The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Inclusive Access to Finance (P163225) EUROPE AND CENTRAL ASIA | Turkey | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 4 | ARCHIVED on 06-Apr-2021 | ISR45870 | 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 Moderately Satisfactory Moderately 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 and asset quality pressures that were intensified with the COVID-19 pandemic. 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 that firms are still recovering from the negative economic impact of the COVID-19 pandemic. 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). With the addition of Denizbank as PFI in December 2020, the entire loan amount under the apex component of the project (US$200 million) has been committed. Disbursement has been satisfactory, especially in light of the challenging market conditions. A total of 58 percent of project funds (US$230 million) have been disbursed from the World Bank to TSKB as of March 15, 2021. Total disbursement from TSKB to PFIs under the wholesale component 4/6/2021 Page 1 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) has reached US$183 million as of March 2021, while PFIs have on-lent US$110 million. Disbursements under the direct lending component have reached US$ 56 million, an increase of about 50 percent since September 2020. TSKB has a pipeline of about US$45 million for which it intends to withdraw funds until 2021Q2. Progress towards achievement of the project development objective is on track. As of September 2020, 317 Small and Medium Sized Enterprises (SMEs) and 13 Large Enterprises (LEs) have been financed. Of the financed enterprises, 126 were women-inclusive enterprises, exceeding the target of 70. In addition, 38 percent of the beneficiaries are located in the least developed regions (compared to the project’s target of 7.5 percent). A total of 75 percent of the funding has been extended to SMEs (US$125 million) and 25 percent to LEs (US$41 million). Maturity extension continues to exceed targets for SME loans but is still falling short of expectations for LE loans. The average maturity of the loans extended to SMEs under the Project is 1.5 times the average maturity of SME loans extended by PFIs under their own portfolio. Given the current operating environment under the COVID-19 pandemic and the increased demand for working capital loans, this is a good outcome. On the other hand, the average maturity of loans extended to LEs under the Project were 34 percent shorter that the average maturity of LE loans extended by TSKB. One reason for not being able to achieve loan maturity extension for LEs is that TSKB has traditionally very long maturities, particularly for the LE portfolio. The second reason is the shifting LE loan demand towards working capital finance and shorter-term loans due to the COVID-19 crisis. TSKB is planning to utilize the reflows (resulting from low maturity transactions) for additional transactions, which will have a positive impact on beneficiaries overall. Initial information on the employment multipliers was received from Is Bank, Sekerbank, Yapi Kredi Leasing and Garanti Leasing. The data shows that employment growth in beneficiary enterprises under the Project has been 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. Regarding citizen engagement, TSKB received information from the first round of surveys of beneficiary enterprises, representing 109 loans to 96 firms. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, and TSKB. The results confirm that clients overall show a high degree of satisfaction with the support received - on average between indicators 99.8 percent of firms rated the financing as reflecting their needs. Given the positive feedback received from beneficiaries, there was no further follow up or actions that needed to be taken from TSKB’s or PFI’s side. More details are provided in the CE indicator description. 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 4/6/2021 Page 2 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Improve access to longer-term finance for women-inclusive and less developed sub-regions enterprises IN00965999 ►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 2.00 1.60 >1 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966000 ►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 0.74 0.66 >1 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966026 ►Volume of Bank support (cumulative, US$ million) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 193.00 230.00 400.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 Intermediate Results Indicators by Components TSKB Direct Lending; lending to eligible beneficiary SMEs and LEs IN00966031 ►Number of LE beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 10.00 13.00 40.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966035 ►Based on Core Indicator: Portfolio Quality: Portfolio at risk (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target n/a Value n/a 3.50 3.40 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966037 ►Based on Core Indicator: Financial Sustainability: Return on Assets (%) (Text, Custom) 4/6/2021 Page 3 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Baseline Actual (Previous) Actual (Current) End Target Value n/a 1.80 1.50 n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966039 ►Based on Core Indicator: Financial Sustainability: Return on Equity (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 13.50 12.10 n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966041 ►Compliance with prudential regulation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a compliant compliant n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 Wholesale Component; on-lending funds through qualified PFIs IN00966027 ►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 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966036 ►Number of SME beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 286.00 317.00 240.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966032 ►Number of women-inclusive beneficiary enterprises financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 121.00 126.00 70.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966034 ►Percent of sub-finance financing beneficiary enterprise sub-projects in the least developed sub-regions (Cumulative) (Text, Custom) 4/6/2021 Page 4 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 32.00 38.00 7.50 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966029 ►Number of enterprises assessed through Project Gender Toolkit (Cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 9.00 9.00 50.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966033 ►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 6.00 6.00 15.00 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966043 ►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 n/a 1.10 >0 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 Based on the first tranche of data received from İş Bankası, Şekerbank, Yapı Kredi Leasing and Garanti Comments: Leasing. IN00966028 ►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 n/a 1.20 >0 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 Based on the first tranche of data received from İş Bankası, Şekerbank, Yapı Kredi Leasing and Garanti Comments: Leasing. IN00966030 ►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 n/a 1.10 >0 Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 4/6/2021 Page 5 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Based on the first tranche of data received from İş Bankası, Şekerbank, Yapı Kredi Leasing and Garanti Comments: Leasing. IN00966038 ►Based on Core Indicator: Outstanding MSME finance portfolio (USD million) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 6,477 8,097 n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966040 ►Based on Core Indicator: Number of active MSME finance accounts (not cumulative) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 100,773 196,165 n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 IN00966042 ►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 n/a 99.80 n/a Date 31-May-2018 01-Sep-2020 15-Mar-2021 31-May-2022 Initial results on citizen engagement through a survey of beneficiary enterprises were obtained for 109 loans to 96 firms. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, 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 99.8 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 70 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 4/6/2021 Page 6 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) P163225 IBRD-88600 Effective USD 400.00 400.00 0.00 257.34 142.66 64% 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 Cumulative Disbursements PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 4/6/2021 Page 7 of 7