investor presentation, september 2019

1

Investor Presentation, September 2019

2

• About Ziraat Finance Group

• ZiraatBank BH d.d. at a glance

• Transformation and business model

• Key financial indicators

• Appendix

Ziraat Finance Group

3

4

T.C. Ziraat Bankasi A.S. - More Than a Bank

(1) Loans include accruals and the loans granted to banks, Deposits include accruals, and the banks’ deposits, securities include accruals. (2) Rankings are among top 7 Banks. The banks are determined as of unconsolidated assets for September 2019 and include: Ziraat Bank, İş Bank, Garanti Bank, Akbank, Yapı Kredi, Halkbank and Vakıfbank Source: BRSA, Publicly available Earnings Reports for peer banks

Rankings

1 1 1 1 1

Total Assets Cash Loans Non-cashLoans

Deposits Equtiy

Q3 2019

5



• Transformation and business model


• Appendix

Ziraatbank at a glance with map of network

Commercialbank

The Bank

Our Network

First domestic bank with

foreign equity

Owned by 100 % of Turkish

state owned bank T.C.Ziraat Bankasi

A.Ş.More than

60Kcustomers

Appetite to

grow locallyOwner of 32branches and intention to grow further

6

Federation of Bosina and

Herzegovina

Republika Srpska

Brčko Distrikt

Corporate Branch

Sarajevo Branch

Ferhadija Branch

Butmir Branch

Tuzla Branch

Lukavac Branch

Gračanica Branch

Srebrenik Branch

Centar Tuzla Branch

Goražde Branch

Zenica Branch

Jelah Branch

Kakanj Branch

Maglaj Branch

Visoko Branch

D.Moštre Branch

Ilidža Branch

Novi Grad Branch

Vogošća Branch

Hadžići Branch

Dobrinja Branch

Mostar Branch

Konjic Branch

Bihać Branch

Cazin Branch

S. Most Branch

Travnik Branch

I.Š. Mostar Branch

Banja Luka Branch

Srebrenica Branch

Bijeljina Branch

Brčko Branch

7

Financial

Bridge with

Turkey

32 Branches

308 Employees

100 K

customers

First domestic

bank with

foreign capital

(1996)

Credit line

supporting

the Bosnian

economy

Strong

Share Capital

ZiraatBank BH d.d.

Assets 23,742

Loan 14,907

Deposits 18,965

Capital 3,159

Capital Adequacy 18,0%

ROA 1,47%

ROE 10,80%

Branches (number) 539

Employees (number) 6,745

Rankings

Banking Sektor (FBiH) Q3 2019 (M BAM)

Assets

4%

Loan

5%

Deposits

4%

Branches

6%

8. 8. 10. 12. 9.

Assets Loan Deposits Profit Employees

Q3 2019

Participation in the banking sector

8

Over 22 Years of Banking Legacy

1996Oct.

1997Mar.

Date of Entity incorporation

/establishment

The first bank in

BiH with foreign

capital. The

bank's core

capital was 10M

BAM.

Becomes a member

of the SWIFT group

and also member

of BAMCARD Sarajevo.

1997Aug.

The Bank

issues the

first Maestro

card in BiH.

2000Aug.

2001Oct.

Ziraat Bank

Bosnia dd

becomes

member of

Deposit Insurance

Agency

2018Aug.

Current

capital 200 M

BAM

2015Feb.

2016Oct.

Investment

in new

banking

software

Investment in

New Head

Office

building,

Increase in

capital for

40M BAM

The bank has

passed a billion

in assets and

takes

significant part

in the market

2017Dec.

2005Feb.

2013Oct.

First

implemented

chip credit

card in BiH

Implementation

of GPRS

wireless POS

terminals

Bosnia and Herzegovina

Macro Economic Indicators 2017 2018 2019*

GDP (M BAM) 31.376 32.954 33.828

GDP per capita (BAM) 8.886 9.415 9.580

Average Net Wage (BAM) 851 879 928

Foreign Direct Investment ( M BAM) 780 784 861

Growth (%) 3,2 3,2 2,7

Inflation (%) 1,2 1,4 -

Unemployment (%) 20,5 18,4 15,7

Current account deficit ( B BAM) 1.48 1.37 1.16

Current account deficit of % GDP 4,7 4,2 -

Foreign trade(milyon BAM) 29.832 31.852 18.811

Export 11.385 12.258 10.976

Import 18.447 19.594 18.255

Public debt ( M BAM) 11.009 11.120 -

External debt 7.853 8.205 8.222

Internal debt 3.156 2.915 3.002

CAPITAL CITY Sarajevo

AREA 51.197 km2

POPULATION 3,5 million

LOCAL CURRENCY Konvertibl Mark (KM)

1 EUR=1,96 KM (Fixed)

1 USD=1,71 KM (2018)

ADMINISTRATIVE STRUCTURE Bosnia and Herzegovina consists of two entities:

• Federation of Bosnia and Herzegovina (10 Cantons )

• Republika Srpska

RATING B Positive (Standard & Poors)

AIRPORTS Sarajevo, Banja Luka, Tuzla, Mostar

Ports Ploce Croatia ports

NATURAL RESOURCES Steel, coal, lead, manganese, bauxite

MAJOR INDUSTRIAL AREAS Installation of motor vehicles, tanks and aircraft, Textiles, Tobacco products, Furniture made of wood, Small household appliances

Year 1991 2013

Total population 4.377.033 3.531.159

Bosnians 1.902.956 (43,5 %) 1.769.592 (50,1 %)

Croats 760.852 (17,4 %) 544.780 (15,4 %)

Serbs 1.366.104 (31,2 %) 1.086.733 (30,8 %)

Other 347.121 (7,9 %) 130.054 (3,7 %)

Urban Population 1.729.768 (39,5 %) 1.506.691 (42,7 %)

Rural Population 2.647.265 (60,5 %) 2.024.468 (57,3 %)

Average age - 39,5

Urban - 39,7

Rural - 39,4

Population density 85 /km² 69 /km²

Urban 1.138 /km² 991/km²

Rural 53 /km² 41 /km²

Area 51.222,84 km² 51.222,84 km²

Residential area by ethnic majority

Bosnian 14.600,82 km² (28,5 %) 15.171,49 km² (29,6 %)

Croatian 9.093,51 km² (17,8 %) 8.212,42 km² (16,0 %)

Serbian 26.742,12 km² (52,2 %) 25.019,34 km² (48,8 %)

Other 786,39 km² (1,5 %) 2.819,59 km² (5,5 %)

Number of municipalities by ethnic m 142 142

Bosnian 63 54

Croatian 25 24

Serbian 54 64

Labor force (2017 forecast) - 1.500.000

Service - 765.000 (51 %)

Industry - 450.000 (30 %)

Agriculture - 285.000 (19 %)

92019* - 3rd quarter of 2019

Federation of Bosnia and Herzegovina - Employment and Wage Distribution (31.12.2018)

Federal Bureau of Statistics www.fzs.ba

TOTAL WOMEN TOTAL WOMEN

TOTAL ( FBiH) 519.800 215.317 329.907 188.503 889 1.365

Sarajevo canton 154.041 67.500 62.561 38.973 1.096 1.702

Tuzlanski canton 96.461 35.701 79.378 46.982 797 1.215

Zeničko-dobojski canton 82.688 32.572 58.577 33.396 763 1.164

Hercegovačko-neretvanski canton 54.133 24.729 30.703 16.858 970 1.495

Srednjobosanski canton 50.957 20.576 34.777 17.847 723 1.091

Unsko-sanski canton 37.687 15.992 38.172 20.429 840 1.286

Zapadnohercegovački canton 19.322 7.776 10.820 6.136 796 1.216

Livanjski canton 10.723 4.470 7.388 3.926 884 1.350

Bosansko-podrinjski canton 7.291 3.281 3.169 1.836 796 1.220

Posavski canton 6.497 2.720 4.362 2.120 773 1.180

Number of

employment

Number of

unemployed Net fee

(BAM)

Gross fee

(BAM)Canton Name

10

Bosnia and Herzegovina - Foreign Trade

EXPORT - Bosnia and Herzegovina 11/2019 M BAM TURKEY Export Products 11/2019 M BAM

Name of country Volume Share Name of country Volume Share

Germany 1,580 14% Animal and vegetable fats and oils 95 0.9%

Croatia 1,344 12% Iron and steel 47 0.4%

Serbia 1,257 11% Furniture, mattress, bed carrier 37 0.3%

Italy 1,229 11% Inorganic chemical products 21 0.2%

Austria 1,030 9% Explosives 7 0.1%

Slovenia 951 9% Weapons and ammunition; Fittings & Accessories 7 0.1%

Montenegro 411 4% Paper and cardboard; paper, paper products 7 0.1%

Turkey 267 2% Nuclear reactors, boilers, machinery, mechanical watches 6 0.1%

Hungary 258 2% Iron and steel products 5 0.0%

France 243 2% Cereals 5 0.0%

Top 10 Total 8,570 78% Top 10 Total 237 2.2%

Total 10,976 100% Total 267 2.4%

IMPORT - Bosnia and Herzegovina 11/2019 M BAM Imports from Turkey Products 11/2019 M BAM

Name of country Volume Share Name of country Volume Share

Croatia 3,241 18% Nuclear reactors, boilers, machinery and mechanical 71 0.4%

Serbia 2,544 14% Articles of apparel and clothing accessories, knitted or crocheted 71 0.4%

Slovenia 1,639 9% Plastics and articles thereof 71 0.4%

Germany 1,636 9% Articles of apparel and clothing accessories, except knitted crochets 66 0.4%

Italy 1,552 9% Iron and steel 41 0.2%

Austria 972 5% Electrical equipment for ignition and starting of engines 34 0.2%

Turkey 753 4% Iron and steel products 29 0.2%

Hungary 699 4% Furniture, mattress, bed carrier 25 0.1%

SDA 506 3% Aluminum and aluminum products 25 0.1%

China 504 3% Fruit for eating; citrus peel or melon and watermelon 24 0.1%

İlk 10 Toplam 14,046 77% Top 10 Total 456 2.5%

Toplam 18,255 100% Total 753 4.1%

FOREIGN TRADE BALANCE -7,279

Foreign Trade 29.231

• Export 10.976• Import 18.255

Foreign Trade with Turkey 1.020

• Export 267• Import 753

Sector

11

Bosnia and Herzegovina - Foreign Investment

38.8

18.014.6

6.8 6.8 5.4 4.7 4.50.2 0.2

41.0

13.4 15.5

7.3 6.8 5.7 5.0 4.80.3 0.2

Austria Turkey Italy Russia Germany B.A.E. Slovenia Saudi Arabia Croatia Other

FBiH Banking Sector Foreign Capital Distribution (%)

31.12.2018 31.12.2017

12

13

2018Total Assets

4,6%

FBiH Sector ZiraatBank BH

Banking Sector Position

Q3 2019Total Assets

4,3%


Market Share

2018Total Loans

5,1%

Q3 2019Total Loans

4,9%

Market Share

Assets, M BAM Loans, M BAM

2016 2017 2018 Q12019

Q22019

Q32019

850

1,020 1,015

973990

1,017

2016 2017 2018 Q12019

Q22019

Q32019

18,38220,210

22,094 22,456 23,082 23,742

2016 2017 2018 Q12019

Q22019

Q32019

634792 728 743 757 740

2016 2017 2018 Q12019

Q22019

Q32019

12,27013,179

14,326 14,583 14,923 14,907

2018Total Assets

7/15 place

Q3 2019Total Assets

8/15 place

Rankings

2018Total Loans

7/15 place

Q3 2019Total Loans

8/15 place

Rankings

14

2018Total Deposits

3,8%



Q3 2019Total Deposits

3,5%


Market Share

2018Total Profit

-13,6%

Q3 2019Total Profit

0,6%

Market Share

Deposits, M BAM Profit, K BAM

2016 2017 2018 Q12019

Q22019

Q32019

506

686 668620 638 665

2016 2017 2018 Q12019

Q22019

Q32019

14,17615,815

17,604 17,801 18,306 18,965

2016 2017 2018 Q12019

Q22019

Q32019

196 2,620

-34,743

547 1,245 1,410

2016 2017 2018 Q12019

Q22019

Q32019

173,248

239,973255,355

89,809

181,681

250,924

2018Total Deposits

9/15 place

Q3 2019Total Deposits

10/15 place

Rankings

2018Total Profit

15/15 place

Q3 2019Total Profit

12/15 place

Rankings

15


ROA (%)

0.03 0.28

-3.54

0.23 0.25 0.19

1.00 1.30 1.20 1.60 1.60 1.46

ZiraatBank Sector

ROE (%)

Total Income / Average Assets (%) Net Interest Income / Average Assets (%)

0.16 1.67-21.16

1.28 1.44 1.09

6.50 8.50 8.70 12.00 11.80 10.80

ZiraatBank Sector

6.465.80 5.67

4.91 4.95 4.98

5.58 5.40 5.00 4.80 4.60 4.67

ZiraatBank Sector

3.58 3.44 3.492.86 2.83 3.08

3.38 3.202.90 2.80 2.60 2.67

ZiraatBank Sector

16



• Business model


• Appendix

17

We are boosting productivity through operational centralization, digitalization, automated processes and decision support systems.

Strategic Plan

Well-educated, talented and dedicated workforce

Continously invest in alternative channel distribution

We continue to offer a distinctive customer experience on digital channels by developing technology-oriented, innovative products and services.

Financial bridge between Turkey and Bosnia

Focus on increasing the portfolio of retail customers

Loan placements to Banks on the primary and secondary markets

18



• Business model


• Appendix

19

Assets Composition

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

5,566 4,892121,910 159,942 183,494 233,010

158,978218,755

219,234 116,257 91,08086,029

28,63442,751

105,201107,677 103,145

105,714

53,326

46,611

50,86061,112 62,051

64,294

661,167

792,873

728,077743,348

756,504

739,536

MM Lends Liquid Assets Provisions for eventual losses Other Assets Loans

Successfully diversifying asset base (000 BAM)

Composition of assets Q3 2019 (%)

Growth prospects in line with strategies

MM Lends

22.91%

Liquid Assets

8.46%

Provisions for

eventual

losses

-10.39%

Other Assets

6.32%

Loans

72.71%

Total assets grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3 vs

sector by 4,3% and total loans decrease by 2,24%

Strong focus to finance the Commerce and Manufacturing

Sectors.

BAM and *Other values are equally denominated on

balance sheet (BAM assets 50% of total assets, other

values 50% of total assets)

850.403

1.020.380

* 95% of other values is EUR currency index loans

+27.171(+2,75%)

1.017.1551.014.880972.982 989.984

+2.275(+0,22%)

20

Loan Composition

Loan portfolio by customer segmentation (%) Currency breakdown of loans Q3 2019 (%)

Manufacturing37%

Commerce21%

Service19%

Agriculture7%

Construction6%

Tourism 7%

Energy3%

Breakdown of Loans, Q3 2019

27.8%

62.2%

10.0%

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

73.0% 72.9% 71.3% 66.5% 64.1% 64.9%

27.0% 27.1% 28.7% 28.2% 28.2% 29.8%

5.3% 7.8% 5.30%

Corporate Retail Bank

Q3 2019

48.3%

51.7%

661.167 792.873

BAM

Foreign

Currency*Corporate

Retail

30.0%

65.0%

5.0%

* 95% of other values is EUR currency index loans

728.077 743.348

Bank

Corporate

Retail

Bank

756.647 739.537 739.537

21

NPL

NPL (%)

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

9.0% 8.5%

23.7%22.5% 22.0% 22.9%

11.7%9.7%

8.5% 8.2% 7.8% 7.6%

ZiraatBank Sector

NPL ratio by segments (%)

(%) Retail Corporate Total

ZiraatBank 7,3 29,6 22,9

Sector 5,8 9,4 7,6

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

155,762 158,383 171,800 172,347 173,045 173,210

166,245 156,466 156,466 156,46697,792 97,792

21,957 19,356 18,653 23,87381,397 81,524

506,439

686,175667,961 620,296 637,750 664,629

Equity Non-Deposit funds Other Deposits

22

Liabilities Composition

Composition of liabilities (000 BAM ) Composition of liabilities Q3 2019 (%)

Equity 17%

Non-Deposit Funds10%

Other8%

Deposits65%

Story about growing

Total Liabilities grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3

vs sector by 3,5% and total deposits increase by 4,21%

Substantially all Bank deposits are insured up to the

applicable limits set by the Deposit Insurance Agency up to

50.000 BAM.

850.403

1.020.380 1.014.880972.982 989.984

+2.275(+0,22%)

1.017.155

+27.171(+2,75%)

23

Diversified and widespread deposit base

Deposits by customer segmentation (%) Currency breakdown of deposits Q3 2019 (%)

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

55.4% 47.9% 49.6% 52.6% 52.7% 54.0%

42.6%38.7% 43.1%

47.5% 47.2% 45.9%

2.0%13.4% 7.4% 0.0% 0.0% 0.0%

Corporate Retail Banks Retail Banks

506.439 686.175

51.0%49.0%

0.0%

Corporate

Retail

Q3 2019

54.0%

45.9%BAM

Foreign

Currency

Banks

2016 2017 2018 Q12019

Q22019

Q32019

65.2% 72.7% 71.6% 69.8% 68.8% 66.5%

34.8% 27.3% 28.4% 30.2% 31.2% 33.4%

Time Demand Demand

Demand vs Time deposits Q3 2019 (% of total)

49.0%51.0%

Corporate

Retail

Q3 2019

66.5%

33.4%Demand

Time

614.965667.691 637.750 664.629 664.629

24

Profitability

2016 2017 2018 Q12019

Q22019

Q32019

1962,620

-34,743

547 1,245 1,410

Net Profit ( BAM K )

20,405

(10.676)9.890

(18.209)

1410

Net InterestIncome

OperatingIncome

Direct Expenses OperatingExpenses

Net Profit

PersonnelExpenses

Other

Loan Fees2%

Fees for Services Renderd

Foreign Exchange Earnings

Other

22%

65%

11%

48%20%

32%

Facility and Utility Expenses

25



• Business model


• Appendix

26

Balance Sheet Summary

(000) BAM 2016 2017 2018

Cash and cash equivalents and deposits held with other inst.

158,978 218,755 219,234

Cash and non interest dep accounts

54,150 179,944 173,323

Interest dep. account 104,828 38,811 45,911

Placements with banks 5,566 4,892 121,910

Loans and receivables 661,167 792,873 728,077

Loans 634,077 751,089 596,179

Receivables 27,090 41,784 131,898

Other Assets 53,326 46,611 50,860

Provisions for eventual losses 28,634 42,751 105,201

TOTAL ASSETS 850,403 1.020,380 1,014,880

DEPOSITS 506,439 686,175 667,961

Interest deposits 326,854 482,654 473,071

Non interest deposits 179,585 203,521 194,890

Loans and other borrowings 166,245 156,466 156,466

Subordinated dept 0,00 0,00 0,00

Total Equity 155,763 158,383 171,800

Others 21,957 19,356 18,653

Q1 2019 Q2 2019 Q3 2019% Change

Q3oQ2

% Change Q3o2018

159,942 183,494 233,010 27.0% 6.3%

132,016 142,429 214,031 50.3% 23.5%

27,926 41,065 18,979 -53.8% -58.7%

116,257 91,080 86,029 -5.5% -29.4%

743,348 756,504 739,536 -2.2% 1.6%

604,748 615,080 584,195 -5.0% -2.0%

138,600 141,424 155,341 9.8% 17.8%

61,112 62,051 63,788 2.8% 25.4%

107,677 103,145 105,714 2.5% 0.5%

972,982 989,984 1,017,155 2.7% 0.2%

620,296 637,750 664,629 4.2% -0.5%

429,616 436,413 437,799 0.3% -7.5%

190,680 201,337 226,830 12.7% 16.4%

156,466 97,792 97,792 0.0% -37.5%

0,00 58,675 58,675 0.0% -

172,347 173,045 173,210 0.1% 0.8%

23,873 22,722 22,849 0.6% 22.5%

27

Income Statement Summary

(000) BAM 2016 2017 2018

Net interest income 29,174 34,229 34,048

Interest income 37,277 43,039 42,909

Interest expense 8,103 8,81 8,861

Operating income 12,502 11,710 12,495

Total non interest expense 39,349 42,263 81,247

Business and direct expenses 16,470 18,449 54,478

Operating expense 22,879 23,814 26,769

Income tax 888 1,056 41

Net profıt 196 2,62 -34,743

Q1 2019 Q2 2019 Q3 2019% Change % Change

Q3oQ2 Q3o2018

6,939 13,783 20,405 48.0% -40.1%

9,104 18,109 26,886 48.5% -37.3%

2,165 4,326 6,481 49.8% -26.9%

2,817 5,984 9,890 65.3% -20.8%

9,209 18,522 28,885 55.9% -64.4%

3,366 6,525 10,676 63.6% -80.4%

5,843 11,997 18,209 51.8% -32.0%

0 0 0 - -100.0%

547 1,245 1,410 13.3% 95,9%

28

Key Financial Ratios

(%) 2016 2017 2018

ROAA 0.03% 0.29% -3,54%

ROAE 0.16% 1.67% -21,16%

Liquid Assets/Total Assets 19.34% 21.88% 33,22%

Loans/Deposits 125.20% 109.46% 79,81%

Loans/Assets 74.56% 73.61% 52,53%

Deposits/Assets 59.55% 67.25% 65,82%

Interest Income / Interest Expense 432.59% 460.31% 453,54%

Equity / Total Liability 18.32% 15.52% 16,93%

Net Interest Income / Interest Assets 4.19% 3.95% 3,53%

Cost / Income Ratio 61,30% 59,05% 65,11%

# of

Branches 30 30 32

Employees 299 326 332

ATMs 53 54 55

Q1 2019 Q2 2019 Q3 2019

0,22% 0,25% 0,19%

1,27% 1,44% 1,09%

28,18% 27,57% 31,19%

88,24% 88,71% 81,02%

56,26% 57,15% 52,94%

63,75% 64,42% 65,34%

395,85% 394,04% 390,20%

17,71% 17,48% 16,24%

2,76% 2,75% 2,70%

68,52% 69,56% 68,83%

32 32 32

323 313 308

57 62 66

29

For further information please contact:Treasury & FI Department

Zmaja od Bosne 47 c, 12 Kat.Sarajevo/Bosnia and Herzegovina

Phone: (+387) 33 955 039E-mail: [email protected]

www.ziraatbank.ba

DECLAIMERThe information contained in the presentation has been prepared by ZiraatBank BH d.d. For informational purposes only.Although the information in this presentation has been obtained from sources which we believe to be reliable, we cannot guarantee that the information is without fault or entirely accurate. This presentation cannot be interpreted as an advice to anyone and is also strictly confidential and may not be reproduced, distributed or published for any purpose.

30

Investor Presentation, June 2018www.ziraatbank.ba

investor presentation, september 2019

Documents