2017 Q1Earnings Presentation

Albaraka Türk

Agenda

1Macroeconomic / Banking Outlook

2 2017 Q1 Financial Results

3Market Comparison

Appendix

4

Macroeconomic Outlook

The rapid depreciation of the Turkish lira in early January, the heightened uncertainty amid financial market volatility

Being subject to a faster exchange rate pass-through, energy prices were the first to reflect the effects of the Turkish lira depreciation

GDP data for the fourth quarter of 2016 confirmed that the third-quarter economic slowdown was transitory.

In this period, the Gross Domestic Product (GDP) expanded by 3.8 percent quarter-on-quarter and 3.5 percent year-on-year. In effect, the economy grew by 2.9 percent in 2016

The first-quarter data for 2017 hint at diminishing recovery in economic activity in the first quarter.

The recent trend of the current account balance has improved, which is expected to continue across the year especially with the support from goods exports.

The current account recorded as USD 2.5bn deficit in February. 12M-rolling deficit moved up to USD 33.7bn.

The relative stability in tourism revenues, the strengthened confidence channel, the favorable effect of the cumulative exchange rate depreciation on net exports, and the normalization of commercial relations with Russia will all contribute to growth.

(Sources CBRT –TurkSTAT)

3

Economic Developments

Banking Industry and Participation Banks

4

In 2017 Q1 net profit of banking sector raised by 65% comparing to 2016 Q1.

Year to Date, loan growth rate reached 5,5% while NPL amount raised 4,6%.

Loan growth is stronger than in previous years owing to macroprudential policies supportive of the financial system.

Profitability expansion continues at a moderate pace.

Commercial loans continued to grow at a higher rate than consumer loans.

Despite the negative developments in the global conditions, the asset quality metrics exhibited a solid trend.

Banking Industry

In the first quarter of 2017, continued to grow under the banking sector.

Capital Adequacy figures continued to increase.

Continuing branch network expansion.

Number of total branches increased to 973 at the end of 2017 Q1

Participation Banks

Agenda

1Macroeconomic / Banking Outlook

2 2017 Q1 Financial Results

3Market Comparison

Appendix

4

Net Profit35,8 mn TRL

Total Assets33,0 bn TRL

Total Credits22,9 bn TRL

Equity2,3 bn TRL

ROAE: 8,51%NPSM: 4,17%

NPL: 5,61%

Loan/Deposits: 96,72%

CAR: 16,53%

Albaraka Türk 2017 Q1 Snapshot6

28.811 29.364 28.633

32.851 33.021

10.364 10.376 9.570 9.359 9.097

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

TRL USD*

Growth in Total Assets

Funded Credits; 69%

Securities Portfolio; 6%

Liquid Assets; 22%

Other Assets; 3%

*USD equivalent of total assets

Ytd Growth: 0,51 % in TRL terms YoY Growth: 14,6% in TRL terms

Total Assets (million TRL) Asset Segmentation (Q1’17)

7

14,61%

8,84

8,398,40

8,058,13

Q1'17Q4'16Q3'16Q2'16Q1'16

9,739,82

9,959,909,87

Q1'17Q4'16Q3'16Q2'16Q1'16

Growth in Funded Credits

1.072 1.182 1.251 1.383 1.428

746763 580

669 612

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

Available for sale Held to Maturity

1.8311.818

1.945

*USD equivalent of total funded credits

Total Funded Credits (including financial leasing, million)

Total Securities Porfolio ( TRL million)

8

QoQ Growth: 0,7% in TRL terms YoY growth: 15,1% in TRL terms

19.891 20.059 20.331

22.722 22.892

7.155 7.088 6.795 6.474 6.306

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

TRL USD*

Credit Yields(1) (%)

(1) Profit share income received from credits for the last 4Q/4Q average credits

Securities Yield(2) (%)

(2) Profit share income received from securities for the last 4Q/4Q average securities

+12,2%

2.051 2.040

Funded Credits PortfolioComposition of Total Funded Credits* (%)

*According to BRSA definition

Currency Composition of Total Funded Credits* (Q1’17)

54%32%

14%

TRL

USD*

EUR*

*Including USD & EUR indexed credits

60 64 68 71 68

2.5

83

2.6

37

2.6

15

2.7

86

2.9

18

124 123 111113

115167 171 173

186288

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

Credit Cards

Housing

Vehicle

Consumer

Total Retail Credits* (%)

Retail credits (excluding installment based

commercial credits and corporate credit cards)

increased to 3.389 million TRL in Q1 2017 up

from 3.156 million TRL in Q4 2016

Housing finance is primary segment among retail

credits

9

+15,5%

*Excluding installment based commercial credits and corporate credit cards

Q1’16 Q2’16 Q3’16 Q4’16 Q1’17

Corporate Credits 38,7 41,7 41,9 41,9 41,6

SME Credits 46,5 43,2 43,5 43,9 43,6

Retail Credits 14,7 15,1 14,6 14,2 14,8

Total 100.0 100.0 100.0 100.0 100.0

57,352,3 49,4 52,3 51,9

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

2,743,46

4,53 4,755,61

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

553

707

941

1.106

1323

317369

465

578687

568653

932

1.106

1323

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

NPA Spesific Provisions Collateral

Asset Quality

Non-performing Loans (TRL million)

7992

122

147

175

0

50

100

150

200

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

Cost of Risk** (bps)

NPL Ratio*

** Spesific provisions for credits for last 4Q/ 4Q average credits

*Including financial leasing & accruals and rediscounts

Provisioning Ratio (%)

10

24% 24% 21% 22% 20%

16% 16% 16% 18% 19%

61% 61% 63% 60% 61%

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

Fund Borrowed Current Accounts Participation accounts

Composition of Total Liabilities (Q1’17, %) Composition of Funding Base (TRL million)

72

18

74

Funds Collected

Wholesale Funding

Shareholders' Equity

Other Liabilities

25.394

15,8%

Total Liabilities11

25.517 25.875 29.583 29.548

5,21%5,26%

5,47%5,42%5,43%

7,90%8,10%

8,30%8,23%8,15%

1,69%1,61%

1,63%1,70%

1,76% 0,80%1,08%

1,84%2,22%2,55%

Q1'17Q4'16Q3'16Q2'16Q1'16

Average TL FC Precious Metal

Total Funds Collected

19.494 19.767 20.109

23.155 23.668

7.012 6.985 6.721 6.597 6.520

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

TRL USD*

Total Funds Collected (million)

Cost of Funds Collected**

*USD equivalent of total collected funds

**Profit share expense to depositors for the last 4Q/4Q average participation accounts

53

28

163

TRL

USD

EUR

Others

Currency Composition of Funds Collected (Q1’17, %)

Maturity Composition of Funds Collected (Q1’17, %)

24

2146

3 1 5 Current Acc.

Up to 1 month

Up to 3 months

Up to 6 months

Up to 1 year

>1year

12

21,4%

Off balance sheet growth13

Off Balance Sheet Composition (%)

69 71 71 71 72

6 6 5 7 7

26 23 24 22 21

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

LG LC Others

LGs-to-Total Assets

27,8%26,9% 27,1%

23,8%23%

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17

Off Balance Sheet (TRL million)

*Revocable credit limits not included.

Q1’16 Q2’16 Q3’16 Q4’16 Q1’17

Growth (%)

Y-Y YtD

Letter of Guarantee 8.011 7.899 7.746 7.810 7.593 -5,22 -2,78

Letter of Credit 681 611 583 753 714 4,85 -5,18

Others* 3.001 2.551 2.648 2.389 2.169 -27,72 -9,21

Total: 11.693 11.061 10.977 10.951 10.476 -10,41 -4,34

Income- Cost Dynamics14

(000 TRL)

Year on Year Change Quarterly Change Notes

2016 Q1 2017 Q1 % Q4’16 Q1’17 %

Net Profit

Share Income277.599 318.384 14,69 266.568 318.384 19,44

Profit share expense increased by 9,7% while PSI

raised by 12,2% YoY basis. Joint venture projects

returns reached to TL 38.802 in Q1’2017 (Q1’ 2016:

TL 51.890)

Net Fee

Income32.354 37.798 16,83 40.744 37.798 -7,23 Higher Net Fee income in 2017 (YoY)

Net Trading

Income22.768 -7.147 -131,39 -6.611 -7.147 8,11 Lower Foreign Exchange volume in 2017

Other Income 33.532 29.434 -12,22 75.391 29.434 -60,96Reversal of prior year provisions inline with 2016

Q1

Provisioning 73.626 138.029 87,47 145.033 138.029 -4,83 Higher provisions in 2017

Other Costs 207.139 194.220 -6,24 188.790 194.220 2,88 YoY decrease in OPEX

Tax 22.405 10.427 -53,46 3.527 10.427 195,63 -

Net Profits 63.075 35.793 -43,25 38.742 35.793 -7,61 -

Agenda

1Macroeconomic / Banking Outlook

2 2017 Q1 Financial Results

3Market Comparison

Appendix

4

Total Growth – 2017 Q116

Percent 2016 Q1 2017 Q1

Albaraka

Türk

Participation

Banks*

Banking

Sector*

Albaraka

Türk

Participation

Banks*

Banking

Sector*

Asset Size -2,5 0,9 2,1 0,5 2,6 4,9

Total Credits** 2,1 2,7 1,8 0,7 3,4 5,5

Deposits/Collected

Funds***-2,5 -1,7 2,8 2,2 5,2 4,3

* According to BRSA data

** Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks

*** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks

21,0%

12,6%

26,4%

15,1%

18,2%15,8%

24,4%

17,8%

39,7%

33,9%

28,3%

11,1%

2011 2012 2013 2014 2015 2016

Asset Size GrowthBanking Sector

Albaraka Türk

Market Share– 2017 Q117

Percent 2016 Q1 2017 Q1

Albaraka

Türk/

Participation

Banks

Albaraka

Türk/ Banking

Sector

Participation

Banks/ Banking

Sector

Albaraka

Türk/

Participation

Banks

Albaraka

Türk/ Banking

Sector

Participation

Banks/ Banking

Sector

Asset Size 23,7 1,2 5,0 24,2 1,2 4,8

Total Credits* 23,5 1,3 5,4 25,0 1,2 4,8

Deposits/Collected Funds** 26,7 1,5 5,5 26,5 1,5 5,5

* Including Leasing Receivables, Interest (Profit Share) and Income Accruals and Rediscounts from Loans, Loans Extended to Banks

** Including Deposit (Participation Funds) Interest (Profit Share) Rediscounts and Deposit (Participation Funds) Collected from Banks

Albaraka Türk; 24,2%

Participation Banking;

4,8%

Banking Sector Participation Banking Sector

9,8

9,08

9,07

9,44

9,81

9,75

15,27

12,22

12,21

12,74

13,46

16,53

Q4'15

Q1'16

Q2'16

Q3'16

Q4'16

Q1'17

CAR Tier I

Capitalization

Capital Adequacy Ratio (%)

18

4,31 bps

200 million USD Basel 2 compliant Sukuk

removed from CAR calculations.

-3,05 ps

Alpha coefficient factorin CAR calculations.

+ 0,72 ps

• 200 Million Basel 3 Conversion (+ 3,00)

• Risk factor for the fx reserverequirements downs to 0 byBRSA (+0,50 - 1,00)

+ 3,00-3,50 ps

Profitability & Efficiency

14,96

9,918,51

Q1'16 Q4'16 Q1'17

Net Profit Share Margin(%) ROAE(NI) (%)

44,14 4,17

Q1'16 Q4'16 Q1'17

Cost/Income (%)

56,5653,65

49,3

Q1'16 Q4'16 Q1'17

Loan/ Deposits (%)

102,0498,13 96,72

Q1'16 Q4'16 Q1'17

19

Ratios20

Percent 2016 2017-Q1

Albaraka Türk Participation

BanksBanking Sector Albaraka Türk

Participation

Banks

Banking

Sector

CAR 13,46 16,17 15,57 16,53 16,63 16,05

NPL Ratio 4,75 3,58 3,22 5,61 3,95 3,19

Provisioning Ratio 52,31 61,00 77,39 51,92 62,94 77,90

Loan/Deposits 98,13 110,61 117,23 96,72 102,53 117,96

ROAA (IBT) 0,88 1,10 1,89 0,73 0,76 1,52

ROAE (NI) 9,91 9,71 13,26 8,51 11,88 14,56

Asset Yield 8,97 8,87 8,37 8,95 8,03 7,13

Asset Spread 4,53 4,45 3,39 5,12 4,11 3,01

Net Profit Share Margin 4,14 4,54 4,01 4,17 4,19 3,52

Net Fee Income / Avg. Assets 1,18 0,80 0,96 1,04 0,86 0,90

Op Costs / Avg. Assets 2,47 2,33 2,34 2,38 2,34 2,06

Cost/Income* 53,65 46,37 40,68 49,30 44,00 35,86

Credits / Branches (000‘TRL) 106.676 92.074 153.632 107.474 94.017 162.385

Staff / Branches 17,82 15,04 17,70 17,86 14,97 18,00

CA / Deposits 23,44 28,35 20,33 23,58 28,15 20,94*Cost: Operating Costs, Income: NII/NPSI, Net Fees and Commissions Income, Other Income

Agenda

1Macroeconomic / Banking Outlook

2 2017 Q1 Financial Results

3Market Comparison

Appendix

4

Summary Balance Sheet22

(Thousand TRL) Dec’16 Mar‘17 Growth (%)

Cash and Banks 7.157.229 6.604.865 -7,72%

Financial Assets 1.448.786 1.985.459 37,04%

Funded Credits 22.722.054 23.891.892 5,15%

Cash Credits 21.843.075 21.418.382 -1,94%

NPL 1.105.954 1.322.771 19,60%

Provisions 578.505 686.792 18,72%

Net Financial Leasing Receivables 878.979 837.531 -4,72%

Investments Held to Maturity (Net) 668.582 612.319 -8,42%

Associates 30.119 30.119 0,00%

Fixed Assets 517.131 512.658 -0,86%

Assets Held For Sale and Investment 92.317 96.271 4,28%

Other Assets (inc. Tax Assets) 214.520 287.733 34,13%

Total Assets 32.850.738 33.021.316 0,52%

Funds Collected 23.151.164 23.667.806 2,23%

Funds Borrowed 4.424.195 4.281.171 -3,23%

Debts 1.247.030 943.504 -24,34%

Provisions (inc. Taxes) 233.849 251.411 7,51%

Tier II Sukuk 1.510.937 1.598.144 5,77%

Shareholders’ Equity 2.279.593 2.277.745 -0,08%

Capital 900.000 900.000

Capital Reserves (inc. Premium) 211.876 217.614

Profit Reserves 946.757 1.119.156

Profits 221.560 40.975

Prior Periods 3,951 5,182

Current Year 217,609 35,793

Total Liabilities 32.850.738 33.021.316 0,52%

Summary Income Statement23

(Thousand TRL) Mar’16 Mar’17 Growth (%)

Profit Share Income 564.024 632.748 12,18%

Profit Share Expense 286.425 314.364 9,75%

Net Profit Share Income 277.599 318.384 14,69%

Net Fees and Commissions Income 32.354 37.798 16,83%

Fees and Commissions Received 46.345 53.274 14,95%

Fees and Commissions Paid 13.991 15.476 10,61%

Net Trading Income 22.768 -7.147 -131,39%

Other Operating Income 33.532 66.606 98,63%

Total Operating Profit 366.253 415.641 13,48%

Provisions for Loan Losses 73.626 175.201 137,96%

Other Operating Expenses 207.139 194.220 -6,24%

Net Operating Profit 85.488 46.220 -45,93%

Tax Provision -22.413 -10.427 -53,48%

Net Profits 63.075 35.793 -43,25%

THANK YOU

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