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

www.invest.gov.tr