Q32019
634792 728 743 757 740
2016 2017 2018 Q12019
Q22019
Q32019
12,27013,179
14,326 14,583 14,923 14,907
2018Total Assets
7/15 place
Q3 2019Total Assets
8/15 place
Rankings
2018Total Loans
7/15 place
Q3 2019Total Loans
8/15 place
Rankings
14
2018Total Deposits
3,8%
FBiH Sector ZiraatBank BH
Banking Sector Position
Q3 2019Total Deposits
3,5%
FBiH Sector ZiraatBank BH
Market Share
2018Total Profit
-13,6%
Q3 2019Total Profit
0,6%
Market Share
Deposits, M BAM Profit, K BAM
2016 2017 2018 Q12019
Q22019
Q32019
506
686 668620 638 665
2016 2017 2018 Q12019
Q22019
Q32019
14,17615,815
17,604 17,801 18,306 18,965
2016 2017 2018 Q12019
Q22019
Q32019
196 2,620
-34,743
547 1,245 1,410
2016 2017 2018 Q12019
Q22019
Q32019
173,248
239,973255,355
89,809
181,681
250,924
2018Total Deposits
9/15 place
Q3 2019Total Deposits
10/15 place
Rankings
2018Total Profit
15/15 place
Q3 2019Total Profit
12/15 place
Rankings
15
Banking Sector Position
ROA (%)
0.03 0.28
-3.54
0.23 0.25 0.19
1.00 1.30 1.20 1.60 1.60 1.46
ZiraatBank Sector
ROE (%)
Total Income / Average Assets (%) Net Interest Income / Average Assets (%)
0.16 1.67-21.16
1.28 1.44 1.09
6.50 8.50 8.70 12.00 11.80 10.80
ZiraatBank Sector
6.465.80 5.67
4.91 4.95 4.98
5.58 5.40 5.00 4.80 4.60 4.67
ZiraatBank Sector
3.58 3.44 3.492.86 2.83 3.08
3.38 3.202.90 2.80 2.60 2.67
ZiraatBank Sector
16
• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix
17
We are boosting productivity through operational centralization, digitalization, automated processes and decision support systems.
Strategic Plan
Well-educated, talented and dedicated workforce
Continously invest in alternative channel distribution
We continue to offer a distinctive customer experience on digital channels by developing technology-oriented, innovative products and services.
Financial bridge between Turkey and Bosnia
Focus on increasing the portfolio of retail customers
Loan placements to Banks on the primary and secondary markets
18
• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix
19
Assets Composition
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019
5,566 4,892121,910 159,942 183,494 233,010
158,978218,755
219,234 116,257 91,08086,029
28,63442,751
105,201107,677 103,145
105,714
53,326
46,611
50,86061,112 62,051
64,294
661,167
792,873
728,077743,348
756,504
739,536
MM Lends Liquid Assets Provisions for eventual losses Other Assets Loans
Successfully diversifying asset base (000 BAM)
Composition of assets Q3 2019 (%)
Growth prospects in line with strategies
MM Lends
22.91%
Liquid Assets
8.46%
Provisions for
eventual
losses
-10.39%
Other Assets
6.32%
Loans
72.71%
Total assets grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3 vs
sector by 4,3% and total loans decrease by 2,24%
Strong focus to finance the Commerce and Manufacturing
Sectors.
BAM and *Other values are equally denominated on
balance sheet (BAM assets 50% of total assets, other
values 50% of total assets)
850.403
1.020.380
* 95% of other values is EUR currency index loans
+27.171(+2,75%)
1.017.1551.014.880972.982 989.984
+2.275(+0,22%)
20
Loan Composition
Loan portfolio by customer segmentation (%) Currency breakdown of loans Q3 2019 (%)
Manufacturing37%
Commerce21%
Service19%
Agriculture7%
Construction6%
Tourism 7%
Energy3%
Breakdown of Loans, Q3 2019
27.8%
62.2%
10.0%
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019
73.0% 72.9% 71.3% 66.5% 64.1% 64.9%
27.0% 27.1% 28.7% 28.2% 28.2% 29.8%
5.3% 7.8% 5.30%
Corporate Retail Bank
Q3 2019
48.3%
51.7%
661.167 792.873
BAM
Foreign
Currency*Corporate
Retail
30.0%
65.0%
5.0%
* 95% of other values is EUR currency index loans
728.077 743.348
Bank
Corporate
Retail
Bank
756.647 739.537 739.537
21
NPL
NPL (%)
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019
9.0% 8.5%
23.7%22.5% 22.0% 22.9%
11.7%9.7%
8.5% 8.2% 7.8% 7.6%
ZiraatBank Sector
NPL ratio by segments (%)
(%) Retail Corporate Total
ZiraatBank 7,3 29,6 22,9
Sector 5,8 9,4 7,6
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019
155,762 158,383 171,800 172,347 173,045 173,210
166,245 156,466 156,466 156,46697,792 97,792
21,957 19,356 18,653 23,87381,397 81,524
506,439
686,175667,961 620,296 637,750 664,629
Equity Non-Deposit funds Other Deposits
22
Liabilities Composition
Composition of liabilities (000 BAM ) Composition of liabilities Q3 2019 (%)
Equity 17%
Non-Deposit Funds10%
Other8%
Deposits65%
Story about growing
Total Liabilities grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3
vs sector by 3,5% and total deposits increase by 4,21%
Substantially all Bank deposits are insured up to the
applicable limits set by the Deposit Insurance Agency up to
50.000 BAM.
850.403
1.020.380 1.014.880972.982 989.984
+2.275(+0,22%)
1.017.155
+27.171(+2,75%)
23
Diversified and widespread deposit base
Deposits by customer segmentation (%) Currency breakdown of deposits Q3 2019 (%)
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019
55.4% 47.9% 49.6% 52.6% 52.7% 54.0%
42.6%38.7% 43.1%
47.5% 47.2% 45.9%
2.0%13.4% 7.4% 0.0% 0.0% 0.0%
Corporate Retail Banks Retail Banks
506.439 686.175
51.0%49.0%
0.0%
Corporate
Retail
Q3 2019
54.0%
45.9%BAM
Foreign
Currency
Banks
2016 2017 2018 Q12019
Q22019
Q32019
65.2% 72.7% 71.6% 69.8% 68.8% 66.5%
34.8% 27.3% 28.4% 30.2% 31.2% 33.4%
Time Demand Demand
Demand vs Time deposits Q3 2019 (% of total)
49.0%51.0%
Corporate
Retail
Q3 2019
66.5%
33.4%Demand
Time
614.965667.691 637.750 664.629 664.629
24
Profitability
2016 2017 2018 Q12019
Q22019
Q32019
1962,620
-34,743
547 1,245 1,410
Net Profit ( BAM K )
20,405
(10.676)9.890
(18.209)
1410
Net InterestIncome
OperatingIncome
Direct Expenses OperatingExpenses
Net Profit
PersonnelExpenses
Other
Loan Fees2%
Fees for Services Renderd
Foreign Exchange Earnings
Other
22%
65%
11%
48%20%
32%
Facility and Utility Expenses
25
• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix
26
Balance Sheet Summary
(000) BAM 2016 2017 2018
Cash and cash equivalents and deposits held with other inst.
158,978 218,755 219,234
Cash and non interest dep accounts
54,150 179,944 173,323
Interest dep. account 104,828 38,811 45,911
Placements with banks 5,566 4,892 121,910
Loans and receivables 661,167 792,873 728,077
Loans 634,077 751,089 596,179
Receivables 27,090 41,784 131,898
Other Assets 53,326 46,611 50,860
Provisions for eventual losses 28,634 42,751 105,201
TOTAL ASSETS 850,403 1.020,380 1,014,880
DEPOSITS 506,439 686,175 667,961
Interest deposits 326,854 482,654 473,071
Non interest deposits 179,585 203,521 194,890
Loans and other borrowings 166,245 156,466 156,466
Subordinated dept 0,00 0,00 0,00
Total Equity 155,763 158,383 171,800
Others 21,957 19,356 18,653
Q1 2019 Q2 2019 Q3 2019% Change
Q3oQ2
% Change Q3o2018
159,942 183,494 233,010 27.0% 6.3%
132,016 142,429 214,031 50.3% 23.5%
27,926 41,065 18,979 -53.8% -58.7%
116,257 91,080 86,029 -5.5% -29.4%
743,348 756,504 739,536 -2.2% 1.6%
604,748 615,080 584,195 -5.0% -2.0%
138,600 141,424 155,341 9.8% 17.8%
61,112 62,051 63,788 2.8% 25.4%
107,677 103,145 105,714 2.5% 0.5%
972,982 989,984 1,017,155 2.7% 0.2%
620,296 637,750 664,629 4.2% -0.5%
429,616 436,413 437,799 0.3% -7.5%
190,680 201,337 226,830 12.7% 16.4%
156,466 97,792 97,792 0.0% -37.5%
0,00 58,675 58,675 0.0% -
172,347 173,045 173,210 0.1% 0.8%
23,873 22,722 22,849 0.6% 22.5%
27
Income Statement Summary
(000) BAM 2016 2017 2018
Net interest income 29,174 34,229 34,048
Interest income 37,277 43,039 42,909
Interest expense 8,103 8,81 8,861
Operating income 12,502 11,710 12,495
Total non interest expense 39,349 42,263 81,247
Business and direct expenses 16,470 18,449 54,478
Operating expense 22,879 23,814 26,769
Income tax 888 1,056 41
Net profıt 196 2,62 -34,743
Q1 2019 Q2 2019 Q3 2019% Change % Change
Q3oQ2 Q3o2018
6,939 13,783 20,405 48.0% -40.1%
9,104 18,109 26,886 48.5% -37.3%
2,165 4,326 6,481 49.8% -26.9%
2,817 5,984 9,890 65.3% -20.8%
9,209 18,522 28,885 55.9% -64.4%
3,366 6,525 10,676 63.6% -80.4%
5,843 11,997 18,209 51.8% -32.0%
0 0 0 - -100.0%
547 1,245 1,410 13.3% 95,9%
28
Key Financial Ratios
(%) 2016 2017 2018
ROAA 0.03% 0.29% -3,54%
ROAE 0.16% 1.67% -21,16%
Liquid Assets/Total Assets 19.34% 21.88% 33,22%
Loans/Deposits 125.20% 109.46% 79,81%
Loans/Assets 74.56% 73.61% 52,53%
Deposits/Assets 59.55% 67.25% 65,82%
Interest Income / Interest Expense 432.59% 460.31% 453,54%
Equity / Total Liability 18.32% 15.52% 16,93%
Net Interest Income / Interest Assets 4.19% 3.95% 3,53%
Cost / Income Ratio 61,30% 59,05% 65,11%
# of
Branches 30 30 32
Employees 299 326 332
ATMs 53 54 55
Q1 2019 Q2 2019 Q3 2019
0,22% 0,25% 0,19%
1,27% 1,44% 1,09%
28,18% 27,57% 31,19%
88,24% 88,71% 81,02%
56,26% 57,15% 52,94%
63,75% 64,42% 65,34%
395,85% 394,04% 390,20%
17,71% 17,48% 16,24%
2,76% 2,75% 2,70%
68,52% 69,56% 68,83%
32 32 32
323 313 308
57 62 66
29
For further information please contact:Treasury & FI Department
Zmaja od Bosne 47 c, 12 Kat.Sarajevo/Bosnia and Herzegovina
Phone: (+387) 33 955 039E-mail: [email protected]
www.ziraatbank.ba
DECLAIMERThe information contained in the presentation has been prepared by ZiraatBank BH d.d. For informational purposes only.Although the information in this presentation has been obtained from sources which we believe to be reliable, we cannot guarantee that the information is without fault or entirely accurate. This presentation cannot be interpreted as an advice to anyone and is also strictly confidential and may not be reproduced, distributed or published for any purpose.
30
Investor Presentation, June 2018www.ziraatbank.ba