Q1’2020Investor Presentation

Albaraka Türk Participation Bank20 May 2020

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

Albaraka Turk – Q1’20 At a Glance3

Balance Sheet Key Ratios

(Million TRL) Q4’19 Q1’20 Q-Q (%) % Q4’19 Q1’20YtD

(bps)Total Assets 51.392 55.552 8,09

Total Funded Credits (Net) 29.749 33.890 13,92CAR 14,97 14,49 -48

Total NPLs 2.222 2.362 6,30

Deposits (incl. Interbank) 39.769 43.277 8,82Tier 1 10,66 9,96 -70

Shareholder’s Equity 3.822 3.780 -1,09

NPL 7,19 6,71 -48Income Statement

(Million TRL) Q1’19 Q1’20 Y-Y (%)

Net Profit Share Income 196 373 90,12Provisioning

Stage III42,61 47,08 447

Net Fees & Commissions 70 61 -12,42

Provisions for Loan Loss 325 243 -25.24 Net Profit ShareMargin

2,10 2,41 31

Operating Expenses* 270 308 14,11

Net Profit 27 12 -55,61Cost/Income 55,89 54,41 -148

* including personnel expenses

6Q1’20 Main Highlights (Million TRL)

2,622,28

1,58

2,12,41

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Net Profit Share Margin*

* Trailing for last 4 quarters

4

44.594 43.88646.295

51.39255.552

26.498 27.771 27.14029.749

33.89030.628 33.045 34.794

39.76943.277

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Total Assets Total Funded Credits Total Collected Funds

63

36

98

27

12

Q1'16 Q1'17 Q1'18 Q1'19 Q1'20

Net Profit

8,40 % 7,83

2,26 % 2,13

4,31 % 4,53

Q4'19 Q1'20

Common Equity Tier I Additional Tier I Additional Tier II

14,49 %14,97 %

Funded Credits; 61,0%

Securities Portfolio;

15,9%

Other Liquid

Assets*; 18,6%

Other Assets; 4,6%

1.789 2.062 1.895 2.015 1.972

549

1.435 1.5621.994

3.0101.195

1.615 2.0242.234

3.845

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Available for sale Held to Maturity Other Marketable Securities

3.533

5.1125.481

8.827

6.243

7Asset Composition

Composition of Total Assets (Q1’20) Liquid Assets (Million TRL)

5

Total Securities Portfolio (Million TRL) Securities Yield (%)

(*) Profit share income received from securities for the last 4Q/5Q average securities

*Liquid Assets includes Cash and Cash Equivalents, Financial Assets Measured at Fair Valuethrough Profit/Loss, Financial Assets Measured at Fair Value through Other ComprehensiveIncome.

* Other Liquid Assets includes Cash and Cash Equivalents and Derivative Financial Assets

7,328,75

10,0611,60

12,92

Q1'20Q4'19Q3'19Q2'19Q1'19

15.510 12.663 15.266 17.215 16.114

34,8%

28,9%33,0% 32,5% 29,0%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Liquid Assets % of Total Assets

10,58% 10,76% 10,33% 10,92% 10,18%

2,62% 2,28%1,58%

2,10%2,41%

7,17% 7,46% 7,61% 7,13%

6,15%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Credit Yield Net Profit Share margin Cost of Collected Funds

-36 4 -41 -189

Q1'19 Profit ShareIncome

Fees &Comm

TradingIncome

Others Q1'20

1.302

6Operating Performance Breakdown

Net Profit Share Income (Quarterly) (Million) Key Movements in Income (Million TRL)

Cost & Yield Movement (%)

6

1.039

196144

108

376 373

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

95 102 98

-25 -26 -37

Fees and Commissions Received Fees and Commissions Paid

70

Q4’19

Net Fees and Commission Income (Million)

Q1’19

76 61

Q1’20

*USD equivalent

Total Funded Credits (including financial leasing, million) Yield on Performing Credits (%)

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

Funded Credits Portfolio

Q1’19 Q2’19 Q3’19 Q4’19 Q1’20

Corporate Credits 41.9 47.1 47.5 48.9 58,3

SME Credits 48.6 44.2 43.9 42.1 32,7

Retail Credits 9.6 8.7 8.6 9.0 9.1

46%

36%

17%

1%

TRL

USD*

EUR*

Other

Composition of Total Funded Credits (%) Currency Composition of Total Funded Credits* (Q1’20)

*Including USD & EUR indexed creditsAccording to BRSA definition

7

Q1’19 Q4’19 Q1’20 YtD Y-Y

TL Credits, TL 13.243 14.205 15.707 10,57% 18,61%

FC Credits, $* 1.549 2.259 2.453 8,59% 58,36%

FC Indexed, $* 1.669 364 319 -12,36% -80,89%

Total Credits, TL 25.938 29.749 33.890 13,92% 30,66%

16,2%17,9%

10,9% 10,7%

6,4% 5,70%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Yield on TL Loans, adjusted, trailingBlended Yield, adjustedYield on FX Denominated Loans, trailing

77,5% 78,6% 78,4% 80,9%83,1%

15,2% 14,1% 13,8%11,9%

10,2%

7,4% 7,3% 7,7%7,2%

6,7%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Group I Group II Group III

29.103

7,36 7,31

7,74

7,19

6,71

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Gross Funded Credits by Groups (including financial leasing, million)

218 213183

257229

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Cost of Risk (bps)

NPL Ratio (%)

Specific provisions for credits for last 4Q/ 5Q average credits

Including financial leasing & accruals and rediscounts

Provisioning (Stage III)

Asset Quality8

35.204

1.069 1.104 1.152947

1.112

52,3% 51,9% 52,2%

42,6%

47,08%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20Lifetime ECL Impaired Credits (Stage 3) (Million TRL) Provisioning Ratio (%)

27.77828.491 30.881

NPL Formation Trend (Quarterly)

Asset Quality9

315

154

243

529

266

78 70 164

64 120

237

84 79 465

145

369

128119

189

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Additions (million TRL) Recoveries (million TRL)

Net NPL Formation (million TRL) Net NPL Formation Rate (bps)

NPL Inflow Sector Distribution (Q1’20)

28,9%

12,5%

11,6%

15,6% 10,0%9,3%

12,2%

Manufacturing Construction & Real EstateTrading TextileTransportation EducationOthers

27,8%

34,5%

11,3%12,6%

4,7%

9,0%

Manufacturing Construction Trading

Energy Hotels&Restaurants Others

Stage II Credits Sector Distribution (Q1’20)

3.582 2.362

3.634

1.527

84

1.112

Stage 2 Stage 2 Stage 3 Stage 3

Risk amount Collateral Provision

Stage II-III Coverage Q1’20 (Million TRL)

677

*Includes construction of power plant projects

25% 16% 15% 13% 13%

23%27% 27% 30% 31%

52% 57% 58% 57% 56%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20Fund Borrowed* Current Accounts Participation accounts

Composition of Total Liabilities (Q1’20,%) Composition of Funding Base (Million TRL)

77,9%

11,8%

6,8%

3,5%Funds Collected

WholesaleFunding

Shareholders'Equity

Others

49.820

25%

39.978

Funding Profile10

*Fund Borrowed includes Funds Borrowed , Borrowings from Money Market and Subordinated Loans

45.697

(Million TRL) Q4’19 Q1’20 YtD Growth %

Funds Collected (incl. Bank deposits) 39.769 43.227 8,8

Wholesale Funding 5.928 6.543 10,4Funds Borrowed 4.535 4.952 9,2

Syndicated Loans - - -Wakala 979 1.708 74,6Issued Lease Certificates & Sukuk 2.743 2.420 -11,8

Other 813 824 1,3Sub-Ordinated Debt (Tier 2) 1.375 1.571 14,2Interbank 18 20 10,9

Shareholders’ Equity 3.822 3.780 -1,1Paid in Capital 900 1.350 50,0Other Liabilities 1.873 1.952 4,2Total Liabilities 51.392 55.552 8,1

39.231

205

250

0 100 200 300

2025

>2030

Tier 1 Sukuk (Perpetual) Tier 2 Sukuk

Maturity Profile of Liabilities (Million USD)

40.881

6,15%

7,13%7,61%7,46%7,17%

12,95%

14,67%15,26%14,11%12,63%

1,73%2,14%2,35%2,50%2,56%

0,27%0,30%0,40%0,68%0,94%

Q1'20Q4'19Q3'19Q2'19Q1'19

Blended TL FC Precious Metal

37,1

37,7

17,8

7,4

TRL

USD

EUR

Others

Total Funds Collected (Million TRL)

Cost of Funds Collected*

*USD equivalent of FC accounts

*Profit share expense to depositors for the last 4Q/5Q average participation accounts

Currency Composition of Funds Collected (Q1’20,%)

Maturity Composition of Funds Collected (Q1’20,%)

35,1

18,5

38,8

3 4,5

Current Acc.

Up to 1 month

Up to 3 months

Up to 1 year

>1year

Funding Profile (Collected Funds)

11

Q4’19 Q1’20 YtD

Funds Collected 39.769 43.277 8,8%

Current Accounts 13.902 15.211 9,4%

Current Accounts TL 4.199 4.385 4,4%

Current Accounts, FC, $ 1.637 1.651 0,9%

Participation Accounts 25.867 28.065 8,5%

Participation Accounts TL 10.497 11.666 11,1%

Participation Accounts FC, $ 2.593 2.500 -3,6%

Off Balance Sheet Composition (%) LGs*-to-Total Assets

18,6% 18,8%

17,7%17,0%

15,9%

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

Guarantees & Sureties (TRL million)

*Revocable credit limits not included.

Off Balance Sheet Growth12

*Below 20% of LGs to Total Assets is targeted

4060 55

6955

7

108

10

10

53

30 3721

35

Q1'19 Q2'19 Q3'19 Q4'19 Q1'20

LG LC Others

20.648 13.753 12.675 16.06614.832

Q1’19 Q2’19 Q3’19 Q4’19 Q1’20Growth (%)

YtD Y-Y

Letter of Guarantee 8.304 8.251 8.192 8.718 8.826 1,2% 6,3%

Letter of Credit 1.423 1.328 1.180 1.330 1.662 25,0% 16,8%

Others* 424 409 347 383 369 -3,7% -13,0%

Total: 10.151 9.998 9.722 10.431 10.857 4,1% 7,0%

14Income- Cost Dynamics

13

(Million TRL)

Y-Y Notes

Q1’19 Q1’20 %

Net Profit Share Income 196 373 90,1%Profit Share income decreased by 4,2% While Profit share Expenses decreased by 32,8% YoY. Downward cost of fundingleading stronger Net Profit Share Income.

Net Fee Income 70 61 -12,4%Circa 12,4 % Y-o-Y contraction in this line item is mostly stemming from new CBRT commissions on required reserves for FC deposits.

Net Trading Income 67 26 -61,5%The FX gains has declined due to the decrease in demand caused by FX tax and USD 205 Million tier1 issuance changed to square position.

Other Income 296 106 -64,2% Less Provision reversals led to other operating income being below last year.

Provisioning 325 243 -25,2% Provisioning expenses decreased due to less NPL Inflow.

Personnel Expenses 165 179 8,4%

Other Costs 105 129 23,2% Increase in other expenses, which is above CPI, is stemming from legal dues (Taxes, Duties, Charges etc.)

Net Profits 27 12 -55,6

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

Percent % Q4’19 Q1’20

Albaraka TürkParticipation

BanksBanking Sector Albaraka Türk

ParticipationBanks

BankingSector

CAR 14,97 18,04 18,43 14,49 18,64 17,90

NPL Ratio 7,19 4,53 5,27 6,71 4,09 4,98

Provisioning Ratio (Stage 3) 42,61 63,88 65,17 47,08 69,30 68,59

Loan/Deposits 74,80 78,21 106,00 78,31 78,72 104,02

Asset Yield 8,53 10,14 11,11 7,99 9,31 10,57

Asset Spread 2,33 3,49 3,80 2,63 3,76 4,22

Net Profit Share Margin 2,10 3,99 4,41 2,41 4,14 4,73

Op Costs / Avg. Assets 2,43 2,11 1,99 2,38 2,12 2,03

Cost/Income* 55,89 35,84 36,65 54,41 34,20 32,31

Credits / Branches (000‘TRL) 129,344 145,358 250,464 147,346 164,877 268,747

Staff / Branches 16,48 13,60 17,99 16,16 13,64 18,03

CA / Deposits 34,96 33,53 24,71 35,15 37,72 27,09

*Cost: Operating Costs, Income: NPSI, Net Fees and Commissions Income, Other Income Net Trading Income

Financial Ratios - Sector Comparison15

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

(Million TRL) Q4’19 Q1’20 Growth

Cash and Balances with Central Bank 8.796 6.631 -24,6%Banks 4.187 3.699 -11,7%Financial Assets 6.226 8.803 41,4%Funded Credits 29.749 33.890 13,9%

Cash Credits 28.415 32.583 14,7%NPL 2.222 2.361 6,3%Provisions (Stage III) 947 1.112 17,5%Net Financial Leasing Receivables 244 259 6.2%

Associates 70 65 -7,0%Fixed Assets 1.547 1.540 -0,4%Assets Held For Sale and Investment 124 132 6,0%Other Assets (inc. Tax Assets) 692 792 14,5%

Total Assets 51.392 55.552 8,1%

Funds Collected 39.769 43.277 8,8%Funds Borrowed 4.535 4.952 9,2%Debts 1.756 1.826 4,0%Provisions (inc. Taxes) 135 145 7,9%Tier II Sukuk 1.375 1.571 14,2%Shareholders’ Equity 3.822 3.780 -1,1%

Capital 900 1.350 50,0%Capital Reserves (inc. Premium) 1.345 924 -31,3%Profit Reserves 1.430 1.493 4,4%

Total Liabilities 51.392 55.552 8,1%

Summary Balance Sheet17

(Million TRL) Q1’19 Q1’20 Growth

Profit Share Income 844 809 -4,2%

Profit Share Expense 648 436 -32,8%

Net Profit Share Income 196 373 90,1%

Net Fees and Commissions Income 70 61 -12,4%

Fees and Commissions Received 95 98 3,7%

Fees and Commissions Paid 25 37 49,5%

Net Trading Income 67 26 -61,5%

Other Operating Income 296 106 -64,2%

Total Operating Profit 464 387 -16,6%

Provisions for Loan Losses and Other Receivables 325 243 -25,2%

Personnel Expenses 165 179 8,4%

Other Operating Expenses 105 129 23,2%

Operating Profit Before Tax 34 15 -56,3%

Tax Provision 7 3 -59,1%

Net Profit 27 12 -55,6%

Summary Income Statement18

THANK YOU

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