financial services in turkey
TRANSCRIPT
FINANCIAL SERVICES IN TURKEY
May 2019
Agenda
Summary
Banking and Financial Intermediary
Capital Markets
Insurance
Turkey’s Competitive Landscape
Resilient and
Attractive
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 financial services has become the
preferred sector for FDI, attracting USD 52 billion since 2005.
Strong Banking System
Banking sector dominates the Turkish financial industry, accounting for over 70 percent of overall financial services, while insurance
services and other financial activities show growth potential too. There are 51 banks in Turkey* (32 deposit banks, 13 development and
investment banks, 6 participation banks). Out of 51 banks, 28 are classified as foreign banks (27% of total assets in the sector are held
by foreign investors).
*Excluding the banks under the administration of the Savings Deposit Insurance Fund of Turkey.
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 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.
Favorable Investment
Climate
A key driver of the Turkish financial sector has been its robust economy with a bright future. Over the past 16 years, Turkish economy
has been growing with an average annual real GDP growth rate of approximately 5.5 per cent and the growth momentum is expected to
continue. Turkey’s sizeable and diversified economy has achieved remarkable growth and became 13th largest economy in the world as
of 2018. 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 gradually integrated with the global economy.
Istanbul Financial
Center
Turkey has set specific economic targets to achieve in the near future. One of them 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
appoints Istanbul as 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.
Executive
SummarySpecifics of financial services industry in Turkey are described as follows…
Evolution of
Financial ServicesTurkey’s financial markets have been in a constant state of evolution..
Source: : BRSA, CMB
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
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
1982-2000… 2001-2006… 2007-2012…
Consists of functioning institutional settings with a strong legal framework…
BANKING CAPITAL MARKETS INSURANCE
Banking Regulation and
Supervision Agency
(BRSA)
Capital Markets Board
(CMB)
Undersecreteriat 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
- Insurance Companies
- Private Pension Companies
- Private Pension Funds
PLAYERS
INDUSTRY
REPRESENTATIVES
& ENABLERS
REGULATORS
SECTORS
- Borsa Istanbul (BIST)
Structure of
Financial ServicesConsists of functioning institutional settings with a strong legal framework…
Source: TCMA
26 31 35 41 51 62 79 96
119 149 171
113 110
128 146 202 266
282 293 345
396 461
733 834
1,0
07
1,2
18
1,3
71
1,7
32
1,9
94
2,3
57
2,7
31 3,2
58
3,8
67
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
BankingCentral BankInsurance and Private PensionOther
FDI Flows to Turkish Financial Industry, (2002-2018)Asset Size of Turkey’s Financial Industry (TL Billion)
Led by banking, Turkish financial industry has been rapidly growing while attracting tremendous amount of foreign direct investment (FDI)…
CAGR
2008-2018
Share
2018
Banking 18 71
Central Bank 15 8
Insurance & Pension 21 3
Other 18 18
Other includes: BIST capitalization, securities, consumer finance, real estate investments, investment
trusts, asset management and venture capital investment trust assets
15.2%
6.9%
Banking
$ 52 BILLION
2002-2018
77.9%
Insurance
Other
Source: CBRT, BRSA, TCMA, IAT, CBRT, AFI, BIST
*Activities of Holding Companies and Other Activities Auxiliary to Financial Services
Performance of
Financial ServicesLed by banking, Turkish financial industry has been rapidly growing while attracting
tremendous amount of foreign direct investment (FDI)…
Agenda
Summary
Banking and Financial Intermediary
Capital Markets
Insurance
Turkey’s Competitive Landscape
Ownership by Asset Size 20190*Number of Banks 2018
There are 51 banks with a total asset size of 3.9 trillion TRY as of 2018 in Turkey…
Source: BRSA, TBB, İş Bankası, *As of March 2019
₺3.9TRILLION
2018
TOTAL
BANKING
ASSETS
TOP 5 BANKS BY ASSET SIZE, 2018
₺537BILLION
₺416BILLION
₺359BILLION
₺348BILLION
₺378BILLION
3251
Development & Investment Banks
Participation Banks
Deposit Banks18
6
39
27
34Locally-owned
State-owned
Foreign-owned
Banking Sector There are 51 banks with a total asset size of ₺3.9 trillion as of 2018 in Turkey…
Total Asset Size as % of GDP (2017) Total Deposits as % of GDP (2017)Total Loans as % of GDP (2017)
Turkish Banking Asset Size as % of GDP
Despite double-digit growth in the asset size, Turkish banking sector still has significant potential for growth…
40%
50%
60%
70%
80%
90%
100%
110%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
104%
53%
103%
105%
145%
167%
197%
215%
233%
235%
369%
Bulgaria
Turkey
Czechia
Greece
EU (28)
Italy
Spain
Germany
France
68%
69%
106%
110%
119%
143%
144%
150%
215%
Turkey
Bulgaria
Czechia
Greece
EU (28)
Italy
Spain
Germany
France
55%
75%
82%
100%
114%
145%
148%
162%
190%
Turkey
Bulgaria
Czechia
Greece
EU (28)
Germany
Italy
Spain
France
Banking SectorDespite double-digit growth in the asset size, Turkish banking sector still has
significant potential for growth…
Source: BRSA, TBB, ECB
Asset Growth (Billion TL)
On top of growing at full speed, the banking sector has also diversified its assets and liabilities…
3,867
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Asset Composition
32%
62%
40%
12%
15% 15%
12% 10%
0%
25%
50%
75%
100%
2004 2018
Other Assets
Cash + Banks
Securities
Loans
2004 2018
Liability Composition
62%
53%
11%
15%
0%5%
15%11%
11% 17%
0%
25%
50%
75%
100%
2004 2018
Other Liabilities
Shareholder’s Equity
Securities Issued
Banks
Deposits
2004 2018
Banking SectorOn the top of growing at full speed, the banking sector has also diversified its assets
and liabilities…
Source: BRSA
Loans and deposits have been rapidly growing…
Asset Growth of the Participation Banks (TL Billion)
• Islamic banking operationsin 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 compliancewith Islamic principles. Today there are sixparticipation 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.
1926 34 43
5670
96104
120133
160
207
0
25
50
75
100
125
150
175
200
225
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Participation Banks’ Asset as % of Total Banking Assets
Lending Growth of Participation Banks (TL Billion)
14 18 2431
3948
67 7079
84
107
125
0
25
50
75
100
125
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Participation Banks’ Loans as % of Total Banking Loans
3.3%
5.3%
2%
3%
4%
5%
6%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
4.9%5.1%
2%
3%
4%
5%
6%
7%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Banking SectorParticipation banks have been outperforming the overall banking industry in Turkey,
but they still have significant room for growth..
Source: Participation Banks Association of Turkey (TKBB)
Loans and deposits have been rapidly growing…
Loans (TL Billion) Breakdown of Loans (2018)
Deposits (TL Billion) Depositors (2018) Deposits by Maturity (2018)
228 296 329 444 551 711
893 1,097
1,278
125 163 200
271 333
389
422
513
611
173 224
266
332 356
385
420
488
504
-
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018
Commercial & Corporate LoansSME LoansConsumer Loans & Credit Cards
434 460 520 561 661 715 845 954 1,042 181 221 233
331 375
519
591
732
953
2 14
19 21
16
11
17
24
41
-
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2010 2011 2012 2013 2014 2015 2016 2017 2018
TLFXPresious Metals
19.3%
12.3%
8.7%
7.6%
9.3%
7.6%
Manufacturing
Construction
Personal Loans (Housing)
Electric, Gas, Water Resources
Wholesale & Retail Trade
Personal Laons (Other)
Natural Persons
62%
Corporate34%
Public Institutions4%
From 1 to 3 Months
59%
Checking Account
25%
From 3 to 6 Months
7%
From 6 to 12 Months
4%
1 year +5%
Banking Sector Loans and deposits have been rapidly growing…
Source: BRSA
Non-Performing Loans/ Total Gross Loans (NPL Ratio) NPL Ratio (2018*)
Capital Adequacy Ratio
6.0%
5.3%
3.9%
0%
2%
4%
6%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
17.3%
0%
5%
10%
15%
20%
25%
30%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Target: 12%
Legal Limit (Basel III): 10.5%
Legal Limit: 8%
0.6%
1.7%
2.5%
3.1%
3.9%
5.6%
9.5%
9.9%
10.7%
Switzerland
Germany
Hungary
Brazil
Turkey
Romania
India
Italy
Russia
Capital Adequacy Ratio (2018*)
12.5%
12.9%
16.0%
16.1%
17.3%
18.0%
18.6%
18.9%
20.0%
Russia
India
Italy
Hungary
Turkey
Brazil
Switzerland
Germany
Romania
Banking SectorSuccessful risk management has also enhanced stability and efficiency of the
banking industry with sound financial indicators…
Source: BRSA, IMF; *latest available as of May 2019
Net Income (Billion TL) Income Statement (Billion TL)
Returns Margins
Banking Sector Banking sector sustains double-digit growth in profitability…
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
48.6
53.8
0
10
20
30
40
50
60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2018 2017 2008
Total Interest Income 368.5 247.5 85.8
Total Interest Expenses (-) 222.3 134.1 54.8
NET INTEREST INCOME/ EXPENSE 146.2 113.4 31.0
Special Provisions for Non performing Loans 35.2 19.8 5.4
NET INTEREST INCOME/ EXPENSE AFTER PROVISIONS 111 93.6 25.6
Total Non-Interest Income 77.2 55.7 17.40
Total Non-Interest Expenses (-) 110.5 78.2 26.6
Total Other Non Interest Income /Expense -11.6 -10.2 0.3
TOTAL NON-INTEREST INCOME/EXPENSE -44.9 -32.7 -8.9
PROFIT/LOSS BEFORE TAX 66.1 60.9 16.6
Provision for Taxes 12.3 12.2 3.2
NET INCOME 53.8 48.6 13.4
15.88%
14.75%
2017 2018
Retun on Equity
2.02%
1.76%
2017 2018
Retun on Asset
3.8%3.9%
2017 2018
38%
34%
2017 2018
Net Interest Margin* Cost / Income Ratio
Source: BRSA, İşEkonomi; *Net interest income / average total assets
Net Income (Billion TL) Sectoral Distribution (2018)
Financial Leasing Revenues (Billion TL) Financial Leasing Net Profit/Loss (Million TL)
Financial Leasing Financial leasing transactions has been growing with double-digit numbers…
Leasing in Numbers
2018
Companies 24
Employees 1,401
Clients 53,510
Branches 131
8.4 9.6
13.9
17.1 17.3 18.6
22.6 22.2
0
5
10
15
20
25
2011 2012 2013 2014 2015 2016 2017 2018
Heavy Equipment and
Constrution Machinery
21%
Other Sectors21%
Other Machinery and
Equipments19%
Real Estate18%
Textile Machinery
12%
Metal Processing Machinery 9%
1.11.4
1.7
2.2
2.73.1
3.7
4.9
0
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016 2017 2018
521
443 451
526
809
922952
917
0
100
200
300
400
500
600
700
800
900
1,000
2011 2012 2013 2014 2015 2016 2017 2018
Source: Association of Financial Institutions (AFI)
Factoring Turnover (Billion TL) Sectoral Distribution (2018)
Factoring Receivables (Billion TL) Factoring Operating Revenues and Net Profit (Million TL)
Factoring Factoring turnover has more than double over the past six years…
Leasing in Numbers
2018
Companies 58
Employees 4,355
Clients 92,422
Branches 354
70.8 77.3
93.8
116.0 119.7 122.8
145.0 147.0
0
20
40
60
80
100
120
140
160
2011 2012 2013 2014 2015 2016 2017 2018
Wholesale & Retail Trade
14%
Construction10%
Textile Manufacturing
10%
Motor Vehicles Manufacturing
9%Mining7%
Other Sectors50%
Source: Association of Financial Institutions (AFI)
14.216.3
20.1
24.7 24.9
31.1
41.6
31.4
0
5
10
15
20
25
30
35
40
45
2011 2012 2013 2014 2015 2016 2017 2018
606 759 612 772 505848
1,1531,713
2,037 2,614 2,425
3,270 3,665
4,316
5,501
8,689
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2011 2012 2013 2014 2015 2016 2017 2018
Profit
Revenues
Consumer Financing Assets (Billion TL)
Consumer Financing Receivables (Billion TL) Consumer Financing Operating Revenues & Net Profit (Million TL)
Consumer
FinancingConsumer financing has been growing with a staggering performance…
8.9
11.6
16.0
20.3
27.2
32.8
39.1 39.7
0
5
10
15
20
25
30
35
40
2011 2012 2013 2014 2015 2016 2017 2018
8.410.7
14.5
18.1
23.8
27.8
34.3 33.7
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015 2016 2017 2018
Receivables (Billion TL, LHS) NPL (%, RHS)
135 203 244 291 438 452800
1,443
840 1,233
1,456 1,817
2,404
3,372
4,243
5,699
0
1,000
2,000
3,000
4,000
5,000
6,000
2011 2012 2013 2014 2015 2016 2017 2018
Profit
Revenues
Source: BRSA, AFI
Agenda
Summary
Banking and Financial Intermediary
Capital Markets
Insurance
Turkey’s Competitive Landscape
Capital Markets Turkish 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
Mutual Funds33.4%
Pension Funds54.7%
Real Estate Investment Trusts 10.8%
Venture Capital Companies 0.9%
Investment Trusts 0.2%
Main Indicators Turkish capital markets have been steadily growing…
COMPANIES
TRADED AT
BIST2018
INSTITUTIONAL
INVESTORS
PORTFOLIO
378MARKET
CAPITALIZATION
OF BIST
FOREX
TRADING
VOLUME
7,905BILLION
TL2018
2018
71.5 CORPORATE
BONDS
MARKETBLLION
TL2018
795
2018
Source: TCMA
EQUITY
INVESTORS1.2MILLION
2018
BILLION
TL
143.8%
115.2%
90.1%
67.6%
51.3%46.5%
40.8% 39.3% 36.3%26.7%
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
170.3BILLION
TL
Agenda
Summary
Banking and Financial Intermediary
Capital Markets
Insurance
Turkey’s Competitive Landscape
Non-life47.7
Life & Pension
6.9
45%Held by 5
insurers
Insurance Despite robust growth, Turkey still has an unsaturated insurance industry…
₺55TOTAL
ASSETS18.4% PREMIUM
GROWTH 2012-2018
₺175Including reinsurance
2018
BILLION CAGR
GROSS
PREMIUMS
WRITTEN2018
Allianz12.2%
Anadolu11.9%
Aksigorta7.2%
Axa7.1%
Mapfre5.5%
NON-LIFE
INSURANCE
MARKET
SHARETop 5 Market Leaders, 2018
Held by 5
insurers
Ziraat18.0%
Anadolu 9.2%
Allianz8.6%
Metlife8.5%
Aegon7.3%
LIFE
INSURANCE
MARKET
SHARETop 5 Market Leaders, 2018
52% AUTHORIZED
INSURERS60 2018
BILLION
Source: Insurance Association of Turkey, OECD
8.9%
7.6%
5.2%4.6%
3.2%3.6%
3.0%2.6% 2.3%
1.9% 1.4% 1.4%
OECD Italy Spain Chile Brazil India Poland Argentina Mexico Indonesia Turkey Russia
INSURANCE PENETRATION (Gross Direct Premiums as % of GDP, 2017)
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
120
140
160
180
200
220
240
260
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Source: TurkStat, OECD, World Bank, IMF, PPP: Purchasing Power Parity
13TH
LARGEST
ECONOMY 5.5 4.0 3.9 2.8 2.1
Average Annual GDP Growth (%), 2003-2018
Turkey Poland Romania Czechia Hungary
2003 2018
Robust
EconomyTrack record growth and bright future with proven resilience..
Contribution to GDP Growth 2002-2018* (%)
71
31 30
-0.7
-32
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
784
2002 2018
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 16 years
Stock of Automobiles(millions of passenger cars)
Source: Turkstat
4.6
12.4
2002 2018
Domestic
MarketTurkey’s economic growth has paved the way for emergence of a sizeable middle-class
with an increasing purchasing power…
10,685
$
27,956
$
Income per capita(GDP per capita at purchasing power parity)
2002 2018
Source: TurkStat, 2018
23 urban centers with populations over 1 million (m)
ISTANBUL15m
ANKARA5.5m
İZMİR
4.3m
BURSA3m
ANTALYA
2.4m
ADANA
2.2 m
KONYA
2.2m
ŞANLIURFA
2mGAZİANTEP
2m
KOCAELİ
1.9m
MERSİN
1.8m
DİYARBAKIR
1.7m
HATAY
1.6m
MANİSA
1.4m KAYSERİ
1.4m
SAMSUN1.4
BALIKESİR1.2m
K.MARAŞ1.1m
VAN1.1m
AYDIN1.1m
TEKİRDAĞ1m
DENİZLİ1m
SAKARYA1m
82MILLION
MUĞLA1m
ESKİŞEHİR
0.9m
MARDİN0.8m
TRABZON0.8m
MALATYA0.8m
ORDU0.8m
ERZURUM0.8m
AFYONKARAHİSAR0.7m
SİVAS0.6m
ADIYAMAN0.6m
TOKAT0.6m
ZONGULDAK0.6m
BATMAN0.6m
ELAZIĞ0.6m
KÜTAHYA0.6m
ÇANAKKALE0.5m
AĞRI0.5m
ÇORUM0.5m
OSMANİYE0.5 m
ŞIRNAK0.5m
Total Population in
2018
Domestic
MarketThe domestic market is further supported by emerging urban centers across Turkey…
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 32..
Production base for MENA
Its 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
80 countries
63 countries
PROXIMITY TO
MAJOR MARKETS1.5 billion people and $24T GDP
in Europe, MENA and Central
Asia at 4 hour flight-distance
CONNECTIVITYTurkish Airlines connects you to
255 destinations in 122 countries
MANUFACTURING
& EXPORT HUB
FOR
MULTINATIONALS
AS WELL AS
MANAGEMENT
HUB FOR
MULTINATIONALS
Strategic
Locationto manufacture, export and manage…
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Financial Account
Income & Expenditure
Trade in Goods & Services
Source: CBRT
International Transactions Volume of Turkey ($ Billion)
62
231
2002 2018
Reserve assets
Other investment
Portfolio investment
Direct investment
148
587
2002 2018
Other investment
Portfolio investment
Direct investment
International Investment Position of Turkey ($ Billion)
ASSETS LIABILITIES
International
TransactionsAs Turkish economy has developed, it has integrated with the global economy and
financial markets with increasing cross-border capital flows..
516
Source: Turkstat, IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat
11.7
43.0 43.748.8 49.0
53.058.9
74.4
Turkey Spain UK Ireland Italy Germany France Luxembourg
6.2 6.3
6.76.9
7.0
7.37.4
Italy Austria Spain Turkey Luxembourg UK Ireland
Availability of IT Skills, 2018
0=Unavailable, 10=Available
5.9 6.06.5 6.8 6.9
7.57.9
Italy Spain Turkey Austria Luxembourg Ireland UK
Labor Cost per hour in Financial & Insurance Sector
2018 (EUR)
Availability of Finance Skills, 2018
0=Unavailable, 10=Available
255KPEOPLE EMPLOYED
IN THE TURKISH
FINANCIAL AND
INSURANCE SECTOR2018
Skilled workorce
with cost advantage
Turkey’s labor markets support the financial sector’s human resources need with a cost-
competitive labor base..
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
http://finansteknopark.com.tr/
Tech
Infrastructure
Turkish financial industry is also supported by university & industry collaboration
through a finance-focused technology development zone…
Istanbul Financial
Center
Turkey is determined to develop İstanbul into an international financial center,
to this end, the government has initiated Istanbul Financial Center Project.
34
Istanbul Financial Center Project
Key Features
• Istanbul Financial Center will house the head offices of the Turkey’s financial market
governing bodies, state-owned and private banks, and related businesses. It will cover
4.2 million square meters of office, residential, retail, conference, hotel and park
space.
• The government is working to improve the Turkish tax system, legal and fiscal
environment, political and economic stability and regulatory framework in order to
attract financial investments.
• Presidential Finance Office was established in 2018, with a mission to implement and
monitor İstanbul Financial Center Project.
• İstanbul is a broad and deep and established transnational financial center, same
category as Geneva, Shangai and Tokyo, according to GFCI.
Source: GFCI (Rank)
“İstanbul satisfies the majority of the criteria of a financial
center”
“Besides regional proximity to our clients, İstanbul provides
appropriate infrastructure, convenient airport links, and a
good quality of life for our staff.”
Ista
nb
ul (
72
)
Ista
nb
ul (
59
)
New
Yo
rk (
2)
Lon
do
n (
2)
Lon
do
n (
1)
New
Yo
rk (
1)
2009 2018
Istanbul is converging with top financial centers..
Tom Shave, Deloitte Senior Manager Dimitris Tsitsiragos,
Vice-President, IFC
Global Financial Center Index (GFCI) Scores
442
774 790
653
787 794
Source: World Bank Global Findex 2017
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
Financial
Inclusion
Despite increasing income, Turkey still lags behind in financial inclusion as compared
to peer and advanced economies, giving room for growth in financial services…
• Ministry of Treasury and Finance: 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/
Useful Links
A governmental agency
reporting to the President
Private sector approach with
public sector capabilities
Acting as your solution
partner
General & customized
business information &
Sectoral analysis &
reports
Site selection support to
find appropriate
location/land for your
investment
Arrangements of meetings
with governmental bodies
and other stakeholders
Matchmaking with local partners
& establishing business linkages Facilitating your
investment at all
stages
Project launch &
Press release Services Facilitating your
visit to Turkey
What can Invest in
Turkey do for you?… assist you before, during and after your entry into Turkey