3Turkey: Within 1st 20 Biggest Economy and Population GDP (USD bn)Population (mn)Source: International Monetary Fund (IMF), TurkStat
42002-2012 Average Real GDP Growth (%) Growing at a Fast and Sustainable PaceAverage Real GDP Growth (%)Source: International Monetary Fund (IMF), TurkStat
5The Model Works in Turkey: Growth Creates Jobs without Distorting Inflation Outlook Labor ForceGrowth creates jobsUnemployment is down to 10.6% from 16% at its peak during the crisis and below the 11% a the end of 2007 (before the crisis)Inflation (%, CPI)High growth does not distort internal balance, i.e. inflationInflation remains within the sustainable 5-10% bandSource: Turkstat
6Debt to GDP (%, EU Defined) This is Due to Strong Fundamentals (I) Prudent Fiscal PolicyBudget BalancePrimary Budget Surplus Remained high at 3.4% of GDP a year since 2002.Debt to GDP (%, EU Defined)Public debt continues to go down; 36% at the end of 2012.Authorities target to decrease it further to 31% by 2015 according to the Medium Term Plan.Source: The Ministry of Finance
7Loans and Assets Annual Growth (%) This is Due to Strong Fundamentals (II) Strong Banking SectorROE and CAR (%)Banking Sector is not leveraged with assets 7.5 times the equity (or 18% Capital Adequacy Ratio).Profitability is high enough to support the capital base to allow for high growth.Loans and Assets Annual Growth (%)The system grew by 19% CAGR a year in assets and 23% CAGR a year in loans since 2007.Client deposits make up 65% of the system’s liabilities.Source: BRSA
8Turkey’s Sovereign Ratings Rating Companies Recognized the Countries Successful Economic Performance and Strong FundamentalsTurkey’s Sovereign RatingsFitchMOODY’SS&PBBB+Baa1BBBBaa2BBB-Baa3BB+Ba1BBBa2BB-Ba3B+B1BB2B-B320122002Investment GradeSource: Bloomberg
9Foreign Capital Inflows and Current Account Deficit Rating Increases and Further Growth Potential Attract Foreign InvestorsForeign Capital Inflows and Current Account DeficitHigher inflows allow for the current account deficit to rise.Source: CBRT
10Current Account Balance So it creates Current Account Deficit; but in fact it is mostly due to energy importCurrent Account BalanceTurkey’s Non Energy Current Account SURPLUS was USD 5 bn in 2012Source: CBRT
11GREEN ENERGY SUSTAINABLE GROWTH ENERGY EFFICIENCY Energy → The main driver of GrowthGreen Energy + Energy Efficiency → The main drivers of Sustainable GrowthGREEN ENERGYSUSTAINABLE GROWTHENERGYEFFICIENCY
12Total Electricity Consumption of the World (2010): Energy → The main driver of GrowthTotal Electricity Consumption of the World (2010):19.3 bn kWhDeveloping countries (population: 5,7 bn) per capita consumption: 1,530 kWh p.a.Developed countries (population: 1,3 bn) Per capita consumption: 8,820 kWh p.a.Total Electricity Demand of the World (if electricity consumption per capita of the Developing Countries reaches that of the Developed Countries):62 bn kWhx 3.2Considering global warming;the World can not produce 62 bn kWh p.a.Only, technologic innovations in green energy and investments in renewable energy & energy efficiency will allow sustainable energy production and growth!
13For Sustainable Growth; Global warming is a great threat!Thanks to new technologies; devices are more energy efficient today.A refrigerator consumes 75% less electricity than a refrigerator in 1975.In order to produce $1 of GDP; we need 44% less energy than we needed in 1975.Energy efficiency should be adopted as an objective by both individuals and corporations!Renewable energy & energy efficiency are critical to sustainability, key to survival!The world must limit the global temperature increase to 2˚C!We must rapidly decrease using fossil fuels to stop global warming!CO2 emissions since 1850 (red);exponential growth (blue);cuts to hit climate target (dashed).Source: guardian.co.uk
14Authorities are Taking Necessary Steps to Increase Energy Investments in Turkey
15The New Investment Incentive Program Specifically designed to encourage investments with the potential to reduce dependency on the energy imports.According to the amended Renewable Energy Law at the end of 2010 the feed in tariffs are as follows:
16Renewable Energy – Installed Capacity 2012:Current electricity consumption in Turkey: ~242 TWhTotal installed capacity in electricity generation: ~57 GWRenewable energy plants’ share: ~ 39%.2023 Target:The envisaged electricity consumption in Turkey: ~500 TWh (CAGR: 7.5%)Total installed capacity in electricity generation envisaged: ~105 GWRenewable energy plants’ share: ~ 30%15,000 MW additional nuclear capacity will shift the installed capacity mix.
17Renewable Energy - Generation In terms of generation; renewables, natural gas, nuclear and other thermal power plants are expected to have an equal share of 25%.
18Renewable Energy Installed Capacity Growth Turkish renewable energy market mainly consisted of hydro power plants.Starting from 2008, wind power plant investment have accelerated.In the coming years, solar power plants will further boost.Renewable installed capacity (MW)20012012CAGR( )Total11,70022,2006%Hydro11,64019,7005%Wind182,20055%Geothermal1615023%Other2616018%
19As DenizBank; our track record in energy is a testament to our commitment to support the sustainable growth objectives of Turkey.
20DenizBank Key Facts & Figures Diversified Loan Portfolio with Significant Growth ( ):48% CAGR!!Total volume of PF transactions: USD 20 bn; since 2006Total outstanding exposure: USD 5 bn
21DenizBank Renewable Energy Track Record Total outstanding energy exposure: USD 2.3 bnTotal ENERGY transaction size: USD 7.3 bnTotal Renewable energy transaction size: USD 6.5 bnDenizBank ENERGY loan amount: USD 2.3 bn.DenizBank Renewable loan amount: USD 1.7 bn34%: Renewables12%: Other
22DenizBank Renewable Energy Track Record DenizBank has financed 1,900 MW of power plants where 63% is Renewable energy: 1,200 MW portfolio, 46 projectsThorough Environmental Due DiligencesAll complying Equator Principles !
25Awarded Strategic Partnership with EBRD Cofinancing:ROTOR WPP,IDO acquisition,TAV Izmir Airport.Ongoing pipeline: natural gas distribution and production, healthcare PPP, portsFunding: MidSEFF &TurSEFF:The objective of MidSEFF & TURSEFF is to reduce Turkey’s dependence on fossil fuels by financing private sector investments in mid-size renewable energy projects.MidSEFF: EUR 150 million (EBRD & EIB)TurSEFF I: USD 40 million (EBRD & CTF)TURSEFF II: EUR 40 million I (EBRD & JBIC)Other/Equity:Ongoing deal to be closed (Graniser) where EBRD will be the equity investor.IDOPrivatization2011USD 750 mnZorlu EnerjiRotor WPPEUR 130 mn2009Internationally recognised transactions in cooperation with EBRD!!Excellence inSustainable EnergyFinancing2013SustainabilityAward2012testimony to the best-in-class service provided by DenizBank and the harmonious collaboration with EBRD; contributing to DenizBank’s brand recognition!!
26135 MW Zorlu ROTOR Wind Farm I. Cofinancing135 MW Zorlu ROTOR Wind FarmRotor WPP2009EUR 130 mnEBRD’S FIRST FINANCING IN TURKEY!Project Location : Osmaniye / Gökçedağ, Southeastern Turkey.Project cost: EUR 210 mnLoan Amount: EUR 130 mnTenor: IFI tranche 14 years, commercial loan tranche 12 yearsTurbines: GE 2.5 XLMLAs: EBRD, IFC, EIB, HSBC, DenizBankDenizBank Role: Coordinator, MLA, Bank Guarantee Facility Agent, Hedging Bank, Onshore Account Bank
27IDO Istanbul Ferries Privatization I. CofinancingIDO Istanbul Ferries PrivatizationProject Description: Financing the privatization of Istanbul FerriesAcquisition Value: USD 861 mnAcquisition finance facility amount: USD 858 mnTenor: 12 yearsDenizBank Role: MLA, Account BankIDOPrivatization2011USD 750 mn
28TAV Izmir Adnan Menderes Airport I. CofinancingTAV Izmir Adnan Menderes AirportProject Description : Financing of TAV’s new concession of Izmir International AirportLoan Amount: USD 325 mnTenor: 15 yearsDenizBank Role: MLA, On-Shore& Off-Shore Account Bank, Hedging Bank
29II. Funding: MidSEFF &TurSEFF MidSEFF & TurSEFF lines:Objective: to reduce Turkey’s dependence on fossil fuels by financing private sector investments in mid-size renewable energy projects.MidSEFF: EUR 150 million (EBRD & EIB)TurSEFF I: USD 40 million (EBRD & CTF)TURSEFF II: EUR 40 million I (EBRD & JBIC)~ 90 diversified renewable energy & energy efficiency transactionsMainly SME & commercial banking segment clients benefiting from a systematic approach:Due diligence & double checking of the technical assumptionsESAP (Environmental&Social Action Plan): Road map with concrete actions & supervision of environmental and social issuesEnhanced awareness of environmental standardsMore Clean, Conscious and Sustainable!!!
33Electricity Overview - 2 Turkey’s electricity consumption per capita is 3,226 kwh while EU, OECD and Russia’s are 6,700 kwh, 9,600 kwh and 6,600 kwh as of 2012 year end.Installed capacity of Turkey has reached app. 57 GW as of 2012 year end with a CAGR of % 6.4 (last 5 years) where the share of renewable energy plants stands at 39%.Annual electricity consumption in Turkey has reached 242 TWh as of 2012 year end, showing a CAGR of ~8.5% during the last 5 years.The envisaged electricity installed capacity in Turkey will be 105 GW for the year 2023.In order to meet the electricity demand in the following period, an additional installed capacity of 48 GW is planned to be added to the system during the next 10 years and reach to a level of 105 GW by 2023 with a CAGR of ~6.1%. The total investment amount required for an additional installed capacity of 48 GW can be envisaged as USD bn with the assumption of investment cost per MW is around USD 1.5 – 2.0 mio.The share of renewable energy plants within the total installed capacity is envisaged as at least 30% in 2023.In terms of share in total energy generation; renewables, natural gas, nuclear and other thermal power plants are expected to have an equal share of 25% in 2023.
34Electricity Overview - 3 Liberalization in Energy started with the new power plant licenses given to the private sector. The government stopped building power plants and handed the business to private sector in BO or BOT type. Also the existing power plant portfolio began to be privatized, starting with the renewable (mostly HEPP) portfolio.After the spin-off of Turkish Electricity Authority (TEK) into production, distribution, wholesale and transmission activities (EÜAŞ, TEİAŞ, TEDAŞ, TETAŞ) the distribution & transmission activities began to be privatized, by transferring the rights of operations in 21 regions nationwide.By the new Energy Market Law, incentives are given to the renewable energy in terms of feed-in tariffs. Power plants of hydro, wind, geothermal, solar biomass and biogas enjoy 10-year purchase guarantee with high level feed-in tariffs.
35Electricity Overview - 4 Under the Law on Utilization of Renewable Energy Resources enacted in 2005 and amended in 2007, companies holding retail distribution licenses were to purchase electricity from renewable producers at the average wholesale electricity price of the previous year. This price was varying between a minimum of EUR 5 cents/kWh and EUR 5.5 cents/kWh converted into TL.The Parliament has amended the Law at the end of 2010 again. According to the new amendment, the final feed in tariffs per renewable source is presented in the table below.Moreover, in the event that operators use locally made equipment and technology in renewable energy facilities, an additional support of 0.4 cents to $ 2.4 per kilowatt can be provided for a five-year term to companies that started producing energy before the end of 2015.