Slide 1: Yapı Kredi 1Q18 Investor Presentation
Yapı Kredi 1Q18 Investor Presentation June 2018
Slide 2: YapıKredi: A leading financial services group
YapıKredi: A leading financial services group YapıKredi Overview Key Figures – 1Q18 Market Share – 1Q18 Ratings Moody’s: Ba3 / Fitch: BBB- / S&P: BB- Market Share6 Total Assets Loans 1 Cash & Non-cash Loans 10.2% 328.7 205.3 Total Bank bln TL bln TL Deposits 9.9% Corporate Loans7 8.9% 2 Net Income R
Slide 3: Well-diversified commercial business mix and customer-oriented service model
Well-diversified commercial business mix and customer-oriented service model Revenues and Volumes by Business Unit (1Q18) Retail1 48% 44% 63% 98% Corporate and Commercial Banking Retail Banking Individual (incl. Card Payment 26% 30% SME Private Systems) Corporate Commercial International/ Individual
Slide 4: Stable, long-term focused majority shareholders supporting YapıKredi’s growth
Stable, long-term focused majority shareholders supporting YapıKredi’s growth Shareholding Structure 50% KOÇ FINANCIAL SERVICES 50% 81.8%1 Simple, successful, pan- Largest business group in European, commercial bank Turkey with combined revenue with a unique Western, equal to 7% of Turkey’s GDP Cent
Slide 5: Boost in Profitability ...
Boost in Profitability ... 1.2 bln TL Net Income +24% y/y All time high net profit 17.1% ROATE1 +126 bps y/y Further improvement in ROATE Cost elimination efforts on track; 36% Cost/Income Ratio -302 bps y/y Further improvement in CIR Slowdown in NPL inflows and 0.91% CoR -17 bps y/y acceleration in
Slide 6: ...through robust performance in all fundamentals
...through robust performance in all fundamentals 1Q18 Summary Profitability Acceleration Strong Operational Performance Net Income ROATE1 Cost/Income CoR2 (TL mln) Revenues +11% +126 bps Costs +6% +24% (vs 10% CPI) 41% +293 bps +42% 1,244 17.1% 39% 36% 1.07% 1.06% 1,001 15.8% 12.9% 0.91% 704 1Q16 1
Slide 7: Optimized growth with a balanced mix
Optimized growth with a balanced mix Volumes Lending (TL bln) Funding (TL bln) Deposit growth +4% ytd Loan growth at 3% ytd Driven by increase in TL deposits with ongoing Well diversified among segments diversification in the funding mix 1 YKB Private Banks1 YKB Private Banks 1Q18 y/y q/q y/y q/q 1Q
Slide 8: Strong set of results through robust top-line and ongoing cost efficiency improvement
Strong set of results through robust top-line and ongoing cost efficiency improvement Income Statement Net income at TL 1.2 bln increasing 24% y/y TL mln 1Q17 4Q17 1Q18 q/q y/y Total Revenues 3,529 3,627 4,054 12% 15% 1 Core Revenues 3,066 3,364 3,577 6% 17% o/w NII inc. swap costs 2,217 2,522 2,543
Slide 9: Revenue increase supported by wider NIM and strong fee growth
Revenue increase supported by wider NIM and strong fee growth Revenues Swap Adjusted NIM (bank-only)1 NIM (bank-only) Revenue Breakdown (TL) 2 3.8% 18 bps wider swap 3.2% 3.1% 3.4% 3.5% 3.0% 2 adjusted NIM q/q on improvement in loan-deposit spreads +15% 4.1 bln Stated NIM +33 bps q/q 1Q17 4Q17 1Q18
Slide 10: Increase in Loan-Deposit spread thanks to ongoing loan repricing
Increase in Loan-Deposit spread thanks to ongoing loan repricing Loan-Deposit Spread 1 Loan Yields Deposit Costs Loan-Deposit Spread (Quarterly) (Quarterly) (Quarterly) Further 56 bps increase in Slight increase in blended cost of Loan-Deposit spread improved blended loan yield deposits (+23 bps) du
Slide 11: Strict cost discipline with a y/y growth well below inflation
Strict cost discipline with a y/y growth well below inflation Costs Cost Breakdown (TL) Cost KPIs Cost increase 4pp below inflation Cost / Income at 35.8% Non-HR cost increase at 3% ongoing recovery in cost ratios Cost / Income vs CPI at 10% -302 bps +6% 38.8% 1.45 bln 35.8% 1.37 bln 46% 1Q17 1Q18 4
Slide 12: Digital transformation sustains
Digital transformation sustains 1 Digital market share significantly 12.5% digital customer market share vs 8.5% market above physical share in physical network 4.7 mln digital customers (+1.1 mln y/y) with 55% Ongoing increase in digital and digital customer penetration mobile banking customers
Slide 13: Improvement in asset quality with ongoing slowdown in Net NPL inflows
Improvement in asset quality with ongoing slowdown in Net NPL inflows Asset Quality NPL ratio improved 50bps y/y Net NPL inflows came down 56% y/y thanks to through slowdown in net NPL inflows NPL 27%Inflows (TL mln) in inflows and y/y reduction as well as the positive impact of NPL sales 15% y/y in
Slide 14: IFRS 9 Transition - Consolidated
IFRS 9 Transition - Consolidated Asset Quality After IFRS9 After IFRS9 TL mln 31.12.2017 01.01.2018 31.03.2018 % 31.12.2017 01.01.2018 31.03.2018 Volumes - Cash Loans Ratios Stage-1 194,356 207,149 210,351 Stage -1 / Total Loans 93% 93% 92% Stage-2 5,518 6,749 9,040 Stage -2 / Gross Loans 2.6% 3.0%
Slide 15: A proactive approach on NPL coverage together with an ongoing positive trend in CoR
A proactive approach on NPL coverage together with an ongoing positive trend in CoR Asset Quality NPL Coverage Cost of Risk2 (Quarterly, net of collections) NPL Coverage ratio increased to 86% with a proactive Total cost of risk -16 bps y/y to 91 bps approach through IFRS 9 adoption; even with the I
Slide 16: Internal capital generation sustains... CAR down 47 bps on macro volatility and one-off impacts
Internal capital generation sustains... CAR down 47 bps on macro volatility and one-off impacts Capital Capital Ratios (Bank) CAR CET1 CAR down 47 bps y/y Mainly due to one-off IFRS 9 impact and sub-debt amortisation 14.5% 14.0% 10.9% with a 32 bps internal capital generation offseting the 10.8% imp
Slide 17: Revised guidance for 2018
Revised guidance for 2018 Capital Loan growth at private bank Loans Deposits Lending mainly driven by TL commercial and individual loans; levels focusing on value mild increase in FC lending Volumes 12-14% 12-14% Further increase in the share of retail deposit and retail demand generating segmen
Slide 18: Annex
Ge yYanikredi
Slide 19: Macro Environment and Banking Sector
Macro Environment and Banking Sector Macro Environment Banking Sector A strong growth; through support by the Banking sector remaining strong, despite the government macro volatility... Ongoing tight stance by CBRT with the intention Loan growth sustains to keep the inflation under control 1Q17 4Q17
Slide 20: Consolidated Balance Sheet
Consolidated Balance Sheet TL bln 1Q171 1H17 1 9M17 1 2017 1 1Q18 q/q y/y Assets Total Assets 278.3 283.3 290.6 316.9 328.7 4% 18% Loans 183.7 185.8 190.6 199.9 205.3 3% 12% Other Assets TL Loans 112.5 116.3 120.4 126.0 125.2 -1% 11% 2% FC Loans ($) 19.6 19.8 19.8 19.6 20.3 4% 4% Other IEAs FC Secur
Slide 21: Consolidated Income Statement
Consolidated Income Statement TL million 1Q17 2Q17 3Q17 4Q17 1Q18 q/q y/y Net Interest Income including swap costs 2,217 2,089 2,154 2,522 2,543 1% 15% o/w NII (ecl. CPI linkers' income) 1,926 1,983 1,944 2,147 2,409 12% 25% o/w CPI-linkers 325 338 409 663 436 -34% 34% o/w Swap costs -34 -232 -198 -
Slide 22: Bank-Only Income Statement
Bank-Only Income Statement TL million 1Q17 2Q17 3Q17 4Q17 1Q18 q/q y/y Net Interest Income including swap costs 2,030 1,895 1,965 2,306 2,270 -2% 12% o/w NII (ecl. CPI linkers' income) 1,816 1,836 1,803 2,021 2,332 15% 28% o/w CPI-linkers 325 338 409 663 436 -34% 34% o/w Swap costs -111 -278 -247 -3
Slide 23: IFRS 9 Transition – Bank-Only
IFRS 9 Transition – Bank-Only After IFRS9 After IFRS9 TL mln 31.12.2017 01.01.2018 31.03.2018 % 31.12.2017 01.01.2018 31.03.2018 Volumes - Cash Loans Ratios Stage-1 187,430 186,399 189,206 Stage -1 / Total Loans 93% 92% 92% Stage-2 5,453 6,484 8,668 Stage -2 / Gross Loans 2.7% 3.2% 4.2% Stage-3 9,02
Slide 24: Securities
Securities 1 Securities/Assets Composition by Type (TL bln) Composition by Clasification1 TL Securities (bln TL) FC Securities (bln USD) FV through P&L 0.5% 0.3% 1.0% 30.5 2.5 FV through 28.0 2.5 2.5 36% 37% Other 41% 12.2% 12.7% 22.2 41% Comprehensive 11.7% 40% Profit Fixed 31% 97% 97% 97% CPI 63%
Slide 25: International Borrowings
Borrowings: 25% of total liabilities ~ US$ 2.8 bln outstanding May’17: US$ 306 mln & € 956.5 mln, all-in cost at Libor+ 1.45% and Euribor+ 1.35% for the 367 day tranche and Libor+ 2.20 % and Euribor+ 2.10 % for Syndications the 2 year and 1 day tranche, respectively. 48 banks from 19 countries O
Slide 26: Leading positions in value generating services and products
Leading positions in value generating services and products Market Position Market Shares – 1Q181 Cash + Non-cash Loans 10.2% Loans 9.4% Total Bank Deposits 9.9% Revenues 9.2% Headcount 9.5% Branches 8.2% Network ATM 8.8% 2 Internet Banking 13.9% Mobile Banking 2 12.4% Credit Card Outstanding 21.1%
Slide 27: Koç Holding Financial Highlights
Financial Highlights Turkey’s largest industrial and services group in terms of revenues, exports, (in EUR, 1Q18) employees, taxes paid and market capitalization The onlyTurkish company in Fortune 5001 Leading positions with clear competitive advantages in sectors with long-term Total Assets (
Slide 28: UniCredit Financial Highlights
Financial Highlights (in EUR, 1Q18) Roots dating back to 1473. Created through the merger of 9 of Italy's largest banks and the subsequent combination with the German HVB Group and the Italian Capitalia Group Total Assets (bln) 824 A major international financial institution based in Italy with
Slide 29: Turkey: A large and dynamic country with solid growth potential and resilient fundamentals
Turkey: A large and dynamic country with solid growth potential and resilient fundamentals Turkey TR 2017 EU 2017 Population (mln) 81 512 Europe’s 7th largest economy and a member of Median Age 32 43 1 G20 Population Growth 2 Turkey 1.3% 0.3% (CAGR 2000-2017) Young, dynamic, large and growing po
Slide 30: Despite solid growth in recent years, Turkish banking sector still underpenetrated in household lending
Despite solid growth in recent years, Turkish banking sector still underpenetrated in household lending Banking Sector Penetration Branches Per Total Loans1/GDP Corporate Loans/GDP Million Inhabitants (2016) 145% 128% 353 125% 49% 113% 46% 41% 39% 76% 36% 136 65% 22% EU28 Turkey 2009 2010 2011 2012
Slide 31: Healthy banking sector, resilient against external shocks and supporting economic growth
Healthy banking sector, resilient against external shocks and supporting economic growth Banking Sector Well regulated (BRSA est. in 2001) Banking Sector Banking Sector Best practices in technology: payment systems 2012 2013 2014 2015 2016 2017 1Q18 and well-qualified workforce Banks # 45 49 51
Slide 32: CBRT rates
CBRT rates 16.1% 12.93% 13.5% 11.4% 11.9% 10.9% 12.75% 10.0% 11.94% 9.4% 10.3% 9.25% CBRT upper band 8.8% 8.8% 8.9% 7.8% CBRT lower band 7.25% Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Benchmark Bond Rate CBRT Average CoF Notes: Benchmar
Slide 33: Credit Ratings
Credit Ratings Long-Term Foreign Currency Long-Term Local Currency Rating Outlook Rating Outlook Yapı Kredi Ba3 Negative Ba2 Negative Garanti Ba3 Stable Ba2 Stable Akbank Ba3 Stable Ba2 Stable Işbank Ba3 Negative Ba2 Negative Halkbank Ba3 Negative Ba3 Negative Vakıfbank Ba3 Stable Ba2 Stable Yapı Kr