JCR Eurasia Rating has upgraded the credit ratings of Akdeniz Faktoring A.Ş. to ‘A-(Trk)/Positve’ on the Long Term National Scale and affirmed its rating as ‘BBB-/Stable’ on the Long Term International Foreign Currency Scale.

JCR Eurasia Rating has upgraded the investment grade credit ratings of “Akdeniz Faktoring A.Ş.” to ‘A- (Trk)’ on the Long Term National Scale along with a ‘Positve’ outlook. In addition, JCR Eurasia Rating has also affirmed the Long Term International Foreign and Local Currency Ratings 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

:

A-(Trk) / (Positive 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

:

1

Stand Alone

:

B

The factoring sector’s significant future growth potential is expected to continue taking into account low levels of domestic penetration along with the increase in the extent of effectiveness by supervisory and regulatory authorities and the increased representational powers and effectiveness of the “Financial Institutions Union” which brings together all factoring, leasing, consumer financing companies constituted by legal obligations put in place at FYE2012. Furthermore, the new Takasbank Money Market (TMM) Procedure which came into force on 10 April 2015 enabling Leasing, Factoring and Financing Companies to join the membership of Takasbank Money Markets (TMM) is estimated to provide factoring companies with alternative models of funding and improve systemic support levels in the subsequent period. On the other hand, the intensely competitive operating environment that prevails throughout the sector necessitates tailor made solutions for customers, rapid conclusion of business procedures and sustainable growth, whilst rising transactional volume and pressure requires emphasis on effective risk management procedures.

Akdeniz Faktoring A.Ş. (henceforth the Company or Akdeniz Faktoring) has operated within Zülfikarlar Holding, which conducts business petroleum and petroleum products, energy and the financial sector, since 1993 and provides funding to a customer profile largely comprised of domestic factoring companies. Akdeniz Faktoring A.Ş. acquired 6.25% shares of the leading Holding company, Turkuaz Petrol Ürünleri A.Ş. on September 17, 2014. The Company has concentrated its operations at its headquarter and has a branch in Ankara which is currently inactive.

Akdeniz Faktoring’s interest margin stood below the sector average reflecting the owner’s prudent risk taking growth strategy. Despite displaying a modest loan-book growth as of yearend 2014, Akdeniz Faktoring has increased its turnover while enjoying a remarkably low NPL ratio thanks to its high asset quality and strong collateral structure. Additionally, Akdeniz Faktoring achieved a satisfactory credit growth along with improved profit indicators owing to the room provided through sound capital increase in 2015, the majority of which was met through cash injection, and the strategy to increase the share of profitable SME on the receivables portfolio. Moreover, in addition to shareholder’s capital support, available cash credit lines and issuance of debt instruments provided flexibility and improved Akdeniz Faktoring’s liquidity management.

In addition to the positive differentiation regarding the ratio of non-interest expenses to total revenues and average assets from that of the sector, the strength conferred upon the Company by a balance sheet with no foreign currency risk, the synergy created among Group companies, significant level of support provided for the revenue generating capacity by its asset quality and collateral structure and the capitalization level are the major factors that underlie the upward revision of the Company’s long term national ratings and outlook as ‘A-/Positive’.

It is considered that the controlling shareholder İsfendiyar Zülfikari and Zülfikarlar Holding have the willingness to ensure long term liquidity and equity depending on financial capability should such a need arises and experience to provide efficient operational support to Akdeniz Faktoring A.Ş. In this regard, the Company's Sponsor Support grade has been determined as (1).

Additionally, taking into account the internal resource generation capacity, profitability potential, growth capability and prospects, asset quality, capitalization level, liquidity profile and over 20 years of experience in the sector, we, as JCR Eurasia Rating, are of the opinion that the Company has reached the adequate level of financial strength, administrative experience and foundation to manage its financial obligations regardless of any assistance, provided that the consistency provided in the senior management and macroeconomic outlook does not concentrate on the negative direction. Within this context, the Stand Alone grade of the Akdeniz Faktoring A.Ş. has been determined as (B) in the JCR Eurasia Rating 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. Abdurrahman TUTĞAÇ.

JCR EURASIA RATING

Administrative Board