BANKING MARKET IN TURKEY, 2014-2016 REPORT by November 2014 Version: 2014/10/c
TABLE OF CONTENTS : BANKING MARKET IN TURKEY, 2014-2016 Slide 1: Executive summary 1. Macroeconomic overview Slide 2: Turkey - General overview and key facts Slide 3: Selected macroeconomic indicators, 2010-2014 H1 Slide 4: Foreign trade statistics, C/A balance, FDIs, 2010-2014 H1 Slide 5: Public finances, 2010-2014 H1 Slide 6: Disposable income in households, 2009-2013; income distribution 2013 Slide 7: Borsa Istanbul- Market cap, # equities, index, 2009-Sep. 2014 2. Banking market Slide 8: Turkey and CEE banking markets: Size vs. growth matrix, 2011-2013 Slide 9: Turkey & CEE banking penetration benchmarks, 2013 Slide 10: Number of banks and banking assets by owner group, 2014 H1 Slide 11: Banking assets evolution (LCU, EUR), 2010-2014 H1 Slide 12: Banking assets evolution by groups of banks, 2010-2014 H1 Slide 13: Top 10 banks, market shares, ownership, 2014 H1 Slide 14: Market concentration, 2014 H1 (Assets, Branches, ATMs, HH Index) Slide 15: Evolution of market shares for top 5 banks, 2010-2014 H1 Slide 16: Number of bank branches and employment at banks, 2010-2014 H1 Slide 17: Payment infrastructure (ATMs, POS terminals, Cards), 2010-2014 H1 Slide 18: Payment infrastructure (ATM, POS per capita): Turkey vs. Europe, 2013 Slide 24: Non-performing loans, ratios by type of product, 2010-2014 H1 Slide 25: Housing loans statistics, 2010-2014 H1 Slide 26: Housing loans international benchmarking, 2013 4. Banks' profitability Slide 27: Banks - revenue, costs and profits composition, 2013 Slide 28: Banks - profitability tree, 2011-2014 H1 5. Top 5 banks Slide 29: Top Banks (1/5) Türkiye Cumhuriyeti Ziraat Bankası A.Ş Slide 30: Top Banks (2/5) Türkiye İş Bankası A.Ş. Slide 31: Top Banks (3/5) Türkiye Garanti Bankası A.Ş. Slide 32: Top Banks (4/5) Akbank T.A.Ş. Slide 33: Top Banks (5/5) Yapı ve Kredi Bankası A.Ş. 6. Mid-term forecasts Slide 34: Key retail volumes forecast, 2014-2016 Slide 35: Key corporate volumes forecast, 2014-2016 Slide 36: Banking assets forecast, 2014-2016 3. Retail & corporate banking Slide 19: Loans by customer segment evolution, 2010-2014 H1 Slide 20: Deposits by customer segment evolution, 2010-2014 H1 Slide 21: Retail deposits by currency, by maturity, 2010-2014 H1 Slide 22: Concentration of retail deposits by size, 2014 H1 Slide 23: Retail loans by type, 2010-2014 H1 7. Notes on Methodology 2
AGENDA Macroeconomic overview Banking market Retail and corporate banking Banks' profitability Top 5 banks Mid-term forecasts Notes on Methodology 3
Banking assets per capita, 2013, `000 EUR TURKEY HAS A LARGE AND FAST GROWING BANKING MARKET Banking market in Turkey vs. major CEE* countries - Size vs. growth matrix, 2011-2013 Contraction Growth IN EUR 25 Hungary 105 Croatia 53 20 15 10 Slovakia 62 188 Czech Republic Poland 339 x Total banking assets, 2013 in billion EUR 44 585 Turkey Serbia 5 81 Bulgaria 25 Romania Average annual assets growth (CAGR), 2011-2013, in EUR, % 0-4% -2% 0% 2% 4% 6% 8% 10% * Major CEE countries. Russia, Ukraine and Belarus not included Source: Central banks, IMF, 4
IN 2013, BANKS RECORDED 88 BILLION TRY IN TOTAL REVENUES AND EARNED TRY 24.7 BILLION (EUR 9.7 BILLION) IN NET PROFITS Profit and loss accounts of banks, 2013 TRY billion ALL BANKS Revenues 4.5 88.0 16.7 Costs Profits 57.3 26.2 2.1 19.2 18.9 31.2 6.5 24.7 Net interest income Net fees & commiss ions FX, trade & other banking revenue Operating revenue Personnel costs Depreciation Other operating costs Costs of risk (net provisions) Profit before tax & other items Taxes & other items Net profit In % of revenue 65 30 5 100 19 2 22 22 35 7 28 (May not always sum to 100% due to rounding) * Excluding foreign bank branches operating in Poland Source: BDDK, 5
TOP BANKS (1/5) TÜRKIYE CUMHURIYETI ZIRAAT BANKASI A.Ş. Key details Distribution Balance sheet Name: Türkiye Cumhuriyeti Ziraat Bankası A.Ş. HQ: Doğanbey Mahallesi, Atatürk Bulvarı, No: 8 06107 Ulus / ANKARA Est. Date: 1863 Type: State-owned Deposit Bank CEO: Muharrem KARSLI - Chairman of the Board and Member of the Audit Committee Market position: # 1 by assets (2014 H1) Recent events Oct. 2014 T.C. Ziraat bank received regulatory approval to establish an Islamic lender (Participation bank) with $300 m capital. Aug. 2014 T.C. Ziraat bank withdrew from negotiations to acquire participation Bank Asya, an Islamic lender. Jun. 2014 Moody's Investors Service has rerated T.C. Ziraat s Long and short-term LC /FX deposit ratings to Baa3. Shareholders, 2014 H1 (share in %) Number of branch offices 1,458 2011 Number of employees (in thousand) 24,374 2011 Efficiency benchmarks (for TOP10 banks) TOP10 banks Garanti B. Akbank Türkiye İş B. Yapı ve Kredi B. Türkiye Halk B. Türkiye Vakıflar B. 1,514 2012 23,153 2012 1,661 2013 24,725 2013 Assets per branch (mtry) 164 164 162 159 205 196 1,674 14H1 24,161 14H1 10.7 11.9 9.2 8.9 9.9 9.3 CAGR +6% CAGR 0% Assets per employee (mtry) Total deposits & loans (TRY billion) deposits deposits loans 113 2011 Return on average equity (ROAE) loans 71 119 2012 71 142 2013 111 145 +10 14H1 124 16.2 15.4 15.0 14.9 10.8 9.3 10.9 11.4 Profitability (in %) 15.8 Market share (in %) 17.5 18.7 CAGR* (%) 18.3 +25 100 % Treasury of the Republic of Turkey TC Ziraat B. Türk Ekonomi B. Finans Bank Denizbank 107 103 89 136 5.8 5.0 4.8 9.4 Return on average assets (ROAA) 1.35 2011 1.64 2012 1.80 2013 1.85 14H1 * Compound Annual Growth Rate Source: TBB, Bank, Press, 6
NOTES ON METHODOLOGY FX rates: As a general rule, all end of year balances such as assets, deposits, loans, and similar volumes have been converted from the local currency using end of year (period) exchange rate All results achieved during a period of time like: profits, revenues, new sales etc. have been converted from the local currency into Euro using average exchange rate Exchange rates used in the report: Estimates and Forecasts: Source: TCMB series unit 2010 2011 2012 2013 14H1 EUR-TRY rate - EOP TRY 2.06 2.44 2.36 2.96 2.90 EUR-TRY rate - AVG TRY 2.00 2.34 2.31 2.53 2.96 USD-TRY rate - EOP TRY 1.54 1.89 1.78 2.15 2.12 USD-TRY rate - AVG TRY 1.51 1.68 1.80 1.90 2.16 In some cases, recent or verified data was not available. Therefore, necessary short-term estimations have been done to fill the gaps. Estimates are always indicated with the letter E When preparing forecasts F we have built models using latest observed trends, available forecasts of main economic indicators, seasonal changes observed in the past, and other specific factors considered important. Multiple sources: In some cases, multiple sources of similar data exist. In this situation we always try to select the most appropriate one /in our view/. The source is indicated in the footer area of each slide. Nevertheless, in specific cases before interpreting the data, we recommend that you get a good understanding of the methodology of data collection by contacting the authors. 7
About this report About This report has been prepared using proprietary research and publicly available sources, including: financial reports, press publications, industry magazines, directories, financial databases and expert opinions. Views presented in this report reflect solely the independent and unbiased opinion of and authors. Whilst all care has been taken in compiling information in this report, is not responsible for any loss, damage, expense or claim, howsoever arising, suffered as a result of reliance on the data contained within this report. This report is copyrighted. Any distribution, storage, replication and usage is restricted to clients only. In case of any doubt please contact us at: info@inteliace.com is an independent and privately owned research firm based in the heart of Eastern Europe in Warsaw / Poland. Our company specializes in value-added research services and tailored business intelligence solutions. Through our customized research services we help our clients to better understand their customers, competitors and overall market dynamics. The lead researcher and founder of is Marcin Mazurek. Our contact details: ul. Foksal 17b/31, Warszawa, Poland Tel. +48 22 408 66 20, Tel. (m) +48 502 512 178 Fax. +48 22 349 21 40 mail: info@inteliace.com http://www.inteliace.com/ 8
379 powiatów RECENT PUBLICATIONS BY INTELIACE RESEARCH Recent Reports: BANK OUTLETS DENSITY IN POLAND (1/3) GĘSTOŚĆ SIECI PLACÓWEK BANKOWYCH W POLSCE (1/3) GE MONEY BANK OVERVIEW As of March 2006 History & Background Timeline In 1995, GE group purchased a small regional bank: Solidarność Chase D.T. Bank. Bank was rebranded soon to GE Capital Bank. In 1998, GE group purchased another small bank (PAMBank)and converted it to a mortgage specialist: GE Bank Mieszkaniowy In 2004, GE group acquired POS lending specialist :Chrobry with a network of ~1000 POS. Chrobry was renamed to: Dobry Kredyt In 2004, a used car dealers network was created under the GEpard brand, being the main channel for car loans sales As of Jan. 2005, all GE activities in Poland were consolidated under one roof: GE Capital bank Channels GE money bank - 48 branches GEpard, ~200 used car dealers Dobry Kredyt consumer finance 12 outlets and ~1000 POS Expander - 33 branches - financial products distributor* Shareholders General Electric Company 1 99 Other Number of bank outlets per 1000 sq km, by region, 2011 Liczba placówek na 1000 km2 powierzchni wg. województw, 2011r. Liczba/Number >60 40-60 < 40 37 35 Źródło/Source: Concept Description Target Clients Products 67 Affluent individuals and professionals looking for mortgage. Valuing quick processing and flexibility, sometimes not fulfilling lending criteria set by other banks (for example job contract or own funds level) Mass market clients looking for simple and quick consumer loans Only lending products on offer: mortgage refinancing loan credit cards installment loans cash loans car loans Top notch risk management and collection High performing sales staff Fast loan processing and flexibility High margins Control over distributors (GEpard, Expander, Dobry Kredyt) Advanced cross-selling between segments 59 59 52 56 176 66 88 Results Assets PLN billion Market share (%) Loans PLN billion Net Profit PLN billion ROE (%) * Although Expander is distributing products from various banks, GE offer / for example mortgage/ is reported to be favoured ** Compound Annual Growth Rate Source: Inteliace Analysis 28 44 75 48 Średnia / Average = 58 28 38 The Southern and Central Poland have the largest density of bank outlets Południowa oraz centralna Polska są najgęściej pokryte siecią placówek bankowych na km2 BANK OUTLETS DENSITY IN POLAND (3/3) 1 GĘSTOŚĆ SIECI PLACÓWEK BANKOWYCH W POLSCE (3/3) Number of outlets per 1 million inhabitants, by county powiat, 2011 Liczba placówek bankowych na 1 milion mieszkańców, wg. powiatów, 2011r. 10.9 7.4 8.3 9.1 2003 2004 2005 1.6 CAGR** 1.6 1.7 Źródło/Source : Minimum: 126 Mediana Median (443) BAZA PLACÓWEK BANKOWYCH W POLSCE I STATYSTYKA POWIATÓW, 2011 Number of bank outlets per 1 million inhabitants varies a lot on county level Na poziomie powiatów gęstość placówek jest bardzo zróżnicowana Maximum: 947 7.6 8.6 100 200 300 400 500 600 700 800 900 1000 2003 2004 2005 0.14 14.2 51.2 0.30 0.32 2003 2004 2005 20.4 26.7 22.8 1 BAZA PLACÓWEK BANKOWYCH W POLSCE I STATYSTYKA POWIATÓW, 2011 2013 February - Mortgage Lending in Poland 13 May - Banking Market in Poland 13 May - Bank outlets database 13 June - Insurance Market in Poland 13 September - Top 200 CEE banks 13 October - Investment Funds and Asset Mgmt. 13 2014 February - Mortgage Lending in Poland 14 May - Bank outlets database 14 May - Insurance agent commission survey 14 May - Banking Market in Poland 14 June - Insurance Market in Poland 14 September - Top 200 CEE banks 14 October - Investment Funds and Asset Mgmt. 14 and many other... Visit http://www.inteliace.com for more details 9
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