FINANCIAL SERVICES

IN TURKEYMay 2018

Agenda

Summary

Banking and Financial Intermediary

Capital Markets

Insurance

Turkey’s Competitive Landscape

Executive

SummaryTurkish financial services offer significant opportunities to grow..

Resilient and attractive

Strong Banking System

Favorable Investment

Climate

A key driver of the Turkish financial sector has been its robust economy with a bright future. Over the past 15 years, Turkish

economy has been growing with an average annual real GDP growth rate of 5.7 per cent and the growth momentum is expected to

continue.

Turkey’s economic growth has resulted in income growth and a growing robust middle class with increasing purchasing power.

As Turkish economy has expanded, it has integrated with the global economy with a staggering increase in its volume of

international transactions. Such developments have further stimulated economic activity, thus expanding financial activities.

The Turkish financial sector proved resilient during the global financial turmoil in 2009 as well as the ensuing economic crisis, thanks

to the regulatory reforms and structural overhaul that the government implemented in the wake of the country’s own financial

meltdown in the early 2000’s. In fact, the reforms in the sector boosted investor confidence so much that the industry has attracted

$51 billion during the past 15 years.

Banking dominates the Turkish financial sector, accounting for over 70 percent of overall financial services, while insurance services

and other financial activities also show significant growth potential. There are 51 banks in Turkey (33 deposit banks, 13 development

and investment banks, 5 participation banks). Out of 51 banks, 21 hold significant foreign capital (30% of total assets are held by

foreign investors).

Unsaturated Insurance

Sector

The Turkish insurance market is still underpenetrated (1.5% of GDP) compared to peer countries and will provide significant

potential as new insurers set up shop and acquire a share of the relatively untapped Turkish market. Turkey has seen strong

economic growth fueled in part by a young and dynamic population that is increasingly in need of financial products and services.

Istanbul Financial

Center

Turkey has also set specific economic targets to achieve by 2023, the centennial of the Republic. One of these targets is to

transform Istanbul into a prominent financial center. Turkey’s large and young population, qualified labor force, and rapidly

developing markets along with its geo-strategic location, makes Istanbul an ideal candidate for an international financial hub. Since

the government launched the project for Istanbul Financial Center, Istanbul has rapidly made progress and is now considered among

emerging financial centers in the world.

Evolution of

Financial ServicesTurkey’s financial markets have been in a constant state of evolution..

Source: : BRSA, CMB

1982-2000 2001-2006

Personal Pension Savings and Investment System Law

Banking Act, Law No. 5411

Regulation on Measurement and Evaluation of Capital Adequacy of Banks

Mortgage Law, Official Gazette No. 26454

Implementation of Basel II standards in Turkey

Record profitability of the banking sector in Turkey

Law No. 6361 regarding Financial Leasing, Factoring and Financial Institutions

Establishment of Insurance Information and Monitoring Center - TRAMER, SAGMER, HATMER, HAYMER

All local or foreign insurance, reinsurance and pension companies operating in Turkey are members of the Insurance Association of Turkey

New Capital Market Law No. 6362

2007-2012 2013-…

Capital Market Law

Istanbul Stock Exchange (ISE) Market opens

Banking Regulation And Supervision Agency (BRSA) founded

Consolidation of the Market from 100 Banks to 49 Banks

Takasbank is Authorized by CMB as the National Numbering Agency of Turkey

Start of internet banking services

Milestones of Turkish Financial Services

Restructuring of Istanbul Stock Exchange and Establishment of Borsa Istanbul A.Ş.

Implementation of Basel III standards in Turkey

State-owned banks opened up participation banks

New regulatory framework for Payment and Electronic Money Institutions

Electronic Fund Trading Platform of Turkey (TEFAS) began to operate

Structure of

Financial Servicesfunctioning institutional settings with a strong legal framework..

Source: TCMA

BANKING CAPITAL MARKETS INSURANCE

Banking Regulation and

Supervision Agency (BRSA)Capital Markets Board (CMB) Undersecretariat of Treasury

-Banks’ Association of Turkey

-Participation Banks’ Association of

Turkey

-Association of Financial Institutions

-Turkish Capital Markets

Association (TCMA) -Insurance Association of Turkey

-Banks

-Participation Banks

-Savings Deposit Insurance Fund

-Leasing Companies

-Factoring Companies

-Consumer Finance Companies

-NPL Management Companies

-Banks

-Brokerage Firms

-Asset Management Firms

-Investment Trusts

-Central Registry Agency

-Settlement and Custody Bank

-Capital Markets Licensing and

Training Agency

-Investor Compensation Center

-Public and Listed Companies

-Rating, Appraisal, Audit Firms

-Insurance Companies

-Private Pension Companies

-Private Pension Funds

-Borsa Istanbul (BIST)

SECTORS

REGULATORS

INDUSTRY

REPRESENTATIVES

& ENABLERS

PLAYERS

FDI Flows into Turkish Financial Sector, 2002-2017Asset Size of Turkey’s Financial Sector (TL Billion)

Financial

ServicesTurkish financial sector, led by banking, has been rapidly growing while attracting

tremendous amount of foreign direct investment (FDI)…

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Banking

Central Bank

Insurance and Private Pension

Other

1,131

4,830

CAGR

18%

78.0%

15.4%

6.6%

$51BILLION2002-2017

CAGR

2008-2017

Share

2017

Banking 18 67

Central Bank 15 8

Insurance & Pension 19 3

Other 17 22

Other includes: BIST capitalization, securities, consumer finance, real estate investments, investment

trusts, asset management and venture capital investment trust assets

Source: CBRT, BRSA, TCMA, IAT, CBRT, AFI, BIST

USD/TL as of 29.12.2017: ₺3.78

*Activities of Holding Companies and Other Activities Auxiliary to Financial Services

Banking

Insurance

Other

Agenda

Summary

Banking and Financial Intermediary

Capital Markets

Insurance

Turkey’s Competitive Landscape

Banking There are 51 banks in Turkey with a total asset size of 3.3 trillion TL..

Source: BRSA, USD/TL as of 29.12.2017: ₺3.78

Number of Banks, 2017

33

13

5

51Deposit Banks

Participation Banks

Development & Investment Banks

₺3.3TRILLION

2017

TOTAL

BANKING

ASSETS

₺408BILLION

₺346BILLION

₺311BILLION

₺293BILLION

₺280BILLION

TOP 5 BANKS BY ASSET SIZE, 2017

Ownership by Asset Size, 2017

36%

36%

28%State-owned

Foreign-owned

Locally-owned

Total Loans as % of GDP (2016)

BankingDespite double-digit growth in the asset size, Turkish banking sector still has significant

potential for growth relative to its economy..

206%

159%

149%

146%

145%

119%

84%

72%

66%

France

EU28

Germany

Spain

Italy

Greece

Czechia

Bulgaria

Turkey

Source: BRSA, TBB, ECB

Turkish Banking Asset Size as % of GDP

53%

105%

40%

50%

60%

70%

80%

90%

100%

110%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Asset Size as % of GDP (2016)

374%

291%

248%

244%

235%

200%

127%

107%

105%

France

EU28

Germany

Spain

Italy

Greece

Czechia

Bulgaria

Turkey

Total Deposits as % of GDP (2016)

182%

169%

149%

148%

147%

121%

77%

76%

56%

France

Spain

Italy

EU28

Germany

Greece

Czechia

Bulgaria

Turkey

Asset Growth (Billion TL)

Asset Composition Liability Composition

BankingWhile growing at full speed, the banking industry has also diversified its

assets and liabilities..

Source: BRSA

USD/TL: ₺3.78

as of

29.12. 2017

32%

65%

40%

12%

15%15%

12%8%

0%

25%

50%

75%

100%

2004 2017

Other Assets

Cash + Banks

Securities

Loans

62%53%

11%

15%

0%5%

15%11%

11%16%

0%

25%

50%

75%

100%

2004 2017

Other Liabilities

Shareholder’s Equity

Securities Issued

Banks

Deposits

306

3,258

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Lending Growth of Participation Banks (TL Billion)

14 1824

3139

48

67 70

7984

107

0

20

40

60

80

100

120

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Asset Growth of the Participation Banks (TL Billion)

19 2634

4356

70

96104

120133

160

0

25

50

75

100

125

150

175

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

BankingParticipation banks have been outperforming the overall banking industry in Turkey,

but still have significant potential for growth..

• Islamic banking operations

in Turkey started in mid

1980’s under the name of

‘Special Finance Houses’. In

2005, these institutions

were renamed as

‘Participation Banks’ and

allowed to conduct banking

activities in compliance

with Islamic principles.

Today there are five

participation banks

operating in Turkey.

• The total asset size of

participation banks was

more than 160 billion by

the end of 2017, growing at

an impressive CAGR of

23.5% since 2007. The share

of participation banks in

banking sector assets

increased from 3.3 % in

2007 to 4.9% in 2017.

Source: Participation Banks Association of Turkey (TKBB), USD/TL as of 29.12.2017: ₺3.78

Participation Banks’ Asset as % of Total Banking Assets

3.3%

4.9%

2%

3%

4%

5%

6%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Participation Banks’ Loans as % of Total Banking Loans

4.9%

5.0%

2%

3%

4%

5%

6%

7%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Loans (TL Billion)

Banking Loans and deposits have been rapidly increasing..

Source: BRSA, USD/TL as of 29.12.2017: ₺3.78

Breakdown of Loans (2017)

17.9%

15.1%

9.5%

9.2%

8.6%6.7%

Personal Laons (Other)

Manufacturing

Personal Loans (Housing)

Construction

228 296 329 444 551 711

893 1,097

125 163 200

271 333

389

422

513

173 224

266

332

356

385

420

488

526 683

795

1,047

1,241

1,485

1,734

2,098

-

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015 2016 2017

Consumer Loans & Credit Cards

SME Loans

Commercial & Corporate LoansWholesale & Retail Trade

Electric, Gas, Water Resources

Deposits (Billion TL)

434 460 520 561 661 715 845

954 181 221 233

331 375

519

591

732

2 14

19

21

16

11

17

24

617 695

772

946

1,053

1,245

143

1,711

-

250

500

750

1,000

1,250

1,500

1,750

2010 2011 2012 2013 2014 2015 2016 2017

Presious Metals FX TL

Depositors (2017)

Natural Persons 59.0%

Corporate36.0%

Public Institutions

5.0%

Deposits by Maturity (2017)

1 to 3 Months53.1%

Checking Account21.2%

3 to 6 Months4.1%

6 to 12 Months3.7%

1 year +4.1%

BankingSuccessful risk management has also enhanced stability and efficiency of the banking

industry with sound financial indicators..

Source: BRSA, IMF

Capital Adequacy Ratio

NPL Ratio, 2017*Non-Performing Loans / Total Gross Loans (NPL Ratio)

6.0%

5.3%

2.9%

0%

2%

4%

6%16.4%

10.2%

10.0%

8.0%

4.2%

3.6%

2.9%

1.7%

0.7%

Italy

Russia

India

Romania

Hungary

Brazil

Turkey

Germany

Switzerland

16.9%

0%

5%

10%

15%

20%

25%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Legal Limit: 8%

Target: 12%

Legal Limit (Basel III): 10.5%

Capital Adequacy Ratio, 2017*

19.3%

19.0%

18.1%

16.9%

16.4%

16.1%

15.3%

12.8%

11.8%

Germany

Romania

Brazil

Turkey

Hungary

Switzerland

Italy

India

Russia

Net Income (Billion TL)

Banking Banking sector has sustained double-digit growth rates in profit..

Source: BRSA USD/TL as of 29.12.2017: ₺3.78; *Net interest income / average total assets

Income Statement (Billion TL)

MarginsReturns

2.9 5.6 6.5 6.0

11.4

14.9 13.4

20.2 22.1

19.8

23.5 24.7 24.6 26.1

37.5

49.1

0

5

10

15

20

25

30

35

40

45

50

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2017 2016 2007

Total Interest Income 247.5 194.7 70.6

Total Interest Expenses 134.1 103.4 44.5

NET INTEREST INCOME/ EXPENSE 113.4 91.3 26.0

Special Provisions for Non performing Loans 19.8 21.5 3.0

NET INTEREST INCOME/ EXPENSE AFTER PROVISIONS 93.6 69.9 23.1

Total Non-Interest Income 55.7 46.5 16.0

Total Non-Interest Expenses 77.8 67.6 22.2

Total Other Non Interest Income /Expense -10.2 -1.5 1.3

TOTAL NON-INTEREST INCOME/EXPENSE 32.3 22.6 4.9

PROFIT/LOSS BEFORE TAX 61.3 47.3 18.2

Provision for Taxes 12.2 9.7 3.3

NET INCOME 49.1 37.5 14.9

14.28%

16.04%

2016 2017

Retun on Equity

1.89%

2.04%

2016 2017

Retun on Assets

3.6%

3.8%

2016 2017

Net Interest Margin*

40%

38%

2016 2017

Cost / Income Ratio

Financial

LeasingFinancial leasing transactions has been growing with double-digit numbers..

Source: Association of Financial Institutions (AFI), Average USD/TL in 2017: ₺3.65

Financial Leasing Transactions (Billion TL)

8.4 9.6

13.9

17.1 17.3 18.6

22.6

0

5

10

15

20

25

2011 2012 2013 2014 2015 2016 2017

Sectoral Distribution (2017)

Heavy Equipment and Constrution Machinery 27%

Real Estate 21%

Other Machinery and Equipments 20%

Metal Processing Machinery

7%

Textile Machinery

7%

Other Sectors

18%

Leasing in Numbers

2017

Companies 25

Employees 1,453

Clients 57,605

Branches 139

Financial Leasing Net Profit/Loss (Million TL)

521

443 451

526

809

922952

0

100

200

300

400

500

600

700

800

900

1,000

2011 2012 2013 2014 2015 2016 2017

Financial Leasing Revenues (Billion TL)

1.11.4

1.7

2.2

2.7

3.1

3.7

0

1

1

2

2

3

3

4

4

2011 2012 2013 2014 2015 2016 2017

Factoring Factoring turnover has more than doubled over the past six years..

Source: BRSA, AFI, Average USD/TL in 2017: ₺3.65, end-2017: ₺3.78

Factoring Turnover (Billion TL)

70.8 77.3

93.8

116.0 119.7 122.8

145.0

0

25

50

75

100

125

150

2011 2012 2013 2014 2015 2016 2017

Sectoral Distribution (2017)

Wholesale & Retail Trade

15.5%

Construction11.6%

Textile Manufacturing 8.5%

Motor Vehicles Manufacturing

8.2%

Mining7.0%

Other Sectors49.2%

Factoring in Numbers

2017

Companies 61

Employees 4,778

Clients 109,658

Branches 388

Factoring Operating Revenues and Net Profit (Million TL)

606 759 612 772505

8481153

2,037

2,614 2,425

3,270 3,665

4,316

5,501

0

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015 2016 2017

Profit

Revenues

Factoring Receivables (Billion TL)

14.216.3

20.1

24.7 24.9

31.1

41.6

0

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014 2015 2016 2017

Consumer

FinancingConsumer financing has been growing with an impressive performance..

Source: BRSA, AFI, Average USD/TL in 2017: ₺3.65, end-2017: ₺3.78

Consumer Financing Assets (Billion TL)

8.9

11.6

16.0

20.3

27.2

32.8

39.1

0

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2016 2017

Consumer Financing Receivables

8.410.7

14.5

18.1

23.8

27.8

34.3

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0

5

10

15

20

25

30

35

2011 2012 2013 2014 2015 2016 2017

Receivables (Billion TL, LHS) NPL (%, RHS)

Consumer Financing Operating Revenues & Net Profit (Million TL)

135 203 244 291438 452

800840

1,233 1,456

1,817

2,404

3,372

4,243

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2011 2012 2013 2014 2015 2016 2017

Profit

Revenues

Agenda

Summary

Banking and Financial Intermediary

Capital Markets

Insurance

Turkey’s Competitive Landscape

Capital

MarketsTurkish capital markets have been undergoing a profound transformation..

CMB wasestablished

Istanbul StockExchange wasestablished

Capital MarketsLaw passed

Fully automatedtrading startedCorportateGovernancePrinciples werepublished first ETF was established

Liberalization of Foreign Investment

Public DisclosurePlatform wasintroduced

First Islamic Bond was issued

New IFRS regulationwas adopted

New CapitalMarkets Law passed

Borsa Istanbulmerged withIstanbul Gold Exchange andDerivativesExchange

ISE demutuailizedand transformed toBorsa Istanbul

Electronic FundDistribution Platform of Turkey (TEFAS) began tooperate

Capital Markets Board (CMB)

TCM

A(T

urk

ish C

apit

al M

ark

ets

Ass

ocia

tion) Banks

Brokerage Firms

Portfolio Management

Companies

Investment Trusts

Equity Market Debt Market

Public Companies

Listed Companies

Funds (TEFAS)

Public Offering

of Equities

of Corporate Debt

BIS

T(B

ors

a Ist

anbul)

Takasbank

Central Registration Agency

Licensing and Training Agency

Rating Companies and

Independent Audit Companies

Institutions Products Infrastructure Providers

Capital

MarketsTurkish capital markets promise more growth...

COMPANIES

TRADED AT

BIST2017

INSTITUTIONAL

INVESTORS

PORTFOLIO

411

$45BILLION

MARKET

CAPITALIZATION

OF BIST

FOREX

TRADING

VOLUME

$2.3TRILLION

20172017

$18CORPORATE

BONDS

MARKETBILLION

2017

$227

2017

Source: TCMA

EQUITY

INVESTORS1+

MILLION2017

BILLION

Mutual Funds35.1%

Pension Funds47.1%

Real Estate Investment Trusts 16.0%

Venture Capital Companies 1.5%

Investment Trusts 0.2%

143.8%

115.2%

90.1%

67.6%

51.3%46.5%

40.8% 39.3% 36.3%28.0%

Bursa Malaysia Korea Exchange National StockExchange of India

BME SpanishExchanges

Indonesia StockExchange

B3 SA Brasil BolsaBalcao

Moscow Exchange Bolsa de Valores deColombia

Bolsa Mexicana deValores

Borsa Istanbul

MARKET CAPITALIZATION AS % OF GDP2017

Agenda

Summary

Banking and Financial Intermediary

Capital Markets

Insurance

Turkey’s Competitive Landscape

45%Held by 5

insurers

Insurance Despite robust growth, Turkey still has an unsaturated insurance industry…

₺47TOTAL

ASSETS19% PREMIUM

GROWTH 2012-2017

₺152Including reinsurance

2017

BILLIONNon-life

38.3

Life & Pension

8.3

CAGR

GROSS

PREMIUMS

WRITTEN2017

Allianz12.9%

Anadolu11.8%

Axa7.3%

Mapfre6.8%

Aksigorta6.6%

NON-LIFE

INSURANCE

MARKET

SHARETop 5 Market Leaders, 2017

Held by 5

insurers

Ziraat20.3%

Allianz 9.1%

Metlife8.4%

Anadolu 8.4%

Halk 7.5%

LIFE

INSURANCE

MARKET

SHARETop 5 Market Leaders, 2017

54% AUTHORIZED

INSURERS61 2017

BILLION

Source: Insurance Association of Turkey, OECD

9.0%

8.0%

5.5%5.0%

3.3% 3.1% 2.9% 2.6%2.2%

1.8% 1.5% 1.4%

OECD Italy Spain Chile Brazil India Poland Argentina Mexico Indonesia Turkey Russia

INSURANCE PENETRATION (Gross Direct Premiums as % of GDP, 2016)

Insurance Turkish insurance industry is characterized by various compulsory insurance products..

COMPULSORY INSURANCE PRODUCTS

Motor third party liability for bodily injury and

property damage. Professional liability cover for tour operators.

Earthquake insurance on private dwellings. Medical malpractice insurance for doctors and

dentists.

Third party liability for bodily injury and medical

expenses for passengers on intercity and

international transport.

Professional indemnity insurance for independent

auditors

Third party liability for passengers on vessels

registered to carry 12 or more passengers.

Sea pollution liability for companies situated near

the shoreline

Personal accident cover for intercity coach

passengers.

Public liability insurance for private security

guards.

Personal accident cover for miners. Third party legal liability and passenger liability

for aircraft.

Professional indemnity insurance for companies

providing professional services to banks.

Insurance of goods that are subject to finance

leasing.

Liability of companies engaged in the production,

storage, and handling of LPG cylinders.

Professional indemnity insurance for electronic

signature certificate providers.

Liability insurance for companies engaged in the production, storage, transport, and sale of

combustible, explosive or flammable materials.

Agenda

Summary

Banking and Financial Intermediary

Capital Markets

Insurance

Turkey’s Competitive Landscape

Real GDP Growth (Index: 2002=100)Ranking of Economies by GDP at PPP

100

125

150

175

200

225

250

275

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: TurkStat, OECD, World Bank, IMF, PPP: Purchasing Power Parity

13TH LARGEST

ECONOMY5.7 3.9 3.8 2.8 1.8

Robust

EconomyTrack record growth and bright future with proven resilience..

Average Annual GDP Growth (%), 2003-2017

Turkey Poland Romania Czechia Hungary

2003 2017 2021

2017 Real GDP Growth in G20

7.4%

6.8%

6.4%

5.1%

3.8%

3.1%

3.0%

2.9%

2.4%

2.3%

2.3%

2.2%

2.0%

1.8%

1.8%

1.7%

1.5%

1.5%

1.3%

1.0%

-0.8%

Turkey

China

India

Indonesia

G20

Korea

Canada

Argentina

EU

Australia

US

Germany

Mexico

France

UK

Japan

Russia

Italy

S. Africa

Brazil

S. Arabia

Fastest growing economy in G20

Source: CBRT, transactions cover gross inflows and outflows

International

TransactionsAs Turkish economy has developed, it has integrated with the global economy and

financial markets with increasing cross-border capital flows..

284

1,273

2002 2017

Financial Account

Income

Trade in Goods & Services

International Transactions Volume of Turkey ($ Billion)

62

228

2002 2017

Reserve assets

Other investment

Portfolio investment

Direct investment

148

682

2002 2017

Other investment

Portfolio investment

Direct investment

International Investment Position of Turkey($ Billion)

ASSETS LIABILITIES

Contribution to GDP Growth 2002-2017 (%)

74

31

22

-2

-25

Turkish Economy (GDP at current prices, $Billion)

Turkish economy has more than

tripled over the past 15 years and

is promising more growth in future

Source: TurkStat

Domestic

Consumption

Investment

Expenditures Stocks

Imports

Exports

236

851

2002 2017

..driven by a robust domestic

market and entrepreneurial

private sector which has spurred

investments and exports

Robust

EconomyDriven by a diversified structure, Turkish economy has more than tripled over the past

15 years..

Stock of Automobiles(millions of passenger cars)

The Rise of Turkish Middle Class(# of individuals by annual disposable income per capita)

Tripling Income per capita (GDP per capita, current prices)

GDP per capita in countries with population over 50 million, 2017

$3,581

$10,597

2002 2017

$59,501

$44,550

$39,869

$39,735

$38,440

$31,984

$29,891

$10,608

$10,597

$9,895

US (1)

Germany (2)

France (3)

UK (4)

Japan (5)

Italy (6)

Korea (7)

Russia (8)

Turkey (9)

Brazil (10)

Source: IMF, Turkstat, Euromonitor

High income (>$55K)

Upper-middle ($25K – $55K)

Middle ($10K – $25K)

Low ($5K – $10K)

Poor (<$5K)

2016

million

million

2002

21.3 million

23 million

17.8 million

3.3

1

3

10.8

million

40 million

21.2 million

5

million

Domestic

MarketTurkey’s economic growth has paved the way for the emergence of a sizeable middle-class

with an increasing purchasing power…

Annual House Sales (million of houses)

4.6

12.0

2002 2017

0.4

1.4

2008 2017

Working Age Population (15-64) (Index: 2014=100) Total Dependency Ratio (%, Age 0-14 & 64)/Age 15-64)

45

50

55

60

65

70

75

2014 2017 2020 2023 2026 2029 2032 2035

Europe

Turkey

90

100

110

120

2014 2017 2020 2023 2026 2029 2032 2035

Europe

Turkey

TURKEY EUROPE

5 3 1 1 3 5

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90+

Female Male

5 3 1 1 3 5

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90+

Female Male

Source: Turkstat, Eurostat, UN, 2016

Ag

e

Gr

ou

ps

(%

)

Ag

e

Gr

ou

ps

(%

)

Favorable

Demographicshalf of population under age 31..

Source: World Bank Global Findex 2017

Financial

InclusionDespite increasing income, Turkey still lags behind in financial inclusion as compared

to peer and advanced economies, giving room for growth in financial services..

Financial Inclusion Strategy

Financial EducationFinancial Consumer

ProtectionAccess to Financial Products

and Services

In order to address

financial gaps, Turkey

launched a national

Financial Inclusion Strategy

in 2014

Percentage of Adults with a Bank Account

99% 96% 95% 94% 93%87% 85% 84% 80% 76% 75% 74% 70% 69%

Germany UK Korea France USA Poland Malaysia China India Russia Hungary Chile Brazil Turkey

Source: Turkstat, IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat

Skilled Workorce

with Cost Advantage

Turkey’s labor markets support the financial sector’s human resources need with a cost-

competitive labor base..

64.7

56.351.7 49.7

45.9 43.838.5

19.1

Luxembourg France Germany Italy UK Ireland Spain Turkey

6.0

6.76.9

7.0

7.27.5

7.6

Italy Spain Turkey Austria UK Ireland Luxembourg

Availability of IT Skills, 2017

0=Unavailable, 10=Available

5.9 6.06.5

7.1 7.3 7.57.8

Italy Spain Turkey Austria UK Luxembourg Ireland

Labor Cost per hour in Financial & Insurance Sector

2016 (EUR)

Availability of Finance Skills, 2017

0=Unavailable, 10=Available

271KPEOPLE EMPLOYED

IN THE TURKISH

FINANCIAL AND

INSURANCE SECTOR2017

Tech

Infrastructure

Turkish financial industry is also supported by university & industry collaboration

through a finance-focused technology development zone.

About

• Produce technological and financial information

• Make innovation in products

• Commercialize technological and financial

information

• Create investment opportunities in technology

intensive areas through ensuring the cooperation

of research companies and organizations with the

finance and manufacturing sectors

• Companies Operating in the Banking and Finance Sectors

• SMEs that produce hardware and software for the

financial sector

• Start-up Companies operating in the financial, money

and capital markets and software, information

technology and technology sectors

Target Groups

Source: http://finansteknopark.com.tr/

Strategic

Locationto manufacture, export and manage…

Source: *IMF and World Bank

PROXIMITY TO

MAJOR MARKETS1.5 billion people and $24T GDP

in Europe, MENA and Central

Asia at 4 hour flight-distance

CONNECTIVITYTurkish Airlines connects you to

246 destinations in 120 countries

Production base for MENA

Largest production facility worldwide

Exporting 85% of its production

Exporting 77% of its production

67 countries

80 countries

60 countries

30 countries

89 countries

72 countries

MANUFACTURING

& EXPORT HUB

FOR

MULTINATIONALS

AS WELL AS

MANAGEMENT

HUB FOR

MULTINATIONALS

Istanbul Financial

CenterTurkey is determined to bolster its capital markets and position, Istanbul, as an

international financial center.

STRATEGIC

LOCATION

SKILLED

LABOR

FORCE

Connecti

vit

y

Regio

nal

HQ

s

for

MN

Cs

• 6.6 million labor force; ~2 million with higher education

• One of the largest concentrations of universities in the

world with 58 universities

• 87K employed in financial and insurance services

• 113K employed in information and communication

Source: Turkstat, Eurostat, Higher Education Council, IMF

2017

• New Capital Markets Law

• New Commercial Code

• Istanbul Arbitration Center

• Unifying All Exchanges (Stock, Derivative, Gold,

etc.) under BIST

• New investment fund structures, capital-raising

products and listing procedures.

IMPROVING

LEGISLATION

THRIVING

LOCAL

ECONOMY AT

GLOBAL SCALE

$260BILLION

2017

260

253

237

218

213

211

200

IstanbulFinland

EgyptPortugalCzechia

RomaniaGreece

GDP (current prices, $Billion)

Useful Links

• Undersecretariat of Treasury: http://www.treasury.gov.tr/

• Central Bank of the Republic of Turkey: http://www.tcmb.gov.tr/

• Banking Regulation and Supervision Agency: http://www.bddk.org.tr/

• Capital Markets Board of Turkey: http://www.cmb.gov.tr/

• Borsa Istanbul: http://www.borsaistanbul.com/

• Turkish Capital Markets Association: http://www.tspb.org.tr/

• Takas Istanbul (Istanbul Clearing, Settlement and Custody Bank Inc.): http://www.takasbank.com.tr/

• Public Disclosure Platform: http://www.kap.org.tr/

• CSD of Turkey: http://www.mkk.com.tr/

• Banks Association of Turkey: http://www.tbb.org.tr/

• Participation Banks Association of Turkey: http://www.tkbb.org.tr/

• Insurance Association of Turkey: http://www.tsb.org.tr/

• Association of Financial Institutions: http://www.fkb.org.tr/

• Turkish Institutional Investment Managers’ Association: http://www.tkyd.org.tr/

• Turkish Investor Relations Society: http://www.tuyid.org/

• Association of Real Estate and Real Estate Investment Companies: http://www.gyoder.org.tr/

• Turkish Payment and Electronic Money Institutions Association: http://www.oded.com.tr/

• Capital Markets Licensing Registry and Training Services: http://www.spl.com.tr/

THANK YOU

www.invest.gov.tr