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Garanti Bank Corporate Presentation October 2016

NOT A COINCIDENCE

ROAE*

16.0% BASEL III CAR

14.5%

>14.3 MILLION CUSTOMERS

2

ADDING VALUE TO THE ECONOMY AND SOCIETY

2nd LARGEST PRIVATE BANK

by assets of

US $ 100.1 billion

Note: Figures are based on BRSA consolidated financials as of June 30, MCAP as of September 5

* Excludes non-recurring items when annualizing Net Income for the second half of the year **Banking revenues defined as; NII adjusted with provisions and Net trading gains/losses+Net F&C

Focused on Relationship Banking with Broad Geographical Coverage & Omni-Channel Distribution Network > 982 branches > Leading internet and mobile banking > Largest financial call center > 4,690 ATMs > Targeted investments to digital platforms

Robust Balance Sheet > Highly liquid > Low risk -- NPL Ratio: 3.1% > Well-capitalized -- Basel III Consolidated CAR: 14.5%; CET-I capital make up 96% of total capital

#1 IN BANKING REVENUES**

~50% Free Float > The most traded stock of Borsa Istanbul -- Average daily turnover represents 20% of BIST 100

> The share of foreign investors including DR holders in actual free float is ~89% -- Shareholders from around 40 countries

Investor Relations Corporate Presentation

3

EMPOWERING

SUSTAINABLE

RESPONSIBLE

READY FOR FUTURE


RESPONSIBLE TOWARDS SOCIETY

ECOSYSTEM AWARENESS

Operating in a Large and Dynamic Economy

5

High and Sustainable Real GDP Growth*

2002-1H16 CAGR: 15%

Avg. GDP growth*

>4% over 2005-2015

* Source: IMF’s World Economic Outlook Report dated April 2016. Country groups are per IMF database. Ranking as of YE 2015 ** Source: EBF Facts&Figures 2015, ranking per total assets. ***BRSA Monthly data as of June 2016.

RESPONSIBLE

vs.

$ 861bn***

LATAM*: 3.4% EU*: 1.2% EM Europe*: 3.5%


100

150

200

250

300

350

400

450

2002 2005 2008 2011 2014 2017 2020

Rea

l GD

P G

row

th (

Reb

ased

)

EU EM Europe LATAM TURKEY

2021

6

Total Population by Age*

negative growth in EU

and CEE countries

Population to reach

*Source: United Nation, World Population Prospects: The 2015 Revision **Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2015 Revision *** TurkStat, as of December 31, 2015, Address Based Population Registration System (ABPRS)

ECOSYSTEM AWARENESS

Turkey with Young and Growing Population

vs.

56% under 35

RESPONSIBLE Investor Relations Corporate Presentation

26.7%

25.1%

25.8%

26.5%

27.4%

42.3%

35.1%

37.2%

36.8%

36.9%

37.4%

36.7%

38.2%

37.6%

37.5%

36.6%

35.2%

21.0%

Europe

Czech Republic

Hungary

Poland

RussianFederation

Turkey

<25 25-50 >50

ECOSYSTEM AWARENESS

Underpenetrated Market with Strong Growth Potential

RESPONSIBLE

Attractive Demographics

Underpenetrated Market

7 Source: ECB, TurkStat, BRSA for commercial banks


58% 39%

13%

109%

60% 69%

300%

111% 102%

Assets / GDP Customer Deposits / GDP Loans / GDP

Turkey - 2002 Turkey - 2Q16 Euro Area - 2Q16

8

Deposits fund 55% of assets*

Loans/Deposits at 114%*

* BRSA monthly data for commercial banks, as of June 2016 ** CBRT Financial Stability Report, May 2016

ECOSYSTEM AWARENESS

Highly Liquid Banking Sector

Deposit-heavy funding structure

Comfortable liquidity

levels

Banks are required to meet regulatory Liquidity Coverage Ratio (LCR) limits.

Continuous access to

international funding sources


LCR shows the capability of banks to cover net cash outflows with the high-quality asset stocks in their balance sheets in a significant stress scenario lasting 30 calendar days

• Total LCR: Legal limit 70%

• FC LCR: Legal limit 50%

With CBRT’s measures,

avg. maturity of banks’international funds has been rising

Leverage remains low: ~8x 42

44

46

48

50

52

54

56

80

100

120

140

Dec-12

Mar-13

Jun-13

Sep-13

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Ave

rage

Mat

uri

ty

Ro

llove

r R

atio

Banking Sector External Debt Roll-over Ratio(%)Average Maturity (Month, Right axis)

% **

18.4% 16.7% 16.2% 15.5%

14.2%

12.4%

Eurozone Poland Brazil Turkey SouthAfrica

Russia

9 * Source: Latest data from the IMF-FSI database. Most of figures are based on 1Q16 figures ** BRSA monthly data as of June 2016

ECOSYSTEM AWARENESS

Well-Capitalized and Underleveraged

> ROAEs ** : 14% (as of 1H16) with low leverage

RESPONSIBLE

> Basel III CAR**: 15.9% (as of 1H16)

> CET-I capital**: 86% of total capital

CAR*

(1Q16)

Leverage*

(1Q16)


8.0x 9.4x 9.7x 10.2x 11.1x 13.2x

Turkey Poland Russia Brazil Eurozone SouthAfrica

RWA/Assets 45% 57% 83% 70% 53% 96%

ECOSYSTEM AWARENESS

Standing out in its Asset Quality

10

Non-performing loans/Total gross loans*

* Source: Latest data from the IMF-FSI database, most of which are based on 1Q16 figures ** BRSA weekly data as of July 01, 2016, commercial banks only

NPL ratio*

> No exposure to any toxic assets or problematic sovereign assets > Established & prudent underwriting procedures


EU 27 10.0%

CEE & Africa 8.0%

LATAM 3.2%

TURKEY 3.2%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2006 2009 2012 2015 1Q16

11

Savings / GDP (2010-2015 Average)

Source: IMF, World Economic Outlook Database, April 2016

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

21.1%

19.3%

17.2%

14.1%

EU LATAM EM - Europe TURKEY


12

ECOSYSTEM AWARENESS

How We Address Challenges for Financial Health

RESPONSIBLE

Savings Test

Accumulating Gold Account

Spend & Save Account

Savings Account

for Future

Pension Funds


EMPOWERING IN ALL POSSIBLE DIMENSIONS

14

SINGLE POINT OF CONTACT FOR ALL FINANCIAL NEEDS

Note: Asset contributions are calculated based on BRSA Consolidated Financials as of June 30, 2016

EMPOWERING

Commercial

Payment Systems

Digital Banking

SME

Corporate

Consumer

Asset Contribution: 5.7%









15

ACTIVE LISTENING & DEVELOPING ACCORDINGLY

Social Platforms

Customer Centricity

Index

Market Research

Investor Perception

Study

Employee Idea Platforms

To Sustain

High Quality & Corporate

Governance

Investor Relations Corporate Presentation EMPOWERING

16

EMPOWERING Investor Relations Corporate Presentation

Number of Branches & Customers

* As of September 22, 2016. 23 investment centers operating under Garanti Bank were transferred to Garanti Securities at the end of October 2015.

INVESTMENTS IN DELIVERY CHANNELS

Welcoming >150k customers per day

mn

mn

20

02

2

01

6

58% of branch openings

since 2005 outside of Istanbul, Ankara and Izmir

100% Geographical Coverage

as of August’16 vs. 49% in 2002

mn mn

mn

331

487

936 1,005 980

3.7

6.2

11.8 13.1

14.3

2002 2006 2012 2014 Sep.16

# of Branches

# of Customers

*


INVESTMENTS IN DIGITAL CHANNELS

Omni-channel convenience

Providing seamless experience across

all channels

>500 types of transactions

44% of non-cash financial transactions

carried via internet banking

• 4,687 ATMs offering

> 200 types of transactions

• Cash deposits/withdrawals: 105%

• Serving non-bank customers

through cardless transactions

• In 2015, 280mn transactions in

total (16mn cardless)

• > 4.5 mn followers: Europe’s Most Followed Financial Institution

• Present on 17 Social Platforms with 55 acct.

• Garanti Link: connecting customer ID with social ID, offering customer-tailored campaigns - First in Europe

• Garanti’yeSor (Ask Garanti): 24/7 customer care on social media. Response Time: max 2h

• Consumer Loan application & result w/o leaving Facebook

Note: active customers defined as minimum one log-in in the last three months

* Have only used mobile banking in the last month

• 3.2 mn active mobile users

• 2.0 mn mobile-only customers*

• 38% of non-cash financial transactions via mobile banking

Internet Banking

Mobile Banking

Social Media

Call Center

ATMs

• 70 mn Customer Contacts in 2015 • 32 sec. avg. response time (sector 72sec) • Centralized branch calls • 32 product offerings

18% of total credit card sales • 3.8 mn products sold in 2015



Leading position & effective utilization

Tax Payments Bill Payments Credit Card Transactions

33% 46% 24%

Tax Payments Investments* Credit Card Transactions

30% 60% 25%

44% Online

38% Mobile

10% ATM

0.2% Call Center

with increasing weight in mobile

25% market share

in retail internet & mobile banking financial transactions volume

Utilizing digital channels effectively..

~51mn in 6M16 alone

Mobile transactions:

70mn in 2015

92% of all non-cash financial transactions

go through digital channels:

* *Investments include saving deposits, FX, equity and options transactions

> Online Banking financial transactions market shares:

Managing the largest customer base in Turkey

1.5million logins/day

> Mobile Banking financial transactions market shares:

4.5 million 24% YoY active digital

customers

3.2 million 53% YoY active mobile

customers



Innovative products and services Empowering customers

Money withdrawal with QR

>US$11mn volume/month

Loan Application with Video Call

E- Government Log-in Integration

MIA – Mobile Interactive Assistant Messaging Services Integration

Instant access to: ATM/Branch locations & market information via BİP, Whatsapp and Telegram. Money transfer available through messaging service BİP.

>1.6mn interaction/month

Mobile Appointment

New appointment system routes customers to ATMs & digital channels

Product specifically designed for digital banking:

Auto Insurance

Since launch in March 30% of total auto insurance sales through digital

Withdraw money from ATMs without even having to login

Virtual voice assistant enables performing banking transactions by voice

- decrease branch density and - gives appointments/suggests alternative branches - get digital ticket for the appointment via Mobile Banking

through turkiye.gov.tr 35 K/month through Internet Banking 65 K unique visitors/month

A first in Turkey - meet face-to-face with loan consultants via Garanti Mobile.

loan disbursement reached $3.8 million in 3.5 months



Feeding the sustainable and profitable growth model

Value Creation through

Digitalization

Higher cross-sell

Product penetration of digital customers is 60% higher than average customers

Growing fee base

Service fees driven by Online & Mobile Banking make up 39% of Bank’s total service fees

Increasing customer satisfaction & loyalty

Branches with >65% digital penetration have 40% higher operational service quality & efficiency

Transaction costs at Online banking is 27x and Mobile banking is 43x lower than branch banking

Lower transaction costs

Sustained Growth Branches increased focus on: - Building relationships - Providing advisory - Generating sales - Acquiring new customers

#1 in per branch efficiencies

among peers

Profitability per digital customer >30% higher than traditional branch customers

Higher Profitability

21

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


SUSTAINABLE FOR A BETTER LIFE

23

SUSTAINABLE

SUSTAINABILITY STRATEGY Our strategic priorities & key achievements


Performance Management 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 programs 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

Sustainable Finance Environmental Impact of Operations Communities and Stakeholders

• ~34% share in Turkey’s installed operational

wind power capacity

• Started supporting CDP Water to raise

awareness on water crisis among private

sector

• Published Climate Change Action Plan in

2015

• Total amount of loans disbursed to women

entrepreneurs to date: TL 2.8 billion

• Women Entrepreneurs Executive School:

300 certificates in 5 provinces in 2015

• 1,013 service points covering 100% of employees certified

to ISO 14001

• Obtained limited assurance for its water consumption,

energy consumption, renewable energy portfolio and ESIAP

for the first time for GRI G4 Comprehensive Sustainability

Reporting, in addition to Scope 1 and Scope 2 GHG

emissions.

• The only Turkish company to be listed in CDP Climate

Change A List and included in CDP Global Climate Leaders

Report

• Received CDP 2015 Climate Performance Leader Award

and CDP 2015 Turkey Climate Disclosure Leader Award

• The only Turkish company to qualify for Dow Jones

Sustainability Index.

• First Turkish Bank to sign Caring for Climate Initiative (C4C)

and UNGC’s Leadership Criteria on Carbon Pricing

• First Turkish bank to become a member of “WeConnect

International”, a global initiative, which is aimed at

including women entrepreneurs in the supply chain.

• Successfully qualified for the second year in a row for the

Borsa Istanbul (BIST) Sustainability Index.

• Member of UN Global Compact, UNEP FI and Business

Council for Sustainable Development in Turkey

24

INNOVATIVE BUSINESS MODEL

SUSTAINABLE

Process Technology

People


Training hours per employee: 44 hrs per annum

25

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

Investing in

people


26

PIONEER WITH ITS TECHNOLOGY SUPPORTED OFFERINGS

SUSTAINABLE

IT Vision Investing in Technology

Full In-House Development

Custom-Fit Solutions

Driver (Integral Part of Management)


27

SUSTAINABLE


5-Minute Loan

FAST

INNOVATIVE

A Total of 551 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)

> iGaranti: First-of-its-kind financial service leading the

future of banking business and the revolution of

conventional banking approach. (2013)

> iGaranti Glass application (2014)

> Broke new ground in Turkey by offering banking service via

WhatsApp by providing Branch/Paramatik ATM addresses

and real-time market data (2015)

> “iPad Banking Application” enabling Customer Relationship Managers in branches to offer service to customers from outside the branches as well – First among large-scale banks in Turkey (2015)


28

SUSTAINABLE


> 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: 92% of the non-cash transactions are carried out via digital channels

Advanced CRM > Segmentation: Propensity Modelling > Personalized Product Offers


29

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, cash loans, customer deposits and ordinary banking income

Smarter Touch-Points for All


30

MANAGING WHAT WE MEASURE

SUSTAINABLE

WE KNOW...

What to Measure

Why to Measure

How to Measure

Risk-Return Balance

Customer Satisfaction

Key Performance Indicators


SUSTAINABLE

OUR JOURNEY TO SUCCESS Strong Market Position

1 Rankings among private banks as of June 2016

31


Assets Loans Consumer Loans

(inc. CCs)

ConsumerMortgage

# POS Customer Deposits

Customer Demand Deposits

Net F&C Ordinary Banking Income

11.7%

#1

#2

#3

#4

13.2%

11.8%

15.3%

14.7%

1H16 2006 2000

9.8%

12.3%

15.6%

17.2%

13.8%

12.1%

14.0%

14.9%

13.1%

11.4%

Market Share and Rankings1 (2000- 1H16)

Healthy market share gains

in key profitable products

Robust

Profitability

Expanding & broad customer base

10.7%

6.6%

#5

8.5% 4.4%

12.7%

6.4% 12.2%

14.6%

READY FOR FUTURE

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.

/garantibankasi

Garanti Bank Headquarters Address: Levent Nispetiye Mah. Aytar Cad. No:2 Besiktas 34340 Istanbul – Turkey Email: [email protected] Tel: +90 (212) 318 2352 Fax: +90 (212) 216 5902

www.garantiinvestorrelations.com


THANK YOU

http://www.garantiinvestorrelations.com/



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