1
Aklease Overview
2
Agenda
•
Aklease Business Overview
•
Turkish Leasing Sector Overview
•
Aklease Financial Highlights
3
Shareholder Structure
• Established as BNP-AK-Dresdner Leasing in November 1988
- JV between Akbank, Dresdner and BNP
• Akbank acquired the entirety of Aklease in 2005
- Renamed Aklease
• 99.985% owned by Akbank
- 0.015% owned by Sabanci Group affiliates
• Akbank elects all of Aklease’s directors
Sabanci Group
• One of the two largest conglomerates in Turkey
• Composed of 72 companies, with approx. USD 99.5 bio in total assets.
• 11% of ISE capitalization with 10 public companies and the Holding itself.
• Controlled by Sabancı Family owning 59.5% shareholding
• Mainly operates in the financial services, energy, retail, cement and industrial businesses.
• Established joint-ventures with distinguished companies in the world including; Ageas, Aviva, Bridgestone, Carrefour, Heidelberg Cement, Phillip Morris and E. ON
Akbank(1) Aklease(1) Sabanci Holding & affiliates; 48,8% Citigroup; 9,9% Free Float; 41,3% Sabanci Holding & affiliates, 0.015% Akbank, 99.985% (1) As at 31 December 2013
4
Aklease Board
Ahmet Fuat Ayla
Board Member Appointed to Aklease’s Board of Directors on 2nd July 2007. Ahmet joined Akbank as Corporate Branch Manager in 2002, becoming Senior VP in charge of Corporate and Commercial Credits Approval Unit in 2005 and appointed as Executive VP in charge of Corporate and Commercial Credits Approval in 2007. Eyüp Engin Board Member Appointed to Aklease’s Board of Directors on 25th March 2010. He joined Akbank in 1978 as an Assistant Internal Auditor and was appointed Head of Internal Audit in July 2007. He has also been the Head of the Treasury Dept. and Executive VP of International Banking at Akbank. Hülya Kefeli Board Member Appointed to Aklease’s Board of Directors on 7th June 2010. Hülya has been with Akbank since 1983 and has held various positions in the Foreign Relations and International Banking Divisions at Akbank. In 2007, she was appointed as Executive VP in charge of International Banking. C. Kaan Gür Deputy Chairman Appointed to Aklease’s Board of Directors on 27th January, 2011. He joined Akbank as Executive VP of SME Banking on 14th January, 2011. Previously, he has worked at various positions at Garanti Bank. K. Atıl Özus Board Member Appointed to Aklease’s Board of Directors on 6th June 2007. He joined Akbank in November 2000 as VP of Financial Control and Risk Management, and later promoted to Senior VP. In December 2007, Atil was appointed as Executive VP (CFO) in charge of Financial Coordination. S. Hakan Binbaşgil Chairman, Aklease Appointed Chairman of Aklease’s Board of Directors on 5th January 2012. Hakan joined Akbank in October 2002 as an Executive VP in charge of Change Management. He was appointed Executive VP in charge of Retail Banking in November 2003 and Deputy CEO in May 2008. He is also the Chairman of the Board of Directors of Ak Asset Management, Ak Investment, Akbank AG and Akbank (Dubai) Ltd. S. Tuncer Mutlucan
Board Member and CEO, Aklease
Joined Aklease on 2nd August 2010 as General Manager and was appointed to Aklease’s Board of Directors on 15th April 2011. Prior to joining Aklease, Tuncer was working in Akbank N.V. as General Manager and was on the supervisory board of Akbank Germany.
5
Organization Chart
CEO
Operation – Financial Control Executive Vice President
Board of Directors
Contract Management & Receivables
Sales
Business Development
& Marketing Legal Counsel
Procurement Risk Management
Internal Control
Customer Relations & Insurance Accounting & Financial Control Financial Control HR & Administrative Affairs Asset Management IT Credit Allocation
Sales and Marketing
Executive Vice President Head of Finance,
Senior Vice President Credits
Executive Vice President
A&L Management
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•
Aklease Organization Overview
•
Turkish Leasing Sector Overview
•
Aklease Financial Highlights
•
Aklease Business Overview
7
Key Strenghts
3rd largest Leasing Company
in Turkey by Net Lease
Receivables
Strong Asset Quality
Resilient Business Model
Diversified Funding Portfolio
Investment Grade Rating by
Fitch
Synergies From Relationship
with Akbank
Experienced Management &
Prudent Risk Management
Lowest Cost-to-Assets Ratio
among Peers
Strong Position in Growing
Market with Low Penetration
Fully owned by Akbank – Most
Valuable Turkish Banking
Brand
(1)8
Synergies From Relationship with Akbank
Extensive Branch Network
• Aklease benefits from Akbank’s 985 domestic branches and 23 regional offices across Turkey as
representation channels
• Most of Aklease's customers are customers from referrals through Akbank
• Approx. 99% of Aklease’s annual net financial lease receivables are from Akbank customers
Başkent, Ankara Antalya İzmir Gaziantep Bursa Kartal Başkent, Ankara Antalya Bursa Kartal Gaziantep İzmir Antalya • Established in 1948
• Rated Baa2 (Moody’s) and BBB (Fitch)
- Rated higher than the sovereign
• 2.4% YoY growth in profits in 2013 to TL 3.1bn
• 19.6% YoY growth in assets in 2013 to TL 195.5bn
• Most valuable Turkish banking brand(1) • Network of :
- 985 domestic branches (plus 1 branch in Malta)
- Approx. 4,121 ATMs
- More than 340,000 PoS
• Over 13 million customers
1: Brand Finance 2013
Consumer Banking
Corp, Commercial and SME Banking
Treasury Private Banking International Banking 4 6 17 315 25 11 4 5 1 2 5 3 11 5 5 2 1 10 6 3 1 1 1 1 1 1 1 1 3 3 1 1 3 4 3 1 4 3 4 1 6 15 10 1 2 27 15 2 6 3 4 1 2 1 4 2 1 18 19 85 40 4 2 10 16 11 11 76 16 41 5 5 2 2 7 6
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Aklease at a Glance
Profile Key Financials(1)
• 3rd largest leasing company in Turkey by net lease receivables(1)
• Provides leasing services to companies in Turkey across a range of sectors including:
- Transportation
- Construction
- Textiles
- Healthcare
- Energy and natural resources
• Financial leases provided for a range of assets including:
- Aircraft / rotorcraft
- Manufacturing machinery and equipment
- Commercial real estate
- Electric/Electronic equipment
- Office equipment
• Strong market position in a growing market with low penetration rates
• Tripled its market share in the Turkish leasing sector since 2005 to 13.4% in 2013
• Committed and robust shareholder, subsidiary and leasing arm of Akbank (99.9%).
• 99.9% owned by Akbank rated Baa2 (Moody’s) and BBB (Fitch)
• Investment grade rating of BBB (Fitch), in line with Akbank
Ownership Structure
(1)In accordance with IFRS. (2)Includes Debt Securities Issued
(1) According to FiDER Sabanci Holding & affiliates, 0.015% Akbank, 99.985% 2010 2011 2012 2013 TLm
Net Finance Lease Receivables 1,058 1,502 2,077 3,315
Total Assets 1,187 1,708 2,288 3,537
Borrowings(2) 833 1,301 1,676 2,843
Total Equity 288 306 322 415
Net Interest Income 59 61 65 84
Income Before Tax 62 44 57 54
Net Income 51 38 42 43
RoAE (%) 19,4 12,9 13,2 11,7
Cost to Income (%) 14,3 22,2 18,2 24,7
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Leasing Activities-I
• 3rd largest leasing company in Turkey by net lease receivables(1) • Grown its market share from 4.4% in 2005 to 13.4% as of 31
December 2013.
• Rated BBB by Fitch
• Core subsidiary and leasing arm of Akbank
• Aklease BBB rating equalised to that of Akbank by Fitch
• Provides financial leases for a variety of assets including:
Aircraft
Commercial real estate
Machinery and equipment
• Market leader in Turkey of financial leases for corporate jets, over 50% market share(1)
• Client base primarily consists of large Turkish corporations
(1) According to FiDER
• Aklease retains legal title of the asset until lease expiry – in case of default entitled to re-possess asset
Supplier of Asset Aklease Purchases
Asset
Lessee : End User of Asset Sale of Interest
Physical (but not legal) transfer of asset on leasing Transfer of ownership of leased asset on expiration of finance lease term Typical Key Financial Leasing Transaction in Turkey
• Lease payments are made mostly on a monthly basis, allowing for regular credit performance monitoring
Lease Portfolio Client Composition by Business Volume Key Features of Financial Leasing in Turkey
25% 25% 20% 22% 75% 75% 80% 78% 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013
SMEs Large Corporates
• Interest on lease payments is typically tax-deductible, helping reduce lessee’s taxable income base
• Certain equipment and machinery leases in Turkey are subject to low VAT rates of around 1% vs. general VAT rates of 8% and 18%
• Lessee able to acquire the asset upon expiry
• Financial leases available in both TL and foreign currencies
• New Financial Leasing Law2 will allow Aklease to:
• Offer leasing of complimentary parts, such as aircraft engines
• Sale – leaseback services
• Provide operating leases
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Leasing Activities-II
1: Others includes: financial institutions, printing, automotive, telecoms media, tourism,agriculture, wholesale & retail, chemistry, education, machinery and metal industry and others
Lease Portfolio by Assets as of 31st Dec. 2013 Lease Maturities as of 31st Dec. 2013
Source: Aklease Source: Aklease
Lease Portfolio by Industries as of 31st Dec. 2013 Lease Portfolio Currency Composition as of 31st Dec. 2013
Source: Aklease Source: Aklease Office Equipment 2% Electric/Electronic Equipment 2% Commercial Real Estate 28% Aircraft 16% Construction Machinery 6% Manufacturing Machinery and Equipment 32% Textile Machinery 4% Medical Equipment 3% Other 7% 1 year 27% 2 years 22% 3 years 17% 4 years 12% 5 years+ 22% EUR 41% USD 39% TL 20% Source: Aklease
1: Other includes the wind turbines leased which constittute 4% of the lease portfolio.
Avg. Maturity: 2.6 yrs Avg. Maturity: 3.0 yrs Avg. Maturity: 2.2 yrs
1: Avg. Maturity means the remaining average maturity
Transportation 18% Construction 11% Textile 11%
Steel and Mining 8% Energy and natural sources 7% Production 7% Health 6% Other 32%
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Strategy
5 Strategic Priorities
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Focus on growth sectors in the economy such as:– Renewable energy – Healthcare – Commercial real estate
– Transportation – Construction
•
Maintain mix of short and long-term funding•
Seek financing from:– Local banks – Foreign banks – ECAs
– Multilaterals – Domestic & international capital markets
•
Healthy growth in lease receivables to be achieved within the framework of:– Continued conservative approach to asset quality and profitability
– Strong focus on risk management procedures
•
Increase market share through customer referrals by Akbank•
Continued support from Akbank, especially Risk Management and IT functions•
Developing specific synergies with AK Sigorta, insurance subsidiary of the Sabanci GroupContinue Exploiting Synergies with Akbank and the Sabancı
Group
Take Advantage of Growing Lease Market
Further Diversify Funding Base
•
Develop sale-leaseback and software leasing products•
Offering clients operating leases through strategic alliances with reputable partnersNew Products & Clients
1
2
3
Maintain High Asset Quality & Grow Receivables 4 Sustainable Market Leadership 5 Strategic Objective
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Risk Management
•
Aklease co-ordinates its risk management policies and processes with Akbank
–
Risk parameters are reported to Akbank’s Risk Management Division on a monthly basis
Principal Leasing Risks
Mitigants
Concentration Risk
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Diversified portfolio by sector and lease asset type
•
Selected counterparties
•
Focus on assets with relatively high second hand value
•
Additional collateral
Credit Risk
•
Detailed and thorough credit analysis, assesment,approval process
•
Adequate level of collateral
•
Monitoring regularly the counterparties’ ability to pay, analyzing the financial
position of the lessees and condition of the leased assets
Market Risk
•
Appropriate combination of fixed and floating rate borrowings and lease
receivables
•
No investment portfolio
•
Use of interest rate swaps and currency swaps (for hedging purposes)
•
Stress tests and gap analysis
Operational Risk
•
Effective segregation of duties, access, authorisation and reconciliation
procedures, staff education and assessment procedures as well assessment
processes
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Agenda
•
Aklease Organization Overview
•
Aklease Business Overview
•
Aklease Financial Highlights
15
Turkish Leasing Sector Overview
• 31 financial leasing companies in Turkey as of year-end 2013
• Top eight financial leasing companies are bank subsidiaries, and
represent approx. 80% of market share in Turkey
• 2008 global financial crisis along with VAT increases in 2007 impacted
the sector negatively
• Strong rebound seen in lease transaction volumes commencing from
2010
• Sector growth expected to accelerate following New Financial Leasing
Law* which allows:
Operating leases and software leases
Sale-leaseback transactions
• The Financial Leasing, Factoring and Financing Companies Union is
established in 2013 in which Aklease is presented at the board level.
* Financial Leasing, Factoring and Financial Companies Law of 13 December 2012
New Business Generation – Leasing Volumes (USDbn)
Gross Lease Transaction Volume in Turkey (TLm)
Net Lease Receivables in Turkey (TLm)
Source : FiDER Source : FiDER +79% 5.702 7.702 10.230 6.811 3.385 4.844 8.448 9.582 13.244 2005 2006 2007 2008 2009 2010 2011 2012 2013 +79% -67% +291% 5.820 8.691 11.942 14.118 10.918 10.560 14.985 16.988 24.639 2005 2006 2007 2008 2009 2010 2011 2012 2013 +143% -25% +133% 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 0 100 200 300 400 500 600 700 800 900 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F T u rk ey W orl d
Leasing Volumes (million USD)
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Aklease vs Sector
Note: Aklease’s results and sector comparisons are BRSA figures (Source: Aklease and FIDER)
NPLs
* Aklease’s IFRS results equivalent are the same
Cost to Income Ratio
* Aklease’s IFRS results equivalent are 14.3, 22.2% ,8.2%,23,44% and 24,17% for 2010, 2011 ,2012, and 2013 respectively
RoAE
* Aklease’s IFRS results equivalent are 19.4%, 12.9% ,13.2% ,13,5% and 11,7% for 2010, 2011 ,2012 ,2013 respectively 3,2% 3,50% 1,80% 1,70% 12,0% 8,50% 8,00% 6,50% 2010 2011 2012 2013
Aklease* Turkish Leasing Sector
15,1% 21,7% 18,2% 25,6% 30,3% 30,1% 32,1% 32,8% 2010 2011 2012 2013
Aklease* Turkish Leasing Sector
19,4% 14,8% 14,1% 11,7% 12,6% 12,9% 10,0% 8,8% 2010 2011 2012 2013
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Turkish Economic Overview
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Aklease Organization Overview
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Aklease Business Overview
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Aklease Financial Highlights
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Share Capital
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The shareholder injected TL 50 million of capital in cash into the paid-in capital at December 17, 2013.
•
After the first capital increase, the shareholder injected an additional TL 50 million of capital in cash into
the paid-in capital at March 21, 2014. Currently, Aklease has TL 188,4 paid-in capital.
•
As of 31 December 2013, the capital adequacy ratio is 14.4%
Shares Shares
(%) TLm (%) TLm
Akbank T.A.Ş 99,985 138,879 99,985 88,387
Hacı Ömer Sabancı Holding A.Ş. 0,005 7 0,005 4 Tursa Sabancı Turizm ve Yatırım Hizm A.Ş. 0,005 7 0,005 4
Bimsa Bilgi İşlem A.Ş. 0,003 5 0,003 4
Ak Yatırım Menkul Değerler A.Ş. 0,002 2 0,002 1
100.00 138,4 100.00 88,4
Adjustment to share capital -13,393 -13,393
125,007 75,007
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Funding Portfolio
Aklease is able to source funding from a well diversified base:
• Local and foreign banks
• ECAs such as US Ex-Im Bank, Euler-Hermes, Export Development Canada
• Multilaterals such as EIB, Proparco and ETDB
• International capital markets
• Asset-backed transactions
Funding by Source
Akbank EIB refers to loans that Akbank provided from EIB and on-lent to Aklease
ECA Covered refers to loans obtained under coverage of Ex-Im Bank, Euler-Hermes, EDC and etc.
Multilateral refers to loans provided by the multilateral organizations such as Proparco and the ECO Trade and Development Bank
DCM refers to “ Debt Capital Market” and includes TL150 million bond issued in February 2012 with 2 years maturity and USD 250 million eurobond issued in April 2013 with 5 years maturity Note: On 20 March 2013, Aklease entered into a syndicated term loan facility agreement of US$90 million and EUR30 million for up to three years
2011
2012
2013
Akbank 11% Akbank EIB 15% Domestic Banks 32% ECA covered 9% Foreign Banks 31% Multilateral 2% Akbank 24% Akbank EIB 9% Domestic Banks 8% ECA Covered 14% Foreign Banks 32% Multilateral 5% DCM 8% Akbank 14% Akbank EIB 3% ECA Covered 16% Multilateral 5% Syndication 10% Foreign Banks 17% Domestic Banks 11% DCM 24%20
TLm 2010 2011 2012 2013
Interest income from direct financial leases 87.9 102.6 142.3 195.9
Interest income on placements and transactions with banks 2.7 9.6 9.5 10.2
Total Interest Income 90.6 112.2 151.8 206.1
Interest expense on borrowings (32.2) (51.0) (74.1) (94.5)
Interest expense on debt securities issued - - (12.7) (27.3)
Net Interest Income 58.4 61.2 65.0 84.3
Foreign exchange gains, including net gains or losses from dealing in foreign
currency 0.5 2.7 3.8 57.2
Net Interest Income after foreign exchange gains and losses 58.9 63.9 68.8 141.5
Net trading, hedging and fair value income/(loss) (1.2) (1.7) 4.1 (51.3)
Fee and commission income, net 2.5 1.0 2.3 3.0
Impairment loss on financial lease receivables (3.3) (14.7) (8.9) (24.3)
Recoveries from impaired lease receivables 14.5 8.1 3.2 2.5
Other income/(expenses), net 1.2 (0.4) 0.1 0.1
Operating expenses (10.4) (12.4) (12.7) (17.6)
Operating Profit 62.2 43.7 57.0 53.8
Income before tax 62.2 43.7 57.0 53.8
Taxation on income (11.3) (5.4) (15.6) (10.8)
Net income for the year 50.9 38.4 41.5 43.0
Other comprehensive income (cash flow hedge reserve) - - (0.1) 0.1
Total comprehensive income 50.9 38.4 41.4 43.0
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Balance Sheet
TLm 2010 2011 2012 2013
Cash and cash equivalents 86.8 157.0 153.5 171.7
Financial lease receivables 1,058.2 1,502.0 2,076.8 3.314,9
Other assets and prepaid expenses 28.2 38.3 18.8 17.8
Assets held for sale 0.1 1.6 11.8 24.7
Property and equipment, net 0.4 1.5 1.2 1.2
Intangible assets, net - 0.6 0.6 0.6
Derivative financial instruments - 0.1 3.6 0.3
Deferred tax asset, net 12.7 7.4 - 5.5
Total assets 1,186.5 1,708.4 2,288.0 3,536.6
Borrowings 833.4 1,301.0 1,676.1 2,158.4
Debt securities issued - - 151.2 684.7
Accounts payable 48.4 51.9 108.4 195.6
Advances from customers 12.5 45.5 21.9 22.5
Derivative financial instruments 0.8 1.6 2.5 52.6
Other liabilities 3.5 1.9 2.8 2.1
Employment benefits 0.4 0.6 0.7 4.6
Deferred tax liability, net - - 2.1 -
Total liabilities 898.9 1,402.4 1,965.7 3,121.3
Total paid-in share capital 75.0 75.0 75.0 125.0
Legal reserves 15.4 19.6 23.8 26.3
Retained earnings 197.2 211.3 223.6 264.0
Total equity 287.5 305.9 322.3 415.4
Disclaimer Statement
The information and opinions contained in this document have been compiled or arrived at by Aklease from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy,
completeness or correctness. All opinions and estimates contained in this document constitute the Company’s judgement as of the date of this document and are subject to change without notice. The information contained in this document is
published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document is strictly confidential and may not be reproduced, distributed or published for any purpose.
