The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Inclusive Access to Finance (P163225) EUROPE AND CENTRAL ASIA | Turkiye | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 7 | ARCHIVED on 07-Oct-2022 | ISR53090 | Implementing Agencies: TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. (TSKB), TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. (TSKB) Key Dates Key Project Dates Bank Approval Date: 22-May-2018 Effectiveness Date: 21-Dec-2018 Planned Mid Term Review Date: -- Actual Mid-Term Review Date: Original Closing Date: 30-Jun-2023 Revised Closing Date: 30-Jun-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The PDO is to improve access to longer-term finance for (i) women-inclusive enterprises and (ii) enterprises in less developed sub-regions affected by SuTP influx. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1:(Cost $200.00 M) Component 2:(Cost $200.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Low Low Implementation Status and Key Decisions The Inclusive Access to Finance Project has been implemented in a volatile environment for Turkey’s banking sector and economy, starting with exchange rate volatility in August 2018 and followed by exchange rate, inflation, and asset quality pressures since. Credit growth to riskier segments, which are targeted under this project, slowed during the past years, as especially private financial institutions deleveraged and approached new lending with more caution. Demand for financing under this project therefore remains high though a cautious lending stance will prevail given elevated risks and the uncertain outlook. Despite the challenging environment TSKB successfully signed Subsidiary Financial Agreements with six Participating Financial Institutions (PFIs). Out of the six PFIs, three are banks (Is Bank, Sekerbank, Denizbank) and three are leasing companies (Yapi Kredi Leasing, Is Leasing and Garanti Leasing). Disbursement has been satisfactory, especially in light of the challenging market conditions. A total of 95.6 percent of project funds (US$383 million) has been disbursed from the World Bank to TSKB as of September 2022. Total disbursement from TSKB to PFIs under the wholesale component 10/7/2022 Page 1 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) has reached US$200 million, while PFIs have on-lent US$186 million. Disbursements under the direct lending component have reached US$129 million. Progress towards achievement of the project development objective is rated as satisfactory. The average maturity of the loans extended to SMEs under the Project is 2.1 times the average maturity of SME loans extended by PFIs under their own portfolio while the average maturity of loans extended to LEs under the Project is 1.55 times the average maturity of LE loans extended by TSKB. Given the current operating environment and the increased demand for working capital loans, this is an excellent outcome. The project is also generating substantial developmental impact. 466 Small and Medium-Sized Enterprises (SMEs) and 22 Large Enterprises (LEs) have been financed. Of the financed enterprises, 193 were women-inclusive enterprises, exceeding by a large margin the target of 70. In addition, 28 percent of sub-finance benefitted beneficiaries in the least developed regions (compared to the project’s target of 7.5 percent). A total of 68 percent of the funding has been extended to SMEs (US$213 million) and 32 percent to LEs (US$101 million). Information provided on the employment multipliers shows that employment growth in beneficiary enterprises under the Project continues to be higher than employment growth in the respective sectors. The same holds for female employment growth in beneficiary enterprises and employment growth in beneficiary enterprises located in less developed regions. TSKB is conducting the gender bias surveys with PFIs, a covenant under the Loan Agreement. The World Bank team is working very closely with TSKB on the survey. TSKB hired the survey firm, and the survey is currently underway. It is expected that the survey will be finalized in 2022. Regarding citizen engagement, TSKB received additional information from the surveys of beneficiary enterprises. The surveys represent feedback from 411 firms. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, Sekerbank, Denizbank, and TSKB. The results confirm that clients overall show a high degree of satisfaction with the support received - on average between indicators 99.2 percent of firms rated the financing as reflecting their needs. Given the positive feedback received from beneficiaries, TSKB and PFIs are not planning to undertake follow-up actions. These surveys will continue during the remainder of the project, and the information in the results framework will be updated accordingly. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Low Low Low Technical Design of Project or Program Low Low Low Institutional Capacity for Implementation and Low Low Low Sustainability Fiduciary Low Low Low Environment and Social Low Low Low Stakeholders Low Low Low Other Low Low Low Overall Low Low Low Results PDO Indicators by Objectives / Outcomes Improve access to longer-term finance for women-inclusive and less developed sub-regions enterprises 10/7/2022 Page 2 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) IN01191476 ►Ratio of the average maturity of SME sub-financing under the project, over the average maturity of the PFIs SME portfolio not financed under the project. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.10 2.10 >1 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191477 ►Ratio of the average maturity of LE sub-financing under the project, over the average maturity of the Borrower's LE portfolio not financed under the project. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.33 1.55 >1 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191478 ►Volume of Bank support (cumulative, US$ million) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 363.00 383.00 400.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 Intermediate Results Indicators by Components TSKB Direct Lending; lending to eligible beneficiary SMEs and LEs IN01191481 ►Number of LE beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20.00 22.00 40.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191483 ►Based on Core Indicator: Portfolio Quality: Portfolio at risk (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target n/a Value n/a 3.80 3.20 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191485 ►Based on Core Indicator: Financial Sustainability: Return on Assets (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 10/7/2022 Page 3 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Value n/a 1.60 1.60 n/a Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191487 ►Based on Core Indicator: Financial Sustainability: Return on Equity (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 16.70 16.70 n/a Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191490 ►Compliance with prudential regulation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a compliant compliant n/a Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 Wholesale Component; on-lending funds through qualified PFIs IN01191479 ►Number of PFIs under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6.00 6.00 5.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191480 ►Number of SME beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 449.00 466.00 240.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191482 ►Number of women-inclusive beneficiary enterprises financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 186.00 193.00 70.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191484 ►Percent of sub-finance financing beneficiary enterprise sub-projects in the least developed sub-regions (Cumulative) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 10/7/2022 Page 4 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Value 0.00 30.00 28.00 7.50 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191486 ►Number of enterprises assessed through Project Gender Toolkit (Cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 57.00 84.00 50.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191488 ►Number of beneficiary enterprises that completed implementation of a gender action plan (Cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 12.00 12.00 15.00 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191489 ►Percentage point difference between the total employment growth in beneficiary enterprises under the Project and employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.10 1.08 >0 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191491 ►Percentage point difference between female employment growth in beneficiary enterprises and female employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.03 1.03 >0 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191492 ►Percentage point difference between employment growth in beneficiary enterprises located in less developed regions and employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.11 1.08 >0 Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191493 ►Based on Core Indicator: Outstanding MSME finance portfolio (USD million) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 8,135 11,763 n/a 10/7/2022 Page 5 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191494 ►Based on Core Indicator: Number of active MSME finance accounts (not cumulative) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 531,806 932,554 n/a Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 IN01191495 ►Citizen Engagement: SMEs and LEs that feel project sub-finance reflected their needs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 99.40 99.20 n/a Date 31-May-2018 18-Mar-2022 16-Sep-2022 31-May-2022 Results on citizen engagement through a survey of beneficiary enterprises were obtained from 411 firms. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, Sekerbank, Denizbank, and TSKB. The client survey assessed in nine questions the extent to which firms felt that financing obtained through the project reflected their needs. Questions revolved around whether the PFI/TSKB (i) worked well with the client during the process, (ii) was responsive, supportive, and delivered quality services, and (iii) ensured that the objective of the financing was aligned with the project. The questions also inquired whether the client would work with the PFI/ TSKB again. The extent of agreement could be rated on a Comments: scale of 1-5 with 5 being the highest scores. The results confirm that clients overall show a high degree of satisfaction with the support received. On average between indicators 99.2 percent of firms thought that the financing reflected their needs (all responses of 5 "strongly agree" and 4 "agree" were counted). If only responses of 5 were counted, a total of 65 percent of loans would show full satisfaction with the financing received. The data will be updated as survey responses are received from loans not assessed so far and those still to be provided from the remaining financing available under the project. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P163225 IBRD-88600 Effective USD 400.00 400.00 0.00 383.00 17.00 96% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P163225 IBRD-88600 Effective 22-May-2018 07-Jun-2018 21-Dec-2018 30-Jun-2023 30-Jun-2023 10/7/2022 Page 6 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 10/7/2022 Page 7 of 7