The Banking Sector in Turkey 2014 – March 2018

For your ideas and suggestions: This study was prepared using data provided by the Central Bank of the Republic of Turkey (CBRT), Banking Regulation and Supervision Agency (BRSA), Turkish Statistical Institute (TurkStat), Capital Markets Board of Turkey, The Interbank Card Center, SNL and The Banks Association of Turkey (BAT). Whilst every effort has been made to ensure that the information contained in this study is correct, The Banks Association of Turkey cannot accept any responsibility for any errors or omissions or for any consequences resulting therefrom. Unless otherwise stated, data covers deposit and development and investment banks. This study was prepared for the aim of following up and assessing the developments in the Turkish Banking Sector. The study will be updated every three months. Any ideas and suggestions are welcome and important for the improvement of the study. For your ideas and suggestions: Ümit Ünsal, umit.unsal@tbb.org.tr 0212 282 09 73 Latest update: June 2018

Index General Information Balance Sheet Indicators Selected Indicators Income/Expenditure Indicators International Comparison

General Information

Banking Sector in Turkey As of March 2018, there are 52 banks in total, 34 of them being deposit, 13 development and investment and 5 of them participation banks. According to Banking Law No 5411: Deposit bank: The institutions operating primarily for the purposes of accepting deposit and granting loan in their own names and for their own accounts, Participation bank: The institutions operating primarily for the purpose of collecting fund through participation accounts and granting loan, Development and investment bank: The institutions operating primarily for the purposes of granting loan and/or fulfill the duties assigned thereto by their special Laws.

Number of Banks 2014 2015 2016 2017 2018 March Deposit Banks 34 State-owned 3 Private 11 9 Foreign 19 21 SDIF 1 Development and Investment Banks 13 Participation Banks 4 5 Total 51 52 Source: BAT, BRSA

Number of Branches (Thousand) Participation banks are included. Source: BRSA

Number of Branches per 100,000 People Participation banks are included. Source: BRSA

Number of Branches of Deposit Banks (Branches abroad are included, thousand) Number of branches of development and investment banks are 40 as of March 2018 . Source: BRSA

Number of Employees (Thousand) Participation banks are included. Source: BRSA

Number of Employees per 100,000 People Participation banks are included. Source: BRSA

Number of Employees (Thousand) Source: BRSA

Distribution of Employees by Sex (Percentage) 2014 2015 2016 2017 2018 March Female 51.1 51.2 50.8 50.9 Male 48.9 48.8 49.2 49.1 Source: BAT

(In terms of paid-in capital, as of December 2017, perc.) Ownership Structure * (In terms of paid-in capital, as of December 2017, perc.) Trading in BIST Other   Resident Non- Resident Total 11.9 53.2 34.9 Deposit Banks 15.3 35.5 49.1 State-owned 13.3 86.7 0.0 Private 25.9 55.5 18.5 SDIF 100.0 Foreign 8.7 0.7 90.6 Development and Investment Banks 4.2 93.1 2.7 * Ownership structure is not taken into account in the shares trading in ISE. The weighted paid-in capital shares are used for the calculation of capital structure . The distribution of shares traded in ISE is not included. Source: BAT

(In terms of paid-in capital, perc.) Ownership Structure (In terms of paid-in capital, perc.) 2013 2014 2015 2016 2017 Trading in BIST 15.4 14.8 13.6 12.5 11.9 Other Resident 55.1 54.8 53.4 52.0 53.2 Non-Resident 29.6 30.4 33.0 35.5 34.9 Source: BAT

Numbers of ATM, POS, Debit Cards and Credit Cards (Thousand) 2014 2015 2016 2017 2018 March ATM 46 48 49 50 POS 2,191 2,158 1,746 1,700 1,613 Debit Cards 105,513 112,384 117,011 131,593 134,581 Credit Cards 57,005 58,215 58,795 62,454 63,428 Source:The Interbank Card Center

Transaction Volume of Debit Cards (Incl. domestic and international transactions) to Gdp (Percent) Source: The Interbank Card Center, TurkStat

Transaction Volume of Credit Cards (Incl. domestic and international transactions) to Gdp (Percent) Source: The Interbank Card Center, TurkStat

Number of customers in Internet Banking and Volume of Transactions 2014 2015 2016 2017 2018 March Number of Active Customers (Million) 14.3 17.4 20.4 13.1 13.5 Volume of Transactions (TL Billion) 2,561 3,075 3,727 4,630 4,855 Volume of Transactions to Gdp** (percent) 125 132 143 149 150 Starting from March 2017, digital banking statistics have been added to the report and updates have been made to internet banking and mobile banking definitions. * The number of customers who have logged in at least once during last three months. Source: BAT

Number of customers in Mobile Banking and Volume of Transactions 2014 2015 2016 2017 2018 March Number of Active Customers (Million) 6.7 12.2 19.2 29.5 32 Volume of Transactions (TL Billion) 218 555 1,011 2,126 2,291 Volume of Transactions to Gdp** (percent) 11 24 39 68 71 Starting from March 2017, digital banking statistics have been added to the report and updates have been made to internet banking and mobile banking definitions. * The number of customers who have logged in at least once during last three months. Source: BAT

Balance Sheet Indicators

Total Assets Source: BRSA

Financial Assets and Liquid Assets (Billion TL) Source: BRSA

Financial Assets and Liquid Assets (Billion USD) Source: BRSA

Loans and Receivables Source: BRSA

Distribution of Loans and Receivables (Percentage) Source: BRSA

The Distribution of Loans* (Annual growth, percent) 2014 2015 2016 2017 2018 March Total 16 20 17 21 Retail 1 10 15 -Credit Cards -7 11 8 12 13 -Housing 14 -Vehicle -20 -5 4 7 -Other 6 18 Corporate 24 22 -SME Loans 27 *Participation banks are included. Source: BRSA

The Distribution of Loans* (Annual growth deflated with CPI, percent) 2014 2015 2016 2017 2018 March Total 7 10 8 Retail -7 1 3 2 -Credit Cards -15 -1 -Housing 4 5 6 -Vehicle -26 -13 -4 -5 -2 -Other Corporate 14 9 -SME Loans 17 *Participation banks are included. Source: BRSA

Deposits Source: BRSA

TL Deposits / Total Deposits (Percent) Source: BRSA

The Distribution of Deposits* (Annual growth, percent) 2014 2015 2016 2017 2018 March TL Deposit 11 8 18 13 17 FX Deposit 38 14 24 Precious Metal Deposit -22 -32 59 31 Total Deposit Natural Persons' Deposit 19 16 Official Institutions' Deposit -4 21 2 25 10 Commercial & Other Institutions' Deposit 20 *Participation banks are included. Source: BRSA

The Distribution of Deposits* (Annual growth deflated with CPI, percent) 2014 2015 2016 2017 2018 Mart TL Deposit 2 -1 9 1 4 FX Deposit 27 5 11 Precious Metal Deposit -29 -38 46 23 17 Total Deposit 8 Natural Persons' Deposit 7 6 Official Institutions' Deposit -12 -6 12 -2 Commercial & Other Institutions' Deposit 10 *Participation banks are included. Source: BRSA

Shareholder’s Equity Source: BRSA

Free Shareholder’s Equity Source: BRSA

Non Deposit Funds Source: BRSA

Selected Indicators

Assets and Income Per Capita (USD) Source: BRSA, TurkStat

Selected Balance Sheet Indicators to Gdp (Percent) Source: BRSA, TurkStat, BAT

Government Domestic Debt to Total Assets (Percent) Source: CBRT, BRSA

Loans and Receivables / Total Assets (Percent) Source: BRSA

Financial Assets / Total Assets (Percent) Source: BRSA

Deposits / Total Assets (Percent) Source: BRSA

Non-Deposit Funds / Total Assets (Percent) Source: BRSA

Shareholder’s Equity / Total Assets (Percent) Source: BRSA

Loans and Receivables / Deposits (Percent) Source: BRSA

Non Performing Loans (Before provisions) / Total Loans and Receivables (Percent) Source: BRSA

Average Return on Equity and 2 Year Government Bond Yield (Percent) Source: BRSA, TurkStat, BAT

Capital Adequacy Ratio (Percent) Source: BRSA

Income / Expenditure Indicators

Interest Income, Interest Expenditure and Net Interest Income to Total Assets (Percent) Source: BRSA

Net Non Interest Income / Total Assets (Percent) Source: BRSA

Net Fees, Commissions and Banking Services Income / Total Assets (Percent) Source: BRSA

Total Expenses to Total Income (Percent) Kaynak: BDDK

Net Operating Profit (Loss) / Total Assets (Percent) Source: BRSA

International Comparison

Total Assets to Gdp (percent) Source: SNL, BRSA

Total Loans to Gdp (2016, percent) Source: SNL, BRSA

Total Deposits to Gdp (2016, percent) Source: SNL, BRSA

Problem Loans / Total Loans (Percent) Source: SNL, BRSA

Remarks Net Interest Income / Expenditure: Interest Income – Interest Expenditures Free Shareholder’s Equity: Shareholder’s Equity - (Fixed Assets + Non Performing Loans (net)) Non Deposit Funds: Payables to the Central Bank + Payables to money market + Payables to banks + Funds from Repo transactions + Funds + Securities issued Net Non Interest Income (Expenditure) : Net Operating Profit (Loss) – Net Interest Income (Expenditure) Net Fees and Commissions (Expenditure) : Fees and commissions provided from loans – Fees and commissions paid Other Assets: Includes all balance sheet asset accounts not covered specifically in other areas of the activity. Dev.: Developed Countries (UK, Germany, France, Italy and Japan) GOÜ: Emerging Counties (Turkey, Russia, India, South Africa, Mexico, Brazil, Poland, Malaysia,