PERFORMANCE & FINANCIAL RESULTS – 9M14 November 4, 2014

1

Performance & Financial Results – 9M14

About Us Market Performance

Financial Results

About Us

2

Shareholder Structure

Free Float 29% İş Bank & İş Bank Group Companies 71%

Business Lines •

Brokerage & Trading

•

Investment Advisory

•

Asset Management

•

Corporate Finance

•

Research

Subsidiaries* IS Private Equity: (Share: 29.1%) (Ticker: ISGSY:TI) Turkey’s largest Private Equity company and listed since 2004; 26.5% IRR (Internal Rate of Return) on USD basis from 11 exits

Credit Rating ‘AA+(tur)’ The first and the only investment house that has (AA+) credit rating in Turkey

IS Investment Trust (Share: 28.9%) (Ticker: ISYAT:TI) Turkey’s leading Investment Trust; listed since 1996, represents more than 50% of the sector with its c. TL 250mn portfolio IS Asset Management: (Share: 70.0%) Turkey’s leading portfolio management company managing mainly IS Group funds, represents more than 20% of the fund market with its TL15.9bn AuM Maxis Investments: (Share: 100.0%) London headquartered B Group capital markets licensed subsidiary

Corporate Governance Rating ‘AAA (Trk)/Distinctive’ The first and the only investment house that has a corporate governance rating in Turkey

IS Investments Gulf: (Share: 100.0%) We are liquidating our fully owned subsidiary based in Dubai Efes NPL Asset Management: (Share: 74.0%) Aims to manage mainly banks’ NPLs * Current structure

3

Performance & Financial Results – 9M14

About Us Market Performance Financial Results

Capital Markets Trading Volume* IS Investment’s Market Share (TL Billion)

Equity Market (TL Billion)

1400 1200 1000 800 600

1,244

1,239

400

200 0 2013/9

4

2014/9

120 110 100 90 80 70 60 50 40 30 20 10 0

1

10%

1

8.5%

7.6%

8% 6%

105.7

4%

94.5

2% 0% 2013/9 Volume

2014/9 Market Share

Rank

Source: Borsa Istanbul

#1 IS Investment

Despite the all unfavourable local and global conditions, the trading volume of the equity market reached 9M13 * Market transactions by members

7.6%

Broker 1

7.5%

Broker 2

7.3%

Broker 3

4.6%

Broker 4

3.9%

We keep leading the market by 7.6% which is expected to increase oncoming periods

Capital Markets Trading Volume* IS Investment’s Market Share (TL Billion)

Derivatives Market (TL Billion)

700 600 500 400 300

647

(3)%

629

200

100 0 2013/9

5

2014/9

100 90 80 70 60 50 40 30 20 10 0

1

16%

1

13.8%

14% 10.9%

12% 10% 8%

89.0

6%

68.7

4% 2% 0% 2013/9 Volume

2014/9 Market Share

Rank

Source: Borsa Istanbul & TurkDEX

#1 IS Investment

Although the volatile equity market continued to press on the derivatives market, the trading volume realized almost same as 9M13 * Market transactions by members

10.9%

Broker 1

10.3%

Broker 2

6.6%

Broker 3

4.9%

Broker 4

4.7%

Some of our clients carry on their wait&see policy but even so we kept staying at the leading position by 10.9% market share

Capital Markets Trading Volume* Bills & Bonds Market (TL Billion)

IS Investment’s Market Share* (TL Billion) 8

700

7

600

5

4

6.0%

7.1%

6

500

8% 6%

5

400 300

6

4

661

478

200

3

4%

6.8

6.0

2

2%

1

100

0

0 2013/9

2014/9

0% 2013/9 Volume

2014/9 Market Share

Rank

Source: Borsa Istanbul Broker 1

28.6%

Broker 2

24.0%

Broker 3

9.9%

#4 IS Investment Broker 4

7.1% 5.4%

* Among brokerage houses

In addition to the sharp interest rate hike and unpredictable monetary policy, rising inflation was also a considerable reason for fixed income investors to stay away the market * Market transactions by members

In spite of not intermediating our main shareholder IsBank’s bills&bond transactions, we mostly take place in top 5

Capital Markets Trading Volume* Securities L/B Market (TL Million)

9,000 8,000 7,000 6,000 5,000 8,522

4,000 3,000 2,000

4,724

1,000 0 2013/9

2014/9

7

IS Investment’s Market Share (TL Million) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

35%

30.7%

30% 25% 19.7%

15%

1,679

1,449

20%

10% 5% 0%

2013/9 Volume

2014/9 Market Share

Rank

Source: Istanbul Settlement and Custody Bank Inc.

L/B market continue to benefit the lower costs

* Market transactions by members

The recovery in the equity market reflected positively to our L/B activities

Capital Markets IPOs

8

Debt Instruments Offerings (TL Billion)

IS Investment’s Market Share (TL Billion)

60

12

50

10 21.2

40 30

7.3

6 4

20 10

8

1.2 0.5

29.7

29.9

2013/9

2014/9

9.3

8.3

2 0

0 IPOs

Private Placements

2013/9

2014/9 IPOs

Private Placements

Source: Borsa Istanbul

- As estimated before, the total size of the offerings increased 38% despite the unfavourable yields - Private placements had a considerable impact

We completed 75 corporate bond offerings (33 IPOs and 42 private placements) and gained market share of 21% in total offerings and 31% in IPOs

Capital Markets

9

FX Margin Trading* (TL Billion)

3500 3000 2500 2000 3,245

1500 1000

2,034

500 0 2013/6

2014/6

IS Investment’s Market Share (TL Billion) 500 450 400 350 300 250 200 150 100 50 0

14.1%

1

10%

403

* Including hedging transactions

5%

287

0% 2013/6 Volume

Source: TSPB, Last publicly announced data

15%

1

12.4%

#1 IS Investment

2014/6 Market Share

Rank

12.4%

Broker 1

10.4%

Broker 2

9.7%

Broker 3

8.0%

Broker 4

7.8%

FX margin trading has become a sustainable business line by comfortably diversifying our operating revenues

Capital Markets

10

International Capital Markets

USD Million 1000

Thousands 650

643 863

800

Equity Margin Trading (TL Million)

720

682

531

600

520 390

378

400

260

300 250

130

0

0 2013/9 Fixed Income

2014/9 Equity

# Der. Contracts (Right Axis)

Source: IS Investment

Our international capital markets activity is always a valuable asset for revenue generation

15%

200 150 100

200

20%

10%

266

239

5%

50 0

0% 2013/9

2014/9 Volume

Market Share

#REF!

Source: IS Investment

Despite the higher interest rates, our fully collateralized equity margin trading business kept its attraction and the volume increased 11% with respect to the same period of last year

Capital Markets

11

IS Investment’s Market Share (TL Billion)

Asset Management (TL Billion) 70

Mutual Funds

18

Pension Funds 60

16

50 40

14

32 31

Mutual Funds* Pension Funds

30

Other Funds** 20 10

25

32

12 10

6 4

0 2013/9

7.8

8

2

0

7.9

2014/9

Market Share 23%

4.6

6.0

2.3

2.6

2013/9

2014/9

Market Share 19%

Source: IS Investment & IS Asset Management

Pension fund size continue to grow in Turkey with a growth rate of 30% due to the undeniable support of the new regulation ran in force at the beginning of 2013

AuM size reached TL 16.5 billion surging by 11% on annual basis, while pension funds which take considerable portion of our portfolio management commissions, grew by 29% Y-o-Y

* Mutual funds includes A and B type funds, ETFs. ** Other funds includes portfolios of private asset management, alternative investment products management, Turkishfund (SICAV) and portfolio of IS Investment Trust

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Performance & Financial Results – 9M14

About Us Market Performance Financial Results

Financial Results Consolidated

13

IS Investment - Consolidated (TL000) Total Assets Shareholders' Equity Net Profit

9M13

9M14

4,708,757

4,928,220

492,883

541,250

48,144

41,359

YoY (%) 5 10 (14)

TL Million

22.5%

5,500 5,000

19.4%

4,500

4,928

4,771 18.2%

17.9%

20%

4,166 15.9%

4,000 3,500 3,000

15.2% 13.1%

3,063 13.5%

2,686

2,539

ROAE 24%

12%

2,500 2,000 1,500

1,569

1,241

8%

1,000

500 0

2007

329

268

244 38.4

45.9 2008

Total Assets

16%

2009

375 67.5

400

64.2 2010

Shareholders' Equity

460 68.7

52.4 2011

2012

Net Profit (Trailing, last 4 quarters)

520

74.4 2013*

541

4%

67.7 9M14

0%

ROAE

* Restated financials

Against the high base effect of 3Q13, we announced our 9M14 net profit as TL 41.4mn decreased by only 14%; the ROE realized as 13%

Financial Results Consolidated Net Profit

14

TL Million 80 Q3

70

Q2 Q1

60

Full Year 50

7.5 21.3

40 67.5

30

24.2 20

12.238.4

45.9

24.0

13.7

16.7 64.2

68.7

22.1

0

7.4 4.9 2007

10.5 2.1 2008

31.6

18.2 10.0 2009

2011

11.7 11.6

7.9 2010

6.6

?

52.4

11.1 12.6

10

24.874.4

2012

2013*

29.8

5.0 2014

* Restated financials

Our 3Q14 net profit would be higher with respect to the same period of last year if we offset TL 21mn profit contribution of IS Private Equity’s exit from Aras Kargo in 3Q13

Financial Results Consolidation Effect

15

Consolidated Net Profit = [IS Investment Solo Net Profit + Contributions from Subsidiaries] – Elimination Adjustments Net Profit in TL IS Investment Solo Net Profit

IS Investment Only

IS Investment Trust IS Private Equity Contributions from Subsidiaries

IS Asset Management Efes NPL Asset Management

Elimination Adjustments

Consolidated Net Profit

Elimination Adjustments* Consolidated Net Profit

9M13

9M14 YoY (%)

42,744,136

36,236,724

(15)

2,335,882

4,412,552

89

21,987,059

3,586,831

(84)

5,300,921

4,984,368

(6)

(2,395,195)

6,469,152

n.a.

(21,828,314)

(14,330,335)

n.a.

48,144,489

41,359,292

(14)

* Dividend and revenue elimination with subsidiaries

 Our

non-consolidated net income decreased by only 15% Y-o-Y in spite of the weak brokerage in the first half and lack of equity IPO during the period  IS Private Equity has a high base effect due to its successful Aras Kargo exit in 3Q13  Investment Trust benefited the higher index levels and its FRN portfolio especially in the second quarter while adversely affected by the lower index level as of end of the 3 rd quarter  IS Asset Management kept its sustainable contribution which is estimated to be better in the last quarter  Efes NPL Asset Management kept its contribution same as the first half but the last quarter is promising

Financial Results Breakdown of Operating Revenues

Breakdown of Revenues (TL 000)

16

9M13

9M14

Interest and Trading Income

137,216

142,172

Commission Revenues*

120,634

93,262

(23)

257,850

235,434

(9)

Total Operating Revenues

Operating Revenues – 9M13

Commission Income 47%

TL 258mn

Interest and Trading Income 53%

YoY (%) 4

Operating Revenues – 9M14

Commission Income 40%

TL 235mn

Interest and Trading Income 60%

* Client based FX margin trading revenues are added to the commission revenues

Against the high revenue generation from the PE exit in 3Q13, our Interest & Trading Income realised slightly higher than 9M13 thanks to the interest rate spreads, challenging index levels and NPL management activities

Financial Results Breakdown of Commissions

17

Commission Revenues (TL 000)

9M13

9M14

YoY (%)

Brokerage*

76,959

63,565

(17)

Corporate Finance

20,652

8,747

(58)

Asset Management

21,935

19,366

(12)

Other Commissions Total

Commission Income – 9M13 Asset Management 18%

Corporate Finance 17%

1,087

1,584

(46)

120,634

93,262

(23)

Commission Income – 9M14

Other Commissions 1% Asset Management 21%

TL 121mn

Brokerage 64%

Other Commissions 2%

Brokerage 68% Corporate Finance 9%

TL 93mn

* FX margin trading revenues are added to the brokerage income

We gradually reduce the negative effects of the poor trading volume in Q1 and the lack of equity IPOs thanks mainly to the better brokerage and FX margin trading activities; besides, asset management revenues were also higher in 3Q14 with respect to 3Q13

Financial Results Interest Rate Sensitive Business Lines

18

Equity Margin Trading Revenue (TL Million)

Interest & Derivative Income (TL Million)

12

30

10

25 20

8

15

6 4 2

11.0 8.9 6.8

8.9

11.1 8.8

7.1 5.3

5.1

5.1

26.8

10

4.9

13.2

5 0

2.8

9.3

7.9

2.6

10.1

9.9

11.5 3.1

-2.6 -5

0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Equity margin trading revenues in 9M14 increased 81% Y-o-Y while Interest&Derivative income increased 88% Y-o-Y

Financial Results Breakdown of Operating Expenses

Operating Expenses (TL 000)

9M13

Marketing, Sales and Distribution Expenses General Administrative Expenses Total

Operating Expenses – 9M13

TL 135mn

9M14

YoY (%)

19,202

19,117

115,592

126,963

10

134,794

146,080

8

-

Operating Expenses – 9M14 Marketing Exp. 13%

Marketing Exp. 14%

Adm. Exp. 86%

19

Adm. Exp. 87%

TL 146mn

As we promised, the operating expenses increased by only 8%, which is lower than the inflation, due to our strict cost management policy

Financial Results Price Performance

20

Price Multiples

ISMEN Expectations

P/BV

P/E 12

1.2

11

1.1

10

1.0

9

0.9

8

0.8

7

0.7

6

0.6

5

0.5

4 Dec-12

0.4 Mar-13

Jun-13

Sep-13 P/E

Dec-13

Mar-14

Jun-14

2014e

Edison

Oyak Securities

TL 70.4mn

TL 59.0mn

5.4%

5.3%

P/E

6.0

6.8

P/BV

0.7

0.7

Net Income Dividend Yield

Sep-14

P/BV

ISMEN currently trades on P/E of 4.6x and P/BV of 0.7x, which indicates a significant discount

Financial Results Dividend

21

Cash Dividend

Dividend Yield

TL Million 30

36.0%

25

30%

30.0%

30.0%

32.5%

30.1%

30.1%

40%

32%

9%

8.2%

8% 7%

6.3%

6%

20

24%

15

4.8%

5%

4.1%

24.5

10

19.9

5

9.5

20.0

20.0 15.1

12.9

16% 8%

0

0% May-08

May-09

May-10

May-11

Cash Dividend

May-12

May-13

4.1%

4.0%

4%

3.1%

3%

3.3%

2%

2.3%

1%

2.0%

2.1%

2.2%

May-10

May-11

May-12

1.8%

1.9%

May-13

March-14

0% May-08

March-14

Payout Ratio

May-09

ISMEN

Borsa Istanbul

Source: Borsa Istanbul / Consolidated Data / Market Capitalization

•

We paid back 122% of our IPO proceeds as cash as of March 2014

•

We also distributed 6.9% per share stock dividend; hence the total pay-out ratio realized as 67.6%

•

Our dividend yield is much higher than the market

•

The average dividend yield of ISMEN is 5% within the last 7 years

Investor Relations

22

Ms. Çağlan Mursaloğlu Deputy CEO Phone

: +90 0212 350 23 48

Fax

: +90 0212 350 20 01

E-mail

:

[email protected]

Mr. Ozan Altan Head of IR Phone

:

+90 0212 350 28 72

Fax

:

+90 0212 350 20 01

E-mail

:

[email protected]

Mr. Alper Alkan, CFA Senior Associate

Phone

:

+90 0212 350 25 22

Fax

:

+90 0212 350 20 01

E-mail

:

[email protected]

The Investor Relations Department is responsible for the timely communication of necessary, accurate, complete, comprehensible and easily accessible information and explanations, which are not considered to be trade secrets to its shareholders and stakeholders. http://www.isinvestment.com/wwa_ir_new.aspx

Disclaimer

23

The information in this report is prepared by “IS YATIRIM MENKUL DEGERLER A.S.” (IS Investment) and it is not to be construed as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services. Information, opinions and comments contained in this material are not under the scope of investment advisory services. Investment advisory services are given according to the investment advisory contract, signed between the intermediary institutions, portfolio management companies, investment banks and the clients. Opinions and comments contained in this report reflect the personal views of the analysts who supplied them. The investments discussed or recommended in this report may involve significant risk, may be illiquid and may not be suitable for all investors. Therefore, making decisions with respect to the information in this report cause inappropriate results. All prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this report is strictly prohibited. The information presented in this report has been obtained from sources believed to be reliable. IS Investment cannot be held responsible for any errors or omissions or for results obtained from the use of such information.

IS Investment

24

HEAD OFFICE

ADANA BRANCH

AKARETLER BRANCH

ANKARA BRANCH

ANTALYA BRANCH

BURSA BRANCH

İZMİR BRANCH

KALAMIŞ BRANCH

Çınarlı Mah. Turhan Cemal Beriker Bulvarı No:31 Kat:9 Seyhan ADANA, TURKEY T: +90 322 355 97 00 F: +90 322 355 97 01 Süleyman Seba Cad. No:44 B1 Blok D:10 34357 Akaretler İSTANBUL, TURKEY T: 0212 326 87 00 F: 0212 326 86 87 Tahran Cad. No: 3/8 06700 Kavaklıdere ANKARA, TURKEY T: +90 312 455 26 50 F: +90 312 466 60 62 Şirinyalı Mahallesi İsmet Gökşen Caddesi No:80/2 Muratpaşa ANTALYA, TURKEY T: +90 266 294 80 00 F: +90 266 294 80 01 Atatürk Cad. Nalbantoğlu Mah. No:71/3 16010 Osmangazi BURSA, TURKEY T: +90 242 320 56 00 F: +90 242 320 56 01 İsmet Kaptan Mah. Şehit Nevres Bulvarı No:10 Deren Plaza K:4 Konak, İZMİR, TURKEY T: +90 232 488 90 00 F: +90 232 488 90 01 Fener Kalamış Cad. Tibaş Belvü Sitesi A2 Blok D:3 34726 Fenerbahçe İSTANBUL, TURKEY T: +90 216 542 72 00 F: +90 216 414 57 57

İş Kuleleri Kule-2 Kat:12 34330 4. Levent İstanbul T: 0212 350 20 00 F: 0212 350 20 01

LEVENT BRANCH

MASLAK BRANCH

YENİKOY BRANCH

YEŞİLKÖY BRANCH

SUADİYE REP. OFFICE

ALMAATY REP. OFFICE

SUBSIDIARY

İş Kuleleri Kule-2 Kat:4 34330 4. Levent İSTANBUL, TURKEY T: +90 212 350 29 00 F: +90 212 350 29 01 Büyükdere Cad. Nurol Plaza No: 257 34398 Maslak İSTANBUL, TURKEY T: +90 212 367 85 00 F: +90 212 367 85 01 Köybaşı Cad. İskele Çıkmazı No:6 34464 Yeniköy İSTANBUL, TURKEY T: +90 212 363 01 00 F: +90 212 363 01 01 Havalimanı Kavşağı EGS Business Park B3 Blok No:470 34149 Yeşilköy İSTANBUL, TURKEY T: +90 212 463 20 00 F: +90 212 463 20 01 Bağdat Cad. Kılıçoğlu Apt. No:451 Kat:1 D:4 34740 Suadiye İSTANBUL, TURKEY T: +90 216 665 46 00 F: +90 216 665 46 01 2nd Floor , Block A2 Samal Towers 97, Zholdasbekov St, 050051 ALMAATA KAZAKİSTAN T: +7 727 334 05 08 F: +7 727 334 05 09 MAXIS INVESTMENTS LTD 8 Princes Street London EC2R 8HL UNITED KINGDOM T: +44207 397 1431

PERFORMANCE & FINANCIAL RESULTS – 9M14 November 4, 2014