EVALUATION OF FINANCIAL STATUS, PROFITABILITY AND SOLVENCY

A review of TEB’s financial statements that are drawn up in accordance with the regulations of the Banking Regulation and Supervision Agency (BRSA) reveals as follows:

TEB’s after-tax profit for 2016 went up by 7% to TL 941.8 million and the Bank posted a RoE of 13.5% in line with its strategies focused on profitability and productivity.

While the Bank’s total assets grew by 11% to TL 79,727 in 2016, total lending also expanded around 6% and reached TL 56.4 billion; in this context, the Bank continued to extend maximum support to its individual and corporate customers. As part of the strategy to offer service to a broader customer base, retail loans reached TL 15.5 billion. Loans made available to SME, Commercial and Corporate customers that serve as a key indicator of TEB’s regular support to the national economy were worth TL 40.3 billion and accounted for 72% of the Bank’s performing loans portfolio.

As at end 2016, TEB converted the entirety of the deposits it has collected into loans and finished the year with a loans/deposits ratio of 113%. Time deposits volume that covers a substantial portion of the Bank’s funding need went up 13% and the ratio of total deposits to balance sheet liabilities was registered as 63%. On the other hand, demand deposits also reached TL 7.63 billion, making a significant contribution to the Bank in terms of funding cost.

TEB diversified its funding sources with international borrowings. The Bank continued to obtain syndication and similar loans from international markets in order to secure long-term funding. Despite the negative developments in global financial markets, on 31 August 2016, TEB signed a loan agreement of two tranches, in the amounts of EUR 352,000,000 and USD 205,000,000 in total with respective terms of 367 days in a bid to channel the same to exporter companies, whose loans have matured in 2016. The all-in cost was LIBOR +0.85% for USD currency and EURIBOR +0.75% for EUR currency that will be used for export financing.

As at the end of 2016, the Bank had ongoing subordinated loans in the total amount of EUR 400 million and USD 230 million based on agreements executed with various banks and financial institutions.

Within the frame of efforts to diversify funding sources and to present investors with alternative products besides deposits, the following TEB bonds with a total nominal value of TL 1.28 billion were offered in domestic markets: a 173-day bond with a nominal value of TL 109.15 million in February 2016; a 168-day bond with a nominal value of TL 146.9 million in May 2016; a 168-day bond with a nominal value of TL 259.5 million in June 2016; a 169-day bond with a nominal value of TL 137.7 million in August 2016; a 160-day bond with a nominal value of TL 297.6 million and a 168-day bond with a nominal value of TL 325 million in November 2016.