NOT A COINCIDENCE - garantibbvainvestorrelations.com...15.2 MILLION CUSTOMERS ADDING VALUE TO THE ECONOMY AND SOCIETY 2nd LARGEST PRIVATE BANK by assets of US $94 billion Note: Figures

Investor Relations Corporate Presentation

NOT A COINCIDENCE

Corporate Presentation February 2018


2

ROAE

16.6% BASEL III CAR

16.8%

15.2 MILLION CUSTOMERS

ADDING VALUE TO THE ECONOMY AND SOCIETY

2nd LARGEST PRIVATE BANK

by assets of

US $94 billion

Note: Figures are based on BRSA consolidated financials as of December 31, 2017 Mcap, number of branches, ATM and customer numbers are as of February 6, 2018 *Among peers. Peers are defined as Akbank, Isbank, YKB

Focused on Relationship Banking with Broad Geographical Coverage & Omni-Channel Distribution Network > 948 branches > Leading internet and mobile banking > Largest financial call center > More than 5,000 ATMs > Targeted investments to digital platforms

Robust Balance Sheet Highly liquid > Low risk -- NPL Ratio: 2.6% > Well-capitalized -- CET-I makes up 88% of total capital

#1 in NIM &

Net F&C base*

~50% Free Float > The most traded stock of Borsa Istanbul -- Average daily turnover represents 11% of BIST 100

> The share of foreign investors including DR holders in actual free float is ~95% -- Shareholders from around 35 countries

Proven track record of generating sustainable banking income > Highest level & Highest improvement in core banking

contribution to ROAA since 2015 among peers*


EMPOWERING

SUSTAINABLE

RESPONSIBLE

READY FOR FUTURE


4

RESPONSIBLE TOWARDS SOCIETY


100

150

200

250

300

350

400

450

500

2002 2005 2008 2011 2014 2017 2020

Rea

l GD

P G

row

th (

Reb

ased

)

EU EM Europe LATAM TURKEY

ECOSYSTEM AWARENESS

Operating in a Large and Dynamic Economy

High and Sustainable Real GDP Growth*

2002-2017 CAGR: 13%

*Source: IMF’s World Economic Outlook Report dated October 2017. Ranking as of YE 2016 Country groups are per IMF database. ** Source: EBF Facts&Figures 2015, ranking per total assets. ***BRSA Monthly data as of December 2017.

RESPONSIBLE

$ 863bn***

5

2022

Avg. GDP growth

>5% over 2006-2016

LATAM: 2.3% EU: 1.9% EM Europe: 3.5%

vs. LATAM: 2.8% EU: 1.2% EM Europe: 3.9%

vs.

vs.

2nd largest banking system

in Emerging Europe after

Russia **


Total Population by Age*

negative growth in EU

and CEE countries

Population to reach

*Source: United Nation, World Population Prospects: The 2017 Revision ** TurkStat, as of December 31, 2017, Address Based Population Registration System (ABPRS)

ECOSYSTEM AWARENESS

Turkey with Young and Growing Population

vs.

55% under 35

RESPONSIBLE 6

%26,7

%25,1

%25,8

%26,5

%27,4

%42,3

%35,1

%37,2

%36,8

%36,9

%37,4

%36,7

%38,2

%37,6

%37,5

%36,6

%35,2

%21,0

Europe

Czech Republic

Hungary

Poland

RussianFederation

Turkey

<25 25-50 >50


ECOSYSTEM AWARENESS

Underpenetrated Market with Strong Growth Potential

RESPONSIBLE

Attractive Demographics

Underpenetrated Market

Source: ECB, TurkStat, BRSA for commercial banks, as of 3Q17

58%

39%

13%

93%

52% 60%

103% 108%

98%

Assets / GDP Customer Deposits / GDP Loans / GDP

Turkey - 2002 Turkey - 3Q17 Euro Area - 3Q17

7


ECOSYSTEM AWARENESS

Highly Liquid Banking Sector

RESPONSIBLE 1 BRSA monthly data as of December 2017 2 Top 4 private banks average of 4Q17, based on BRSA bank-only financials 8

Deposit-heavy funding structure

Comfortable liquidity

levels

Liquidity Adequacy Ratios2 well-above required levels FC Liquidity Coverage Ratio: 210% (Legal limit 70% for 2018) Total Liquidity Coverage Ratio: 131% (Legal limit 90% for 2018)

Deposits fund 55% of assets1

Comfortable level of Loans/Deposits at 117%1


19,8% 18,0% 17,3% 16,5%

15,6% 13,4%

Eurozone Poland Brazil SouthAfrica

Turkey Russia

* Source: Latest data from the IMF-FSI database. Most of figures are based on 2Q17 figures ** BRSA monthly data as of December 2017

ECOSYSTEM AWARENESS

Well-Capitalized and Underleveraged

> ROAEs ** : 14.8%

with low leverage

RESPONSIBLE

> Basel III CAR**: 16.9% (Dec ’17)

> CET-I capital**: 84% of total capital

> RWA/Assets**: 76% vs. 82% 2016YE

CAR*

(2Q17)

Leverage*

(2Q17)

9

8,3x 8,3x 8,9x 9,2x 10,4x 11,8x

Russia Turkey Poland Brazil SouthAfrica

Eurozone


EU 27 9.2%

CEEMEA 6.5%

LATAM 3.0%

TURKEY 3.2%

0,0

2,0

4,0

6,0

8,0

10,0

12,0

2006 2009 2012 2015

ECOSYSTEM AWARENESS

Standing out in its Asset Quality

Non-performing loans/Total gross loans1

NPL ratio*

RESPONSIBLE 10

2016

> No exposure to any toxic assets or problematic sovereign assets

> Advanced risk management systems > Established & prudent underwriting

procedures

1 Source: Latest data from the IMF-FSI database. Most figures are based on 2Q17 figures 2 BRSA monthly data as of December 2017 for the sector


ECOSYSTEM AWARENESS

How We Address Challenges for Financial Health

RESPONSIBLE

Savings Test

Accumulating Gold Account

Spend & Save Account

Savings Account

for Future

Pension Funds

11


EMPOWERING IN ALL POSSIBLE DIMENSIONS


SINGLE POINT OF CONTACT FOR ALL FINANCIAL NEEDS

EMPOWERING

Commercial

Payment Systems

Digital Banking

SME

Corporate

Consumer

Note: Asset contributions are calculated based on BRSA Consolidated Financials as of December 31, 2017

13

Asset Contribution: 5.44%








ACTIVE LISTENING & DEVELOPING ACCORDINGLY

Social Platforms

Customer Centricity

Index

Market Research

Investor Perception

Study

Employee Idea Platforms

To Sustain

High Quality & Corporate

Governance

EMPOWERING 14


EMPOWERING

INVESTMENTS IN DELIVERY CHANNELS

Welcoming ~160k customers per day

20

02

2

01

8

100% Geographical Coverage

Since Nov’13 vs. 49% in 2002

15

Number of Branches & Customers

mn

mn mn

mn

mn

331

487

936 1,005 949

3,7

6,2

11,8 13,1

15,2

2002 2006 2012 2014 Şub.18

# of Branches

# of Customers

Investor Relations Investor Presentation

16

Note: active customers defined as minimum one log-in in the last three months * In Marketing and Sales, and Cross Channels categories. ** Have only used mobile banking in the last month

INVESTMENTS IN DIGITAL CHANNELS

Omni-channel convenience 2b

Providing seamless experience across

all channels

>500 types of transactions

26% of non-cash financial transactions carried via internet banking

• 5,007 ATMs

Cash deposits/withdrawals:105% • Serving non-bank customers

through cardless transactions

• In 2017, approximately 300 mn

transactions in total

• 77,4 mn Customer Contacts in 2017

• 33 sec. avg. response time (sector 81 sec) • Centralized branch calls • 37 product offerings • 16% of total credit card sales • 4,2 mn products sold in 2017

• 5 mn followers: Europe’s Most Followed Financial Institution

• Present on 17 Social Platforms with 55 acct.

• Garanti Link: connecting customer ID with social ID, offering customer-tailored campaigns - First in Europe

• Garanti’yeSor (Ask Garanti): 24/7 customer care on social media. Response Time: max 2h

• Consumer Loan application & result w/o leaving Facebook

• 5.2 mn active mobile users

• 3.9 mn mobile-only customers**

• Mobile banking app named as

Best in class in Europe*

in Forrester’s Global Mobile Banking

Functionality Benchmark Study

• 58% of non-cash financial transactions via mobile banking

Internet Banking

Mobile Banking

Social Media

Call Center

ATMs


26.2% Online

58% Mobile

10.6% ATM

0.1% Call Center

with increasing weight in mobile

Utilizing digital channels effectively

183mn in 2017

Mobile transactions:

114mn in 2016

95% of all non-cash financial transactions

go through digital channels:


Leading position & effective utilization

Managing the largest customer base in Turkey

17

2c

6.1 million 24% YoY active digital

customers

5.2 million 38% YoY active mobile

customers

2.8 million logins/day

Note: Market share info is calculated based on the figures provided by «The Banks Association of Turkey» for period Q3

Tax Payments Bill Payments Credit Card Transactions

26% 44% 24%

Tax Payments

26% 63% 29%

23% market share

in retail internet & mobile banking financial transactions volume

> Online Banking financial transactions market shares:

> Mobile Banking financial transactions market shares:

Credit Card Transactions Bill Payments


• Advantageous Casco: Product specifically designed for digital banking > Share of digital increased from 2% to 51%

• Money in Installment and Skip/Split transactions now on mobile > 24% increase in transaction volume in 5 months • Travel health Insurance now on mobile > Share of digital is 54% • Money withdrawal with QR, w/o even having to login > US$38 mn volume/month

Loan Application with Video Call

MIA – Mobile Interactive Assistant

Empowering Customers


Virtual voice assistant enables performing banking transactions by voice

A first in Turkey - meet face-to-face with loan consultants via Garanti Mobile.

So far, loan disbursement reached $8.6 million in 2017

18

2d

>1.5 mn unique customers

GarantiOne

> Turkey’s first youth mobile banking application for people aged between 18 and 25. > Helps managing financial status and budget planning > Offers special campaigns personalized for users’ life styles

Services available on Digital

Innovative products and services

Mobile Appointment New appointment system routes customers to ATMs & digital channels

- decrease branch density - gives appointments/suggests alternative branches - get digital ticket for the appointment

Digital Gifting

Enables users to send P2P digital gifts such as digital subscriptions, gaming credits, coffees

>

> Turkey’s first one-step investment platform (2002)

> Access to local and global market data

> House view reports and video commentaries of Garanti experts

New Paragaranti.com

Login via Eye Scanning

A new way to log in to Garanti Mobile. Quick, easy and secure

>474k unique customers logged in

Investor Relations Corporate Presentation EMPOWERING


Feeding the sustainable and profitable growth model

Value Creation through

Digitalization

Higher cross-sell

Product penetration of digital customers is 65% higher than average customers

Growing fee base

Increasing customer satisfaction & loyalty

Branches with >65% digital penetration have >40% higher operational service quality & efficiency

Transaction costs at Online banking is 30x and Mobile banking is 55x lower than branch banking

Lower transaction costs

Sustained Growth Branches increased focus on: - Building relationships - Providing advisory - Generating sales - Acquiring new customers

Profitability of a digital customer is twice that of a non-digital customer

Higher Profitability

19

Digital channels’ share in non-credit linked fees: 40% vs. 34% in 2016


CULTURE OF PARTICIPATION & SHARING IN DECISION MAKING

Management Information

at all levels for performance monitoring

> Bank level

> Business line level

> Region level

> Branch level

> Sales person level

> Customer level

A single source of data & common understanding

> Single data dictionary

> Standardized management reports

> Consolidated data into MR platform

Platform for management and legal reporting

> Transparency

> Accountability

> Governance

EMPOWERING

Performance Management

Successful Decision Making

20


SUSTAINABLE FOR A BETTER LIFE

Investor Relations Corporate Presentation SUSTAINABLE

SUSTAINABILITY APPROACH Our strategic priorities

22

Performance Management

Performance Management Performance Management

Advise our corporate clients to help them make their

businesses more sustainable

Extend E&S risk framework and management systems

across the bank, local and international subsidiaries

Strengthen the financial capacity of Turkish

women by providing them financial education

and access to our products and services

Support financial planning and health of our

retail clients

Develop innovative sustainable financial

products linked to material issues for society

and Garanti

Develop and implement a financial education

program

Engage with stakeholders and build partnership

Support philanthropic programs with a focus on

material issues for society

HR: Enhance employees’ knowledge and life style

Environmental Footprint: Enhance operational efficiency

Governance: Enhance integration of sustainability within the Bank

Corporate

Clients

Impact

Business

Financial Systems

Communities

Individuals

Retail

Clients Stakeholders


Rolled out its Green Mortgage product to promote energy efficiency in buildings in 2017

SUSTAINABILITY APPROACH Sustainable Finance

Transition to Low-Carbon Economy Supporting SMEs and Entrepreneurship

Launched GarantiPartners to promote and support entrepreneurs

Launched Agricultural Irrigation Systems Loan to promote efficient irrigation systems in 2015

Applied a shadow carbon price for PF loans

Published Climate Change Action Plan in 2015

Became the main sponsor of CDP Turkey to raise awareness of climate change & water risks among private sector

Loans provided to renewable energy exceeded USD 4.8 billion

32% share in Turkey’s installed operational wind power capacity

Cardless bill payment and cardless money transfer options provided by the ATMs for unbanked and underbanked population

Women Entrepreneurs Executive School: 338 certificates in 4 provinces in 2016

Total amount of loans disbursed to women entrepreneurs to date: nearing USD 1 billion

58% of its ATMs and 16% of its branches are disabled-friendly

Reached out to 2.931 women through its financial literacy program

Financial Inclusion & Health


Environmental Impact of Operations

Pioneering Sustainability

• 971 service points covering 100% of employees certified to ISO 14001 • Obtained limited assurance for its community investments, materiality analysis , Scope 3

GHG emissions due to business flights and sustainability governance for the first time for GRI G4 Comprehensive Sustainability Reporting, in addition to Scope 1 and Scope 2 GHG emissions, water consumption, energy consumption, renewable energy portfolio and ESIAP

• The only financial institution worldwide to qualify for CDP 2017 Water A List • Listed in the CDP Climate Change A List in 2016 and 2015 • Reduced its total Scope 1 and Scope 2 GHG emissions per total assets by 56% in 2016

compared to 2012, the launch year of Environmental Management System

• The only company in Turkey to qualify for Dow Jones Sustainability Index for the third time in a row

• First bank in Turkey to sign Caring for Climate Initiative (C4C) and UNGC’s Leadership Criteria on Carbon Pricing

• Presented as a case study by the Carbon Pricing Leadership Coalition (CPLC) • First and only company in Turkey to be included in the Bloomberg Financial Services

Gender Equality Index • Successfully qualified for the fourth year in a row for the Borsa Istanbul (BIST)

Sustainability Index. • Listed in FTSE4GOOD Emerging Index in its first year • Vice Chair of Global Compact Türkiye and Business Council for Sustainable Development

Turkey

SUSTAINABILITY APPROACH Key Achievements

Sustainability Index

Initiatives*

*23 memberships & initiatives

Recognitions


INNOVATIVE BUSINESS MODEL

SUSTAINABLE

Process Technology

People

25


Training hours per employee: 36 hrs per annum

THE MOST VALUABLE ASSET: HUMAN CAPITAL

SUSTAINABLE

I International

quality standards

Performance Based

Incentive

Measured by customer satisfaction, service quality, efficiency and profitability

Investing in

people > 542K classroom training sessions > 113K hours of digital training

> IIP Gold certificate 2015 > 1st company from Turkey to earn

“Gold Certificate” from Investors in People for the second time.

26


PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS

SUSTAINABLE

IT Vision Investing in Technology

Full In-House Development

Custom-Fit Solutions

Driver (Integral Part of Management)

27



5-Minute Loan

FAST

> 1st private bank to launch SME support package (1996)

> Started to offer «firsts» in cash management solutions (1997)

> 1st chip-based installment credit card loyalty program in Turkey - Bonus Card (2000)

> Turkey’s 1st cardless transactions via ATMs (2005)

> Cep-T paracard: Turkey’s 1st prepaid card

enabling SIM based secure service (2011)

> World’s 1st banking application for Windows 8 (2012)

> Broke new ground in Turkey by offering banking service via WhatsApp by providing Branch/Paramatik ATM addresses and real-time market data (2015)

> “iPad Banking Application” enabled Customer Relationship Managers in branches to offer service to customers from outside the branches as well – First among large-scale banks in Turkey (2015)

> GarantiOne: Turkey’s first youth mobile banking application for people aged between 18 and 25. (2016)

INNOVATIVE

Introducing Many Firsts

28



> 1st bank in Turkey to create “paperless banking” operating environment and 1st bank in the world with ID scanning facilities in branches (2006). > Digital Banking: 95% of the non-cash transactions are carried out via digital channels

Advanced CRM > Segmentation: Propensity Modelling > Personalized Product Offers

29


LESS IS MORE

SUSTAINABLE

> 1st Bank to set up centralized operations in Turkey > 99% Operational Centralization Ratio

> Electronic Data Warehousing

Smarter Touch-Points for All

30


MANAGING WHAT WE MEASURE

SUSTAINABLE

WE KNOW...

What to Measure

Why to Measure

How to Measure

Risk-Return Balance

Customer Satisfaction

Key Performance Indicators

31


OUR JOURNEY TO SUCCESS Strong Market Position

32

PROFITABLE SUSTAINABLE EFFICIENT

Highest NIM & Fee Highest ROAE

despite the lowest leverage among private peers1

Best-in-class solvency

High liquidity

+4.6pp YoY improvement in Cost/Income ratio

Assets Loans Consumer Loans

(inc. CCs)

Consumer Mortgage

# POS Customer Deposits

Customer Demand Deposits

Net F&C Ordinary Banking Income

11.1%

#1

#2

#3

#4

13.2%

11.1%

15.3%

14.1%

2017 2006 2000

9.8%

11.2%

15.6%

18.6%

13.4%

12.1%

13.5%

14.9%

14.2%

11.4%

Market Share and Rankings (2000 - 2017)

10.7%

6.6%

#5

8.5% 4.4%

12.7%

6.4% 12.2%

13.1%

Note: Rankings are among private commercial banks. Market shares are calculated per BRSA monthly commercial banks 1 Peers defined as Akbank, Isbank and YKB per bank-only financials


READY FOR FUTURE


Disclaimer statement

Türkiye Garanti Bankasi A.Ş. (the “TGB”) has prepared this presentation document (the “Document”) thereto for the sole purposes of providing information which include forward looking projections and statements relating to the TGB (the “Information”). No representation or warranty is made by TGB for the accuracy or completeness of the Information contained herein. The Information is subject to change without any notice. Neither the Document nor the Information can construe any investment advise, or an offer to buy or sell TGB shares. This Document and/or the Information cannot be copied, disclosed or distributed to any person other than the person to whom the Document and/or Information delivered or sent by TGB or who required a copy of the same from the TGB. TGB expressly disclaims any and all liability for any statements including any forward looking projections and statements, expressed, implied, contained herein, or for any omissions from Information or any other written or oral communication transmitted or made available.

/garantibankasi

Garanti Bank Headquarters Address: Levent Nispetiye Mah. Aytar Cad. No:2 Besiktas 34340 Istanbul – Turkey Email: [email protected] Tel: +90 (212) 318 2352 Fax: +90 (212) 216 5902

www.garantiinvestorrelations.com

THANK YOU

http://www.garantiinvestorrelations.com/



https://play.google.com/store/apps/details?id=com.garanti.garantiIR&hl=en

Documents

NOT A COINCIDENCE - garantibbvainvestorrelations.com...15.2 MILLION CUSTOMERS ADDING VALUE TO THE ECONOMY AND SOCIETY 2nd LARGEST PRIVATE BANK by assets of US $94 billion Note: Figures