Investor Relations / Corporate Presentation
Garanti Bank Corporate Presentation January 2015
NOT A COINCIDENCE
Investor Relations / Corporate Presentation
ROAE
16% BASEL III CAR
13.7%
~13 MILLION *
CUSTOMERS
2
WE ARE ADDING VALUE TO THE ECONOMY AND SOCIETY
2nd LARGEST PRIVATE BANK
by assets of
US $ 107.0 billion
Note: Figures are based on BRSA consolidated financials as of September 30, 2014 *As of December 22, 2014 **As of September-end ***Banking revenues defined as; Net interest income adjusted with provisions and net trading gains/losses+Net Fees & Commissions
Focused on Relationship Banking with Broad Geographical Coverage & Omni-Channel Distribution Network > 1,002 branches*
> Leading internet and mobile banking > Largest financial call center > 4,138 ATMs*
> Targeted investments to digital platforms
Robust Balance Sheet > Highly liquid > Well-capitalized -- Basel III CAR: 13.7% > Low risk -- NPL Ratio: 2.8%
#1 IN BANKING REVENUES***
~50% Free Float > The most traded stock of Borsa Istanbul -- Average daily turnover represents 21% of BIST 100**
> The share of foreign investors in actual free float is 96% ** -- Shareholders from around 40 countries
Investor Relations / Corporate Presentation
ECOSYSTEM AWARENESS
Operating in a Large and Dynamic Economy
5
High and Sustainable Real GDP Growth1
2004-9M14 CAGR: 14%
Avg. GDP growth*
5% over 2003-2013
* Source: IMF, World Economic Outlook Database, October 2014. Country groups are per IMF database. ** Source: EBF Facts&Figures 2014, ranking per total assets . CEE countries include Russia ***BRSA Monthly data for commercial banks as of Sept’14.
RESPONSIBLE
vs.
$ 769bn***
2019
90
140
190
240
290
340
390
440
490
2002 2005 2008 2011 2014 2017
Rea
l GD
P G
row
th (
Reb
ased
)
EU EM Europe LATAM TURKEY
LATAM*: 3.9% EU*: 1.2% EM Europe*: 4.0%
Investor Relations / Corporate Presentation
27.1%
25.9%
26.5%
27.8%
27.5%
41.5%
35.0%
37.3%
35.5%
36.6%
36.3%
37.4%
37.9%
36.8%
38.0%
35.6%
36.2%
21.1%
EU27
Czech Republic
Hungary
Poland
Romania
Turkey
<25 25-50 >50
6
Total Population by Age*
no growth in EU and negative growth in CEEMEA
Population to reach
*Source: Eurostat, as of 2013 **Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2012 Revision *** TÜİK, as of December 31, 2013
ECOSYSTEM AWARENESS
Turkey with Young and Growing Population
vs.
58% under 35
RESPONSIBLE
Investor Relations / Corporate Presentation
ECOSYSTEM AWARENESS
Underpenetrated Market with Strong Growth Potential
RESPONSIBLE
Attractive Demographics
Underpenetrated Market
7 Source: ECB, TUIK, BRSA for commercial banks
58% 39%
13%
102%
56% 63%
311%
110% 105%
Assets / GDP Customer Deposits / GDP Loans / GDP
Turkey - 2002 Turkey - 3Q14 Euro Area - 3Q14
Investor Relations / Corporate Presentation
8
Deposits fund 55% of assets*
Loans/Deposits at 112%*
* BRSA monthly data for commercial banks, as of September, 2014 ** CBRT Financial Stability Report May 2014. Liquidity Ratios are as of April 2014.
ECOSYSTEM AWARENESS
Highly Liquid Banking Sector
Deposit-heavy funding structure
Comfortable liquidity
levels
Liquidity Adequacy Ratios** well-above required levels Total Liquidity Ratio – Monthly: 129% (Legal limit 100%) FC Liquidity Ratio – Monthly: 137% (Legal limit 80%)
Banking Sector External Debt Roll-over Ratio**
Continuous access to
international funding sources
RESPONSIBLE
75.9
60
70
80
90
100
110
120
130
140
09
/07
03
/08
09
/08
03
/09
09
/09
03
/10
09
/10
03
/11
09
/11
03
/12
09
/12
03
/13
09
/13
03
/14
Investor Relations / Corporate Presentation
9 * Source: Latest data from the IMF-FSI database. Most of figures are based on 2Q14 figures ** BRSA monthly data as of September 2014, commercial banks only
ECOSYSTEM AWARENESS
Well-Capitalized and Underleveraged
> High ROAEs ** : ~13% (9M 2014)
despite the low leverage
RESPONSIBLE
CAR *
(2Q14)
> Basel III CAR**: 15.3% (9M 2014)
> Tier-I capital: ~84% of total capital
Leverage*
(2Q14)
16.7% 16.3% 15.7% 15.5%
12.8%
Eurozone Turkey Poland Brazil Russia
RWA/Assets 47% 84% 63% 81% 100%
7.5x 8.2x 9.7x 10.0x 12.0x 12.4x
Turkey Russia Brazil Poland SouthAfrica
Eurozone
Investor Relations / Corporate Presentation
ECOSYSTEM AWARENESS
Standing out for Its Asset Quality
10
Non-performing loans/Total gross loans*
* Source: Latest data from the IMF-FSI database, most of which are based on 2Q14 figures ** Source: Latest data from the IMF-FSI database. Represents country averages most of which are based on 2Q14 figures *** BRSA monthly data as of September 2014, commercial banks only
NPL ratio**
> No exposure to any toxic assets or problematic sovereign assets > Established & prudent underwriting procedures
RESPONSIBLE
EU 27 11.0%
CEEMEA 9.8%
LATAM 2.8%
TURKEY 2.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2006 2007 2008 2009 2010 2011 2012 2013 2Q14
Investor Relations / Corporate Presentation
11
ECOSYSTEM AWARENESS
Strictly Monitored and Prudently Regulated Environment
Main pillars of regulatory environment
> Strictly regulated & supervised by risk Based & autonomous agency (BRSA) since 2000
> Independent Central Bank > policies targeting both financial and price stability
> Deposit Insurance scheme (SDIF)
> Separate authority to regulate listed companies (Capital Market Board)
> Authorities highly experienced in crisis management
Prudent regulatory actions
> Conservative provisioning policies
> Basel III implementation started in January 2014 > Buffers for possible downturns
> Higher provisioning and capital requirement for consumer loans > Supportive regulatory actions on credit card asset quality > Limitations on installments and maturities of consumer loans > Active utilization of Reserve Requirement Ratio (RRR) and Reserve Option Coefficent (ROC) to manage liquidity
RESPONSIBLE
Investor Relations / Corporate Presentation
12
Savings / GDP (2008-2013 Average)
Source: IMF, World Economic Outlook Database, Octoberl 2014
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
19.9% 19.5%
16.2%
13.8%
EU LATAM EM - Europe TURKEY
Investor Relations / Corporate Presentation
13
ECOSYSTEM AWARENESS
How We Address Challenges for Financial Health
RESPONSIBLE
Savings Test
Accumulating Gold Account
Spend & Save Account
Savings Account
for Future
Pension Funds
Investor Relations / Corporate Presentation
14
ACTIVE LISTENING & DEVELOPING ACCORDINGLY
RESPONSIBLE
Social Platforms
Customer Centricity
Index
Market Research
Investor Perception
Study
Employee Idea Platforms
To Sustain
High Quality & Corporate
Governance
Investor Relations / Corporate Presentation
16
SINGLE POINT OF CONTACT FOR ALL FINANCIAL NEEDS
EMPOWERING
Commercial
Payment Systems
Digital Banking
SME
Corporate
Consumer
Note: Asset contribuions are calculated based on BRSA Consolidated Financials as of September 30, 2014
Asset Contribution: 5.2%
Asset Contribution: 2.3%
Asset Contribution: 0.4%
Asset Contribution: 1.6%
Asset Contribution: 1.0%
Asset Contribution: 2.8%
Asset Contribution: 0.0%
Asset Contribution: 0.0%
Investor Relations / Corporate Presentation EMPOWERING
17
OMNI-CHANNEL CONVENIENCE
Save Time for Customers Along with the Freedom It Offers
Internet Banking
Mobile Banking
Social Media
Call Center
ATMs
Omni Channel Strategy Providing seemless experience across
all channels
2.7 mn active users
23% market share in financial transactions volume «The 2014 World’s Best Corporate/Institutional
Internet Banks in Western Europe» by Global Finance
• ~200 type of transactions
• Serving non-bank customers
through cardless transactions
• Cash deposits/withdrawals: 109%
• 50 mn customer contact/year • Centralized branch calls
• Special offerings a first-of-its-kind application in Europe
• Money transfer
• Consumer loan application via secure full form
#1 in mobile banking >1.4 mn active users 31% market share in financial transactions volume
A new banking experience targeting socially active & connected customers
#1 per Forrester’s «2014 Global
Mobile Banking Functionality Benchmark Scores»
• Digital Wallet – credit, debit, identity and loyalty cards under one roof
• Location based offers based on check-ins from foursquare
• First in Europe: speech recognition, speech command
Exceeded 216K customers as of Nov’14 vs.107K as of Dec’13
Investor Relations / Corporate Presentation
18
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
Investor Relations / Corporate Presentation
20
SUSTAINABILITY STRATEGY Our strategic priorities
20
SUSTAINABLE
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 programmes 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
Investor Relations / Corporate Presentation
SUSTAINABILITY STRATEGY Key Achievements
SUSTAINABLE 21
21
21
Performance Management
21
Performance Management
Corporate Clients
Stakeholders
• 600+ service points certified to ISO 14001
• Recognized as the “Turkey - Carbon Disclosure Leader” by CDP in 2014
• First Turkish bank to receive GRI G4 approval with its Sustainability Report in 2014
• Received limited assurance for its 2013 Scope 1 and Scope 2 GHG emissions
• 3.8% reduction in energy consumption per employee (MWh/FTE) in 2013
• 67% increase in amount of waste recycled in 2013
Communities and Stakeholders
Environmental Impact of Operations
• No Limits in Teaching: reached 85,095 teachers across 79 cities by the end of 2013
• 4,679 students received basketball trainings in 2013
• Number of SALT visitors: 729,747 (Entrance free of charge)
• Board member of Business Council in Turkey, founder of Sustainable Finance WG
• Qualified for the Borsa Istanbul Sustainability Index in 2014
• Organized an ESRA** training to 15 banks jointly with UNEP-FI in 2013
• Organized the Sustainable Finance Forum in 2013 and 2014
Sustainable Finance
21
• ~35% share in Turkey’s installed wind power capacity
• Total amount of loans disbursed to women entrepreneurs to date: 2.1 billion TL
• Management Training for Women Entrepreneurs: 497 certificates in 2013
• Received “EBRD Sustainability Award” in Environmental and Social Performance in 2014
• 23 projects evaluated in depth in line with the ESIAP* in 2013
• Supported 4 subsidiaries to develop their ESG and Human Rights Policies
• Launched a new product for financing of solar power projects under 1 MW for SMEs
• 36 disabled-friendly branches, 98 orthopedically and 26 visually disabled friendly ATMs
*Environmental and Social Impact Assessment Process **Environmental and Social Risk Assessment
Investor Relations / Corporate Presentation
22
INNOVATIVE BUSINESS MODEL
SUSTAINABLE
Process Technology
People
Investor Relations / Corporate Presentation
Training hours per employee: 43hrs per annum
23
THE MOST VALUABLE ASSET: HUMAN CAPITAL
SUSTAINABLE
I International
quality standards
Performance Based
Incentive
> First Turkish company to receive the Investors in People (IIP) achievement certificate in 2005. > The first and only Gold IIP
certificate in Turkey in 2012
Measured by customer satisfaction, service quality, efficiency and profitability
vs.
Investing in people
Fortune 500 corporations
avg. of 31.5hrs
Investor Relations / Corporate Presentation
24
PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS
SUSTAINABLE
IT Vision Investing in Technology
Full In-House Development
Custom-Fit Solutions
Driver (Integral Part of Management)
Investor Relations / Corporate Presentation
63 New Products in 2013
25
SUSTAINABLE
PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS
5-Minute Loan
FAST
INNOVATIVE
A Total of 577 Products
Introducing Many Firsts
> 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)
> Began receiving GPL applications via Facebook with secure form - first in the world (2013) > iGaranti: First-of-its-kind financial service leading the future of banking business and the revolution of conventional banking approach. (2013)
Investor Relations / Corporate Presentation
26
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: 85% of the transactions are carried out via digital channels.
Advanced CRM > Segmentation: Propensity Modelling > Personalized Product Offers
Investor Relations / Corporate Presentation
27
LESS IS MORE
SUSTAINABLE
> 1st Bank to set up centralized operations in Turkey > 99% Operational Centralization Ratio
> Electronic Data Warehousing > Highest per branch efficiencies in terms of assets, loans and ordinary banking income
Smarter Touch-Points for All
Investor Relations / Corporate Presentation
28
MANAGING WHAT WE MEASURE
SUSTAINABLE
WE KNOW...
What to Measure
Why to Measure
How to Measure
Risk-Return Balance
Customer Satisfaction
Key Performance Indicators
Investor Relations / Corporate Presentation SUSTAINABLE
OUR JOURNEY TO SUCCESS
Assets Loans Consumer Loans
(exc. CCs)
ConsumerMortgage
# POS Customer Deposits
Customer Demand Deposits
Net F&C Ordinary Banking Income
12.3%
#1
#2
#3
#4
13.2%
12.3%
12.2%
12.6%
9M14 2006 2000
9.8%
11.1%
15.5%
18.0%
13.5%
12.1%
15.6%
14.9%
14.2%
11.4%
Market Share and Rankings1 (2000- 9M14)
Healthy market share gains
in key profitable products
Robust
Profitability
Burgeoning & broad customer base
10.4%
6.6%
#5
8.5% 4.4%
12.7%
6.4% 12.2%
13.6%
1 Rankings among private banks as of September 2014
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.
Investor Relations Levent Nispetiye Mah. Aytar Cad. No:2 Beşiktaş 34340 Istanbul – Turkey Email: [email protected] Tel: +90 (212) 318 2352 Fax: +90 (212) 216 5902 Internet: www.garantiinvestorrelations.com
/garantibankasi
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