2019 ANNUAL REPORT
TEB FINANCIAL SERVICES GROUP
TEB FAKTORİNG A.Ş.
One of the biggest 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.
In 2019, TEB Faktoring’s business volume was TL. 8,9 billion and its total assets were TRY 2,087,066 thousand, with 24% growth.
Affected by the slowdown of the economy starting with the second half of 2018, business volume of the factoring industry decreased by 11%. However,TEB achieved to maintain its business volume of prior year thanks to its effective service provided particularly in export factoring.
The Company had net income of TL 37,568 thousand in 2019. As of 2019 year end, TEB Faktoring’s return on equity was 25.5%.Return on equity for the industry was 18% for 2019.
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 2019, non-performing loan ratio (NPL) and cost of risk ratio were 5.92% and 2.47%, respectively, in the factoring industry. Focusing more on risk management, TEB Faktoring’s NPL ratio and cost of risk ratio were 1.5% and 0.3%, respectively, which are well below the industry average.
In 2019, the total number of customers in TEB Faktoring’s portfolio went up to 30,244. As of year-end, the company had 1,823 active customers, 16 branches and 113 employees.
TEB Faktoring remained among the leading 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. At the same time, TEB Faktoring was selected the best export factoring company of the world for the 7th time.
In 2019, TEB Faktoring was rewarded as the most admired company of our country.
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 2019. This allowed for risk management, increased efficiency and automation, which are the key elements of profitability.
Attracting more customers in 2019 through its investments in digital platforms and competencies developed in this area, TEB Faktoring aims to increase its use of digital platforms in factoring transactions starting with 2020 and provide more support to SMEs. The Company works on adding new digital partnerships in 2020 to the existing ones which started in 2019.
Within the frame of the contract signed with “hamilinden.com” which is the new solution partner of TEB Start-up House project, TEB Faktoring started to provide a new service to SMEs on digital platform. With this product, “hamilinden.com” members who want access to financing are given the opportunity to convert their invoiced receivables into cash at a favorable cost.
TEB Faktoring adopted “faster, cheaper, more reliable business” principles and in this context, it launched the Automated Decision (ADS) project in 2018 which enables parametric inquiry, calculates a scoring for cıustomers/debtors via artificial intelligence embedded in the Decision Tree and generates automatic results for transactions which are in line with the pre-defined criteria. With this project, manual error risk is minimized, transactions became faster and realized at a lower cost. TEB Faktoring will launch Automatic Limit Allocation Project (ALA) in 2020 which will allow automatic conclusion of limit increase requests from customers based on same inquiry and scoring methods.
Supply Chain Finance, a product used extensively around the world, has been in the focus of the factoring sector since 2016. A digital platform was set up for this specific product in 2018 by the Association of Financial Institutions. This platform, called Supply Chain Finance System (SCF), brings together financial institutions, buyers and suppliers in the same electronic environment. SMEs using SCF platform had the opportunity to access lower cost financing. TEB Faktoring started to offer this product to its customers in 2019 and became the first company to use SCF platform in its industry.
It is anticipated that the positive trend which started during the second half of 2019 with the new economic program will continue in 2020. Moreover, 2020 is expected to be a year when uncertainties will decrease and growth will increase.
Management of risks in economy, particularly in the domestic market, is becoming more critical. 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, finance and collection services.
TEB Faktoring achieved a first in the industry and signed a protocol with Turkish Exporters’ Assembly together with TEB, to meet financing needs of exporter companies.
With this protocol, favorable interest rates will be offered to export foreign currency credits with maturities upto 1 year. At this period when maturities are getting longer, collectibility of receivables becoming more important and access to financing resources becoming more difficult, TEB Faktoring is offering a very important service and continues to provide support to building stones of our economy, SMEs and companies who turn onto exports.
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 2019, it is the 6th largest asset management company in Turkey, with TL 12,7 billion assets under management and 4.47% 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 main activity of the company is to launch and manage mutual funds subject to the Capital Market Law and the provisions of applicable legislation.
One of the cornerstones of 2019 for TEB Asset Management was the agreement signed with ING Bank to acquire all shares of ING Portföy Yönetimi. In accordance with the resolution of Extraordinary General Assembly held on 31 May 2019, ING Bank A.Ş. transferred all of its shares in ING Portföy Yönetimi A.Ş. to TEB Asset Management.
On 26 July 2019, CMB gave permission for the facilitated merger transaction of TEB Asset Management’s acquisiton of ING Portföy Yönetimi A.Ş. as a whole with all assets and liabilities through winding up without liquidation method in accordance with articles 155 and 156 of the Turkish Commercial Code numbered 6102. The acquisition was realized on 16 August 2019.
Increasing its strength in the industry as a result of this merger, TEB Asset Management also signed an Investment Fund Distribution Agreement with ING Bank to distribute TEB Asset Management investment funds.
Another positive reflection of the merger was the transfer of management of NN Hayat Emeklilik funds, previously managed by ING Portföy, to TEB Asset Management.
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 2019 year end TEB Asset Management had
with a wide external distribution channel.
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 221 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 79 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 86 million for which the company acts as consultant make TEB Asset Management Turkey’s largest asset manager working for international clients..
TEB Asset Management designated 2019 as the year of digitalization and started to launch its projects in this context.
English version of TEB Asset Management web site which went on line in 2018, was launched. Additionally, within the scope of a project carried on with TEB, robo advisory system, ‘My Fund Advisor’ which establishes model portfolios based on fund customers’ risk profiles with an algorithm was launched after testing and regulatory compliance processes.
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 volatility risks in the markets.
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 2019, as the first step of achieving these targets, transformation initiatives were continued 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.
The Company conducts activities to plan new products to be offered in the following period, particularly structured products and digital platforms.
Sharp fall realized in deposit interests which started with the interest reduction cycle down to 1200 base points initiated by the Central Bank caused an increase in household interest to capital markets in the second half of the year.
As a result of these developments, TEB Investments successfully achieved its budgeted targets for 2019.
At 2019 year-end, the company ranked 13 with a 2.30% share of the market for its trading volume worth TL 96,915 million in Borsa İstanbul Equity Market.
TEB Investment ranks 5th in Borsa İstanbul Derivatives Market with a 5.07% market share secured with a trading volume of TL 145,518 million.