Investor Presentation

1
Investor Presentation
November 2004
2
Agenda

• Strategy 3
• Products 5
• Profitability Improvements 15
• Annex 21

3
Strategy

• Customerdriven balance sheet and income
  statement
• Emphasis on consumer and SME segments
• Emphasis on higher margin products
• Significant increase in fee and commission income
• Further increase in operational efficiency

4
Agenda

• Strategy 3
• Products 5
• Profitability Improvements 15
• Annex 21

5
Controlling 14 of all customers assets
BRSA TL 000 trillion
38.9
31.0

• Akbanks client money increased 26 y-o-y, over
  the sectors 18 growth

6
Asset management
Mutual Funds (USD million)

• Akbank ranks second among all fund managers in
  Turkey
• The underlying factors behind this performance
  are
• Superior asset management performance
• Superior channel management
• Effective marketing and communication

Private Banking Assets (USD million)

• Wide range of domestic and international
  investment products
• Top quality investment advisory service
• Already 9 private banking centers in urban
  high-income areas

7
Consumer and SME lending is now 51 of total loans
Breakdown of Loans ()
8
Consumer loans
Consumer Loans (market share, )
736
1,348
199
3Q04
Volume (USD million)
Previous periods are not given due to a one time
correction in the market data by the Central Bank

• Akbank continues to grow its market share in
  consumer loans

Excluding credit cards
9
Salient performance in credit cards
Credit Card Loans (market share, )
Credit Cards Issuing Volume (market share, )
Acquiring Volume (market share, )

• Approx. 1 market share gain per quarter in
  issuing
• 65 increase in credit card loans
• 3.0 million credit cards by 3Q04

Amex is included
10
SME lending - commercial
Commercial loans (USD million)

• Medium size companies with sales turnover btw.
  USD 302 mn are serviced through our commercial
  banking unit
• There is already 36 commercial banking centers in
  11 provinces and we are targeting to add approx.
  10 more in a year

Cross sell ratio ()

• Commercial loans are also considered as a hook
  product, which paves the way for further
  marketing opportunities like credit cards and car
  loans

11
SME lending - small businesses
Small Business Loans (USD million)
Only 4 in FC

• Small business loans, which are given to
  companies with sales turnover ltUSD 2 mn are
  granted by the retail banking unit
• Special credit packages for
• Certain sectors and regions (pharmaceuticals,
  agriculture, tourism etc.)
• Dealer networks of corporate clients (ie.
  Microsoft, IBM, Bosch, Arçelik)

Monthly average
12
An effective cash management tool
of Business Cards biz. card

• Over 38,000 cards by September 2004
• Effectively used by 72 companies, including Coca
  Cola, Exxon Mobil, Philip Morris, Temsa
  (Mitsubishi) and Hedef Alliance

• Benefits to card member
• On-line management systems
• Efficient payment processing
• Elimination of cash / checks
• Extra liquidity / increased sales volume

• Benefits to supplier/distributor
• Centralized collections and payments
• Saving time and money by eliminating cash /
  checks
• Streamlined operations

13
Corporate banking

• Akbank has traditionally been the House Bank of
  multinationals in Turkey
• Corporate loans that has been extended to
  blue-chip companies like Ford, Unilever,
  Carrefour, Dimon stood at USD 2.3 billion
• Akbanks leadership continues in project finance.
  USD 1.2 billion of loans have been extended to
  projects like irrigation, highway and natural gas
  pipeline construction
• Along with core products, Akbank offers special
  and structured financial solutions for
  corresponding corporate needs. In this context,
  Akbank also offers cash management products
  regulating the collection and payment cycle of
  companies
• Blue-chip companies provide excellent cross-sell
  opportunities (3.6x)

14
Agenda

• Strategy 3
• Products 5
• Profitability Improvements 15
• Annex 21

15
Net fees and commissions
Net Fees Commissions (BRSA, TL trillion)
Fees and commissions revenue contribution ()
Asset management fees
Credit cards commissions
Money transfer fees
Consumer loan related
Other
Bank only - excluding commissions from cash and
non-cash loans

• Net fees and commissions increased 116 in real
  terms due to the rapid growth in credit cards and
  consumer loans
• Credit cards contribution to fee income rose to
  52 from 51 q-o-q

16
Improving fee income ratios in line with targets
Net fees commissions/operating expense
Net fees commissions/operating income
Source BRSA figures

• We are rapidly approaching our medium term fee to
  income target of 20
• Fee to expense ratio will continue to rise as fee
  income will continue to grow while expense growth
  will be moderate

17
Branches are becoming more sales focused
Number of Branch Staff
6,653
5,868
5,486
1,300
Tellers will contribute to sales
1,874
2,590
2,011
2,192
2,283
3,252
50
31
1,802
11
613
2006
2003
2001
Teller
Sales
Operation

• The number of back office staff in branches,
  which was 2,590 in 2001 has been reduced due to
  centralization of operations
• Growth in sales staff is not detrimental to
  personnel costs as their variable salary is based
  on performance targets

18
State of the art and widely used alternative
channels (65 of all transactions)

• Internet
• Fully reflects the new corporate identity
• One of the most visited sites in Turkey 3 mn.
  visitors / month)
• State of the art investment services
• User friendly design for easy access (e.g One
  password for all channels)
• Over 9 mn. transactions / month
• Over USD 4 bn. volume / month

• Call Center
• 13.5 mn calls in the period of Jan-Sept. 2004
• More than 1 mn. customers since Dec02
• Quick and easy access with increased line
  capacity and renewed menus
• Enriched set of transactions on IVR
• Fast authentication Customer No Mobile No
  for the callers from mobile phones

• Other
• 11 of all transactions were directed to ADC in
  1.5 years (branch share 46 to 35)
• USD 6.5 mn. income from alternative delivery
  channel commissions by Sept. 04
• Freedom Banking Zones in 250 branches

• ATM BTM
• 1,440 ATMs are being rebranded
• 125 cash-in/out ATMs (Branded as BTM-Beyond
  Teller Machine). The remaining branch
  ATMs will be converted in 2005

19
Efficiency ratios
Operating expense/operating income ()
Operating expense/average assets ()
Source BRSA figures

• Centralization together with the new technology
  infrastructure allows us to keep operational
  costs subdued
• Performance based compensation and profitability
  measurement systems will contribute to further
  efficiency

20
Agenda

• Strategy 3
• Products 5
• Profitability Improvements 15
• Annex 21

21
Balance sheet highlights
Shares ()
BRSA (TL Trillion)
2003
3Q04
3Q04
2003
TOTAL ASSETS Cash and Due from
Banks Securities Loans TOTAL
LIABILITIES Deposits Funds Borrowed TOTAL
EQUITY
32,953 1,744 14,944 11,874 27,140 20,212
4,751 5,813
32,231 1,684 15,398 9,529 26,719
20,883 3,988 5,512
5 45 36 61 14 18
5 48 30 65 12 17
Amounts are expressed in terms of the
purchasing power of TL at 30 September 2004
22
Income statement highlights
BRSA (TL Trillion)
3Q03
3Q04
Interest Income Interest Expense Net Interest
Income FX Gain (Loss), Net Provision for Loan
Losses Net Interest Income after FX,
Income/Loss NPL Prov. Fees and Commissions
(Net) Profit on Trading Securities
(Net) Operating Profit Operating
Expenses Monetary Loss Income Before
Tax Tax Net Income
3,235 (1,348) 1,887 (96) (90) 1,701 286 25
4 2,443 (697) (406) 1,260 (376) 884
3,784 (1,670) 2,114 123 (34) 2,203 132 276
2,715 (640) (303) 1,737 (596) 1,141
Amounts are expressed in terms of the
purchasing power of TL at 30 September 2004
23
Balance sheet highlights in USD
Shares ()
BRSA (USD million)
2003
3Q04
3Q04
2003
TOTAL ASSETS Cash and Due from
Banks Securities Loans TOTAL
LIABILITIES Deposits Funds Borrowed TOTAL
EQUITY
21,794 1,154 9,882 7,853 17,950 13,368
3,142 3,844
20,654 1,079 9,868 6,107 17,121 13,382
2,555 3,533
5 45 36 61 14 18
5 48 30 65 12 17
Figures are stated with exchange rates
effective at respective dates
24
Income statement highlights in USD
BRSA (USD million)
3Q03
3Q04
Interest Income Interest Expense Net Interest
Income FX Gain (Loss), Net Provision for Loan
Losses Net Interest Income after FX,
Income/Loss NPL Prov. Fees and Commissions
(Net) Profit on Trading Securities
(Net) Operating Profit Operating
Expenses Monetary Loss Income Before Tax
Tax Net Income
2,141 (894) 1,247 (63) (59) 1,126 189 168
1,616 (461) (268) 834 (249) 585
2,396 (1,057) 1,339 78 (22) 1,395 84 175
1,719 (405) (192) 1,100 (377) 722
Figures are stated with exchange rates
effective at respective dates
25
Akbanks dividend policy

• For the purpose of optimizing the Banks capital
  structure, Akbank has formulated a new dividend
  policy
• Effective on its 2003 financials, Akbank will pay
  minimum 30, maximum 50 of the net distributable
  profit to its shareholders who are described in
  its articles of corporation, as cash dividend.
  This policy will be dependent on relevant market
  conditions and sustenance of a comfortable level
  of capital adequacy ratio

26
Free capital comparison
Total Equity (BRSA, TL trillion)
Free Capital 1H04 (BRSA, TL trillion)
AKBANK
2003 figures are restated with WPI

• Strong equity growth driven by strong profits
• Akbank will optimize its capital structure
  through its dividend policy of 30 min. - 50
  max. cash dividend payment

27
Financial strength approved by ratings
FitchRatings National Rating
FitchRatings Individual Rating
Moodys Financial Strength Rating
D D D E
Akbank Garanti Is Bankasi YKB
AA- A A BBB
C C/D C/D E
Negative outlook Positive outlook
28
Disclaimer Statement
The information and opinions contained in this
document have been compiled or arrived at by
Akbank 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 Companys 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
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purpose.