JCR Eurasia Rating has affirmed the credit ratings of Şekerbank T.A.Ş. as ‘AA-(Trk)’ on the Long Term National Scale and as ‘BBB-(Trk)’ on the Long Term International Foreign and Local Currency Scales along with ‘Stable’ outlooks.

JCR Eurasia Rating has evaulated Şekerbank T.A.Ş in a high level investment category and affirmed the credit ratings as ‘AA- (Trk)’ on the Long Term National scale along with a ‘Stable’ outlook. On the other hand, the Long Term International Local and Foreign Currency ratings have been affirmed as ‘BBB-’. Other notes and details of the ratings are given in the table below.

Long Term International Foreign Currency

:

BBB- /(Stable Outlook)

Long Term International Local Currency

:

BBB- /(Stable Outlook)

Long Term National Local Rating

:

AA-(Trk) /(Stable Outlook)

Short Term International Foreign Currency

:

A-3 /(Stable Outlook)

Short Term International Local Currency

:

A-3 /(Stable Outlook)

Short Term National Local Rating

:

A-1+(Trk)/(Stable Outlook)

Sponsor Support

:

2

Stand Alone

:

AB

Established in 1953, Şekerbank is an integrated financial institution operating in corporate, trade and retail banking via 312 branches and over 4,000 personnel country-wide along with subsidiaries and affiliates active in the fields of capital markets, factoring, leasing, mortgage and insurance. Despite the attainment of a below Turkish banking sector average performance with respect to assets, deposits, loan growth, return on assets and equity, the Bank maintained its successful track record regarding the provision of international funding. There was a minor contraction in its market share due to a comparatively low growth performance and the Bank held the 15th largest position in the sector base on asset size as of FYE2014. The Bank strengthened its equity structure via an internal equity generation capacity supported by sustainable revenue streams derived from core banking activities, retention of generated internal resources along with a cash capital injection. In addition, it enlarged its capital base through the sub-ordinated loans obtained from international markets. The Bank’s capital adequacy ratio recorded an improvement in comparison to the previous year and remains compliant with the legal regulations, however maintained a level that was below sector average.

The share of non-performing loans among total loans generally maintained an above sector average level whilst the rise in the non-performing loans portfolio over the last 2 years and the relatively low level of provisioning increased the negative impact on the Bank’s asset quality. Despite the maintenance of an above sector-average net interest margin, the high level of operating expenses, low level of fee and commission income along with the provisions set for non-performing loans have a limiting impact on the bank’s net profit growth. On the other hand, the issue of the average maturity of deposits of less than 3 months leading to maturity mismatch between the total assets and liabilities and the subsequent pressure created on liquidity management inherent across the sector also holds true for Sekerbank. Resembling the sector from a resource composition perspective, Sekerbank diversifies its resource structure through the funds obtained from various overseas resources and as such contributes to the liquidity management.

The political atmosphere following the general elections in 2015, the increasing domestic impact of the rising levels of unrest in neighboring countries, increasing potential for contagion and the conjecture accompanied by low growth, the devaluation of the Turkish Lira on the currency markets, high levels of volatility and deterioration in the debt roll-over capacity of real sector companies considerably increase the upward level risks. Under the current circumstances, the Bank’s level of capitalization, liquidity level and balance sheet composition stands at a level that could withstand losses arising from fluctuations in macro-economic indicators and contingent and soft systemic risks.

Taking into consideration the bank’s balance sheet composition, capital adequacy, capability to access international markets and obtain funding, retention of internal resources, SME loans portfolio, collaboration with international financial institutions, support for projects aiming to increase energy productivity, organizational structure, risk appetite and corporate governance practices, the Bank’s long-term international foreign and local currency have been affirmed at the country-ceiling level of ‘BBB-’.

The fiscal strength of the Bank’s shareholders and willingness to support the Bank have been affirmed as (2), whilst the Stand Alone grade, referring to the ability of the Bank to manage the incurred risks regardless of shareholder support, has been determined as (AB). The (AB) grade in the Stand Alone category and the (2) grade in the Sponsor Support category denote “High” and “Sufficient” levels, respectively, based on JCR Eurasia Rating’s notation system.

For more information related to the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Şevket GÜLEÇ.

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