FINANCE WE ARE OFFERING THE MOST CREATIVE SOLUTIONS TO OUR CUSTOMERS THROUGH OUR FOCUS ON DIGITILIZATION AS WELL AS EXTENSIVE BRANCH NETWORK!

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1 102 KOÇ HOLDİNG ANNUAL REPORT 2015 FINANCE WE ARE OFFERING THE MOST CREATIVE SOLUTIONS TO OUR CUSTOMERS THROUGH OUR FOCUS ON DIGITILIZATION AS WELL AS EXTENSIVE BRANCH NETWORK!

2 KOÇ HOLDİNG ANNUAL REPORT KOÇ KOÇ TOPLULUĞU GROUP

3 104 KOÇ HOLDİNG ANNUAL REPORT 2015 FINANCE Sustainable PROFITABILITY Developments in the finance sector in 2015 The banking sector was affected by economic and political developments in both Turkey and abroad in The focal issues globally included the timing and amount of the Fed s interest rate hike, ECB s policies and geopolitical risks. Furthermore, the economic slowdown in China put pressure on emerging markets. The increase in economic and political uncertainties during the year triggered the depreciation of the Turkish lira as well as a rise in interest rates, which in turn slowed credit growth. Capital adequacy ratios were also adversely affected by these developments in Despite this challenging environment, the banking sector s profitability increased 4% over the prior year. Against this backdrop, it is possible to view 2015 as a year of success for the banking industry. The sector s solid performance once again confirmed that Turkish banking is built on a sound foundation. Koç Group in the finance sector In the finance sector, Koç Group operates through Koç Financial Services, a Koç Holding and UniCredit Group 50%-50% joint venture, and Koç Finansman, Turkey s first consumer finance company. Koç Financial Services is the parent company of Yapı Kredi, established in 1944 as Turkey s first private nationwide bank, and of various subsidiaries that are leaders in their own segments. Yapı Kredi ranks among Turkey s top ten most valuable brands with its sustainable, customer-focused banking philosophy and innovative approach. As a strong financial services group, Yapı Kredi s operations include: Retail Banking (individual banking, SME banking, Platinum Banking and card payment systems); Corporate and Commercial Banking; Private Banking and Wealth Management. The Bank s operations are supported by domestic subsidiaries engaged in portfolio management, brokerage, financial leasing and factoring as well as overseas banking subsidiaries based in the Netherlands, Russia, Azerbaijan and Malta. In 2015, Yapı Kredi s branch network climbed to 1,000 branch locations and its ATM network expanded to 4,332 ATMs. With a total workforce of more than 19 thousand employees, Yapı Kredi s customer base includes 11 million active customers and 21.3 million total customers. During the year, the Bank garnered nearly 30 awards presented by prestigious domestic and international institutions. For Yapı Kredi, 2015 was a year of developing and enriching all digital channels, mobile banking in particular, with the rapidly changing world and diversifying customer demands. Pioneering the digital transformation of banking, Yapı Kredi s digital banking active customer base has expanded 80% and reached 2.6 million customers over the last two years. İn this period, Yapı Kredi s internet banking market share increased 330 basis points to reach 14.9%. Likewise, its mobile banking market share increased 147 basis points and reached 12.4%. As of 2015 year-end, alternative distribution channels share in total banking transactions is around 85%, which is one of the higher figures in the sector. Established to provide customers with financing alternatives at sales locations, Koç Finansman delivers loan services, primarily in the automotive sector, but also in mortgage, education, durable goods and other areas. Koç Finansman is the only financing company to provide a service independent of the brand and sector in question. Financial solutions are delivered without the intermediation of branches, directly by the dealers who sell the products and services covered by the loan. Koç Finansman s total assets amounted to TL 3 billion as of year-end 2015.

4 KOÇ HOLDİNG ANNUAL REPORT KOÇ GROUP Yapı Kredi maintained its growth-oriented investment strategy in Leader Turkey s 4 th largest private sector bank by assets, Yapı Kredi is the market leader in credit cards, factoring, and financial leasing.

5 106 KOÇ HOLDİNG ANNUAL REPORT 2015 FINANCE/YAPI KREDİ MARKET SHARES Asset Size 4 th largest among private banks Total Cash and Non-cash Loans 4 th largest bank with an 11% market share 3 rd largest private bank with a 17% market share Cash Loans 4 th largest bank with a 10.3% market share 3 rd largest private bank with a 16.0% market share Deposits 5 th in total with a 10.2% market share 4 th largest private bank with a 15.3% market share Credit Cards Sector leader in credit cards outstanding volume with a 21.2% market share, credit cards revenues with 19.5%, POS revenues with 20.9% and number of credit cards with 18.1% shares Financial Leasing Sector leader in financial leasing transaction volume with 20.3% Factoring Sector leader in revenue with a 17.6% market share Mutual Funds 2 nd in with a 17.5% market share Equity Transaction Volume 2 nd with a 7.2% market share Branch Number 3 rd with an 8.9% market share ATM Number 4 th with a 9% market share Internet Banking Pioneer with a 14.9% market share Mobile Banking Pioneer with a 12.4% market share Yapı Kredi ranks among Turkey s top ten most valuable brands with its sustainable, customer-focused banking philosophy and innovative approach. As a strong financial services group, Yapı Kredi s operations include: Retail Banking (individual banking, SME banking, Platinum Banking and card payment systems); Corporate and Commercial Banking; Private Banking and Wealth Management. The Bank s operations are supported by domestic subsidiaries engaged in portfolio management, brokerage, financial leasing and factoring as well as overseas banking subsidiaries based in the Netherlands, Russia, Azerbaijan and Malta. Smart growth: Sustainable and healthy In 2015, Yapı Kredi continued to build on the Growth-Focused Investment Strategy, which the Bank initiated in This strategy helps bolster Yapı Kredi s standing in the sector and maintain a sustainable profitability performance. The main pillars of the strategy are investments in digital channels, ATMs and the branch network coupled with measures to boost customer acquisition and operational efficiency. To this end, Yapı Kredi opened 77 new branches over the last two years, expanding the branch network to 1,000 locations; in addition, it increased the ATM network to 4,332 ATMs by adding 1,299 new ATMs. With a total workforce of more than 19 thousand employees, Yapı Kredi s customer base includes 11 million active customers and 21.3 million total customers. For Yapı Kredi, 2015 was a year of developing and enriching all digital channels, mobile banking in particular, with the rapidly changing world and diversifying customer demands. Pioneering the digital transformation of banking, Yapı Kredi s digital banking active customer base expanded 80% and reached 2.6 million customers in the last two years. İn this period, Yapı Kredi s internet banking market share increased 330 basis points and reached 14.9%. Likewise, its mobile banking market share increased 147 basis points and reached 12.4%. As of 2015 year-end, alternative distribution channels share in total banking transactions was around 85%, one of the higher figures in the sector. In 2015, Yapı Kredi increased its total cash and non-cash loans volume by 21% to TL billion. The Bank is the 4 th in this field with an 11% market share among all banks while it is the 3 rd bank with a 17% market share among private banks. As a result of strong growth in general purpose loans and SME loans, which generate significant value for the Bank, Yapı Kredi s total cash loan portfolio increased 21% to TL billion. In this segment, the Bank ranked fourth in the sector with a market share of 10.3%. Among private banks, Yapı Kredi held a market share of 16%, and ranked third having moved up one place over the last two years. Please use the adjacent QR code to reach detailed information about Yapı Kredi.

6 KOÇ HOLDİNG ANNUAL REPORT Yapı Kredi is among the 10 most valuable brands in Turkey. KOÇ GROUP TOTAL ASSET SIZE 235 (TL billion) RETURN ON AVERAGE EQUITY 9.2% (9.7% Return on Average Tangible Equity) 81.80% Koç Financial Services SHAREHOLDER STRUCTURE 18.20% Free Float

7 108 KOÇ HOLDİNG ANNUAL REPORT 2015 FINANCE/YAPI KREDİ Yapı Kredi s digitalization efforts were recognized with the World s Best Mobile Banking Application award. During the year, total deposits grew 21% above the sector average to TL 130 billion. Yapı Kredi ranked fifth in total deposits industry-wide with a market share of 10.2%. Among private banks, Yapı Kredi ranked fourth and has a 15.3% market share. Yapı Kredi posted TL 1,909 million in net profits in The Bank s return on average tangible equity stood at 9.7% and its capital adequacy ratio amounted to 13.8% despite strong loan growth. Robust and diversified funding base The Bank continued to diversify its funding sources in During the year, the Bank raised USD 4.6 billion through syndications, securitizations, bond issuance and other financial instruments. Awards received for a successful year Yapı Kredi is on the mark when it comes to identifying banking and social needs and has received considerable praise for its performance. The Bank received nearly 30 awards from both national and international organizations in different fields. In Turkey s Most Appreciated Companies survey, conducted by the leading Turkish business magazine Capital, Yapı Kredi was designated one of the country s top three banks. Meanwhile, Marketing Türkiye named Yapı Kredi as The Bank that Makes Life Easiest for Clients and The Bank that Best Understands the Client. Yapı Kredi s focus on digitization earned it the World s Best Mobile Banking App award at the renowned Stevie Awards. Corporate Governance rating In 2015, Yapı Kredi s Corporate Governance rating was raised from to Outlook, targets and strategies for 2016 In 2016, the banking sector is expected to demonstrate loan growth of 13% and deposit growth of 11%. The net interest margin is anticipated to remain at its 2015 level while non-performing loans could increase 40 basis points. Over the last two years, Yapı Kredi has invested heavily in branches, ATMs and employees in order to strengthen its service network. Currently, the Bank will focus on further bolstering its operational performance and efficiency. At the same time, Yapı Kredi will maintain profitability while sustaining its asset quality, capital and liquidity base. A leader of the digital transformation in banking, Yapı Kredi will continue investing in this area in 2016 to boost its standing in the sector. In 2016, Yapı Kredi is expected to expand its total loan and deposit portfolio in line with the sector average, while outpacing the sector in higher value-creating products such as general purpose and SME loans. Despite rising deposit costs, the net interest margin will be sustained by efficient loan pricing, while fee and commission growth will be driven by customer acquisition.

8 KOÇ HOLDİNG ANNUAL REPORT FINANCE/ KOÇ FİNANSMAN Koç Finansman is the only financing company to offer loan services to all brands and industries Asset size: TL 3 billion Established to provide customers with financing alternatives at sales locations, Koç Finansman delivers loan services, primarily in the automotive sector, but also in mortgage, education, durable goods and other areas. Koç Finansman is the only financing company to provide a service independent of the brand and sector in question. Financial solutions are delivered without the intermediation of branches, directly by the dealers who sell the products and services covered by the loan. Celebrating its 20 th anniversary in 2015 around the theme 20 Splendid Years, Koç Finansman conducts operations on two cultural axes: Innovation and customer focus. This approach has helped the Company win various awards in the areas of technology and social responsibility. In line with its portfolio diversification strategy, Koç Finansman ventured into the durable goods and consumer electronics areas, forged new partnerships and launched the Kredidakik brand. Outlook, targets and strategies for 2016 Koç Finansman is keen to diversify its business lines and services, maintain a competitive edge, and bolster its market position with customer-focused, innovative projects in KOÇ GROUP In 2015, the Company s short term national credit rating was affirmed as (TR) A1, while its long term national credit rating was upgraded from (TR) A to (TR) A+. Please use the adjacent QR code to reach detailed information about Koç Finansman.