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Mustafa Dereci Group Manager Kuveyt Turk Participation Bank March 2014 PARTICIPATION BANKS A Success Story of Financial Inclusion in Turkey PARTICIPATION.

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Presentation on theme: "Mustafa Dereci Group Manager Kuveyt Turk Participation Bank March 2014 PARTICIPATION BANKS A Success Story of Financial Inclusion in Turkey PARTICIPATION."— Presentation transcript:

1 Mustafa Dereci Group Manager Kuveyt Turk Participation Bank March 2014 PARTICIPATION BANKS A Success Story of Financial Inclusion in Turkey PARTICIPATION BANKS A Success Story of Financial Inclusion in Turkey

2 AGENDA  Financial Inclusion: Definition and Facts  Islamic Banking in the World: Facts and Figures  Participation Banking in Turkey: Facts and Figures  Conclusion

3 Financial Inclusion: Definition  The delivery of financial services and products at affordable costs to sections of disadvantaged and low-income segments of society,  The antonym of financial inclusion is financial exclusion where those services are not available or affordable.

4 Financial Inclusion: Facts  Half of the World is unbanked  Proportion of the Muslim population using financial services is less than their non-Muslim counterparts  Financial exclusion rate is currently 47% in Turkey.  Microfinace loans business is almost untapped in Turkey. The volume of microfinance loans is around USD 5 Million per annum.

5 Financial Inclusion: Why?  There is a strong positive correlation between financial inclusion and GDP per capita  It is a strong tool to alleviate poverty  It is an important parameter for economic development and growth of a country  It curtails unregistered economy

6 Financial Exclusion: Why? Population Non-users of formal financial services Users of formal financial services Voluntary self-exclusion No Need Cultural / religious reasons not to use / indirect access Involuntary exclusion Insufficient income / high risk Discrimination Contractual / informational framework Price / product features

7 Kuwait Finance House, IFN Turkey Roadshow Borsa Istanbul Stock Exchange Report, 2013 Islamic Banking in the World Size of Global Islamic Finance = 1.8 Trillion USD

8 KatılımBüyüme % % % % % 2013F % Kuwait Finance House, IFN Turkey Roadshow Borsa Istanbul Stock Exchange Report, 2013 Islamic Banking Assets in the World 1.45 Trillion USD (2%)

9 History of Islamic Banking in Turkey Government Decree for SFH Albaraka Turk and Faisal Finans established Kuveyt Turk established SFH under Banking Law Asya Finans has established İhlas Finance established Anadolu Finans established Faisal Finans becomes Family Finans Ihlas Finans left the market Anadolu Finans and Family Finans merged as Türkiye Finans TKBB established Turkiye Finans acquired by National Commerce Bank First Sukuk Four participation bank are in service - AlBaraka Türk - Bank Asya - Kuveyt Türk - Turkiye Finans

10 45 Billion USD (5.5%, 2023 vision: 15%) 813 Billion USD KatılımSektör , , , , , , , , , , ,339 1,006, ,148 1,217, ,279 1,370, ,075 1,732,401 CAGR % CAGR % BDDK, 2014 Participation Banks in Turkey (Assets)

11 KatılımSektör , , , , , , , , , , , , , , , , , , Billion USD (6.3%) 444 Billion USD CAGR % CAGR % BDDK, 2014 Participation Banks in Turkey (Deposits)

12 KatılımSektörPayBüyüme ,726,000 32,939, % ,072,000 58,413, %-37.89% ,101,000 54,860, %95.99% ,001,000 72,169, %42.84% ,894, ,615, %63.08% ,407, ,005, %51.35% ,492, ,141, %41.65% ,332, ,928, %46.13% ,733, ,417, %28.70% ,911, ,684, %26.24% ,084, ,128, %28.79% ,103, ,771, %28.11% ,031, ,597, %21.72% ,042,000 1,047,428, %24.01% 29 Billion USD (6%) 490 Billion USD CAGR % CAGR % BDDK, 2014 Participation Banks in Turkey (Loans)

13 KatılımTicariSektörPayBüyüme ,514, ,744, ,259, %#REF! ,748, ,110, ,859, %30.76% ,335, ,375, ,711, %40.63% ,726, ,557, ,284, %22.71% ,592, ,895, ,487, %16.29% ,203, ,051, ,254, %20.34% ,735, ,199, ,934, %19.67% 19 Billion USD (7.8%) 245 Billion USD CAGR % CAGR % BDDK, 2014 Participation Banks in Turkey (Saving Deposits)

14 16.4 Billion USD (%12) 133 Billion USD CAGR % CAGR % BDDK, 2014 (milyon TL)SectorCenventionalParticipation Banks ,696 TL22,053 TL2,257 TL ,105 TL29,589 TL3,338 TL ,149 TL52,011 TL5,490 TL ,673 TL74,700 TL6,958 TL ,904 TL71,805 TL13,826 TL ,174 TL113,078 TL19,689 TL ,151 TL152,003 TL23,066 TL ,647 TL189,058 TL28,845 TL ,475 TL244,004 TL35,277 TL Participation Banks in Turkey (SME Loans)

15 BDDK, 2014 Participation Banks in Turkey (Gold Deposits) 200K Gold Customers

16 TonMşt Kuveyt Türk 6,600 39,000 Bankasya 4,400 26,000 Türkiye Finans 1,300 7,682 Albaraka Türk 700 4,136 Katılım Bankaları 13,000 76,818 56% 43% 13,000 Kg 17,000 Kg New Customer 77,000 New Customer 100,000 Participation Banks (Scrap Gold Collection)

17 ATM Sayıları BKM Islamic BanksSector CAGR % CAGR % 1.9K ATMs (4.5%) 42K ATMs BKM, 2013 Participation Banks (ATM)

18 Islamic Banks Conventiona l Banks CAGR % CAGR % 2.4 Units 53 Units BKM, 2013 Participation Banks (ATM per 1,000 km 2 )

19 ATM Sayıları BKM Katılım Bankaları Tüm Bankalar CAGR % CAGR % 2.5 units 56 units BKM, 2013 Participation Banks (ATM per 100,000 People)

20 PersonelPersonel - Sektör CAGR % CAGR +4.10% 17 K (8.5%) 200 K BKM, 2013 Participation Banks (Staff)

21 ŞubeŞube - Sektör CAGR % CAGR +6.13% 966 (8.8%) 11,023 BKM, 2013 Participation Banks (Branch Network)

22 CAGR % CAGR +6.22% 1.2 Branch 14 Branch Islamic Banks Conventiona l Banks BKM, 2013 Participation Banks (Branches per 1,000 km 2 )

23 ŞubeKatılım Bankaları Tüm Bankalar , , , , ,541 Yıl -Year Yıl ortası nüfus Mid-year population ('000) Islamic Banks Conventional Banks CAGR % CAGR +4.90% 1.7 Branches 19.3 Branches BKM, 2013 Participation Banks (Branches per 100,000 People)

24 CAGR % CAGR +8.16% 5 Million (5%) 100 Million yılIslamic BanksSector ,100 53,464, ,101,848 55,510, ,772,187 60,551, ,348,690 64,661, ,925,504 69,916, ,633,634 81,879, ,399,256 91,263, ,178, ,164,954 BKM, 2013 Participation Banks (Debit Card)

25 CAGR % CAGR +7.26% 2.5 Million (4.3%) 57 Million yıl Islamic BanksSector ,702 32,433, ,362 37,335, ,525,532 43,394, ,841,882 44,392, ,273,173 46,956, ,429,269 51,360, ,577,084 54,342, ,544,969 56,835,221 BKM, 2013 Participation Banks (Credit Card)

26 Katılım Bankaları Tüm Bankalar ,743 1,282, ,160 1,453, ,535 1,632, ,676 1,738, ,830 1,823, ,914 1,976, ,839 2,134, ,924 2,293,695 CAGR % CAGR +7.54% 132 K (5.7%) 2.3 Million BKM, 2013 Participation Banks (POS Terminals)

27 Conclusion  Without appropriate regulations and ethical approach to financial inclusion, undeserved consumer may become overdebted. Remember subprime mortgage crash in US.  Financial inclusion is to create an environment for disadvantaged people to access financial services if they need, it is not to force them to become overbanked.  Participation Banks in Turkey have great potential to embrace a big deal of unbanked people with solid and ethical Islamic Banking arguments  The most ignored part of financial inclusion tools is microfinance loans in Turkey

28 Thank You


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