2017 ANNUAL REPORT
TEB FINANCIAL SERVICES GROUP
TEB FAKTORİNG A.Ş.
One of the top five players in its sector, TEB Faktoring A.Ş. (TEB Faktoring) provides export, import and domestic factoring products and services to corporate and commercial customers, with a particular focus on the SME segment of the market.
In 2017, TEB Faktoring wrote TL 8.2 billion worth of business, up from the previous year’s TL 7.7 billion. Total assets increased by 19% and amounted to TL 2,032,906 thousand. Additionally, the net income and total factoring receivables of the company increased by 44% and 20%, respectively, in comparison with the previous year. According to year-end 2017 figures, the company registered a 21.45% return on equity and a 1% return on assets. Based on the data released by the Association of Financial Institutions, the sector average for the return on equity was 17.0%.
While the non-performing loans ratio in the factoring sector was 3.5% in 2017, thanks to TEB Faktoring’s over emphasis on risk management, the NPL ratio was 2.1%, a result below sector average and even below the budgeted figure.
In 2017, the total number of customers in TEB Faktoring’s portfolio went up to 26,493. As of year-end, the company had 2,437 active customers, 16 branches and 121 employees.
TEB Faktoring ranked in the top three largest factoring companies in Turkey in terms of the export factoring business volume and among the biggest factoring companies in the world according to Factors Chain International (FCI), the world’s biggest umbrella organization for independent factoring companies. In 2017, TEB Faktoring was named the best export factoring company with a score of 100% by FCI and has become the first and only factoring company to win the “Best Factoring Company” award 6 times in the history of the award.
With the aim of better serving its customers and enlarging the market, the company has worked on projects based on digitalization in 2016 and brought a substantial portion of them into life in 2017. This allowed risk management, increased efficiency and automation, which are the key elements of profitability. Also in 2018, the company will be putting much emphasis on digitalization and innovation.
Supply Chain Finance, another product used extensively around the world, has been in the focus of the factoring sector since 2016, and the company made investments in this product in the reporting period. A portal, which will be established under the umbrella of the Association of Financial Institutions will allow financial institutions, buyers and suppliers to interact on the same platform. The shared electronic infrastructure will enable companies, especially SMEs, to obtain financing at more favorable rates and conditions. To this end, TEB Faktoring entered into an agreement with one of Turkey’s leading supply chain platforms and began making this product available for its customers.
TEB PORTFÖY YÖNETİMİ A.Ş.
A joint venture of BNP Paribas, one of Europe’s leading financial institutions, and of TEB, one of Turkey’s leading banks, TEB Portföy Yönetimi A.Ş. (TEB Asset Management) has been active in the field of asset management since 1999.
As of year-end 2017, it is the 9th biggest asset management company in Turkey, whose portfolio of TL 4.8 billion worth of assets under management gave it a 3.02% share of the sector.
Under the new regulations, the Capital Markets Board of Turkey (CMB) authorized the Company to engage in asset management and investment advisory activities on 15 June 2015, and issued the authorization certificate for operations numbered PYŞ/PY.22-YD.11/524. The Company’s authorization certificates for Asset Management Operations dated 03 January 2000 and Investment Advisory dated 12 May 2004 have been revoked as of the said date.
The primary field of activity of the company is to set up and manage mutual funds subject to the Capital Market Law and the provisions of applicable legislation. In addition, the company manages the private pension funds of BNP Paribas Cardif Pension, manages the assets of institutional and individual clients by determining the optimum breakdown of financial instruments that suit their risk profiles in the capacity of proxy under the asset management agreement, and offers asset management and investment advisory service to funds set up abroad.
As of December 2017, TEB Asset Management was an asset management company with an extensive international distribution network and it:
The synergies that TEB Asset Management generates by collaborating with BNP Paribas Investment Partners, one of the Euro Zone’s leading asset managers, are powering the company’s progress towards becoming a global force. Thanks to this collaboration, TEB Asset Management continues to enter into strategic partnerships with many other international firms.
TEB Asset Management manages the Parvest Turkey fund, a leading open-ended collective investment scheme (SICAV) whose assets of TL 185 million are invested mainly in the equities of companies established in Turkey. TEB Asset Management also manages the Japan-based Turkey Equity Mother Fund, whose assets amount to about TL 130 million. These two plus the TL 190 million in other international funds which invest in Turkish equities and for which the company acts as a consultant make TEB Asset Management Turkey’s biggest asset manager working for international clients.
Under the implementation principles that will enter force as of 1 January 2018, pension companies will be allowed to have no more than 40% of their funds that they have set up managed by the same asset management company. Taking advantage of this requirement, TEB Asset Management held contacts with pension companies potentially aligned with the Group’s vision and strategy to manage the pension funds they incorporated and entered into new partnerships in order to diversify the institutional portfolios under its management throughout 2017.
Having made use of 2017 as a year devoted to “simplification” of the mutual funds it has incorporated, TEB Asset Management decreased the number of funds from 23 to 21 and made relevant changes to the remaining set of funds to ensure managerial and operational optimization.
In addition, TEB Asset Management captured a good acceleration in new customer acquisition in 2017 in keeping with its target of growing in the area of institutional asset management.
In 2018
In 2018, TEB Asset Management will continue to introduce new products in keeping with its innovative approach to business. Putting much emphasis on digitalization, the company’s plans include the construction of a new website and development of a mutual funds application for smart phones. In addition, robo-advisory services are planned to be offered for the customers’ selection of mutual funds within the scope of a joint project with TEB.
In the forthcoming period, TEB Asset Management will continue to guide investors in their making the best possible investment choices at the best possible time, to work with domestic and international stakeholders in the exploration and exploitation of ways to boost market share and to protect its clients as well as itself against adverse market risks.
TEB YATIRIM MENKUL DEĞERLER A.Ş.
Having started its operations in 1996, TEB Yatırım Menkul Değerler A.Ş. (TEB Investment) is engaged in capital market transactions under the Capital Market Law and the provisions of applicable legislation.
The company’s licenses were reviewed and renewed by the Capital Markets Board pursuant to two Capital Markets Act communiqués: Communiqué III-37.1 on principles regarding investment services and activities and their ancillary services (“Investment Services Communiqué”) and Communiqué III-39.1 on the establishment and operation of investment institutions (“Investment Institutions Communiqué”). The company has been providing investment and ancillary services as a “broadly-licensed brokerage” since 13 November 2015.
TEB Investment is also licensed to provide introducing brokerage services to Türk Ekonomi Bankası A.Ş. by the resolution of Capital Markets Board dated 27 June 2016.
The company is currently licensed to provide the following investment services:
TEB Investment serves its clients at home and abroad with an extensive lineup of products and services through a variety of service channels that address the particular needs of different investor profiles. Accordingly, the company provides different client groups with the investment and trading services (equities, derivatives, mutual funds, bonds & bills, repo, etc.) as well as corporate finance and research services according to their requirements, and also intermediation services in debt issues and acquisitions to companies in the field of corporate finance.
Being a bank’s intermediary institution, TEB Investment derives its primary advantage against the increasing competition in the sector from the research infrastructure at its disposal, which backs its extensive and efficient marketing network. TEB Investment also boasts being a company recognized with a number of awards in research in recent years.
TEB Investment distinguishes itself in the sector by virtue of:
TEB Investment collaborates with several units of the BNP Paribas Group. The company cooperates particularly in research, electronic trading and customer acquisition activities concerning Institutional Intermediation Services and commodity custody transactions for corporations. There is intense collaboration also in Retail and Private Banking particularly concerning investment advisory, digitalization and new customer acquisition. Joint work is intended to be carried out regarding forex and structured products in the period ahead.
TEB Investment recognizes that digitalization , which has gained speed due to the accelerated consolidations in the aftermath of the recent CMB regulations coupled with the trends in technology will modify the sector’s structure and business conduct. Carefully considering this fact, the company implemented the strategies it has formulated and concentrated on enriching the customer experience through service diversification in different segments.
As the first step of achieving these targets, transformation initiatives were launched in 2017 in a bid to create a customer experience that puts effective employment of technology and research in the forefront, and to rebuild TEB Investment into a more efficient company with a higher level of digitalization.
During the reporting period, work was carried out on new services with a particular focus on structured products and digital platforms, which are planned to be introduced in the period ahead. The preparations for the introduction of forex and corporate bonds, in particular, are at their final stages.
TEB Investment is one of the few companies maintaining a good balance in the delivery of its extensive intermediation and research services to individual and institutional investors, alike. The company ranked 12th with 3.7% share of the market for its trading volume worth TL 107,056 million in Borsa İstanbul Equity Market.
TEB Investment ranks 3rd in Borsa İstanbul Derivatives Market with a 9.9% market share secured with a trading volume of TL 165,749 million.