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Investor Relations Corporate Presentation
NOT A COINCIDENCE
Corporate Presentation October 2017
Investor Relations Corporate Presentation
2
ROAE
18.1% BASEL III CAR
16.4%
14.9 MILLION CUSTOMERS
ADDING VALUE TO THE ECONOMY AND SOCIETY
2nd LARGEST PRIVATE BANK
by assets of
US $96 billion
Note: Figures are based on BRSA consolidated financials as of June 30 2017 Mcap, number of branches, ATM and customer numbers are as of October 12, 2017 *Among peers. Peers are defined as Akbank, Isbank, YKB, Vakıf and Halk
Focused on Relationship Banking with Broad Geographical Coverage & Omni-Channel Distribution Network > 952 branches > Leading internet and mobile banking > Largest financial call center > 4,779 ATMs > Targeted investments to digital platforms
Robust Balance Sheet > Highly liquid > Low risk -- NPL Ratio: 2.7% > Well-capitalized -- CET-I makes up 87% of total capital
#1 in NIM &
Net F&C base*
~50% Free Float > The most traded stock of Borsa Istanbul -- Average daily turnover represents 15% of BIST 100
> The share of foreign investors including DR holders in actual free float is ~95% -- Shareholders from around 35 countries
Investor Relations Corporate Presentation
EMPOWERING
SUSTAINABLE
RESPONSIBLE
READY FOR FUTURE
Investor Relations Corporate Presentation
4
RESPONSIBLE TOWARDS SOCIETY
Investor Relations Corporate Presentation
ECOSYSTEM AWARENESS
Operating in a Large and Dynamic Economy
High and Sustainable Real GDP Growth*
2002-2Q17 CAGR: 14%
*Source: IMF’s World Economic Outlook Report dated April 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 June 2017.
RESPONSIBLE
$ 849bn***
5
2022
100
150
200
250
300
350
400
450
2002 2005 2008 2011 2014 2017 2020
Rea
l GD
P G
row
th (
Reb
ased
)
EU EM Europe LATAM TURKEY Avg. GDP growth
~5% over 2006-2016
LATAM: 2.3% EU: 1.8% EM Europe: 3.2%
vs. LATAM: 2.8% EU: 1.2% EM Europe: 3.9%
vs.
vs.
2nd largest banking system
in Emerging Europe after
Russia **
Investor Relations Corporate Presentation
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, 2016, Address Based Population Registration System (ABPRS)
ECOSYSTEM AWARENESS
Turkey with Young and Growing Population
vs.
56% under 35
RESPONSIBLE 6
26.8%
25.2%
26.1%
26.7%
27.4%
42.2%
35.1%
37.3%
36.0%
36.8%
37.3%
36.6%
38.1%
37.5%
37.9%
36.5%
35.3%
21.3%
Europe
Czech Republic
Hungary
Poland
RussianFederation
Turkey
<25 25-50 >50
Investor Relations Corporate Presentation
ECOSYSTEM AWARENESS
Underpenetrated Market with Strong Growth Potential
RESPONSIBLE
Attractive Demographics
Underpenetrated Market
Source: ECB, TurkStat, BRSA for commercial banks, as of 1Q17
58% 39%
13%
96%
53% 62%
284%
109% 99%
Assets / GDP Customer Deposits / GDP Loans / GDP
Turkey - 2002 Turkey - 2Q17 Euro Area - 2Q17
7
Investor Relations Corporate Presentation
ECOSYSTEM AWARENESS
Highly Liquid Banking Sector
RESPONSIBLE 1 BRSA monthly data as of June 2017 2 Top 4 private banks average of 2Q17, 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: 171% (Legal limit 60% for 2017) Total Liquidity Coverage Ratio: 112% (Legal limit 80% for 2017)
Deposits fund 56% of assets1
Comfortable level of Loans/Deposits at 115%1
Investor Relations Corporate Presentation
19.5% 17.4% 17.2% 16.1% 16.1%
13.4%
Eurozone Poland Brazil Turkey SouthAfrica
Russia
* Source: Latest data from the IMF-FSI database. Most of figures are based on 1Q17 figures ** BRSA monthly data as of June 2017
ECOSYSTEM AWARENESS
Well-Capitalized and Underleveraged
> ROAEs ** : 16.1%
with low leverage
RESPONSIBLE
> Basel III CAR**: 16.9% (June ’17)
> CET-I capital**: 84% of total capital
> RWA/Assets**: 77% vs. 82% 2016YE
CAR*
(1Q17)
Leverage*
(1Q17)
9
8.0x 8.3x 9.2x 9.8x 11.1x 11.8x
Turkey Russia Poland Brazil SouthAfrica
Eurozone
Investor Relations Corporate Presentation
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 1Q17 figures 2 BRSA monthly data as of June 2017 for the sector 3 Includes specific and general provisions. TBA data for the commercial banks as of March 2017
Investor Relations Corporate Presentation
Savings / GDP (2016 Year End)
Source: IMF, World Economic Outlook Database, April 2017
ECOSYSTEM AWARENESS
How Authorities Address the Savings Challenge
> Incentives through private pensions Encourage more participants through direct government contributions
> Proliferation of gold deposits with effective use of RR tools Gold under-the -mattress will be revealed
> New severance scheme Severance payments will accumulate in a pooled fund, thus act like mandatory savings by government
> Withholding tax on deposits Lower rate for longer term deposits to encourage long term savings
RESPONSIBLE
24.9%
22.7% 22.2%
17.3%
TURKEY EM - Europe EU LATAM
11
Investor Relations Corporate Presentation
ECOSYSTEM AWARENESS
How We Address Challenges for Financial Health
RESPONSIBLE
Savings Test
Accumulating Gold Account
Spend & Save Account
Savings Account
for Future
Pension Funds
12
Investor Relations Corporate Presentation
EMPOWERING IN ALL POSSIBLE DIMENSIONS
Investor Relations Corporate Presentation
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 June 30, 2017
14
Asset Contribution: 5.11%
Asset Contribution: 2.71%
Asset Contribution: 1.56%
Asset Contribution: 0.83%
Asset Contribution: 0.58%
Asset Contribution: 0.02%
Asset Contribution: 0.05%
Investor Relations Corporate Presentation
ACTIVE LISTENING & DEVELOPING ACCORDINGLY
Social Platforms
Customer Centricity
Index
Market Research
Investor Perception
Study
Employee Idea Platforms
To Sustain
High Quality & Corporate
Governance
EMPOWERING 15
Investor Relations Corporate Presentation
EMPOWERING Note: 23 investment centers operating under Garanti Bank were transferred to Garanti Securities at the end of October 2015.
INVESTMENTS IN DELIVERY CHANNELS
Welcoming ~160k customers per day
20
02
2
01
7
100% Geographical Coverage
as of Sep’17 vs. 49% in 2002
16
331
487
936 1,005 952
3.7
6.2
11.8 13.1
14.9
2002 2006 2012 2014 Oct.17
# of Branches
# of Customers
Number of Branches & Customers
mn
mn mn
mn
mn
Investor Relations Corporate Presentation
17
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
Providing seamless experience across
all channels
>500 types of transactions
27% of non-cash financial transactions carried via internet banking
• 4,779 ATMs Cash
deposits/withdrawals:112% • Serving non-bank customers
through cardless transactions
• In 2016, 300 mn transactions in
total (20mn cardless)
• 70 mn Customer Contacts in 2016 • 34 sec. avg. response time (sector 72sec) • Centralized branch calls • 32 product offerings • 20% of total credit card sales • 4 mn products sold in 2016
• 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
• 4.7 mn active mobile users
• 3.4 mn mobile-only customers**
• Mobile banking app named as
Best in class in Europe*
in Forrester’s Global Mobile Banking
Functionality Benchmark Study
• 57% of non-cash financial transactions via mobile banking
Internet Banking
Mobile Banking
Social Media
Call Center
ATMs
Investor Relations Corporate Presentation
Tax Payments Bill Payments Credit Card Transactions
27% 45% 24%
Tax Payments
25% 55% 30%
27.2% Online
56.6% Mobile
10.8% ATM
0.1% Call Center
with increasing weight in mobile
23% market share
in retail internet & mobile banking financial transactions volume
Utilizing digital channels effectively
> 114mn in 2016
Mobile transactions:
70mn in 2015
95% of all non-cash financial transactions
go through digital channels:
INVESTMENTS IN DIGITAL CHANNELS
Leading position & effective utilization
> Online Banking financial transactions market shares:
Managing the largest customer base in Turkey
> Mobile Banking financial transactions market shares:
18
5.6 million 22% YoY active digital
customers
4.7 million 42% YoY active mobile
customers
2.3 million logins/day
Credit Card Transactions Bill Payments
Note: Market share info is calculated based on the figures provided by «The Banks Association of Turkey» for period Q2
Investor Relations Corporate Presentation
• Advantageous Casco: Product specifically designed for digital banking > Share of digital increased from 2% to 53%
• Overdraft Account now on digital > Share of digital has become 31% • 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
INVESTMENTS IN DIGITAL CHANNELS
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
19
>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
>423k unique customers logged in
Investor Relations Corporate Presentation EMPOWERING
INVESTMENTS IN DIGITAL CHANNELS
Feeding the sustainable and profitable growth model
Value Creation through
Digitalization
Higher cross-sell
Product penetration of digital customers is 61% higher than average customers
Growing fee base
Service fees driven by Online & Mobile Banking make up 38% of Bank’s total service fees
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
20
Investor Relations Corporate Presentation
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
21
Investor Relations Corporate Presentation
SUSTAINABLE FOR A BETTER LIFE
Investor Relations Corporate Presentation SUSTAINABLE
SUSTAINABILITY STRATEGY Our strategic priorities & key achievements
Performance Management Performance Management Performance Management
Corporate
Clients
Impact
Business Financial Systems
Communities Individuals
Retail Clients
> 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
Stakeholders
Sustainable Finance Environmental Impact of Operations Communities and Stakeholders
23
• 32% share in Turkey’s installed operational wind
power capacity and loans provided to renewable
energy reached USD 4.8 billion
• Started supporting CDP Water to raise awareness
on water crisis among private sector
• Published Climate Change Action Plan in 2015
• Launched GarantiPartners to promote and
support entrepreneurs
• Total amount of loans disbursed to women
entrepreneurs to date: nearing USD 1 billion
• Women Entrepreneurs Executive School: 338
certificates in 4 provinces in 2016
• Reached out to 2.931 women through its financial
literacy program
• 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 company in Turkey to be listed in CDP Climate
Change A List and received CDP 2016 Climate Leader
Award for the second time in a row
• Received CDP Turkey 2016 Water Leader Award
• The only company in Turkey to qualify for Dow Jones
Sustainability Index for the second time in a row
• First bank in Turkey to sign Caring for Climate Initiative
(C4C) and UNGC’s Leadership Criteria on Carbon Pricing
• First and only company in Turkey to be included in the
Bloomberg Financial Services Gender Equality Index
• Successfully qualified for the third year in a row for the
Borsa Istanbul (BIST) Sustainability Index.
• Listed in FTSE4GOOD Emerging Index in its first year
• Member of UN Global Compact, UNEP FI and Business
Council for Sustainable Development in Turkey
Investor Relations Corporate Presentation
INNOVATIVE BUSINESS MODEL
SUSTAINABLE
Process Technology
People
24
Investor Relations Corporate Presentation
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.
25
Investor Relations Corporate Presentation
PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS
SUSTAINABLE
IT Vision Investing in Technology
Full In-House Development
Custom-Fit Solutions
Driver (Integral Part of Management)
26
Investor Relations Corporate Presentation SUSTAINABLE
PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS
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
27
Investor Relations Corporate Presentation SUSTAINABLE
PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS
> 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: 92% of the non-cash transactions are carried out via digital channels
Advanced CRM > Segmentation: Propensity Modelling > Personalized Product Offers
28
Investor Relations Corporate Presentation
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
29
Investor Relations Corporate Presentation
MANAGING WHAT WE MEASURE
SUSTAINABLE
WE KNOW...
What to Measure
Why to Measure
How to Measure
Risk-Return Balance
Customer Satisfaction
Key Performance Indicators
30
Investor Relations Corporate Presentation SUSTAINABLE
OUR JOURNEY TO SUCCESS Strong Market Position
Rankings among private commercial banks. Market shares are calculated per BRSA weekly commercial banks data. Market shares of Assets, Net F&C and Ordinary Banking Income are per BRSA monthly commercial banks data. 1 Peers defined as Akbank, Isbank and YKB per bank-only financials
31
Assets Loans Consumer Loans
(inc. CCs)
Consumer Mortgage
# POS Customer Deposits
Customer Demand Deposits
Net F&C Ordinary Banking Income
11.5%
#1
#2
#3
#4
13.2%
11.6%
15.3%
14.2%
1H17 2006 2000
9.8%
11.4%
15.6%
18.1%
13.2%
12.1%
13.1%
14.9%
13.6%
11.4%
Market Share and Rankings (2000- 1H17)
10.7%
6.6%
#5
8.5% 4.4%
12.7%
6.4% 12.2%
13.4%
PROFITABLE SUSTAINABLE EFFICIENT
Highest NIM & Fee Highest ROAE
despite the lowest leverage among private peers1
Best-in-class solvency
High liquidity
+5pp YoY improvement in Cost/Income ratio
Investor Relations Corporate Presentation
READY FOR FUTURE
Investor Relations Corporate Presentation
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