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Turkish NPL PurchasingMarket Overview and the way forward

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April 2018

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3 | Turkish NPL Purchasing Market

Foreword

Historical Evolution

AMCs: Competitive Landscape

The Way Forward

Methodology and Assumptions

Notes on Exhibits

04

05

15

19

32

35

Contents

Since the enactment of the communique governing the foundation and operations of NPL servicing platforms (so-called Asset Management Companies, “AMCs”) in Turkey in November 2006, financial institutions, despite being volatile, have consistently sold non-performing loans (NPL). The NPL purchasing market has experienced considerable growth over the years with the increase in number of banks selling portfolios, entrance of new AMCs to the market, as well as banks selling larger portfolios. In 2017, private banks, factoring, leasing and other financial institutions sold a total of TRY 8.6 billion NPLs, in terms of UPB, to asset management companies, the highest number since the inception year of 2008.

The major driving factors behind this growth were: i) banks and other financial institutions realizing the benefits of selling NPLs (e.g., avoiding operational costs, reducing NPL ratios and ability to focus more on core business); and ii) increasing maturity and sophistication of AMCs in the market.

Going forward, we expect to see further growth in the next few years, driven by several factors: i) overall volume growth in relation to the growing credit and NPL balances; and ii) expectation of state banks to start selling NPLs. In order to estimate the growth in the coming years, we have developed three scenarios in this study based on different macroeconomic assumptions (i.e. expected baseline economic growth, prospering economy with higher growth, conservative economic growth). We believe that GDP is one of the key drivers of credit and NPL balance growth in the financial sector, thus our scenarios primarily differ by the expected GDP in the forecast period.

According to our base scenario, we expect gross NPL outstanding balance to reach TRY 117.9 billion by 2020 with an NPL sales volume of TRY 9.2-13.7 billion by private banks between 2018 and 2020. In addition to this, for state banks, we envisaged NPL sales of 1.0 billion each in 2019 and 2020. Note that the resulting NPL ratio after sales, out of gross loan volume, would range between 3.1% and 3.4% from 2018 to 2020.

In summary, we expect the credits and NPL to grow in line with the GDP estimates of the country (similar to prior years), which would yield regular NPL sales by private banks and financial institutions. This study does not incorporate any NPLs to be disposed by non-financial institutions, such as telecoms and utilities. This study also does not include the potential impact of IFRS 9 implementation and any large-scale one-off exposures, which may potentially be classified as NPLs in the forecast period. We foresee attractive opportunities for AMCs in the Turkish NPL purchasing market. We hope that you enjoy our study covering the historical overview, competitive landscape and expected growth of this market.

Serkan Tarmur PwC Turkey Banking and Capital Markets Sector Leader, Partner [email protected]

Ozan Cığızoğlu PwC Strategy&, Principal [email protected]

Foreword



1 Turkish lending market includes banks, factoring, leasing and financing companies, and other financial institutions2 Selected developing economies include Brazil, Russia, Poland, South Africa, Chile, Hungary, Croatia3 Using average 2017 USD/TRY exchange

Exhibit 1

Loan Volume and Loan / GDP Ratio Benchmarking, 2017 (USD billion, %)

Germany

Source: BMI, IMF, BRSA

4,665

2,3752,038

1,572 1,207821 629

320 313 248 52 33

UK Spain Italy Brazil Russia Turkey Poland Chile Hungary CroatiaSouth Africa

Gross loans / GDP ratio

128%

Established Markets Developing Economies

93% 156% 82% 58% 56% 75% 63% 91% 94% 39% 62%

Historical Evolution

Turkey’s lending market is still in a growth phase. It had a loan/GDP ratio of 75% in 2017, below established markets and select developing markets (Germany, the UK, Spain, Italy, South Africa, Chile), but a few percentage points above the average of developing economies2 (67%) within the select group (see Exhibit 1).

Following the banking crisis in 2001, the lending market loan size grew at a fast pace of 26% per annum on a TRY basis until 2017, to reach a size of TRY 2,292 billion (USD 629 billion3). The main drivers of this growth have been macroeconomic growth, stabilizing inflation, portfolio inflows and government initiatives (e.g. the Credit Guarantee Fund), especially in 2017.

Turkish Lending1 Market Evolution


8%6%

5%

6%

6%

Factoring

Private Banks

Leasing

State Banks

Other Non-Banking FI

Lending Market Breakdown by Origination Channel4

Within the overall market, banking industry loans make up majority of the gross loans, representing a share of 94% in 2017, and have demonstrated a y-o-y growth of 26% between 2002 and 2017 (see Exhibit 2).

Factoring, leasing and other financing companies’ share of loans have remained below 10% in Turkey since 2005. Most of the leading factoring and leasing companies are affiliates of banks.

Exhibit 2

Lending Market Breakdown by Origination Channel, 2002-2017 (TRY billion)

Non-bank Loan Breakdown, 2017 (TRY billion)

Bank Loan Breakdown, 2017 (TRY billion)

Source: BRSA

2002 2005 2008 2011 2014 2017

68179

407

741

1,352

2,292 130

2,162

Non-Bank Bank

94%

43 (33%)

1,353 (63%)

94%95%

94%92%13%

26%

52 (40%)

809 (37%)

35 (27%)

CAGR 02 - 17

20%

27%

87%

4 Origination channel does not include non-financial institutions (e.g., telecom, utilities)


Lending Market Breakdown by Asset Type

The percentage of retail loans increased from 2002 to 2011. However, after 2011, this percentage decreased, partially due to regulations to control consumer spending (e.g., the introduction of limits on credit cards and consumer loans, higher risk weights on credit cards, limitations on usage of instalments for certain product groups) and more recently the government’s Credit Guarantee Fund, which provides collateral for loans, specifically to SMEs (totalling up to TRY 250 billion in guarantees in 2017). As of 2017, the majority of loans (77%) were disbursed to corporate, commercial and SME segment customers.

Exhibit 3

Lending Market Breakdown by Asset Type , 2002-2017 (TRY billion)

2002 2005 2008 2011 2014 2017

68 179407

741

1,352

2,292

23%

77%

72%68%

70%72%89%11% 30%

28%

32%

28%

Corporate, Commercial & SMERetail

Source: BRSA

CAGR 02 - 17

33%

25%


4.4%

2.9%1.7%

0.9%

Exhibit 4

Bank NPL Ratio, 2016* (%)

Developed economiesDeveloping economies

Source: World Bank, BRSA

Evolution of Non-Performing Loan Balance

Turkey’s growing lending market’s NPL volume reached TRY 69.5 billion in 2017 (and stood at TRY 63.6 billion in 2016). The NPL ratio is within the lower group of select developed and developing economies (the NPL ratio of banks in Turkey stood at 3.2% in 2016, below the 5.3% average of the select group of countries in Exhibit 4). This is due to several factors: strong monitoring of banks by the BRSA following the 2001 crisis, the relatively low impact of the 2008-2009 global crisis on the Turkish banking sector, and the introduction of regulations supporting bank restructuring and recovery practices.

Turkey’s gross NPL balance has grown at 13% per annum since 2002, which is lower than gross loan volume growth (26%). The NPL balance y-o-y growth would have been 16% if there had not been any NPL sales, which is still lower than loan volume growth.

Croatia

13.6%

9.4%9.0%

7.4%

5.6%

4.0% 3.9%3.2% 2.9%

1.8%

Russia Italy Hungary Spain Poland Brazil Turkey Chile Germany UKSouth Africa

5.3%Selected group averageEU avg.

OECD avg.

* As of April 2018, at the time of this publication, World Bank reported bank NPL ratios for countries up to 2016.


NPL Balance Breakdown by Origination Channel4

Similar to loans, the primary contributor to NPL volume is Turkey’s banking sector, at 92%, specifically the country’s private banks (accounting for 70% of total bank NPL volume in 2017). Furthermore, except in 2002, the gross bank NPL-to-loan volume ratio remained relatively stable within the 2.5-5% band.

Exhibit 5

Turkey NPL Volume By Origination Channel, 2002-2017 (TRY billion)

1 Banks include both conventional and participation banks. Non-bank financial institutions consist of factoring, leasing, financing firms.

Source: BRSA

2002 2005 2008 2011 2014 201720172002

10.4 7.814.1

19.0

36.4

64.069.5

11.4

Private BankBanks1 State-owned BanksNon-Bank1

70%64.0

(92%)10.4 (92%)

30%5.5

(8%)

0.9 (8%)

71%

29%

74%

26%

75%

25%

66%34%66% 34%

13%

13%

Bank NPL Ratio

CAGR 02 - 17

Pre-Sales Bank NPL Ratio

17.6%

17.6%

4.8%

4.8%

3.7%

4.2%

2.7%

3.7%

2.9%

4.3%

3.0%

4.6%

+7%

+18%



Exhibit 6

Turkey NPL Volume By Asset Type, 2002-2017 (TRY billion)

NPL Balance Breakdown by Asset Type

Looking at the NPL balance by asset type, the retail NPL share grew to over 30% in 2011, driven by an increase in retail loan volume as well as flexible limits on credit card spending and the number of instalments. However, the retail NPL share decreased to 26%, mainly due to stricter credit card regulations (e.g., limits on the number of instalments, limits on total spend), and more NPL sales for retail than corporate and SME.

Source: BRSA

13%

2002 2005 2008 2011 2014 2017

11.4 9.115.9

21.2

40.3

69.5

26%

74%

68%

68%71%80%96%

29%20%4%

32%

32%

Corporate, Commercial & SMERetail

CAGR 02 - 17

28%

11%


Evolution of Non-Performing Loan Sales

Non-performing loan sales to AMCs began with the Savings Deposit Insurance Fund’s transactions in 2004 and 2005, the purpose of which was to dispose of large sums of problematic loans which originated as a result of the 2001 banking crisis. Following the introduction of the communique specific to AMCs in Turkey in November 2006, Turkish private banks and other financial institutions (e.g., leasing, factoring, financing companies) started selling NPLs to AMCs in 2008.

Since then, cumulative NPL sales totalled approximately TRY 38 billion, with y-o-y growth of 20% per annum between 2008 and 2017. NPL sales were above TRY 6 billion in 2014, when 22 private banks (including Tier 1 and 2 banks: Yapı ve Kredi, Akbank, İş Bankası, Garanti, TEB, Denizbank, Finansbank) initiated auctions in that year. In the last 4 years (2014-2017) banks started selling their NPLs on a regular basis (except for 2015), contributing to the increasing NPL sales volume. The decrease in sales volumes in 2015 was mostly due to prices offered by AMCs not meeting the expectations of banks. Recovery expectations for AMCs were lower than usual, primarily due to pre-election campaign pledges from political parties promising to erase or defer consumer credit debts. The largest NPL sales volume in terms of unpaid principal balance was in 2017. It totalled TRY 8.6 billion.

Exhibit 7

Total NPL Sales Volume1 (UPB), 2008-2017 (TRY billion)

1 Includes only primary market sales2 Current Year NPL Sales / Current Year Pre-Sale NPL Volume

2008

1.7

0.6

2.9

2.0

3.23.4

6.1

2.5

6.5

8.6

2009 2010 2011 20142012 2013 2015 20172016

NPL Sales Ratio2

9.4% 2.3% 10.5% 7.2% 8.8% 7.2% 10.2% 3.3% 7.1% 8.0%

Source: Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies

+20%


1.7

0.6

2.0

Exhibit 8

NPL Sales Volume1 (UPB) by Origination Channel, 2008-2017 (TRY billion)

1 Includes only primary market sales2 Yapı Kredi Bankası, Akbank, Garanti Bankası, İş Bankası, Finansbank

NPL Sales Breakdown by Origination Channel4

Since 2008, approximately 95% of NPL sales in terms of UPB have originated from the banking sector, specifically from privately owned banks. Although there is no regulation preventing the disposal of NPLs, state banks have been very cautious in selling NPLs, primarily due to their ‘public’ status. The top five private banks (based on cumulative UPBs sold), Yapı Kredi Bankası, Finansbank, Akbank, İş Bankası and Garanti Bankası, were the primary originators

of NPL transactions, cumulatively originating above 50% of total NPL sales. This is a strong indication of a healthy and sustainable NPL purchasing market in Turkey. The increasing maturity of the Turkish NPL purchasing market is also reflected in the increasing number of banks initiating auctions since 2008. The same trend can be observed on the non-bank side, with the number of originators increasing from one in 2008 to twenty-six in 2017.

# of Banks with Transactions

6 4 10 9 14 19 22 14 20 18


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Other Private Banks Non-banksTop 5 Private Banks2

2.9 3.23.4

6.1

2.5

6.5

8.6

54%

38%

8%

49%

3%

71%

8%

46%

3%

50%

4%

39%

6%

35%11%

24%4%

54%72%

76% 49%51%

23%46%55%

50% 48%

21%

CAGR 08 - 17

27%

49%

16%



NPL Sales Breakdown by Asset Type

Historically, retail NPL sales have made up the majority (58%) of total sales. This has been mostly due to a) lower average ticket size requiring a systematic approach to collection for financial institutions; b) the higher share of unsecured loans, hence lower recovery expectations of financial institutions; and c) the moral hazard problem for financial institutions (i.e. granting favorable terms to some borrowers may lead to a moral hazard amongst performing borrowers).

Exhibit 9

NPL Sales Volume1 (UPB) by Asset Type, 2008-2017 (TRY billion)

1 Includes only primary market sales. Asset type shares are based on Turkish Asset Management Companies Association's Market Report


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate, Commercial & SME Retail

1.7

0.6

2.9

2.0

3.23.4

6.1

2.5

6.5

8.6

5.3

3.3

3.1

1.1

2.6

1.51.6

0.9

1.2

1.11.71.3

0.50.1

0.41.91.6

3.5 3.4

1.4

CAGR 08 - 17

26%

17%


Exhibit 10

Sales Price Ratio1 Evolution, 2008-2017 (%)

NPL Sales Prices Evolution

After trending upward from 2009 to 2013 (but not in the first year of sales in 2008) due to the introduction of new players and increased participation by asset management companies in auctions, sales price ratios have declined from 15% to 6.5% (excluding transactions with publicly undisclosed UPBs and prices). This decline is because of a) less intense competition due to exits and mergers of AMCs; b) lower quality NPL portfolios sold by banks; and c) increased funding costs of AMCs.

Examining the historic sales price trend in the market in detail highlights a number of facts:

• 2008 had a high sales price ratio because the NPL portfolio sold that year had a higher percentage of secured loans.

• In the first three years, competition was mainly between incumbents Hayat and Güven, with some involvement from Bebek, Artı and Istanbul, bringing down the average sales price ratio (except 2008 due to high percentage of secured loan sales).

• In 2011, 2012 and 2013 competition became more intense, with new players in the NPL purchasing market. Final and Efes were founded in 2011, Vera was founded in 2012, and there was increased participation from Birleşim. Price ratios began trending upward.

• After 2013, the maturing NPL purchasing market experienced exits, mergers and acquisitions within the competitive landscape, resulting in fewer players. In addition to these market developments, the decreasing quality of bank portfolios also contributed to the decline in sales prices.

1 Average market price % for all Financial Institutions’ NPL sales (as % of unpaid principal balance). Includes only those transactions with disclosed price information (covers 90% of the total transaction UPB value)


2008

19.7%

10.2% 10.2%

10.4%12.5%

13.9% 13.7%

11.8%

6.5%

15.0%

2009 2010 2011 20142012 2013 2015 20172016

Notes: This exhibit was updated based on new public information received from market players (i.e. asset management companies) in June 2018, after the initial publication of this report in April 2018.


AMCs: Competitive Landscape

As of April 2018, there are sixteen asset management companies active in the market (see Exhibit 11). Incumbents Hayat and Güven, who have survived in the market since 2008 and gained significant scale, have the largest shares from an asset size perspective. These incumbents can be considered generalists since they do

not focus on a specific NPL portfolio type. Final and Vera are catching up with them, in terms of asset size. On the other hand, there are specialist boutique players, such as Mega, Birleşim and Yunus, which generally focus on single-ticket items.

Overall NPL purchasing market size and evolution

Exhibit 11

Turkish asset management companies general information

Source: Audited annual financial statements of Asset Management Companies

1 These players, with current names listed, have had different names throughout their lifetime in the market2 Met-Ay and Merkez received operating licenses from BRSA after June 2017, their annual reports for the year 2017 not yet published/ available. Birikim's reports not published/available at time of this report's publication3 Efes’ ownership structures, asset sizes and return on equity stated for 2016, since 2017 annual reports not yet published/ available for these companies at time of this report's publication4 Does not include those NPL sales transactions with buyers not publicly disclosed. Assumed equal share of UPB among buyers in case of multiple buyers for a transaction, where sales amounts to each buyer is not explicitly stated

AMCs Years in Business Current Shareholders Total Asset Size

(TRY mn, 2017)Cumulative UPB Share4

(%, '08-'17, primary market)

Hayat1 10 Vector Holdings, EBRD 1037.0 27%Güven1 11 Fiba Holding, Private Individuals 854.1 25%Vera 6 Private Individuals 420.3 1%

Final 7 Altınhas Holding, Ak Faktoring, Paladyum Madencilik, Private Individuals 328.3 16%

Mega 3 Private Individuals 225.6 1%Birleşim1 13 TMSF 188.9 4%

Efes3 7 İş Yatırım Menkul Değerler, İş Portföy Yönetimi, İş Finansal Kiralama, İş Faktoring, Camiş Yatırım Holding 174.0 7%

İstanbul1 9 Ünlü Yatırım Holding 153.0 6%Sümer 4 ASV Holding 136.8 7%Destek1 5 Lider Faktoring 123.8 3%Hedef 3 Private Individuals 44.5 1%Emir 1 Private Individuals 30.9 1%Yunus 2 Smart Finansal Kiralama 27.6 n.dMet-Ay2 1 Met-Ay Faktoring Finans Hizmetleri n/a n.dMerkez2 1 Private Individuals n/a n.d

Birikim2 2 Altınhas Holding, Ak Faktoring, Paladyum Madencilik, Private Individuals n/a n.d

Notes: This exhibit was updated based on new public information received from market players (i.e. asset management companies) in June 2018, after the initial publication of this report in April 2018.


AMC Comparison by Market Share Evolution

The AMC market grew quickly in terms of assets, at a rate of ~29% p.a., between 2008 and 2017. Although incumbents Hayat and Güven experienced a decline of 26 percentage points in combined market share due to the increasing number of players and the maturing market, they still hold more than half of the total assets (See Exhibit 12). Vera and Final are the third and fourth largest players, following the incumbents.

375 374

Exhibit 12

AMC share evolution by asset size (TRY mn)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Vera Final Güven HayatOther Players1

703982

1,4401,862

2,5592,771

3,206

3,745

28%29%28%31%33%33%34%32%36%31%

23%27%30%32%

31%39%

33%1%

40%36%

28%

28%23%46%

32% 2%1%

25%5%2%

28% 6%5%

27%

7%7%

27%

9%

8%

27%

9%

11%

30%

+29.1%

Number of AMC players

5 6 6 8 9 10 10 12 14 16


1 Efes is assumed to have the same asset size in 2017 as 2016, since respective company reports are not published at time of this report's publication


AMC Comparison by UPB Purchase Share Evolution

As seen in Exhibit 13, Hayat and Güven, long-time incumbents and scale-players, have gained the largest share of transactions for the last seven years. As a latecomer, Final has been aggressive in achieving scale since 2014 by being in the top three in terms of NPL purchases of UPB shares (i.e., it had the largest share in 2015 and 2016). Another latecomer, Sümer, founded in

2014, has followed a strategy similar to Final’s and has been buying large portfolios in the last two years. It is important to note that Vera, the third largest player in the market in 2017 in terms of asset size, has purchased a sizeable portion of its NPL volume from other AMCs through secondary market transactions (see Exhibit 14).

43%

14%

43%

14%

16%

71%

37%

55%

8%

43%

29%

2%

14%

13%

39%

48%

4%

8%1%

29%

14%

12%

10%

35%

27%

17%

24%

13%

19%

25%

25%

33%

1%5%

11%

12%

19%

25%

2%

18%

23%

Exhibit 13

AMC share evolution by transaction1 UPB purchase size (%, primary market)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Efes Final Güven HayatOther Players Sümer

21%

16%

17%

10%

16%

19%

Number of AMC players1

% of Total Transaction UPB Value

4

34 %

4

81%

4

97%

5

89%

7

95%

8

82%

10

85%

9

68%

11

74%

10

70%

Source: BRSA, Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies

Notes: Top 5 players in terms of cumulative UPB share are Hayat, Güven, Final, Efes, Sümer for those transactions with buyer information publicly disclosed. This exhibit was updated based on new public information received from market players (i.e. asset management companies) in June 2018, after the initial publication of this report in April 2018.

1 Does not include those NPL sales transactions with buyers not publicly disclosed. Assumed equal share of UPB among buyers in case of multiple buyers for a transaction


Secondary Market Transactions

Secondary market purchases (those publicly disclosed) only occurred from 2012 to 2016, usually accounting for 8-11% of primary market sales (in terms of unpaid principal balance). Hayat and Vera are the generalist players with highest activity in the secondary market (~82% and ~17% cumulative UPB sales shares, respectively).

37.5

295.2

242.5174.0

6.2

28.1

Exhibit 14

Secondary Market Purchases1 UPB Volumes Evolution (TRY mn)

2012 2013 2014 2015 2016

Birleşim Hayat Vera

707.4

202.1248.7

332.7312.5

% of Primary Market UPB Purchases

9.8% 9.9% 4.1% 8.1% 10.8%


1 Includes those transactions only with publicly disclosed buyer information


The Way Forward

We followed a multi-step approach, as seen in Exhibit 15, for forecasting NPL sales in the Turkish NPL purchasing market through 2020, estimating the expected growth of gross loans and estimating NPL balances and the respective NPL sales volumes. Our forecasts are based on three scenarios (see Exhibit 26 and 27 for assumptions on all three scenarios):

• Macro-base scenario: most probable economic scenario (based on Economist Intelligence Unit), resulting in baseline growth for loan volumes, net NPL inflows and outstanding balance, and NPL sales.

• Based on our regression analysis using historical data of >15 years, certain macro-economic indicators have significant impact on loan volume and NPL balance:

• Real/Nominal GDP growth rate

• Population

• Gross fixed capital formation

• Therefore, these indicators were forecasted

• Expected growth for gross loan volume was estimated by asset type

• Both Retail and Corporate/SME loans are highly correlated with Turkey’s gross domestic output

• Estimates for future retail and corporate/ SME loans growth were calculated based on nominal GDP growth

• First, net NPL inflows1), by asset type, were forecasted based on several macro-economic indicators:

• Real GDP growth

• Gross fixed capital formation

• Population

• Upcoming year’s NPL outstanding balance was estimated based on NPL inflow change and NPL balance from current year

• It was assumed that NPL sales ratios2) in the forecast period would remain similar to historical figures

• Additional NPL sales from state-owned banks were also taken into account

• Macro-good scenario: economy prospers, hence optimistic assumptions for macroeconomic indicators (nominal/real GDP and total investment) resulting in highest growth for loan volumes, lowest growth for net NPL inflows and NPL outstanding balance, and lowest growth for NPL sales.

• Macro-conservative scenario: lowest economic growth, hence conservative assumptions for macroeconomic indicators resulting in lowest growth for loan volumes, highest growth for net NPL inflows and NPL outstanding balance, and highest growth for NPL sales.

Exhibit 15

Economic Growth NPL SalesNPL BalanceLoan Growth

Forecast Methodology OverviewForecast Methodology Overview

1 NPL inflows net of collections and asset write-offs, excluding sales

2 NPL sales ratio = (NPL sales volume) / (avg. of NPL outstanding balance, prior year-end, and net NPL inflow, current year)


Historically, the Turkish lending market has grown generally in line with the country’s overall economic growth. We believe that this relationship will continue going forward. Based on our forecast analysis, by 2020, driven by GDP growth expectations, gross loan volume is expected to reach the TRY 3,402-3,691 billion band, with 14-17% p.a. growth (see Exhibit 16), which is lower than historic growth.

Furthermore, by asset type, retail loans, and corporate and SME loans have risen with Turkey’s GDP growth, but each has a different corresponding relationship to the country’s nominal gross domestic product.

Turkish Lending Market Expected Growth

Exhibit 16

Gross loans total volume expected growth (TRY billion, 2008-20)

Source: BRSA, IMF, Turkstat, PwC analysis

2008 2009

407 440 576 741864

1,1381,352

1,6211,898

2,292

3,691

Nominal GDP (TRY billion)

Gross Loans Historical CAGR (08-17)

3,4983,402

Historical Gross Loans Macro Base (Loans) Macro Conservative (Loans) Macro Good (Loans)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

500

1,000

2,000

3,000

4,000

5,000

1,500

2,500

3,500

4,500CAGR 17 -20

+21.2%

+17.2%

+15.1%

+14.1%


Gross Retail Loan Volume Expected Growth (2018-2020)

Going forward, we expect Turkey’s retail loan volumes to increase with nominal GDP growth but remain at ~16% of nominal GDP within the 2018-2020 period, as historic trends and benchmarks with comparable economies suggest. This behaviour will be similar to other middle-income economies whose GDP per capita is within the USD 10,000-15,000 range. Developing economies

Hungary, Croatia and Argentina experienced a decline/plateau in retail loan-to-GDP ratio, as well as in GDP per capita, after consistent increases over several years (as seen in Exhibit 17). Similarly, Turkey's retail loans have increased their volume share of nominal gross domestic product from 2006 (at 9%) to 2013 (at 19%). Starting with 2013, retail loans share decreased from 19%, falling to 17% in 2016. We forecast this decline will continue and remain at 16% in the forecast period.

Exhibit 17

Retail loan-to-GDP ratio vs GDP per capita evolution select developing economies (USD thousand, %, 2006-16 )

2006

2006

2006

2006

2007

2007

2007

2007

2008

2008

2008

2008

2009

2009

2009

2009

2010

2010

2010

2010

2011

2011

2011

2011

2012

2012

2012

2012

2013

2013

2013

2013

2014

2014

2014

2014

2015

2015

2015

2015

2016

2016

2016

2016

9.2

24.4

8.9

8.8

8.0

11.4

11.4

5.9

11.3

27.0

11.0

10.4

9.7

13.9

13.5

7.2

12.5

29.4

15.0

10.3

10.9

15.7

15.9

9.0

14.1

27.0

15.9

10.5

9.0

13.0

14.2

8.2

15.8

30.0

16.7

10.3

10.7

13.1

13.5

10.3

16.9

30.7

15.1

10.6

11.3

14.1

14.5

12.7

17.9

26.0

16.6

12.3

11.7

12.9

13.2

13.0

19.3

24.1

15.6

12.8

12.5

13.7

13.6

13.0

18.5

22.7

15.2

11.3

12.1

14.2

13.5

12.2

17.7

19.5

15.5

11.2

11.0

12.5

11.6

13.5

17.4

18.7

15.1

9.3

10.9

12.8

12.1

12.4

Turkey

Hungary

Croatia

Argentina

Decline period

Decline period

Decline/Plateau period

Decline period

Retail Loan-to-GDP (%) GDP per Capita (current USD, thousands)

Source: BRSA, Euromonitor, World Bank


Exhibit 18

Gross retail loans volume expected growth (TRY billion, 2008-20)

As a result, Turkey’s retail loans will reach TRY 734-791 billion by 2020, with 12-15% p.a. growth, slightly lower than historic growth, and will make up ~21-22% of total loan volume.

2008

2008

2009

2009

124 141183

236280

350 378414

453523

791753734

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2019

2019

2020

2020

0

200

400

600

800

CAGR 17 -20

Historical CAGR (08-17, TRY) +17.3%


% of Gross Loans Total

30.5% 32.0% 31.8% 31.8% 32.4% 30.7% 28% 25.6% 22.1%23.9% 21.8%22.8% 21.5%

Historical Macro Base Macro Conservative Macro Good

+14.8%

+12.9%

+12.0%

0

500


Gross Corporate and SME Loan Volume Expected Growth (2018-2020)

Based on our regression analysis, there is a highly correlated relationship between nominal GDP (TRY billion) and corporate and SME loan volume total (TRY billion) for the past 15 years. Based on co-efficient values determined as a result of this regression analysis, we estimated corporate and SME loan volumes will continue growing

at 15-18% p.a. through 2020. This is faster than expected retail loan volume growth and slightly lower than historic growth. Hence, corporate and SME loans are estimated to grow to TRY 2,667-2,899 billion by 2020, increasing their share of total loans to ~78-79%.

Exhibit 19

Gross SME and Corporate loans volume expected growth (TRY billion, 2008-20)


2008

2008

2009

2009

283 299393 505 584

788974

1,2061,445

1,769

2,899Historical CAGR (08-17, TRY)

2,7452,667

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2019

2019

2020

2020

0

500

1,000

2,000

3,000

1,500

2,500

CAGR 17 -20

+22.6%

% of Gross Loans Total

69.5% 68.0% 68.2% 68.2% 67.6% 69.3% 72.0% 74.4% 76.1% 78.2%77.2% 78.5%77.9%


+17.9%

+15.8%

+14.7%


Non-Performing Loan Balance Expected Growth

The non-performing loan outstanding balance is influenced by four drivers:

• NPL inflows: loans that attained NPL status during the period;

• NPL collection: banks and non-bank financial institutions collecting or seizing assets from NPL customers during the period;

• NPL write-off: banks and non-bank financial institutions writing-off uncollectible NPLs in line with the local regulations during the period;

• NPL sales: bank and non-bank financial institutions selling part of their NPLs to AMCs during the period.

In order to estimate the NPL outstanding balance, we first forecasted “net NPL inflows” which is defined as NPL inflows net of collections and write-offs (excluding sales). Then, we calculated the upcoming year’s NPL outstanding balance volume by adding net NPL inflows to the current year’s NPL balance.

Our estimations are based on the financial statements of banks, non-bank financial institutions and AMCs as at 31-December-2017, audited in line with the BRSA regulations. We did not take into account the impact of IFRS 9 on financial institutions’ NPL amounts, due to the uncertainties involved, for 2018 and beyond. We have also not included any large-scale one-off exposures, which may potentially be classified as NPLs in the forecast period.

0


Net NPL Inflow Expected Growth (2018-2020)

Historically, net NPL inflows have been driven by three macro-economic indicators: real GDP growth (in reverse relation: e.g., net NPL inflow decreases as real GDP growth increases), gross fixed capital formation (only for corporate and SME, the increase in total fixed investment leads to a decrease in inflow) and population growth. We determined the expected value of net NPL inflow for each asset type and then derived the total.

Primarily because of the decline in real GDP growth, the net NPL inflow in 2020 is expected to reach TRY 30-32 billion, a 27-30% p.a. growth. This is higher than the expected gross loan volume growth of 15-17% p.a. and expected NPL sales growth of 11-20% p.a. Thus, the NPL ratio will increase to the 3.1-3.5% band.

Exhibit 20

Net NPL inflow total volume expected growth (TRY billion, 2008-20)

Source: BRSA, Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies

2008

2008

2009

2009

5.69.0

0.8 0.9

8.010.2

13.6 14.3

18.014.6


2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017 2020

2018 2019 20200

5

10

20

35

30

15

25

CAGR 17 -20

NPL Ratio1

3.9% 5.5% 3.9% 2.9% 3.0% 2.9% 3.0% 3.2% 3.3% 3.0%

3.5%

3.4%

3.1%

1 Gross NPL Volume Outstanding Balance / Gross Loan Volume

* Due to real GDP growth bouncing back from upward or downward trend from ’19 to ’20 in both macro-good or macro-conservative scenarios (typical trend for developing economies such as Turkey), SME & corporate net NPL inflow gets higher for macro-good scenario and lower for macro- conservative scenario.

+29.5%*

+29.9%*

+27.4%*


Exhibit 21

Net retail NPL inflow volume expected growth (TRY billion, 2008-20)

Gross Retail NPL Volume Expected Growth (2018-2020)

Exhibit 21 depicts the historic relationship between net retail NPL inflow and real GDP per capita growth. Based on real GDP per capita values in our three forecast scenarios, we estimate the gross retail NPL ratio will reach 2.8-3.9% by 2020 as a result of net retail NPL inflow growing at 30-40% p.a. These ratios are within the 2011-2017 levels.

Source: BRSA, Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies, IMF, Turkstat, PwC analysis

2008

2008

2009

2009

2.94.4

0.7 0.3

3.03.7

6.2 6.35.1

3.9


2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017 2020

2018 2019 20200

2

4

8

12 10%

8%

6%

4%

2%

-2%

-4%

-6%

-8%

0%6

10

CAGR 17 -20

Retail NPL Ratio1

3.7% 6.1% 4.1% 2.9% 2.9% 2.9% 3.4% 4.2% 4.3% 3.4%

3.9%

3.6%

2.8%

1 Gross Retail NPL Volume Outstanding Balance / Gross Retail Loan Volume

+41.0%

+40.2%

+29.8%

0

Real GDP per capita growth rate

Net retail NPL inflow volume


Gross Corporate and SME NPL Volume Expected Growth (2018-2020)

Based on our regression analysis and as seen in the historic trend in Exhibit 22, both the real GDP growth rate and gross fixed capital formation (i.e., total fixed investment) affect corporate and SME NPL inflows. Due to the expected slow-down in real GDP growth and

total investment, net SME and corporate NPL inflow are expected to go up by 25-27% p.a. until 2020. As a result, the gross corporate and SME NPL ratio will reach 3.2-3.4% by 2020, which is above the 2011-17 levels.

Exhibit 22

Net SME and Corporate NPL inflow volume expected growth (TRY billion, 2008-20)

2008

2008

2009

2009

4.7

0.1 0.6

5.06.6

7.4 8.0

12.9

10.6

Historical Macro Base Macro Conservative Macro Good Historical Real GDP Growth Rate

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018 2019 202002

4

8

1214161820

22 12%

10%

8%

6%

4%

0%

-2%

-4%

-6%

2%

6

10

CAGR 17 -20

SME & Corp. NPL Ratio1

Total Fixed Investment (TRY billion)

4.0%

267.1

5.3%

223.6

3.7%

288.5

2.9%

391.4

3.0%

428.8

2.9%

516.2

2.8%

590.7

2.9%

694.8

3.1%

764.8

2.9%

820.5

2.7

Source: BRSA, Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies, IMF, Turkstat, PwC analysis

* Due to real GDP growth bouncing back from upward or downward trend from ’19 to ’20 in both macro-good or macro-conservative scenarios (typical trend for developing economies such as Turkey), SME & corporate net NPL inflow gets higher for macro-good scenario and lower for macro- conservative scenario.

1 Gross SME & Corp. NPL Volume Outstanding Balance / Gross SME & Corp. Loan Volume

+26.5%*

+25.6%

+24.6%*

2020

3.2%

3.3%

3.4%

Real GDP growth rate

Net SME & Corp. NPL inflow volume


We forecasted NPL sales by asset type according to historic sales trends:

• For private bank and non-bank financial institution sales:

• In the macro-base scenario, we believe the aggregated volume of NPL sales will be similar to the average sales ratio5 of the past four years, 2014 to 2017 (2014 was the year when all the top nine private banks, in terms of cumulative sales volume, sold NPLs).

• In the macro-good scenario, where higher economic growth is assumed compared to the base scenario, we envisage financial institutions will sell at a lower volume due to lower NPL outstanding balances as well as lower NPL growth expectations. Hence, we base our sales forecasts on the average sales ratio5 of the past 3 years (2015 had a lower sales volume compared to the 2012-14 interval).

• In the macro-conservative scenario, we envisage financial institutions will sell higher volumes compared to the base scenario due to higher overall NPL outstanding balances and higher NPL growth expectations. In this scenario, we assumed that sales will be similar to the average of the most recent 2 years, 2016 and 2017, when sales ratios5 were relatively high as the top nine private banks, in terms of cumulative sales volume, sold NPLs regularly.

• For state-owned bank sales:

• There is still an uncertainty as to potential disposal of NPLs from state banks, since no sales were realized from these banks since the inception year of 2008. On the other hand, with the assurance of legislation passed in 2017, we envisage state banks will commence sales in 2019 at the average historic sales ratio5 of private banks and non-bank finance firms. It is likely that they will prioritize retail NPL sales in the first few years for similar reasons to those of private banks which prefer selling retail NPLs over SME and corporate: a) lower average ticket size requiring a systematic approach to collection; b) a higher share of unsecured loans, hence lower recovery expectations; and c) the moral hazard problem.

5 Sales ratios were calculated by taking ratio of NPL sales volume out of prior year's NPL stock and current year's net NPL inflow

Non-Performing Loan Sales Expected Growth


NPL Sales Total Volume Expected Growth (2018 -2020)

Since 2008, an NPL portfolio with a cumulative total of TRY 37.5 billion, in terms of UPB, has been sold. We foresee that the upward trend in NPL sales, which occurred in the last two years, will continue in each of our three scenarios. The total NPL sales volume is expected to

Exhibit 23

NPL Sales total volume expected growth (TRY billion, 2008-20)

Macro Conservative Macro Base Macro Good State-owned Banks' upliftHistoric

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2020

1.7 0.6

2.92.0

3.2 3.4

6.1 6.5

8.6

10.2

13.2

14.9

2.5

1.0

11.7

13.7

10.1

1.0

11.8

8.0

9.2

NPL Outstanding Balance, TRY billion

15.9 24.4 22.3 21.2 26.0 32.9 40.3 52.1 63.6 69.5

CAGR 17 -20

119.3

117.9

115.0

Source: BRSA, Audited annual financial statements and KAP (Public Disclosure Platform) disclosures of Banks, Leasing, Factoring, Financing and Asset Management Companies, PwC analysis

reach TRY 11.7-14.9 billion by 2020, growing at 11-20% p.a. This estimate includes potential NPL sales of state banks in 2019 and 2020 (TRY 1.0 billion sales in both years).

+20.2%

+16.8%

+10.8%


Exhibit 24

Retail NPL Sales volume expected growth (TRY billion, 2008-20)

Retail NPL Sales Volume Expected Growth (2018-2020)

Similar to total sales volumes, retail NPL sales are expected to continue increasing and reach TRY 6.2-8.5 billion by 2020, which represents 5-17% p.a. growth (without state bank sales, retail NPL sales are expected to reach TRY 5.2-7.5 billion).

Macro Conservative Macro Base Macro Good State-owned Banks' upliftHistoric

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2020

1.30.5

1.71.1

1.61.9

3.5 3.4

5.3 5.5

7.7

8.5

1.4

1.0

6.2

7.6

5.5

1.0

6.7

4.2

4.8

Retail NPL Outstanding Balance, TRY billion

4.6 8.5 7.6 6.8 8.2 10.0 12.7 17.6 19.3 17.9

CAGR 17 -20

28.6

26.8

22.4


+16.8%

+12.6%

+5.4%


4.7

0.1

SME and Corporate NPL Sales Volume Expected Growth (2018-2020)SME and Corporate NPL sales are expected to reach TRY 5.5-6.5 billion by 2020, growing at 19-25% p.a., primarily driven by increase of the SME and corporate NPL balance share within the gross NPL outstanding balance from 2017 to 2020.

Exhibit 25

SME and Corporate NPL Sales volume expected growth (TRY billion, 2008-20)

Macro Conservative Macro Base Macro GoodHistoric

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2020

0.4 1.2 0.91.6 1.5

2.63.1

3.3

5.5

6.5

1.1

5.5

6.1

4.5

5.1

3.8

4.4

SME & Corp. NPL Outstanding Balance, TRY billion

11.3 15.8 14.7 14.4 17.8 22.8 27.6 34.5 44.3 51.6

CAGR 17 -20

90.7

91.1

92.6

Notes: State-owned banks not expected to sell SME & corporate non-performing loans from 2018 to 2020


+25.4%

+23.0%

+18.6%


Methodology and Assumptions

Exhibit 26

Scenario descriptions

Scenario type Scenario assumptions

Macro-good scenario• Focus on structural reforms to boost economy• Geopolitical risks decrease, impacting Turkey’s economy positively• Investments will increase significantly, particularly due to lower import dependency• Inflationary concerns will decrease due to lesser TRY depreciation

Macro-base scenario• Expected baseline economic growth according to Economist Intelligence Unit fore-

casts on macroeconomic indicators, and Turkish Statistical Institute forecasts on population

Macro-conservative scenario

• Increase in geopolitical risks in 2019• Lack of structural reforms• Higher interest rates, thus low growth with low investment and consumption appetite• Despite low demand, high currency depreciation keep inflation at high levels • Decline in investment growth for 2018 and 2019 compared to base case scenario,

with some increase in 2020 with base effect and deferred investments


Exhibit 27

Macroeconomic indicator forecasts1

Scenario type Indicators

2017

(Actual)

2018

(Forecast)

2019

(Forecast)

2020

(Forecast)

Macro-good scenario

Real GDP Growth (%) 7.4% 6.4% 7.1% 5.8%Nominal GDP (TRY billion) 3,104 3,734 4,370 4,944

Gross Fixed Capital Formation (TRY billion) 925 1,082 1,258 1,433

Population (mn) 80.6 81.4 82.2 83.0

Macro-base scenario



Population (mn) 80.6 81.4 82.2 83.0

Macro-conservative scenario



Population (mn) 80.6 81.4 82.2 83.0

1 Historical figures and macro-base scenario forecasts are from Turkstat and Economic Intelligence Unit. Macro-good and macro-conservative scenario forecasts excluding population are done by the Chief Economist of PwC. Population forecasts are based on Turkstat estimates.


Exhibit 28

Step I: Gross Loan Volume Estimation

Retail Loan Retail

Net NPL Inflow

Private FI* Retail NPL outstanding balance (1 yr. prior) + Private Retail Net NPL inflow (current year) / 2

Private FI* SME & Corp. NPL outstanding balance (1 yr. prior) + Private SME & Corp. Net NPL inflow (current year) / 2

State-owned banks’ retail NPL outstanding balance (1 yr. prior) + State Retail Net NPL inflow (current year) / 2

Private FI* retail NPL sales volume (TRY billion)

Private FI* SME & Corp. NPL sales volume (TRY billon)

State-owned banks retail NPL sales (TRY billion)

SME & Corp. Net NPL inflow

Retail NPL outstanding balance

Gross NPL Total outstanding balance

SME & Corp. NPL outstanding balance

SME & Corp. Loan

Gross loan total (TRY billon)

as % of nominal GDP (TRY billion, current year)

Regression of retail NPL inflow % of retail loan total vs. real GDP p.c. y-o-y growth (%)

Regression with real GDP y-o-y growth (%) and total investment (TRY billion)

Historic annual average (%) of prior private FI* retail NPL sales ratio out of retail NPL balance (1 yr. prior) and retail net NPL inflow (current year)

Historic annual average (%) of prior private FI* SME & Corp. NPL sales ratio out of SME & Corp. NPL balance (1 yr. prior) and SME & Corp. net NPL inflow (current year)

All-time historic annual average (%) of private FI* retail NPL sales ratio out of retail NPL balance (1 yr. prior) and retail net NPL inflow (current year)

Pre-sales Retail NPL (previous year, TRY billion)

Private FI* Retail NPL sales ratio (%)

Private FI* SME & Corp. NPL sales ratio (%)

State-owned banks NPL sales ratio (%)

Pre-sales SME & Corp. NPL volume (previous year, TRY billion)

Retail NPL sales (cumulative up to current year)

SME & Corp. NPL sales (cumulative up to current year)Regression

with nominal GDP (TRY billion, current year)

Step II: Gross NPL Volume Estimation Step III: NPL Sales Estimation

Forecast methodology

* FI = Financial institutions including, banks, as well as factoring, leasing and financing companies

Total NPL sales volume

Forecasted Values Drivers NPL Indicators


Notes on Exhibits

Exhibit 16: Forecasted gross loan volume totals for the 2018-2020 period are calculated as the sum of forecasted gross retail loans and forecasted gross SME and corporate loans.

Exhibit 18: Nominal GDP (TRY billion) was identified to be the driver for Turkey’s gross retail loan volumes, based on the historical trend between 2002 and 2017 (regression analysis between gross retail loans and nominal GDP has an adjusted R-squared value of 0.982). Going forward, gross retail loans are forecasted to stay at ~16% of nominal GDP volume (TRY billion), as historic trends and the benchmarking study of other middle-income economies (i.e. Hungary, Croatia, Argentina) suggests.

Exhibit 19: Based on regression analysis, nominal GDP (TRY billion) was identified as the driver for Turkey’s gross SME and corporate loan volume (TRY billion) according to the historical trend between 2002 and 2017. The linear regression model suggests a regression intercept term of -321.8 and a regression slope co-efficient of 0.65 for the relation between the two variables. The forecasted values of SMEs and corporate loans for 2018-2020 are calculated with respect to these intercept terms and slope co-efficient values.

Exhibit 20: Forecasted net NPL inflow totals for 2018-2020 are calculated as the sum of forecasted net retail NPL inflow and forecasted net SME and corporate NPL inflow.

Exhibit 21: Net retail NPL inflow values are estimated based on forecasting Turkey’s net retail NPL inflow as a percentage of total retail loan volume. The real GDP per capita year-on-year growth rate (%) was identified as the driver for net retail NPL inflow ratio, based on the regression analysis of historical trends between 2002 and 2017. This linear regression model suggests an intercept term of 0.019 and a slope co-efficient of -0.177 for the relation between the two variables. The net retail NPL inflow ratio was forecasted using the intercept term and the slope co-efficient. Then, the net retail NPL inflow volume for 2018-2020 was determined using forecasted retail loan values and the net retail NPL inflow ratio.

Exhibit 22: Based on regression analysis of the historical trend between 2002 and 2017, real GDP year-on-year growth rate and nominal gross fixed capital formation (i.e. total investment, TRY billion) were identified as the drivers for Turkey’s net SME and corporate NPL inflows. The linear regression model suggests a regression intercept term of -1.12, a regression slope co-efficient of -36.03 for real GDP year-on-year growth rate and a regression slope co-efficient of 1.72 for gross fixed capital formation volume. Forecasted values of net SME and corporate NPL inflow volume (TRY billion) for 2018-2020 are calculated with respect to this intercept term and slope co-efficient values found in the regression model.


Exhibit 23: Forecasted NPL sales total volumes (TRY billion) for 2018-2020 are calculated as the sum of forecasted retail NPL sales volume (TRY billion) and forecasted SME and Corporate NPL sales volume (TRY billion).

Exhibit 24: Retail NPL sales volumes for 2018-2020 are estimated based on the average of annual retail loan ratios (i.e., this ratio was calculated as retail sales volumes divided by the average of prior year's retail NPL balance and current year's net retail NPL inflow). The time interval (specific years) for taking the average value changes based on the scenario. State bank sales estimations in 2019 and 2020 are based on the all-time average of annual retail loan ratios.

Exhibit 25: SME and corporate NPL sales volumes for 2018-2020 are estimated based on the average of annual SME and corporate loan ratios (i.e., this ratio was calculated as SME and corporate sales volumes divided by the average of prior year's SME and corp. NPL balance and current year's net SME and corp. NPL inflow.) The time interval (specific years) for taking the average value changes based on the scenario.


Abbreviations

BRSA: Banking Regulation and Supervision Agency of Turkey ("BDDK" in Turkish)

KAP: Public Disclosure Platform of Turkey (where capital markets and Istanbul Stock Exchange announcements are publicly disclosed)

IFRS 9: International Financial Reporting Standard, promulgated by the International Accounting Standards Board

Turkstat: Turkish Statistical Institute

NPL: Non-performing loans

AMC: Asset management company

UPB: Unpaid principal balance

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© 2018 PwC Turkey. All rights reserved. In this document, PwC refers to the Turkey member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.

2018-0101

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236.000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.tr

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