DENİZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2015 DENİZBANK ANNUAL REPORT 2015 DENİZBANK ANNUAL DenizBank is a member of Sberbank Group. SECTION I INTRODUCTION 42 Branch and Central Operations Group CONTACT INFORMATION FOR DENİZBANK A.Ş. 1 DenizBank Financial Services Group (DFSG) 42 Branch Operations and Foreign Trade Center Operations 2 DenizBank’s Mission, Vision 42 Central Operations 2 Dividend Distribution Policy 43 Fund Management, Payment Systems and Private 3 Dividend Distribution Proposal Banking Operations HEAD OFFICE DOMESTIC BRANCHES 3 Amendments to the Articles of Association 44 Investment Banking, Custody and Fund Services 3 Shareholding Structure, Paid-in Capital and Changes, Operations Büyükdere Cad. No: 141 34394 Esentepe-İstanbul DenizBank has 691 branches in Turkey. Information on Shares Held by the Management 45 Foreign Subsidiaries Tel: (+90 212) 348 20 00 domestic branches is available on the DenizBank web site. 3 Changes in the Management, Shareholding Structure 46 Information Technology (IT) Services Fax: (+90 212) 354 83 48 and Activities of DFSG Companies 48 Investment Banking and Brokerage Services FOREIGN BRANCHES 4 DenizBank in Brief 50 Leasing, Factoring and Asset Management Services WEB SITE 6 Sberbank in Brief 52 Cultural Services Bahrain Branch 8 Financial Highlights www.denizbank.com Al Jasrah Tover 6th Floor, Office 62/63 PO Box 10357, 10 2015 at a Glance… Trade Register Number Diplomatic Area, Manama-Bahrain 11 Awards 368587 SECTION II MANAGEMENT AND CORPORATE 12 Message from the Chairman of the Board of Directors Tel: (+973) 17541137 GOVERNANCE 13 Message from the CEO Fax: (+973) 17541139 15 Banking Services 53 Board of Directors 16 Retail Banking Group 61 Resident Board Members 16 Affluent Banking 62 Executive Board 17 Mass Banking 63 Executive Board Members 18 Retail Banking Products 66 Executive Management 19 Branch and ATM Planning 67 Committees 20 Bancassurance 68 Summary Report of Board of Directors to the General 20 SME and Agricultural Banking Group Assembly 20 SME Banking 69 Donations Made in 2015 21 Merchant Relations 69 Related Party Transactions 21 Gold Banking 69 Human Resources 22 Cash Management 71 Training 22 Agricultural Banking 72 Support Services 25 Wholesale Banking Group 74 DenizBank Corporate Governance Principles Compliance 25 Corporate Banking Group Report 25 Corporate Banking 25 Commercial Banking and Public Finance Group 25 Commercial Banking SECTION III FINANCIAL INFORMATION AND RISK 26 Public Finance MANAGEMENT 26 Project Finance 27 Payment Systems and Non-Branch Channels Group 82 Internal Audit, Internal Control, Compliance and 27 Credit Cards Risk Management Systems 27 Debit Cards/PTT Cards 85 Assessments of the Audit Committee 28 Call Center 87 Independent Auditor Report on the Annual Report 29 Telemarketing and Customer Retention 88 Five-Year Summary Financial Highlights 30 Direct Sales 90 Assessment of Financial Position 31 Treasury, Financial Institutions, Private Banking Group 91 Capital Market Instruments Issued by DenizBank 31 Treasury 91 DenizBank Ratings by International Rating Agencies 31 Treasury Sales 32 Financial Institutions 33 Private Banking SECTION IV INDEPENDENT AUDIT REPORTS, FINANCIAL 33 Digital Generation Banking STATEMENTS AND NOTES 34 Internet and Mobile Banking Management 34 Web, Social Media and New Generation Banking 93 Independent Auditor’s Report, Unconsolidated Financial 35 Digital Payment Systems, Cloud Banking Platforms and Statements and Notes for the Year Ended 31 December 2015 Customer Practices Management 203 Independent Auditor’s Report, Consolidated Financial 37 Operations Group Statements and Notes for the Year Ended 31 December 2015 37 Information Technology and Support Operations Group 38 Organization Contact Information 38 Service Quality 39 CRM - Customer Relationship Management 40 Digital and Card Payment R&D/Operations 41 Credits Project Management 1 DENİZBANK FINANCIAL SERVICES GROUP (DFSG) BANKING SERVICES INVESTMENT BANKING AND DENİZBANK BROKERAGE SERVICES DENİZBANK AG (AUSTRIA) DENİZINVEST SECURITIES DENİZBANK MOSCOW (RUSSIAN FEDERATION) EKSPRESSECURITIES EURODENİZ INTERNATIONAL BANKING UNIT LTD. (TRNC) DENİZ REAL ESTATE INVESTMENT TRUST DENİZPORTFOLIO MANAGEMENT LEASING, FACTORING AND ASSET INFORMATION TECHNOLOGY MANAGEMENT SERVICES SERVICES DENİZLEASING INTERTECH DENİZFACTORING DESTEKASSET MANAGEMENT CULTURAL SERVICES DENİZKÜLTÜR OTHER SERVICES BANTAŞ AÇIK DENİZ RADIO-TV DENİZ CARD PAYMENT SYSTEMS 2 SECTION I INTRODUCTION DENİZBANK’S MISSION, VISION DIVIDEND DISTRIBUTION POLICY DenizBank’s mission is After deducting any sums that would be compulsory for the Bank to pay or set aside, such as general expenditures and to become a bank that miscellaneous depreciation costs as well as any amount of taxes that would be compulsory for the Bank to pay, from maximizes employee, the calculated income at the end of the accounting year, the remaining sum shall constitute the net income; after customer and shareholder deducting the previous year’s losses if any, the net income satisfaction with her position, shall be distributed as follows: image and corporate First Scheme Legal Reserves: characteristics in the market a) 5% of this sum shall be allocated to the legal reserves. First Dividends: by adopting a “supermarket b) Out of the remaining amount, the rate and amount set by the Capital Markets Board of Turkey is allocated to the first approach” to financial dividend. services. Second Dividends: c) After deducting any sums specified in item (a) and (b) from the net income, the General Assembly shall be DenizBank envisions authorized to distribute such remaining amount, in part or in full, or to allocate as the extraordinary reserves. becoming one of the five largest banks in Turkey General Legal Reserves: d) Out of the sum calculated after deducting a dividend and the foremost financial of 5% of the paid-in capital from the set amount to be distributed to the shareholders and other parties institution in the region participating in the profit, 10% shall be added to the general legal reserves in accordance with Article 519, defined as the Middle Paragraph 2, Item c of the Turkish Commercial Code. East, Balkans, Caucasus Unless the discretionary legal reserves are duly set aside, and unless the dividends determined for the shareholders and Commonwealth of are distributed in cash and/or in the form of share certificates as per the Articles of Association, no decision Independent States countries may be adopted to allocate further legal reserves, to pass any profits to the following year, or to distribute any through sustained and dividends to the members of the Board of Directors as well as any officials, workers and employees, to foundations profitable growth. established for various purposes, and to similar person and/ or persons. The date and manner of distribution to shareholders of the annual profit shall be determined by the General Assembly upon a proposal by the Board of Directors prepared under the relevant legislation issued by the Capital Markets Board. As of the accounting period of the dividend, irrespective of its issuing and acquiring dates, annual profit shall be distributed equally to all existing shares. The profits distributed pursuant to the provisions of these Articles of Association shall not be recalled. DENİZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2015 3 DIVIDEND DISTRIBUTION SHAREHOLDING STRUCTURE, PROPOSAL PAID-IN CAPITAL AND CHANGES, SHARES HELD BY THE MANAGEMENT At its meeting on February 25, 2016, the Board of Directors DenizBank increased its share capital from TL 716.1 million to TL resolved: 1,816.1 million, by TL 1,100 million, via TL 550 million from retained earnings from share premium and TL 550 million in cash. Not to distribute to the shareholders, the net profit of At the Board of Directors meeting held on December 31, 2015, it was the Bank for the financial year 2015 amounting to TL decided to increase the Bank’s share capital from TL 1,816.1 million 762,645,179.19; to TL 3,316.1 million, by TL 1,500 million, via TL 750 million from retained earnings and TL 750 million in cash. - to allocate 5% of the net profit amounting to TL Required approvals were obtained from BRSA, CMB and the Ministry 38,132,258.96 to the general legal reserve according to of Customs and Trade on January 14, 2016, January 20, 2016 and Article 519/1 of the Turkish Commercial Code, February 1, 2016, respectively. DenizBank’s shareholding structure, and the shares held by ultimate - to keep the exempt amount of TL 9,421,458.70 in the controlling real person(s), as of December 31, 2015 are presented in Mandatory Funds Account in order to benefit from the the table below. DenizBank’s shareholding structure does not contain exception stated in Article 5/1-e of the Corporate Tax any cross-shareholdings. Law with respect to the profit gained by the Bank in Shares Held by the Management 2015 from the real estate sale, DenizBank’s CEO Hakan Ateş owns 28.725 shares, corresponding to - to allocate the remaining amount of TL 715,091,461.53 0.000002% of the total capital. to the extraordinary reserve and to propose every item to the approval of the General Assembly. DenizBank Shareholding Structure - 31.12.2015 Shareholders Nominal Share Value (TL) (%) Sberbank of Russia 1,813,422,610 99.8526 Central Bank of Russia 49.9263 Foreign Institutional Investors 47.1005 Domestic Legal Entities 2.8258 Others 86 0.000005 AMENDMENTS TO THE ARTICLES Publicly Listed 2,677,304 0.1474 OF ASSOCIATION TOTAL 1,816,100,000 100.00