PARTICIPATION BANKS. A Success Story of Financial Inclusion in Turkey. Mustafa Dereci. Group Manager Kuveyt Turk Participation Bank

Transcription

1 PARTICIPATION BANKS A Success Story of Financial Inclusion in Turkey Mustafa Dereci Group Manager Kuveyt Turk Participation Bank March 214

2 AGENDA Financial Inclusion: Definition and Facts Islamic Banking in the World: Facts and Figures Participation Banking in Turkey: Facts and Figures Conclusion

3 Financial Inclusion: Definition The delivery of financial services and products at affordable costs to sections of disadvantaged and low-income segments of society, The antonym of financial inclusion is financial exclusion where those services are not available or affordable.

4 Financial Inclusion: Facts Half of the World is unbanked Proportion of the Muslim population using financial services is less than their non-muslim counterparts Financial exclusion rate is currently 47% in Turkey. Microfinace loans business is almost untapped in Turkey. The volume of microfinance loans is around USD 5 Million per annum.

5 Financial Inclusion: Why? There is a strong positive correlation between financial inclusion and GDP per capita It is a strong tool to alleviate poverty It is an important parameter for economic development and growth of a country It curtails unregistered economy

6 Financial Exclusion: Why? Users of formal financial services Voluntary self-exclusion No Need Cultural / religious reasons not to use / indirect access Population Insufficient income / high risk Discrimination Non-users of formal financial services Contractual / informational framework Involuntary exclusion Price / product features

7 Islamic Banking in the World Sukuk 14.5% Islamic Funds 4.1% Takaful 1.% Size of Global Islamic Finance = 1.8 Trillion USD Islamic Banking 8.4% (1.45 Trillion USD) Kuwait Finance House, IFN Turkey Roadshow Borsa Istanbul Stock Exchange Report, 213

8 Islamic Banking Assets in the World Billion USD Trillion USD (2%) 1 8 CAGR = 21.53% F Kuwait Finance House, IFN Turkey Roadshow Borsa Istanbul Stock Exchange Report, 213

9 History of Islamic Banking in Turkey Kuveyt Turk established SFH under Banking Law Turkiye Finans acquired by National Commerce Bank Government Decree for SFH İhlas Finance established Anadolu Finans and Family Finans merged as Türkiye Finans Albaraka Turk and Faisal Finans established Asya Finans has established TKBB established First Sukuk Anadolu Finans established Faisal Finans becomes Family Finans Ihlas Finans left the market Four participation bank are in service - AlBaraka Türk - Bank Asya - Kuveyt Türk - Turkiye Finans

10 Participation Banks in Turkey (Assets) Billion TL CAGR % CAGR % 813 Billion USD 45 Billion USD (5.5%, 223 vision: 15%) Billion TL BDDK,

11 Participation Banks in Turkey (Deposits) Billion TL Billion USD 28 Billion USD (6.3%) Billion CAGR +18.1% CAGR % 1 BDDK,

12 Participation Banks in Turkey (Loans) Billions Billion USD 29 Billion USD (6%) Billions 4 CAGR +28.3% 2 2 CAGR % 1 BDDK,

13 Participation Banks in Turkey (Saving Deposits) Billions Billion USD 19 Billion USD (7.8%) Billions BDDK, CAGR % CAGR +2.92%

14 Participation Banks in Turkey (SME Loans) Sector Participation Banks Binler 3 TL 25 TL 2 TL 133 Billion USD 16.4 Billion USD (%12) 4 TL 35 TL 3 TL 25 TL Binler 15 TL 2 TL 1 TL 15 TL 5 TL CAGR +31.2% CAGR % 1 TL 5 TL BDDK, 214 TL TL

15 Participation Banks in Turkey (Gold Deposits) Non-Gold Deposits Gold Deposits 2K Gold Customers 6,14% 21,72% 93,86% 78,28% Islamic Banks Conventional Banks BDDK, 214

16 Participation Banks (Scrap Gold Collection) Conventional Banks Participation Banks 43% 13, Kg 56% New Customer 77, 17, Kg New Customer 1,

17 Participation Banks (ATM) K ATMs CAGR % CAGR % 1.9K ATMs (4.5%) BKM,

18 Participation Banks (ATM per 1, km 2 ) 6, 5, 53 Units 3, 2,5 4, 2, 3, CAGR % 2.4 Units 1,5 2, CAGR % 1, 1,,5, BKM, ,

19 Participation Banks (ATM per 1, People) Binler units 2 1,8 Binler CAGR +12.4% CAGR % 2.5 units 1,6 1,4 1,2 1,8,6 1,4 5,2 BKM,

20 Participation Banks (Staff) Binler K (8.5%) Binler 2 15 CAGR +4.1% 2 K CAGR % BKM,

21 Participation Banks (Branch Network) , CAGR +6.13% 966 (8.8%) 8 6 CAGR % BKM,

22 Participation Banks (Branches per 1, km 2 ) 16, 14, 14 Branch 1,4 1,2 12, 1, 8, CAGR +6.22% 1.2 Branch 1,,8 6,,6 4, CAGR %,4 2,,2, BKM, ,

23 Participation Banks (Branches per 1, People) Branches CAGR +4.9% CAGR +12.3% 1.7 Branches BKM,

24 Participation Banks (Debit Card) Milyonlar Million 6 5 Milyonlar CAGR +8.16% 5 Million (5%) 3 4 CAGR +28.7% BKM,

25 Participation Banks (Credit Card) Milyonlar Million 3 3 Milyonlar 4 CAGR +7.26% 2.5 Million (4.3%) CAGR +2.55% BKM,

26 Participation Banks (POS Terminals) Binler CAGR +7.54% 132 K (5.7%) 2.3 Million Binler CAGR % BKM, 213

27 Conclusion Without appropriate regulations and ethical approach to financial inclusion, undeserved consumer may become overdebted. Remember subprime mortgage crash in US. Financial inclusion is to create an environment for disadvantaged people to access financial services if they need, it is not to force them to become overbanked. Participation Banks in Turkey have great potential to embrace a big deal of unbanked people with solid and ethical Islamic Banking arguments The most ignored part of financial inclusion tools is microfinance loans in Turkey

28 Thank You