2018 ANNUAL REPORT
TEB FINANCIAL SERVICES GROUP
TEB FAKTORİNG A.Ş.
One of the top five players in its industry, TEB Faktoring A.Ş. (TEB Faktoring) provides export, import and domestic factoring products and services to corporate and commercial customers and SMEs.
TEB Faktoring’s business volume was up to TL 8,9 billion in 2018 from TL 8,2 billion in 2017 and its total assets were TL 1.682.248 thousand.
The Company had net income of TL 39,957 thousand in 2018, which represents an increase of 142%, the highest profitability ratio since the Company’s inception and a performance which is well above the sector’s profitability increase. As of 2018 year end, TEB Faktoring’s return on equity is 36,02% and return on assets is 2,19%. Return on equity for the industry has been 20,4% for 2018.
Economic recession, increase in input costs, increase in number of companies going for debt composition agreements with creditors due to difficulties in payment all affected the repayment of credits. In 2018, non-performing loan ratio (NPL) was up to 6% in the factoring industry. Focusing on risk management, TEB Faktoring’s NPL ratio was 3,8% for 2018, which is below the industry average.
In 2018, the total number of customers in TEB Faktoring’s portfolio went up to 28.406. As of year-end, the company had 1.892 active customers, 16 branches and 119 employees.
TEB Faktoring remained among the largest factoring companies in Turkey and the world in terms of the export factoring business volume according to Factors Chain International (FCI), the world’s biggest factoring chain.
With the aim of better serving its customers and helping them achieve success in challenging economic conditions with an efficient and effective company management principle, TEB Faktoring focuses on digitalization and accordingly initiated many projects in this context in 2018. This allowed for risk management, increased efficiency and automation, which are the key elements of profitability.
Supply Chain Finance, another product used extensively around the world, has been in the focus of the factoring sector and the Supply Chain Finance Platform under the umbrella of Association of Financial Institutions was established upon the completion of all infrastructural studies. This platform will allow for financing of suppliers at favorable costs by financial institutions before the maturity based on the buyers’ credibility. On the buyers’ side, this platform allows them to manage their own cash flows through financial institutions. Thanks to this platform, factoring transactions will be realized and followed up in electronic environment and provide contribution to corporate firms, SMEs and more importantly the country’s economy.
2019 is expected to be a year when impacts and uncertainties resulting from political and economic fluctuations continue. Economic recession, particularly in domestic market, stresses the importance of better risk management. In today’s economic environment, for healthy growth SMEs will need to focus on exports with more favorable conditions. Their most significant needs will be to open up to new markets, realize trade with companies in countries they do not know and which they cannot measure their risk while protecting their cash flow and equity. Factoring firms providing all these services will be their biggest supporters by providing factoring guarantee and finance. In this context, being on SMEs side, TEB Faktoring signed a collaboration agreement with TİM to provide factoring services to exporters with favorable terms. Accordingly in 2019, TEB Faktoring will allocate a funding of USD 50 million to TİM exporters with special interest advantages.
TEB PORTFÖY YÖNETİMİ A.Ş.
TEB Portföy Yönetimi A.Ş. (TEB Asset Management) has been operating in asset management sector since 1999.
As of year-end 2018, it is the 8th largest asset management company in Turkey, with TL 6,7 billion assets under management and 3,87% market share in 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 an authorization certificate numbered PYŞ/PY.22-YD.11/524. The Company’s authorization certificates for Asset Management activitydated 03 January 2000 and Investment Advisory activity dated 12 May 2004 have been cancelled as of the said date.
The main activity of the company is to launch and manage mutual funds subject to the Capital Market Law and the provisions of applicable legislation.
Within the framework of the principles of the new legislation which is effective as of 1 January 2018, an asset manager is allowed to manage maximum 40% of pension fund assets launched by a pension company. In order TEB Asset Management took this as an opportunity to diversify its assets under management , and signed contracts with 5 new pension companies other than BNP Paribas Cardif Emeklilik to manage their funds they have established, which are suitable for Group’s vision and strategy . In parallel with these developments, TEB Asset Management now manages pension funds of 3 of the 4 largest pension companies of Turkey.
TEB Asset Management also provides investment management services to institutional and retail clients in line with their risk profiles as a proxy under portfolio management agreements and investment advisory services to international funds.
As of 2018 year end TEB Asset Management had
The synergies that TEB Asset Management generate by collaborating with BNP Paribas Asset Management, one of Euro Zone’s leading asset managers, are accelerating the company’s progress in 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 Parvest Turkey Fund, a leading Turkish equities based fund whose assets of TL 202 million are invested in the stocks of companies established in Turkey. TEB Asset Management also manages Japan-based Turkey Equity Mother Fund, whose assets amount to about TL 111 million.
Besides those two international funds mentioned above, TEB Asset Management provides investment advisory to other international funds which invest in Turkish equities with asset size of TL 96 million for which the company acts as consultant make TEB Asset Management Turkey’s biggest asset manager working for international clients..
In terms of its “simplification” process for mutual funds which started in 2017, TEB Asset Management decreased number of funds from 23 to 21 and made relevant changes to the remaining funds to ensure managerial and operational optimization. In addition, TEB Asset Management captured a good acceleration in new customer acquisition in the institutional client segment during 2018, in line with its targets.
In 2019
In 2019, TEB Asset Management aims to complete and develop “Digitalization” projects which started in 2018 of. In this context, TEB Asset Management web site which became live at the end of 2018 will be improved and smart phone application which is at concept stage will be completed.
The joint project with TEB on robo-advisory services, which was completed and currently being tested, is expected to be launched to be used by customers, upon the completion of relevant tests and the process of compliance with regulations. Additionally, applications to CMB were filed to merge some of the mutual funds to decrease the total number under the “simplification” process,. These processes are expected to be completed during 2019.
In the forthcoming period, TEB Asset Management will continue to develop strategies to guide its investors in making the right investment choices with right timing, to work with domestic and international stakeholders in exploration of ways to increase its 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 of the Capital Market Law numbered 6362: 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.
The company currently provides the following investment services:
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.
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 supports its extensive and efficient marketing network. TEB Investment has been a company recognized with a number of awards in research in recent years.
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.
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 transactions, customer acquisition activities 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.
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.
In 2018, as the first step of achieving these targets, transformation initiatives were launched in order 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.
Activities were 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.
Volatility in financial markets during the year caused an increase in the transaction volume of stock and derivative markets particularly in the second half of the year.
On the other hand, changes in prices and macro balances limited the interest of both individuals and corporate investors.
As a result of these developments, TEB Investments successfully achieved its budgeted targets for 2018.
The company ranked 11th with 3,24% share of the market for its trading volume worth TL 129.189 million in Borsa İstanbul Equity Market.
TEB Investment ranks 3rd in Borsa İstanbul Derivatives Market with an 8,90% market share secured with a trading volume of TL 224.324 million.