Q2-2019Investor Presentation

Albaraka Türk Participation Bank02 Aug 2019

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

Albaraka Turk – Q2’19 At a Glance3

Balance Sheet Key Ratios

(Million TRL) Q4’18 Q2’19 YtD (%) % Q4’18 Q2’19 YtD (%)

Total Assets 42.223 43.886 3,9

Total Funded Credits (Net) 26.185 27.771 6,1CAR 14,66 13,83 -83

Total NPLs 1.889 2.128 12,7

Deposits (incl. Interbank) 28.623 33.045 15,5Tier 1 9,98 9,49 -49

Shareholder’s Equity 3.261 3.288 0,8

NPL 6,88 7,31 43Income Statement

(Million TRL) Q2’18 Q2’19 Y-Y (%)

Net Profit Share Income 498 340 -31,8Provisioning

Stage III47,31 51,87 456

Net Fees & Commissions 85 147 72,6

Provisions for Loan Loss 353 410 16,1 Net Profit ShareMargin

2,80 2,22 -58

Operating Expenses 207 211 2,1

Net Profit 196 50 -74,7Cost/Income 59,93 53,15 -678

6Q2’19 Main Highlights (Million TRL)

3,143,37

2,94

2,62

2,19

3,35 3,48

2,8

2,552,22

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

NPSM (Exc. JV Projects)* Net Profit Share Margin*

* Trailing for last 4 quarters

4

40.45644.712

42.224 44.594 43.886

27.689 29.79726.185 26.498

27.771 27.71129.330

28.623 30.62833.045

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Total Assets Total Funded Credits Total Collected Funds

131

196

50

Q2'17 Q2'18 Q2'19

Net Profit

7,56 % 7,12

2,42 % 2,37

4,68 % 4,34

Q4'18 Q2'19

Common Equity Tier I Additional Tier I Additional Tier II

13,83 %14,66 %

1.1441.492 1.230

1.789 2.062

564515

619

549

1.435

941927 1.117

1.195

1.615

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Available for sale Held to Maturity Other Marketable Securities

2.875

2.6482.934

5.112

7Asset Composition

Composition of Total Assets (Q2’19) Liquid Assets (Million TRL)

5

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

13,6412,9212,84

11,11

10,02

Q2'19Q1'19Q4'18Q3'18Q2'18

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

10.920 12.580 13.465 15.484 12.650

27,0%28,1%

31,9%34,7%

28,8%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Liquid Assets % of Total Assets

Funded Credits; 63,3%

Securities Portfolio;

11,6%

Other Liquid

Assets*; 20,5%

Other Assets; 4,6%

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

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

2.965

298 69 -9 56

1H'18 Profit ShareIncome

Fees &Comm

TradingIncome

Others 1H'19

1.986

6Operating Performance Breakdown

Income (Million TRL)

720 844 836

-471 -648 -692

Profit Share Income Profit Share Expense

250

Q4’18

Net Profit Share Income (Million TRL)

Key Movements in Income (Million TRL)

Cost & Yield Movement (%)

Q2’18

196 144

6

10,04% 10,47% 10,09% 10,58% 10,76%

3,35% 3,48% 2,80% 2,55%2,22%

6,08% 6,41% 6,78%7,17% 7,46%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Credit Yield Net Profit Share margin

Cost of Collected Funds

69,6%70,0%

6,4%

8,1%

7,4%

5,7%16,7%

16,1%

1H'18 1H'19

Others

TradingIncome

Fees & Comm

Profit ShareIncome

2.400

1.9862.400

Q2’19

*USD equivalent

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

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

Funded Credits Portfolio

Q2’18 Q3’18 Q4’18 Q1’19 Q2’19

Corporate Credits 39.6 41.4 41.7 41.9 47.1

SME Credits 49.2 48.9 48.1 48.6 44.2

Retail Credits 11.2 9.7 10.2 9.6 8.7

44%

36%

20%

TRL

USD*

EUR*

Composition of Total Funded Credits* (%) Currency Composition of Total Funded Credits* (Q2’19)

*Including USD & EUR indexed credits*According to BRSA definition

7

Q2’18 Q4’18 Q2’19 YtD YoY

TL Credits, TL 13.599 12.092 12.233 1,2% -10,0%

FC Credits, $* 1.771 1.933 2.233 15,5% 26,1%

FC Indexed, $* 1.319 735 460 -37,4% -65,1%

Total Credits, TL 27.689 26.185 27.771 6,1% 0,3%

13,4%

19,8%

10,0%11,9%

7,0%6,0%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19Yield on TL Loans, adjusted, trailingBlended Yield, adjustedYield on FX Denominated Loans, trailing

80,3% 76,2%73,7% 77,5% 78,6%

14,2% 17,6%

19,4% 15,2% 14,1%5,6%

6,2%

6,9% 7,4% 7,3%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Group I Group II Group III

29.103

5,576,22

6,887,36 7,31

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

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

227 232216 218 213

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Cost of Risk** (bps)

NPL Ratio (%) *

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

*Including financial leasing & accruals and rediscounts

Provisioning (Stage III)

Asset Quality8

31.27227.442

28.887

9291.168

8931.069 1104

57,7%60,1%

47,3%52,3% 51,9%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Lifetime ECL Impaired Credits (Stage 3) (Million TRL) Provisioning Ratio (%)

27.778

NPL Formation Trend

Asset Quality9

209

454

439

315

154

44 117

253

78 70165

336

186

237

84

250

475

272

369

128

2Q'18 3Q'18 4Q'18 Q1'19 Q2'19

Additions (million TRL) Recoveries (million TRL)

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

NPL Inflow Sector Distribution 1H’19

Source: Albaraka Turk

8,8%12,6%

29,9%

14,8%

29,9%

4,0%

Communication Construction&Real EstateManufacturing OthersTrading Transportation

23,7%

13,5%

29,8%

10,1%3,7%

19,0%

Manufacturing OthersConstruction&Real Estate TradingTransportation Energy

Stage II Credits Sector Distribution 1H’19

5.212

2.128

4.390

1.382

78

1.104

Stage 2 Stage 2 Stage 3 Stage 3

Risk amount Collateral Provision

Stage II-III Coverage (Million TRL)

*Includes construction of power plant projects

24% 27% 24% 25% 16%

21% 21% 23% 23%27%

56% 52% 53% 52% 57%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19Fund Borrowed* Current Accounts Participation accounts

Composition of Total Liabilities (Q2’19,%) Composition of Funding Base (Million TRL)

75,3%

14,1%

7,5%2,5% Funds Collected

Wholesale Funding

Shareholders'EquityOthers

36.295

8,1%

40.155

Funding Profile10

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

39.231

(Million TRL) Q4’18 Q2’19 YtD GrowthFunds Collected (incl. Bank deposits) 28.623 33.045 15%

Wholesale Funding 8.828 6.185 -30%Funds Borrowed 6.852 3.979 -42%

Syndicated Loans 1.665 0 -100%Wakala 1.211 1.309 8%Issued Lease Certificates & Sukuk 3.463 2.363 -32%Other 514 306 -40%

Sub-Ordinated Debt (Tier 2) 1.204 1.316 9%Interbank 772 891 15%

Shareholders’ Equity 3.261 3.288 1%Paid in Capital 900 900 0%Tier 1 Sukuk 776 - -Other Liabilities 1.510 1.080 -28%Total Liabilities 42.224 43.886 3,9%

37.452

205

250

0 100 200 300

2025

>2030

Tier 1 Sukuk (Perpetual) Tier 2 Sukuk

Maturity Profile of Liabilities (Million USD)

39.978

34

39

22

4

TRL

USD

EUR

Others

7,46%7,17%6,78%

6,41%6,13%

14,11%12,63%

11,31%10,34%

9,58%

2,50%

2,56%2,47%2,33%2,13%

0,68%0,94%1,21%1,41%1,36%

Q2'19Q1'19Q4'18Q3'18Q2'18

Blended TL FC Precious Metal

Total Funds Collected (Million TRL)

Cost of Funds Collected**USD equivalent of FC accounts

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

Currency Composition of Funds Collected (Q2’19,%)

Maturity Composition of Funds Collected (Q2’19, %)

33

19

41

3 4

Current Acc.

Up to 1 month

Up to 3 months

Up to 1 year

>1year

Funding Profile (Collected Funds)

11

Q4’18 Q2’19 YtD

Funds Collected 28.623 33.045 15,4%

Current Accounts 8.729 10.822 24,0%

Current Accounts TL 2.810 2.907 3,5%

Current Accounts, FC, $ 1.121 1.372 22,4%

Participation Accounts 19.895 22.223 11,7%

Participation Accounts TL 8.970 8.365 -6,7%

Participation Accounts FC, $ 2.069 2.402 16,1%

Total Funds 36.248 37.914 4,6%

Total Funds TL 14.385 14.615 1,6%

Total Funds FC, $ 4.141 4.038 -2,5%

Q2’18 Q3’18 Q4’18 Q1’19 Q2’19Growth (%)

YoY

Letter of Guarantee 8.004 8.910 8.575 8.304 8.251 3,1%

Letter of Credit 1.178 1.266 1.230 1.423 1.328 12,7%

Others* 137 205 242 424 409 198,5%

Total: 9.319 10.382 10.046 10.151 9.998 7,3%

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

19,8% 19,9% 20,3%

18,6% 18,8%

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Guarantees & Sureties(TRL million)

*Revocable credit limits not included.

Off Balance Sheet Growth12

*Below 20% of LGs to Total Assets is targeted

59 5869

4060

9 810

7

10

32 3421

5330

Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

LG LC Others

15.413 12.444 13.75313.544 20.648

14Income- Cost Dynamics

13

(Million TRL)

YoY Notes

Q2’18 Q2’19 %

Net Profit Share Income 498 340 -31,7%

Profit Share income increased by 22% While Profit share Expenses incresed by 52% YoY. Upward pricing of Funded Credits and downward cost of funding in 2H19 is expected to lead stronger Net Profit Share Income.

Net Fee Income 85 147 72,9%Circa 73 % Y-o-Y expansion in this line item is mostly driven by higher POS commissions and custody services, despite the deceleration in economic activity leading to slower growth in Funded Credits.

Net Trading Income 146 138 -5,5%$205 mln Tier-1 capital sukuk shaped stronger FX gains in the 2019 1H. This USD-denominated capital has acted as an organic hedge to TL depreciation.

Other Income 331 384 16,0%Provision reversals from stage 2 credits in first Quarter led to 2019 1Htotal operating income being above the same period of last year.

Provisioning 352 410 16,5%Provisioning expenses related to Stage 3 credits put pressure on the provisioning expenses 1H 19. Nevertheless, our total coverage ratio dropped to 62.6%, while Stage-3 coverage ratio increases to 51.9%.

Personnel Expenses 257 326 26,8% Impact of CPI, compensation for people leaving the Bank

Other Costs 207 212 2,4%Despite the continued branch expansion (+9 branches YoY) to 232headline cost growth remained far below 15,7% inflation.

Net Profits 196 50 -74,5% Worsening asset quality related higher provisioning expenses, rising cost of funding depressed net profit in 1H 201

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

Percent % Q4’18 Q2’19

Albaraka TürkParticipation

BanksBanking Sector Albaraka Türk

ParticipationBanks

BankingSector

CAR 14,66 15,76 17,27 13,83 17,40 17,73

NPL Ratio 6,88 3,74 3,81 7,31 4,27 4,29

Provisioning Ratio (Stage 3) 47,31 63,30 68,32 51,87 68,87 67,61

Loan/Deposits 91,48 96,62 117,25 84,04 85,33 112,84

Asset Yield 8,29 9,64 10,49 8,55 8,44 11,60

Asset Spread 2,81 3,23 3,37 2,31 0,89 2,39

Net Profit Share Margin 2,80 4,21 4,26 2,22 3,24 4,25

Op Costs / Avg. Assets 2,89 2,10 1,84 2,86 2,03 1,84

Cost/Income* 59,93 35,70 34,39 53,15 34,44 35,72

Credits / Branches (000‘TRL) 113,848 121,472 219,358 119,702 132,379 235,770

Staff / Branches 17,34 14,08 17,96 16,74 13,86 17,92

CA / Deposits 30,49 32,75 21,32 32,75 33,67 23,55

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

Financial Ratios - Sector Comparison15

Agenda

1 Financial Highlights

2 Market Comparison

3 Appendix

(Million TRL) Q4’18 Q2’19 GrowthCash and Balances with Central Bank 5.918 6.348 7,3%Banks 5.217 2.651 -49,2%Financial Assets 2.949 5.100 72,9%Funded Credits 26.185 27.771 6,1%

Cash Credits 25.174 26.697 6,0%NPL 1.889 2.128 12,7%Provisions 893 1.104 23,6%Net Financial Leasing Receivables 380 277 -27,1%

Associates 40 48 20,0%Fixed Assets 687 1.259 83,3%Assets Held For Sale and Investment 650 390 -40,0%Other Assets (inc. Tax Assets) 578 320 -44,6%

Total Assets 42.224 43.886 4,0%

Funds Collected 28.623 30,045 5,0%Funds Borrowed 6.852 3.979 -41,9%Debts 2.192 1.970 -10,1%Provisions (inc. Taxes) 90 111 23,3%Tier II Sukuk 1.204 1.316 9,3%Shareholders’ Equity 3.261 3.288 0,8%

Capital 900 900 0,0%Capital Reserves (inc. Premium) 846 870 2,8%Profit Reserves 1.301 1.431 10,0%

Total Liabilities 42.224 43.886 4,0%

Summary Balance Sheet17

(Million TRL) Q2’18 Q2’19 Growth

Profit Share Income 1.382 1.680 22%

Profit Share Expense 884 1.340 52%

Net Profit Share Income 498 340 -32%

Net Fees and Commissions Income 85 147 73%

Fees and Commissions Received 126 195 55%

Fees and Commissions Paid 41 48 17%

Net Trading Income 146 138 -5%

Other Operating Income 331 384 16%

Total Operating Profit 804 686 -15%

Provisions for Loan Losses and Other Receivables 353 410 16%

Other Operating Expenses* 464 538 16%

Operating Profit Before Tax 244 64 -74%

Tax Provision 48 15 -69%

Net Profit 196 50 -74%

Summary Income Statement18

* including personnel expenses

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Investor RelationsAddress : Saray Mahallesi Dr.Adnan Büyükdeniz Caddesi No:6 34768 Ümraniye/ İSTANBULE-mail : yim@albarakaturk.com.trTel : +90 216 666 03 03Fax : +90 216 666 16 20 Internet : www.albaraka.com.tr