Leasing Sector , Turkey

1. Leasing Sector, Turkey Bülent Tasar Chairman – Turkish Leasing Assosciation (FIDER) CEO - Siemens Finansal Kiralama A.S. - Turkey 1

2. Outline Changing dynamics of the emerging markets & the potential for their leasing industries Special Reference: Turkish Leasing Industry 2

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4. Shifting Balances Emerging Economies Advanced Economies *Emerging Economies as % of total World, 2010; Source: IMF 4

5. EM: Strong Human Capital Projected Growth of Working Age Population (Ages 10-65), 2005-2030 5

6. They are growing faster than the advanced economies Contribution to Global Growth Emerging Economies Source: HSBC Advanced Economies GDP Growth 2010 2011 2012 Advanced Economies 3.0 2.4 2.6 Emerging Economies 7.3 6.5 7.0 Source: IMF 6

7. By 2050… E7 countries, which comprise of Turkey, China, India, Brazil, Russia, Indonesia and Mexico are expected to outperform the growth rates in the US, EU, G7 and OECD countries. E7 countries are expected to attract the highest levels of capital inflow in addition to the strong increase in their trade volumes. Source: Goldman Sachs, PriceWaterHouseCoopers 7

8. They invest heavily in sectors where leasing industry is the most active Energy Infrastructure Transportation Telecommunications Health 8

9. Share of SMEs in GDP & employment is very high… …but their access to financial services remains severely constrained 9

10. Key Take Away: Emerging Markes will provide significant growth prospect for their leasing industries… Larger and relatively stronger Offering significant growth potential Under-penetrated Under-capitalized Under-leveraged Under-owned & under-valued Providing compelling sector/company-specific stories 10

11. …& significant value-added for global players Margins are higher Returns are stronger Penetration levels are low Presence of captive parents Strong M&A activity and search for partnerships Scope for know-how transfer and value add 11

12. Special Reference: Turkish Leasing Sector 12

13. What can Turkey offer different than other Emerging Markets Unique Geographical Location… • …enjoys a very special location at the crossroads between East & West, overlapping Europe & Asia geographically • …occupies an area approximately equivalent to the quarter of the size of the EU • …strategically located on critical energy corridors • …is the leading investor in Caucasian and Central Asian Turkic Republics 13

14. Consecutive High Growth Rates US$bn % Fast growing economy GDP 1970 US$ 13 bn 2000 US$ 200 bn 2011 US$ 776 bn Source: TURKSTAT 14

15. Declining Budget Deficit & Net Public Debt Budget Balance / GDP % Source: TURKSTAT Net Public Debt / GDP % 15 Source: TURKSTAT

16. Increasing Trade Volumes 1970 US$ 1.5 bn 2000 US$ 81 bn 2011 US$ 382 bn 16

17. Stronger FDI flows over US$20bnper year in 2005-2008 compared to only less than US$1bn historically 17

18. Promising for Higher Growth Rates due to Low Penetration Levels Automotive Car ownership per ‘000 Finance Energy Loans + Deposits/ GDP, % Per capita consumption (toe) 18

19. Turkish Leasing Industry in a Nutshell Financial Leasing can be applied in the form of domestic lease, cross - border lease. Currently No operational leasing. Main medium-long term equipment financing instrument, especially for SME’s. 31 companies of which 26 are member of the association. First 15 players dominate the market (mainly bank subsidiaries). 4 Participation islamic 11 Investment Banks Contracts : Almost all full payout - mostly fixed interest rate Average term: 3 years Average growth rate: 35% in real terms. 2011 growth 55% in US$ terms. 19

20. Legislative Framework • Leasing Law (No: 3226) governs only Financial Lease. (since June 1985). • Uncancellable period is four years (two years in some exceptions such as cars, computers, photocopiers, constructionmachineries, buses, trucks, medical equipments, aircraft and vessels). • Lessor change is permitted. • Sub Leasing is not allowed. • Both movables and immovables can be leased (except industrial rights such as patent rights, software etc). • Lease rentals can be fixed or floating and in TL and/or in FX. • Lessor is the legal owner of the asset. • Leasing sector is governed by the Banking Regulation and Supervision Agency (BRSA). • Contracts should be registered with notary public to secure the ownership rights of Lessor. • Lessor is obliged to take out insurance, Lessee should pay the insurance premium. • Total book value of the leased assets can not exceed 30 times of the shareholders’ equity. • Minimum capital requirement is TL 5 million (appx. USD 2.7 million). • Cross -border leasing contracts should be registered with the BRSA. 20

21. Accounting & Taxation in Turkish Leasing Industry IFRS since 2007 for all enterprises. Corporatetax: 20% 0.5% withholding tax on Cross-border rental payments. No stamp duty or any tax on the lease contracts. Investment incentivesfor special sectors and/or regions with 0% VAT allowances. LESSEE LESSOR 21

22. Strong Growth Rates of the Past are expected to Return with New Legislation and Tax Reform Sharp decline due to tax changes coupled with global financial turmoil Strong growth rates: CAGR: 50.23% Another growth phase 42,963 6,197 6,712 19,373 24,250 28,581 37,239 51,519 19,878 10,186 11,195 Dec 2007-Jan 2012 5th Phase 1st Phase 2nd Phase 3rd Phase 4th Phase Jan 2006 – Dec 2007 June 1985 – June 2003 July 2003 – Dec 2005 current 22

23. Draft Leasing Law WhatwillChange? • Operating Leasing • Sale and Lease Back • Sub Leasing • Software Leasing • Improvement in legal cases (i.e. Get equipment quicker, more severe trade/civil law articles against fraud). • No time restriction • The voluntary-based Leasing Association will become obligatory, covering all lessors and strengthening its status. • Registration of lease contract with the Association will be less bureaucratic compared to the ex Notary Public application Higher volumes New Products Less Bureaucracy More Efficiency 23

24. Future Prospects • Penetration levels will increase in line with strong growth rates in Turkish GDP, increasing per capita income and higher level of private investments. • New financial openings like operating leasing, sale and leaseback, sub leasing, software leasing will also increase the growth rate and fuel higher levels of penetration. • Margins will improve via taking asset/RV risks (operation leasing, techfresh etc.) • Asset management and risk management will be crucial (Basel II to be applied within 2 years). • Technology investments will be used to create competitive advantages (IT, software, web base applications etc.) • Brokership will increase. • Specialization/Value Creation/ Innovation will differentiate the lessors. Benchmarking will be key. • Learning organizations will be formed. (Dynamic and ongoing trainings). 24

25. Future Prospects Thank you for your kind attention. Siemens Finansal Kiralama A.S. BÜLENT TASAR Managing Director/CEO Meclisi Mebusan Cad. No:45 34427 Findikli / Istanbul Tel : +90 (0 212) 251 02 07/08 Tel (Direct) +90 (0 212) 252 92 09 Fax : +90 (0 212) 293 35 30 e-mail: bulent.tasar@siemens.com website : www.siemensleasing.com.tr Finansal Kiralama Dernegi (FIDER) BÜLENT TASAR Chairman Nisbetiye Cad. Ayyildiz Is Merkezi No. 2/2 34300 1.Levent / Istanbul Tel : +90 (0 212) 284 53 10 Fax : +90 (0 212) 281 66 47 website : www.fider.org.tr 25