Aklease Overview May, 204
Agenda Aklease Organization Overview Aklease Business Overview Turkish Leasing Sector Overview Aklease Financial Highlights 2
Shareholder Structure Established as BNP-AK-Dresdner Leasing in November 988 - JV between Akbank, Dresdner and BNP Akbank acquired the entirety of Aklease in 2005 - Renamed Aklease 99.985% owned by Akbank - 0.05% owned by Sabanci Group affiliates Akbank elects all of Aklease s directors Sabanci Group One of the two largest conglomerates in Turkey Composed of 72 companies, with approx. USD 99.5 bio in total assets. % of ISE capitalization with 0 public companies and the Holding itself. Controlled by Sabancı Family owning 59.5% shareholding Mainly operates in the financial services, energy, retail, cement and industrial businesses. Established joint-ventures with distinguished companies in the world including; Ageas, Aviva, Bridgestone, Carrefour, Heidelberg Cement, Phillip Morris and E. ON Akbank () Aklease () Free Float; 4,3% Sabanci Holding & affiliates; 48,8% Akbank, 99.985% Sabanci Holding & affiliates, 0.05% Citigroup; 9,9% () As at 3 December 203 3
Aklease Board S. Hakan Binbaşgil Chairman, Aklease Appointed Chairman of Aklease s Board of Directors on 5 th January 202. Hakan joined Akbank in October 2002 as an Executive VP in charge of Change Management. He was appointed Executive VP in charge of Retail Banking in November 2003 and Deputy CEO in May 2008. He is also the Chairman of the Board of Directors of Ak Asset Management, Ak Investment, Akbank AG and Akbank (Dubai) Ltd. C. Kaan Gür Deputy Chairman Appointed to Aklease s Board of Directors on 27 th January, 20. He joined Akbank as Executive VP of SME Banking on 4 th January, 20. Previously, he has worked at various positions at Garanti Bank. S. Tuncer Mutlucan Board Member and CEO, Aklease Joined Aklease on 2 nd August 200 as General Manager and was appointed to Aklease s Board of Directors on 5 th April 20. Prior to joining Aklease, Tuncer was working in Akbank N.V. as General Manager and was on the supervisory board of Akbank Germany. Ahmet Fuat Ayla Board Member Appointed to Aklease s Board of Directors on 2 nd July 2007. Ahmet joined Akbank as Corporate Branch Manager in 2002, becoming Senior VP in charge of Corporate and Commercial Credits Approval Unit in 2005 and appointed as Executive VP in charge of Corporate and Commercial Credits Approval in 2007. Eyüp Engin Board Member Appointed to Aklease s Board of Directors on 25 th March 200. He joined Akbank in 978 as an Assistant Internal Auditor and was appointed Head of Internal Audit in July 2007. He has also been the Head of the Treasury Dept. and Executive VP of International Banking at Akbank. Hülya Kefeli Board Member Appointed to Aklease s Board of Directors on 7 th June 200. Hülya has been with Akbank since 983 and has held various positions in the Foreign Relations and International Banking Divisions at Akbank. In 2007, she was appointed as Executive VP in charge of International Banking. K. Atıl Özus Board Member Appointed to Aklease s Board of Directors on 6th June 2007. He joined Akbank in November 2000 as VP of Financial Control and Risk Management, and later promoted to Senior VP. In December 2007, Atil was appointed as Executive VP (CFO) in charge of Financial Coordination. 4
Organization Chart Internal Control Board of Directors Risk Management CEO Sales and Marketing Executive Vice President Credits Executive Vice President Head of Finance, Senior Vice President Operation Financial Control Executive Vice President Business Development & Marketing Credit Allocation Legal Counsel HR & Administrative Affairs Contract Management & Receivables Sales Asset Management A&L Management Procurement Financial Institutions Customer Relations & Insurance Accounting & Financial Control Financial Control IT 5
Agenda Aklease Organization Overview Aklease Business Overview Turkish Leasing Sector Overview Aklease Financial Highlights 6
Key Strenghts 3rd largest Leasing Company in Turkey by Net Lease Receivables Investment Grade Rating by Fitch Synergies From Relationship with Akbank Fully owned by Akbank Most Valuable Turkish Banking Brand () Lowest Cost-to-Assets Ratio among Peers Strong Position in Growing Market with Low Penetration Experienced Management & Prudent Risk Management Diversified Funding Portfolio Strong Asset Quality Resilient Business Model : Brand Finance 203 7
Synergies From Relationship with Akbank Established in 948 Rated Baa2 (Moody s) and BBB (Fitch) - Rated higher than the sovereign 2.4% YoY growth in profits in 203 to TL 3.bn 9.6% YoY growth in assets in 203 to TL 95.5bn Most valuable Turkish banking brand () Network of : - 985 domestic branches (plus branch in Malta) - Approx. 4,2 ATMs - More than 340,000 PoS Over 3 million customers : Brand Finance 203 Consumer Banking Corp, Commercial and SME Banking Treasury Private Banking International Banking Extensive Branch Network 4 6 5 3 7 35 5 2 25 4 3 4 5 4 2 6 6 Kartal 85 2 7 2 Kartal 5 Başkent, Bursa Başkent, Ankara 4 Bursa 2 6 5 76 Ankara 9 0 4 2 2 İzmir 27 6 2 40 İzmir 8 Antalya 0 5 0 6 5 2 4 3 3 4 4 6 3 5 Gaziantep 3 3 3 Aklease benefits from Akbank s 985 domestic branches and 23 regional offices across Turkey as representation channels Most of Aklease's customers are customers from referrals through Akbank Approx. 99% of Aklease s annual net financial lease receivables are from Akbank customers Antalya Antalya Gaziantep 8
Aklease at a Glance 3rd largest leasing company in Turkey by net lease receivables () Profile Key Financials () Provides leasing services to companies in Turkey across a range of sectors including: - Transportation - Construction - Textiles - Healthcare - Energy and natural resources Financial leases provided for a range of assets including: - Aircraft / rotorcraft - Manufacturing machinery and equipment - Commercial real estate - Electric/Electronic equipment - Office equipment Strong market position in a growing market with low penetration rates Tripled its market share in the Turkish leasing sector since 2005 to 3.4% in 203 Committed and robust shareholder, subsidiary and leasing arm of Akbank (99.9%). 99.9% owned by Akbank rated Baa2 (Moody s) and BBB (Fitch) Investment grade rating of BBB (Fitch), in line with Akbank TLm ()In accordance with IFRS. (2)Includes Debt Securities Issued Akbank, 99.985% Ownership Structure 200 20 202 203 Net Finance Lease Receivables,058,502 2,077 3,35 Total Assets,87,708 2,288 3,537 Borrowings (2) 833,30,676 2,843 Total Equity 288 306 322 45 Net Interest Income 59 6 65 84 Income Before Tax 62 44 57 54 Net Income 5 38 42 43 RoAE (%) 9,4 2,9 3,2,7 Cost to Income (%) 4,3 22,2 8,2 24,7 NPL (%) 3,2 3,5,8,6 Sabanci Holding & affiliates, 0.05% () According to FiDER 9
Leasing Activities-I 3rd largest leasing company in Turkey by net lease receivables () Grown its market share from 4.4% in 2005 to 3.4% as of 3 December 203. Rated BBB by Fitch Core subsidiary and leasing arm of Akbank Aklease BBB rating equalised to that of Akbank by Fitch Provides financial leases for a variety of assets including: Aircraft Commercial real estate Machinery and equipment Market leader in Turkey of financial leases for corporate jets, over 50% market share () Client base primarily consists of large Turkish corporations () According to FiDER Lease Portfolio Client Composition by Business Volume Typical Key Financial Leasing Transaction in Turkey Aklease retains legal title of the asset until lease expiry in case of default entitled to re-possess asset Supplier of Asset Sale of Interest Lessee : End User of Asset Physical (but not legal) transfer of asset on leasing Aklease Purchases Asset Transfer of ownership of leased asset on expiration of finance lease term Lease payments are made mostly on a monthly basis, allowing for regular credit performance monitoring Key Features of Financial Leasing in Turkey 00% 80% 60% 40% 20% 0% 75% 75% 80% 78% 25% 25% 20% 22% 200 20 202 203 SMEs Large Corporates Interest on lease payments is typically tax-deductible, helping reduce lessee s taxable income base Certain equipment and machinery leases in Turkey are subject to low VAT rates of around % vs. general VAT rates of 8% and 8% Lessee able to acquire the asset upon expiry Financial leases available in both TL and foreign currencies New Financial Leasing Law 2 will allow Aklease to: Offer leasing of complimentary parts, such as aircraft engines Sale leaseback services Provide operating leases (2) Financial Leasing, Factoring and Financial Companies Law of 3 December 202 0
Leasing Activities-II Lease Portfolio by Assets as of 3 st Dec. 203 Lease Maturities as of 3 st Dec. 203 Textile Machinery 4% Medical Equipment 3% Office Equipment 2% Other 7% Electric/Electronic Equipment 2% 5 years+ 22% year 27% Source: Aklease Construction Machinery 6% Manufacturing Machinery and Equipment 32% Commercial Real Estate 28% Aircraft 6% : Other includes the wind turbines leased which constittute 4% of the lease portfolio. Source: Aklease Source: Aklease Lease Portfolio by Industries as of 3 st Dec. 203 Lease Portfolio Currency Composition as of 3 st Dec. 203 4 years 2% 3 years 7% 2 years 22% Other 32% Health 6% Production 7% Energy and natural sources 7% Transportation 8% Construction % Textile % Steel and Mining 8% : Others includes: financial institutions, printing, automotive, telecoms media, tourism,agriculture, wholesale & retail, chemistry, education, machinery and metal industry and others Source: Aklease Source: Aklease TL 20% Avg. Maturity: 2.2 yrs Avg. Maturity: 3.0 yrs USD 39% : Avg. Maturity means the remaining average maturity EUR 4% Avg. Maturity: 2.6 yrs
Strategy 2 Continue Exploiting Synergies with Akbank and the Sabancı Group Take Advantage of Growing Lease Market 5 Strategic Priorities Increase market share through customer referrals by Akbank Continued support from Akbank, especially Risk Management and IT functions Developing specific synergies with AK Sigorta, insurance subsidiary of the Sabanci Group Focus on growth sectors in the economy such as: Renewable energy Healthcare Commercial real estate Transportation Construction Strategic Objective 3 4 5 Further Diversify Funding Base Maintain High Asset Quality & Grow Receivables New Products & Clients Maintain mix of short and long-term funding Seek financing from: Local banks Foreign banks ECAs Multilaterals Domestic & international capital markets Healthy growth in lease receivables to be achieved within the framework of: Continued conservative approach to asset quality and profitability Strong focus on risk management procedures Develop sale-leaseback and software leasing products Offering clients operating leases through strategic alliances with reputable partners Sustainable Market Leadership 2
Risk Management Aklease co-ordinates its risk management policies and processes with Akbank Risk parameters are reported to Akbank s Risk Management Division on a monthly basis Principal Leasing Risks Concentration Risk Credit Risk Mitigants Diversified portfolio by sector and lease asset type Selected counterparties Focus on assets with relatively high second hand value Additional collateral Detailed and thorough credit analysis, assesment,approval process Adequate level of collateral Monitoring regularly the counterparties ability to pay, analyzing the financial position of the lessees and condition of the leased assets Market Risk Appropriate combination of fixed and floating rate borrowings and lease receivables No investment portfolio Use of interest rate swaps and currency swaps (for hedging purposes) Stress tests and gap analysis Operational Risk procedures, staff education and assessment procedures as well assessment Effective segregation of duties, access, authorisation and reconciliation processes 3
Agenda Aklease Organization Overview Aklease Business Overview Turkish Leasing Sector Overview Aklease Financial Highlights 4
998 999 2000 200 2002 2003 2004 2005 2006 2007 2008 2009 200 20 202 203 204F 205F 206F 207F World Turkey Turkish Leasing Sector Overview 3 financial leasing companies in Turkey as of year-end 203 Top eight financial leasing companies are bank subsidiaries, and represent approx. 80% of market share in Turkey 2008 global financial crisis along with VAT increases in 2007 impacted the sector negatively Strong rebound seen in lease transaction volumes commencing from 200 Sector growth expected to accelerate following New Financial Leasing Law* which allows: Operating leases and software leases Sale-leaseback transactions The Financial Leasing, Factoring and Financing Companies Union is established in 203 in which Aklease is presented at the board level. Gross Lease Transaction Volume in Turkey (TLm) 3.244 +29% 0.230 +79% -67% 8.448 7.702 9.582 6.8 5.702 4.844 3.385 2005 +79% 2006 2007 2008 2009 200 20 202 203 * Financial Leasing, Factoring and Financial Companies Law of 3 December 202 New Business Generation Leasing Volumes (USDbn) Source : FiDER Net Lease Receivables in Turkey (TLm) 900 800 700 600 500 400 300 200 00 0 Leasing Volumes (million USD) 4,0 2,0 0,0 8,0 6,0 4,0 2,0 0,0 5.820 +43% 8.69.942 4.8-25% 0.98 0.560 +33% 4.985 6.988 24.639 World (LHS) Turkey (RHS) 2005 2006 2007 2008 2009 200 20 202 203 Source : FiDER 5
Aklease vs Sector Note: Aklease s results and sector comparisons are BRSA figures (Source: Aklease and FIDER) NPLs Cost to Income Ratio 2,0% 30,3% 30,% 32,% 32,8% 8,50% 8,00% 25,6% 6,50% 2,7% 3,2% 3,50%,80%,70% 5,% 8,2% 200 20 202 203 200 20 202 203 Aklease* Turkish Leasing Sector Aklease* Turkish Leasing Sector * Aklease s IFRS results equivalent are the same RoAE * Aklease s IFRS results equivalent are 4.3, 22.2%,8.2%,23,44% and 24,7% for 200, 20,202, and 203 respectively 9,4% 4,8% 2,6% 2,9% 4,% 0,0%,7% 8,8% 200 20 202 203 Aklease* Turkish Leasing Sector * Aklease s IFRS results equivalent are 9.4%, 2.9%,3.2%,3,5% and,7% for 200, 20,202,203 respectively 6
Agenda Turkish Economic Overview Aklease Organization Overview Aklease Business Overview Aklease Financial Highlights 7
Share Capital 3 December 203 3 December 202 Shares Shares (%) TLm (%) TLm Akbank T.A.Ş 99,985 38,879 99,985 88,387 Hacı Ömer Sabancı Holding A.Ş. 0,005 7 0,005 4 Tursa Sabancı Turizm ve Yatırım Hizm A.Ş. 0,005 7 0,005 4 Bimsa Bilgi İşlem A.Ş. 0,003 5 0,003 4 Ak Yatırım Menkul Değerler A.Ş. 0,002 2 0,002 00.00 38,4 00.00 88,4 Adjustment to share capital -3,393-3,393 25,007 75,007 The shareholder injected TL 50 million of capital in cash into the paid-in capital at December 7, 203. After the first capital increase, the shareholder injected an additional TL 50 million of capital in cash into the paid-in capital at March 2, 204. Currently, Aklease has TL 88,4 paid-in capital. As of 3 December 203, the capital adequacy ratio is 4.4% 8
Funding Portfolio Aklease is able to source funding from a well diversified base: Local and foreign banks ECAs such as US Ex-Im Bank, Euler-Hermes, Export Development Canada Multilaterals such as EIB, Proparco and ETDB International capital markets Asset-backed transactions Funding by Source 20 202 203 Multilateral 2% Foreign Banks 3% ECA covered 9% Akbank % Akbank EIB 5% Domestic Banks 32% Multilateral 5% Foreign Banks 32% DCM 8% ECA Covered 4% Akbank 24% Akbank EIB 9% Domestic Banks 8% DCM 24% Domestic Banks % Foreign Banks 7% Akbank 4% Akbank EIB 3% ECA Covered 6% Multilateral 5% Syndication 0% Akbank EIB refers to loans that Akbank provided from EIB and on-lent to Aklease ECA Covered refers to loans obtained under coverage of Ex-Im Bank, Euler-Hermes, EDC and etc. Multilateral refers to loans provided by the multilateral organizations such as Proparco and the ECO Trade and Development Bank DCM refers to Debt Capital Market and includes TL50 million bond issued in February 202 with 2 years maturity and USD 250 million eurobond issued in April 203 with 5 years maturity Note: On 20 March 203, Aklease entered into a syndicated term loan facility agreement of US$90 million and EUR30 million for up to three years 9
Income Statement TLm 200 20 202 203 Interest income from direct financial leases 87.9 02.6 42.3 95.9 Interest income on placements and transactions with banks 2.7 9.6 9.5 0.2 Total Interest Income 90.6 2.2 5.8 206. Interest expense on borrowings (32.2) (5.0) (74.) (94.5) Interest expense on debt securities issued - - (2.7) (27.3) Net Interest Income 58.4 6.2 65.0 84.3 Foreign exchange gains, including net gains or losses from dealing in foreign currency 0.5 2.7 3.8 57.2 Net Interest Income after foreign exchange gains and losses 58.9 63.9 68.8 4.5 Net trading, hedging and fair value income/(loss) (.2) (.7) 4. (5.3) Fee and commission income, net 2.5.0 2.3 3.0 Impairment loss on financial lease receivables (3.3) (4.7) (8.9) (24.3) Recoveries from impaired lease receivables 4.5 8. 3.2 2.5 Other income/(expenses), net.2 (0.4) 0. 0. Operating expenses (0.4) (2.4) (2.7) (7.6) Operating Profit 62.2 43.7 57.0 53.8 Income before tax 62.2 43.7 57.0 53.8 Taxation on income (.3) (5.4) (5.6) (0.8) Net income for the year 50.9 38.4 4.5 43.0 Other comprehensive income (cash flow hedge reserve) - - (0.) 0. Total comprehensive income 50.9 38.4 4.4 43.0 20
Balance Sheet TLm 200 20 202 203 Cash and cash equivalents 86.8 57.0 53.5 7.7 Financial lease receivables,058.2,502.0 2,076.8 3.34,9 Other assets and prepaid expenses 28.2 38.3 8.8 7.8 Assets held for sale 0..6.8 24.7 Property and equipment, net 0.4.5.2.2 Intangible assets, net - 0.6 0.6 0.6 Derivative financial instruments - 0. 3.6 0.3 Deferred tax asset, net 2.7 7.4-5.5 Total assets,86.5,708.4 2,288.0 3,536.6 Borrowings 833.4,30.0,676. 2,58.4 Debt securities issued - - 5.2 684.7 Accounts payable 48.4 5.9 08.4 95.6 Advances from customers 2.5 45.5 2.9 22.5 Derivative financial instruments 0.8.6 2.5 52.6 Other liabilities 3.5.9 2.8 2. Employment benefits 0.4 0.6 0.7 4.6 Deferred tax liability, net - - 2. - Total liabilities 898.9,402.4,965.7 3,2.3 Total paid-in share capital 75.0 75.0 75.0 25.0 Legal reserves 5.4 9.6 23.8 26.3 Retained earnings 97.2 2.3 223.6 264.0 Total equity 287.5 305.9 322.3 45.4 Total equity and liabilities,86.5,708.4 2,288.0 3,536.6 2
Disclaimer Statement The information and opinions contained in this document have been compiled or arrived at by Aklease from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document constitute the Company s judgement as of the date of this document and are subject to change without notice. The information contained in this document is published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document is strictly confidential and may not be reproduced, distributed or published for any purpose. 22