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2016 Q3Earnings Presentation

Albaraka Türk

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Agenda

1Macroeconomic / Banking Outlook

2 2016 Q3 Financial Results

3Market Comparison

Appendix

4

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Macroeconomic Outlook

Economic activity slowed in the second quarter GDP grew by 0.3 and 3.1 percent in quarter-on-quarter and year-on-year terms, respectively main driver of annual growth was final domestic demand Indicators for the third quarter of 2016 point to further deceleration in economic activity. Economic activity is expected to recover starting from the 4th Quarter Decisions of credit rating agencies caused domestic financial markets to fluctuate Consumer inflation ended the third quarter at 7.28 percent the persistent slump in tourism and the gradual decline in the favorable effects of

commodity prices are likely to cause some increase in the current account deficit in the short term

1

Global financial markets and capital flows remain highly volatile.

Uncertainties surrounding monetary policies stopped the ongoing decline in bond yields

Growing expectations of a possible Fed rate hike

Ultra-loose monetary policy incentives mainly by the ECB and BoJ

Portfolio flows into emerging economies have recently started to slow down again

Global Economy

Turkish Economy

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Banking Industry and Participation Banks

2

In 3Q 2016 , net profit of banking sector raised by 56% comparing to 3Q 2015.

Year to Date, credit growth rate reached 8,4% while NPL amount raised 23,4%.

The loan growth lost pace in 2016.

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

Uptrend in the amount of NPL continues and the NPL ratios are increasing.

Banking Industry

In the third quarter of 2016, continued to grew under the banking sector.

Bank Asya's banking operations suspended by Turkish Deposit Insurance Fund (TMSF).

Continuing branch network expansion.

Number of total branches is 942 at the end of 3Q.

Participation Banks

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 Q3 Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Net Profit178,9 mn TRL

Total Assets28,6 bn TRL

Total Credits20,3 bn TRL

Equity2,2 bn TRL

ROAE: 12,54%NPSM: 4,18%

NPL: 4,53%

Loan/Deposits: 101,11%

CAR: 12,74%

Albaraka Türk 2016 3Q Snapshot3

HİZMETE ÖZEL

29.213 29.562 28.811 29.364 28.633

9.738 10.265 10.364 10.3769.570

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

TRL USD*

Growth in Total Assets

Funded Credits; 71%Securities

Portfolio; 6%

Liquid Assets; 20%

Other Assets; 3%

*USD equivalent of total assets

Ytd Growth: -3,1 % in TRL terms QoQ Growth: -2,5 % in TRL terms

Total Assets (million TRL) Asset Segmentation (Q3’16)

4

-2,0%

8,40

8,058,13

8,047,96

Q3'16Q2'16Q1'16Q4'15Q3'15

9,959,909,87

9,539,47

Q3'16Q2'16Q1'16Q4'15Q3'15

Growth in Funded Credits

971 1.052 1.072 1.182 1.251

746763 746

763 580

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

Available for sale Held to Maturity

1.8311.717 1.814 1.818

1.945

*USD equivalent of total funded credits

Total Funded Credits (including financial leasing, million)

Total Securities Porfolio ( TRL million)

5

Ytd Growth: 4,2% in TRL terms YoY growth: 4,8% in TRL terms

19.399 19.505 19.891 20.059 20.331

6.466 6.773 7.155 7.088 6.795

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

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

+6,7%

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Funded Credits PortfolioComposition of Total Funded Credits* (%)

*According to BRSA definition

Currency Composition of Total Funded Credits* (Q3’16)

55%30%

15%

TRL

USD*

EUR*

*Including USD & EUR indexed credits

62 62 60 64 68

2.3

82

2.4

31

2.5

83

2.6

37

2.6

15

124 124124 123 111173 171167 171 173

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

Credit Cards

Housing

Vehicle

Consumer

Total Retail Credits* (%)

Retail credits (excluding installment based

commercial credits and corporate credit cards)

grew to 2.967 million TRL in Q3 2016 up from

2.788 million TRL in Q4 2015

Housing finance is primary segment among retail

credits

6

+8,2%

*Excluding installment based commercial credits and corporate credit cards

Q3’15 Q4’15 Q1’16 Q2’16 Q3’16

Corporate Credits 39,8 38,9 38,7 41,7 41,9

SME Credits 45,9 46,7 46,5 43,2 43,5

Retail Credits 14,2 14,3 14,7 15,1 14,6

Total 100.0 100.0 100.0 100.0 100.0

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70,5

60,0 57,352,3 49,4

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

2,60 2,402,78

3,46

4,53

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

503 468553

707

941

356281

317369

465438 439

568

653

932

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

NPA Spesific Provisions Collateral

Asset Quality

Non-performing Loans (TRL million)

6370

7992

122

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

Cost of Risk** (bps)

NPL Ratio*

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

*Including financial leasing & accruals and rediscounts

Provisioning Ratio (%)

7

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21% 23% 24% 24% 21%

14% 16% 16% 16% 16%

64% 61% 61% 61% 63%

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

Fund Borrowed Current Accounts Participation accounts

Composition of Total Liabilities (Q3’16, %) Composition of Funding Base (TRL million)

70

18

84

Funds Collected

Wholesale Funding

Shareholders' Equity

Other Liabilities

25.40225.967

-2,2%

26.461

Total Liabilities8

25.526 25.875

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5,47%5,42%5,43%5,36%5,33%

8,30%8,23%

8,15%7,84%7,66%

1,63%1,70%1,76%1,89%1,94%

1,84%2,22%

2,55%2,51%2,43%

Q3'16Q2'16Q1'16Q4'15Q3'15

Average TL FC Precious Metal

Total Funds Collected

20.438 20.346 19.494 19.767 20.109

6.813 7.065 7.012 6.985 6.721

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

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

5726

152

TRL

USD

EUR

Others

Currency Composition of Funds Collected (Q3’16, %)

Maturity Composition of Funds Collected (Q3’16, %)

20

14

57

22 6 Current Acc.

Up to 1 month

Up to 3 months

Up to 6 months

Up to 1 year

>1year

9

-1,6%

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Q3’15 Q4’15 Q1’16 Q2’16 Q3’16

Growth (%)

Y-Y YTD.

Letter of Guarantee 7.844 7.730 8.011 7.899 7.746 -1,2 0,2

Letter of Credit 626 640 681 611 583 -6,9 8,9

Others* 2.101 2.041 3.001 2.551 2.648 26,0 29,7

Total: 10.570 10.411 11.693 11.061 10.977 3,9 5,4

Off balance sheet growth10

Off Balance Sheet Composition (%)

74 74 69 71 71

6 66 6 5

20 20 26 23 24

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

LG LC Others

LGs-to-Total Assets

26,8%26,1%

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

Q3'15 Q4'15 Q1'16 Q2'16 Q3'16

Off Balance Sheet (TRL million)

*Revocable credit limits not included.

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Income- Cost Dynamics11

(000 TRL)

Year on Year Change Quarterly Change Notes

3Q’15 3Q’16 % Q2’16 Q3’16 %

Net Profit

Share Income642.626 757.050 17,81 236.473 242.978 2,75

Profit share expense increased by 14,7% while PSI

raised by 16,0% YoY basis. Joint venture projects

returns reached to TL 62.108 in 3Q 2016 (3Q 2015:

TL 31.335)

Net Fee

Income94.198 105.191 11,67 41.739 34.896 -16,39 Higher Net Fee income in 3Q 2016

Net Trading

Income30.971 51.750 67,09 37.941 20.314 -46,46

Higher Foreign Exchange income in 3Q2016: 72.937

(3Q 2015: -21.435 ) due to Lower volatility in

exchange rates

Other Income 94.174 82.120 -12,80 31.479 17.109 -45,65Reversal of prior year provisions in 3Q’ 2016 is lower

than 3Q’ 2015

Provisioning 123.102 227.124 84,50 70.554 82.944 17,56 Higher provisions in 2016

Other Costs 473.701 547.336 15,54 168.319 171.878 2,11YoY increase in other costs due to increase in

Personnel Expenses, FX rates

Tax 53.315 42.784 -19,75 10.213 10.158 -0,54 -

Net Profits 211.861 178.867 -15,57 65.475 50.317 -23,15 -

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 3Q Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Total Growth – 2016 3Q12

Percent 2016 3Q 2015 3Q

Albaraka

Türk

Participation

Banks*

Banking

Sector*

Albaraka

Türk

Participation

Banks*

Banking

Sector*

Asset Size -3,1 -0,2 7,5 26,8 17,2 20,2

Total Credits** 4,8 -0,6 8,4 20,5 16,0 20,3

Deposits/Collected

Funds***-1,6 -1,9 7,5 22,2 13,3 17,9

18,2%

15,1%

26,4%

12,6%

21,0%

28,3%

33,9%

39,7%

17,8%

24,4%

20152014201320122011

Asset Size GrowthBanking Sector

Albaraka Türk

* 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

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Market Share– 2016 3Q13

Percent 2016 3Q 2015 3Q

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 23,8 1,1 4,7 23,9 1,2 5,1

Total Credits* 24,8 1,2 4,9 23,7 1,3 5,3

Deposits/Collected Funds** 27,1 1,4 5,2 26,0 1,5 5,7

* 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; 23,8%

Participation Banking;

4,7%

Banking Sector Participation Banking Sector

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9,58

9,8

9,08

9,07

9,44

12,11

15,27

12,22

12,21

12,74

Q3'15

Q4'15

Q1'16

Q2'16

Q3'16

CAR Tier I

Capitalization

Capital Adequacy Ratio (%)

14

+63 bps

+3,16 bps

250 million USD Basel 3 compliant

Tier 2 SukukIssued

200 million USD Basel 2 compliant Sukuk

removed from CAR calculations.

-3,05 bps

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Profitability & Efficiency

15,08 15,57

12,54

Q3'15 Q4'15 Q3'16

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

3,93 3,93

4,18

Q3'15 Q4'15 Q3'16

Cost/Income (%)

54,96 55,06

51,66

Q3'15 Q4'15 Q3'16

Loan/ Deposits (%)

94,92 95,87

101,11

Q3'15 Q4'15 Q3'16

15

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Ratios16

Percent 2016 3Q 2015 3Q

Albaraka Türk Participation

BanksBanking Sector Albaraka Türk

Participation

Banks

Banking

Sector

CAR 12,74 15,66 16,00 12,11 14,39 14,65

NPL Ratio 4,53 3,66 3,31 2,59 5,45 2,90

Provisioning Ratio 49,38 60,21 76,37 70,49 71,24 73,08

Loan/Deposits 101,48 112,36 116,73 97,24 110,61 117,23

ROAA (IBT) 1,15 0,91 1,88 1,36 0,81 10,34

ROAE (NI) 12,54 6,93 13,32 15,35 -0,54 11,24

Asset Yield 8,97 8,77 8,32 8,23 8,55 7,85

Asset Spread 4,33 4,51 3,37 3.66 4,47 3,26

Net Profit Share Margin 4,18 4,59 3,98 3,93 4,54 3,83

Net Fee Income / Avg. Assets 1,20 0,85 0,97 1,06 1,00 1,02

Op Costs / Avg. Assets 2,43 2,39 2,18 2,40 2,69 2,31

Cost/Income* 51,66 45,80 40,59 54,65 51,81 47,53

Credits / Branches (000‘TRL) 95.637 87.098 140.110 92.620 78.035 125.211

Staff / Branches 17,82 15,08 17,75 17,51 15,80 17,68

CA / Deposits 19,91 26,53 19,38 19,32 25,83 19,76*Cost: Operating Costs, Income: NII/NPSI, Net Fees and Commissions Income, Other Income

HİZMETE ÖZEL

Agenda

1Macroeconomic / Banking Outlook

2 2016 3Q Financial Results

3Market Comparison

Appendix

4

HİZMETE ÖZEL

Summary Balance Sheet17

(Thousand TRL) Sep’16 Dec'15 Growth (%)

Cash and Banks 5.748.567 7.387.412 -22,18%

Financial Assets 1.222.903 1.073.849 13,88%

Funded Credits 20.331.255 19.505.392 4,23%

Cash Credits 18.959.063 18.370.399 3,20%

NPL 941.367 468.413 100,97%

Provisions 463.767 280.847 65,13%

Net Financial Leasing Receivables 895.714 947.427 -5,46%

Investments Held to Maturity (Net) 580.236 762.890 -23,94%

Associates 29.969 25.469 17,67%

Fixed Assets 515.677 545.411 -5,45%

Assets Held For Sale and Investment 103.565 22.819 353,85%

Other Assets (inc. Tax Assets) 310.586 238.757 30,08%

Total Assets 28.632.535 29.561.999 -3,14%

Funds Collected 20.108.581 20.346.178 -1,17%

Funds Borrowed 3.966.774 4.104.688 -3,36%

Debts 715.516 1.457.345 -50,90%

Provisions (inc. Taxes) 261.994 310.317 -15,57%

Tier II Sukuk 1.318.291 1.239.557 6,35%

Shareholders’ Equity 2.221.109 2.103.914 5,57%

Capital 900.000 900.000

Capital Reserves (inc. Premium) 192.815 200.910

Profit Reserves 946.332 696.531

Profits 181.962 306.473

Prior Periods 3.095 3.610

Current Year 178.867 302.863

Total Liabilities 28.632.535 29.561.999 -3,14%

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Summary Income Statement18

(Thousand TRL) Sep’16 Sep15 Growth (%)

Profit Share Income 1.635.408 1.409.456 16,03%

Profit Share Expense 878.358 766.830 14,54%

Net Profit Share Income 757.050 642.626 17,81%

Net Fees and Commissions Income 105.191 94.198 11,67%

Fees and Commissions Received 150.630 130.490 15,43%

Fees and Commissions Paid 45.439 36.292 25,20%

Net Trading Income 51.750 30.971 67,09%

Other Operating Income 82.120 94.174 -12,80%

Total Operating Profit 996.111 861.979 15,56%

Provisions for Loan Losses 227.124 123.102 84,50%

Other Operating Expenses 547.336 473.701 15,54%

Net Operating Profit 221.651 265.176 -16,41%

Tax Provision 42.784 53.315 -19,75%

Net Profits 178.867 211.861 -15,57%

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THANK YOU

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