Investor Presentation with 9M’17 Financials October 2017 Executive summary Structurally attractive Turkish Economy Underpinning A Dynamic Banking Sector • Turkish market presents a strong opportunity among emerging markets thanks to large and growing economy energized by a highly attractive demographic profile • In this macro backdrop, banking sector has a promising future, with growth opportunities implied by current product and volume penetration figures, and a profitability higher than that of emerging market peers • Tight monetary stance of the Central Bank helped ease the currency volatility paving the way for realization of growth objectives • With positive impact from macro incentives headlined by the Credit Guarantee Fund program, strong growth returned to lending One of the Top Performing Banks in the Market • QNB Finansbank is one of the strongest players in this market with 5th ranking across most categories among privately owned banks • It has a very strong distribution network balanced between a branch footprint covering 99% of banking business in the market and best in market digital offerings • It has shown strong financial performance beyond its scale even in most volatile market conditions driven by differentiation, adaptability and right people brought together New Shareholder Opens a New Frontier to QNB Finansbank • Recent acquisition by QNB positions QNB Finansbank as the Turkish bank with the strongest shareholder • QNB is the largest player in Middle East and Africa by all critical measures and has the highest ratings among all banks with a presence in Turkey • Its presence across a wide geography overlaps well with Turkey’s key foreign trade partners bringing opportunities in this area • QNB Finansbank’s launch of its new brand has been very successful, and is translating to successful expansion of its customer franchise in potential growth areas • QNB Finansbank already started seeing positive impact of new shareholder structure in funding costs and trade volumes • With the new shareholder, QNB Finansbank will add a new growth chapter in its successful history capturing its fair share in Corporate and Commercial Banking while sustaining its success in Retail and SME Banking 1 Contents 1 Macro-economic Overview 2 QNB Finansbank and QNB Group at a Glance 3 Loan-based Balance Sheet Delivering High Quality Earnings 4 Solid Financial Performance 5 Appendix 2 Macro-economic Overview Structurally attractive Turkish economy and focus on fiscal discipline(1) Large economy with low GDP / capita… …and highly attractive demographic profile … generating high real GDP growth GDP # GDP per capita Population by Age Groups GDP Growth, Constant Prices 2016, USD, tn (USD, k) 2016 ,% 2016, % 35.0 8.7 8.9 10.9 12.4 5.3 SA 28 18 41 7 6 3.2 2.6 11.9 TR 25 16 43 8 7 1.8 1.8 0.3 BR 23 16 44 9 8 1.3 -0.2 0.9 RU 17 10 45 14 14 0.5 0.3 PL 15 11 44 14 16 -3.6 EUZ BR RU TR PL SA 0-14 15-24 25-54 55-64 65+ TR PL EUZ SA RU BR Low fiscal deficit… … and controlled external deficit… … with low public debt Fiscal Deficit / GDP Current Account Deficit / GDP Gross Public Debt / GDP 2016, % 2010-2016, % 2016, % 9.0 89.0 8.9 78.3 6.7 4.0 5.5 51.7 54.4 3.6 4.7 2.4 3.7 3.8 28.1 1.1 1.5 15.6 TR EUZ PL RU SA BR 2011 2012 2013 2014 2015 2016 RU TR SA PL BR EUZ (1) EUZ: Eurozone, BR: Brazil, RU: Russia, PL: Poland, SA: South Africa, TR: Turkey Source: IMF WEO – Oct’17; ECB; CIA World Fact Book; Central Banks; BRSA; Turkstat; IMF FSI 4 Sound banking system with inherent growth potential(1) Low leverage ratio… … and limited NPL levels… … with strong profitability characteristics Leverage ratio NPL ratio Banking Sector Pre-tax RoA 6M’17 6M’17, % 2010-6M’17 average, % 12.5 9.7 2.1(3) 11.4 10.3 9.9 9.3 9.1 1.5(3) 1.5 1.5 4.8(2) 1.0 4.1 3.7 3.1 2.9 EUZ SA BR PL RU TR RU EU PL BR TR SA TR RU BR SA PL Further growth potential in deposits… … feeding overall lending growth potential… … as well as ongoing retail lending growth Deposits / GDP Loans / GDP Household debt / GDP 6M’17, % 6M’17, % 6M’17, % 112.3 110.9 51.2 33.9 36.5 75.9 75.0 70.1 63.2 62.4 57.7 61.8 24.8 46.7 52.3 47.8 16.5 13.5 EUZ SA PL BR TR RU EUZ SA TR PL RU BR EUZ SA PL BR TR RU (1) EUZ: Eurozone, BR: Brazil, RU: Russia, PL: Poland, SA: South Africa, TR: Turkey (2) Q1’17 data (3) Q4’16 data 5 Source: Bloomberg; ECB; Central Banks; BRSA; Turkstat; IMF FSI Lacklustre credit growth of 2016 has turned high pace in 2017 thanks to Credit Guarantee Fund Incentive Program Credit Guarantee Fund Program Annualized credit growth rate in Turkish market TRL, % Business loans • Total guaranteed portfolio (constant FX) (1) size: TRL 250bn • A total of TRL Retail loans • Individual client loan size cap 250-280bn loans 29 for PGS will be under ˗ SME: TRL 12mn CGF guarantee 26 ˗ Commercial: TRL 50mn at the end of the 24 • Guarantee ratio program 25 ˗ SME: 90% • This is equal to 20 20 ˗ Commercial: 85% 22% of business 18 ˗ Exporter: 100% loans at the end 17 • NPL cap for guarantee: 7% of of 2016 15 total portfolio 17 11 Regulatory changes to support retail loan growth 9 7 10 • Extended maximum loan maturity from 36 to 48 months • General provision on retail loans reduced from 4% to 1% • Risk weighting of retail loans realigned to international standards • LTV on mortgages increased from 75% to 80% 2011 2012 2013 2014 2015 2016 9M’17 (1) At least 80% will be under Portfolio Guarantee System (an accelerated way to include bank loans in CGF incentive program. CGF approves loans to be induced in 2 days on average) 6 Effective tightening of monetary policy alleviated FXvolatility alleviated policy ofmonetary tightening Effective Central Bank rates Central Bank Jan’16 borrowing O/N repo 1 week rate funding Avg. lendingO/N liquidity Late Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 Feb’17 Mar’17 Apr’17 May’17 Jun’17 Jul’17 Aug’17 12.5 Sep’17 4.0 12.0 3.5 Options implied TRL volatility TRL implied Options TRL against USD against TRL 11.5 Jan’16 Jan’16 3.0 11.0 Feb’16 Feb’16 Mar’16 Mar’16 10.5 2.5 Apr’16 Apr’16 PM resignation PM resignation 10.0 May’16 May’16 Jun’16 Coup attempt Jun’16 Coup attempt 9.5 Jul’16 Jul’16 Aug’16 Aug’16 9.0 Sep’16 Moody’s downgrade Sep’16 Moody’s downgrade Oct’16 Oct’16 8.5 25 Nov’16 U.S. election Nov’16 U.S. election 8.0 Dec’16 Monetary policy Dec’16 Monetary policy20 Jan’17 response Jan’17 response 7.5 15 Feb’17 Fitch downgrade Feb’17 Fitch downgrade Mar’17 Mar’17 7.0 Constitutional Constitutional10 Apr’17 referendum Apr’17 referendum 6.5 May’17 May’17 5 Jun’17 Jun’17 Jul’17 Jul’17 Aug’17 Aug’17 7 Sep’17 Visa crisis with U.S. Sep’17 Visa crisis with U.S. QNB Finansbank and QNB Group at a Glance QNB Finansbank: 5th Largest Privately Owned Universal Bank(1) QNB Finansbank group structure QNB Finansbank market positioning % Owned by QNB Finansbank Bank only, 6M’17 Comm. Total Total Total Credit install. Branch assets loans deposits GPL(2) cards loan Mortgage Brokerage, Co-operation Leasing and Information Consumer Fund Mgmt. with Other Factoring Technology Finance 1st İşbank İşbank İşbank İşbank İşbank Garanti İşbank Garanti and Insurance Banks 99 100 100 33 100 Yapı 2nd Garanti Garanti Garanti Garanti Garanti Garanti İşbank 100 51 100 9 Kredi Yapı Yapı Yapı Yapı 3rd Akbank Akbank İşbank Akbank 49 Kredi Kredi Kredi Kredi Yapı Yapı Yapı 4th Akbank Akbank Akbank Akbank Kredi Kredi Kredi Financial highlights 5th Denizbank DenizbankDenizbank Akbank TEB QNB Finansbank BRSA bank only financials 9M’17 TRL, bn 6th Denizbank Denizbank Denizbank TEB Total assets 120.0 Net loans 79.0 7th TEB TEB TEB TEB ING HSBC DenizbankDenizbank Customer deposits 63.1 Shareholder's equity 11.7 8th ING ING ING ING TEB TEB ING ING Branches (#) 580 Active customers (mn) 5.3 9th HSBC HSBC HSBC HSBC HSBC ING HSBC HSBC Bank only employees (#) 11,815 Note: All information in the presentation is based on BRSA bank only data unless stated otherwise (1) In terms of total loans, total assets (2) Includes overdrafts 9 Source: BRSA bank only data; BAT QNB Finansbank covers Turkish geography through a diverse distribution network and market’s only “pure digital bank” Internet banking Mobile banking Mobile banking ATMs Internet banking 654k active 1,714k active internet banking mobile banking customers customers 538k active mobile banking customers 580 branches Direct sales 2,795 ATMs 327k active around Turkey internet banking customers Covering 71 out of 631 in-house 81 cities of POS Field service personnel Turkey(1) Call center Call center Telesales 243k POS 141 field service terminals personnel 169 inbound agents 792 inbound 55 outbound agents agents (1) Representing 99% of banking activity in Turkey in terms of total loans and deposits by cities Source: BRSA Finturk 10 QNB Finansbank has shown success beyond its scale in volatile market settings Financial performance since 2010 Drivers of QNB Finansbank’s performance resilience Average RoA Between Q1’10 and Q2’17, quarterly 2.1 Unique practices delivering market 2.0 Differentiation leading financial results 1.9 1.8 1.7 (3) 1.6 (1) Entrepreneurial culture and capabilities Adaptability 1.5 to adapt to changing market conditions (2) 1.4 1.3 1.2 Right people brought together via a clear 1.1 guidance of meritocracy and an Right people 1.0 aspiration for diversity that forms the basis of everything 0 50 100 150 200 250 300 350 Asset Size TRL bn, 6M’17 (1) TRL 180mn sale of Finans Emeklilik in Q4’12 is excluded (2) TRL 388mn sale of Deniz Emeklilik in 2011 and TRL 262mn dividend income in 2012 are excluded (3) Sale of YKB Emeklilik in 2013