Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) EUROPE AND CENTRAL ASIA | Turkey | Financial and Private Sector Development Global Practice | IBRD/IDA | Financial Intermediary Loan | FY 2010 | Seq No: 7 | ARCHIVED on 30-Dec-2014 | ISR17783 | Implementing Agencies: Key Dates Key Project Dates Board Approval date:15-Jun-2010 Effectiveness Date:12-Aug-2010 Planned Mid Term Review Date:-- Actual Mid-Term Review Date:-- Original Closing Date:30-Sep-2014 Revised Closing Date:31-Mar-2015 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project's main development objective is to broaden and deepen the access of Turkish small and medium enterprises to medium- and long-term finance, with a view to ultimately contributing to an expansion of productive activities and job creation. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Kalkinma Bank : A US$ 100 million wholesale credit line to Kalkinma Bank to be intermediated through private retail banks/leasing:(Cost $100.00 M) Ziraat Bank: A US$200 million credit line to be intermediated through ZiraatBank as a retail bank directly to SMEs.:(Cost $200.00 M) Vakif Bank: A US$200 million credit line to be intermediated through VakıfBank as a retail bank directly to SMEs.:(Cost $200.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory Overall Risk Rating  --  Low 12/30/2014 Page 1 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Implementation Status and Key Decisions Implementation pace has started to recover slowly by Ziraat Bank’s disbursements in normal regions. Overall disbursements have reached 82.2 percent of the total Loan compared to 76.7 in June 2013 and 78.4 in June 2014. A total of US$ 89.1 million remains undisbursed to final beneficiaries , of which US$55.7 million remains with Ziraat Bank and US$33.4 million with Vakif Bank. Kalkinma Bank has fully disbursed its US$ 100 million portion and Kalkinma Bank Loan Agreement was closed on September 30, 2014. 554 SMEs have been financed under the project, with most companies coming from the manufacturing sector. Maturities vary from 24 to 120 months, with an average of 51 months. Sub-loans are being extended both in foreign currency and Turkish Lira. The proceeds for a large proportion of the sub-loans (68 percent) are being used for working capital purposes. Disbursements to underserved areas are still relatively low, with about 10.8 percent of total sub-loans going to those areas (compared to a project requirement of 15 percent) A loan restructuring is completed to improve the implementation progress, and to give additional time for successful completion of the project. A level 2 loan restructuring was agreed with the borrowers, Ziraat Bank (Loan No 7030-TU) and Vakif Bank (Loan No 7040-TU ) to address the slow disbursements mainly due to the issues in disbursing to the priority regions. Loan amendments was prepared based on Undersecretariat of Treasury’s Letter dated September 1st, 2014 which was requesting certain amendments to the loan agreements. By the restructuring following modifications are made to the Loan No 7030-TU and Loan No 7040-TU: (i) extension of the closing date of both loans by six months from September 30, 2014 to March 31, 2015; (ii) revision of legal covenants related to the disbursement requirement in priority regions, reducing it from 25 percent of total disbursements to 15 percent; (iii) cancelation of legal covenants regarding financial requirements for priority regions (debt to equity (D/E) and the debt service coverage ratio (DSCR)), relying instead on the banks’ own financial evaluation and scoring systems. (iv) revision of the target value of the project development objective level indicator “Share of finance provided to priority regions” in accordance with point (ii) above; and (v) modification of the disbursement estimates due to extension of the closing date. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  --  Moderate Macroeconomic  --  --  Moderate Sector Strategies and Policies  --  --  Low Technical Design of Project or Program  --  --  Low Institutional Capacity for Implementation and Sustainability  --  --  Moderate Fiduciary  --  --  Low Environment and Social  --  --  Low Stakeholders  --  --  Low Other  --  --  -- Overall  --  --  Low 12/30/2014 Page 2 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Results Project Development Objective Indicators PHINDPDOTBL  Number of Participating Financial Institutions (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6.00 6.00 5.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDPDOTBL  Quality of Project Financed Portfolio (NPL Ratio) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.98 1.98 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDPDOTBL  Share of Finance Provided to Underserved Regions (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 13.39 13.39 15.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDPDOTBL  Increase in Sale in Beneficiary SMEs (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 793658368.00 793658368.00 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDPDOTBL  Increase in Employment in Beneficiary SMEs (Number, Custom) 12/30/2014 Page 3 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8150.00 8150.00 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDPDOTBL  Number of SME Beneficiaries Financed Under the Project (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 547.00 547.00 200.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 Overall Comments Results will be updated in January with end of year data. This ISR is to report the restructuring of the project. Intermediate Results Indicators PHINDIRITBL  Return on Assets/Equity (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 1.98 1.20 1.20 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Return on Assets/Equity (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 3.10 1.80 1.80 -- Date 06-Jul-2010 20-Jun-2013 20-Jun-2013 30-Sep-2014 12/30/2014 Page 4 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) PHINDIRITBL  Return on Assets/Equity (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 1.32 1.32 -- Date 06-Jul-2010 20-Jun-2013 20-Jun-2013 30-Sep-2014 PHINDIRITBL  Portfolio at Risk - SME (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 6.10 3.90 3.90 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Portfolio at Risk - SME (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 2.30 2.20 2.20 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Portfolio at Risk - SME (Percentage, Core) Baseline Actual (Previous) Actual (Current) End Target Value 10.80 3.81 3.81 -- Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 12/30/2014 Page 5 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) PHINDIRITBL  Outstanding SME Loan Portfolio (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 2800000000.00 10769000000.00 10769000000.00 3000000000.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Outstanding SME Loan Portfolio (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 2358000000.00 16247330796.00 16247330796.00 2558000000.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Outstanding SME Loan Portfolio (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 316000000.00 774000000.00 774000000.00 400000000.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  No of active loan accounts -SME (Number, Core) Baseline Actual (Previous) Actual (Current) End Target Value 40000.00 222509.00 222509.00 40075.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 12/30/2014 Page 6 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) PHINDIRITBL  No of active loan accounts -SME (Number, Core) Baseline Actual (Previous) Actual (Current) End Target Value 92119.00 1816485.00 1816485.00 92195.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  No of active loan accounts -SME (Number, Core) Baseline Actual (Previous) Actual (Current) End Target Value 530.00 180.00 180.00 580.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  PFI Performance (Compliance with Prudential Norms) / (a)Garanti Bank, (b)Deniz Bank (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (a)compliant, (a)compliant, (a)compliant, Value -- (b)compliant (b)compliant (b)compliant, Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Volume of Bank Support: Lines of Credit - SME (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 165.50 165.50 199.50 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 12/30/2014 Page 7 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) PHINDIRITBL  Volume of Bank Support: Lines of Credit - SME (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 126.40 126.40 199.50 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Volume of Bank Support: Lines of Credit - SME (Amount(USD), Core) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 99.75 Date -- 01-Jun-2014 01-Jun-2014 -- PHINDIRITBL  Volume of Bank Support (%) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 78.40 78.40 100.00 Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 PHINDIRITBL  Borrower Performance (Compliance with Prudential Norms) / (a)Ziraat Bank, (b)Vakif Bank, (c)Kalkinma Bank (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target (a)compliant, (a)compliant, (a)compliant, Value -- (b)compliant, (b)compliant, (b)compliant, (c)compliant (c)compliant (c)compliant Date 06-Jul-2010 01-Jun-2014 01-Jun-2014 30-Sep-2014 Overall Comments Data on Financial Performance 12/30/2014 Page 8 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P118308 IBRD-79020 Closed USD 100.00 100.00 0.00 100.00 0.00 100% P118308 IBRD-79030 Effective USD 200.00 200.00 0.00 173.77 26.23 87% P118308 IBRD-79040 Effective USD 200.00 200.00 0.00 200.00 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P118308 IBRD-79020 Closed 15-Jun-2010 06-Jul-2010 19-Oct-2010 30-Sep-2014 30-Sep-2014 P118308 IBRD-79030 Effective 15-Jun-2010 06-Jul-2010 12-Aug-2010 30-Sep-2014 31-Mar-2015 P118308 IBRD-79040 Effective 15-Jun-2010 06-Jul-2010 12-Aug-2010 30-Sep-2014 31-Mar-2015 Cumulative Disbursements Restructuring History Level 2 Approved on 16-Sep-2014 12/30/2014 Page 9 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Second Turkey Access to Finance for Small and Medium Enterprises Project (P118308) Related Project(s) There are no related projects. 12/30/2014 Page 10 of 10 Public Disclosure Copy