Turkiye Garanti Bankasi Anonim Sirketi · BIST:GARAN

Turkiye Garanti Bankasi Anonim Sirketi — Turkiye Garanti Bankasi A.S. — 9M 2023 Earnings Presentation

33 slides from Turkiye Garanti Bankasi Anonim Sirketi's earnings presentation, Oct 30, 2023

  1. Slide 1: 9M23 Earnings Presentation

    9M23 EARNINGS PRESENTATION Based on BRSA Consolidated Financials October 30th, 2023

  2. Slide 2: Macro Recap

    GRADUAL MONETARY TIGHTENING RESTORING THE CONFIDENCE ECONOMIC GROWTH SLOWS DOWN HELPED BY THE DECELERATION IN DOMESTIC DEMAND MACRO RECAP EXTERNAL & INTERNAL INFLATIONARY PRESSURES POSE A RISK TO ANTICIPATED INFLATION PATH

  3. Slide 3: Current policies are on the right track to rebalance the economy

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 3 CURRENT POLICIES ARE ON THE RIGHT TRACK TO REBALANCE THE ECONOMY GDP GROWTH (YoY) CA DEFICIT / GDP (year end) 11.4% -0.9% 5.5% 4.5% -4.6% 3.9% 3.8% -5.3% 2021 2022 2023E CA BALANCE 2021 2022 Aug’23 (ytd) 2023E 2021 2022 1Q23 2Q23 2023E -7bn$ -43bn$ -49b

  4. Slide 4: 9M23 Recap

    OUR DISTINCTIVE CORE BANKING REVENUES CONTINUE TO DRIVE PROFITABILITY SLOWDOWN IN TL LENDING DUE TO LOWER CONSUMER LOAN GROWTH POST INCREASING RATES INCREMENTAL SPREADS ARE ON THE RISE, WORST IS BEHIND IN TL CORE SPREADS 9M23 RECAP STRONG FEES & TRADING INCOME, BETTER ASSET QUALITY TRENDS SUGGEST A

  5. Slide 5: Inherent strength: core banking revenue generation capability

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 5 INHERENT STRENGTH: CORE BANKING REVENUE GENERATION CAPABILITY NET INCOME (TL bn) QUARTERLY CUMULATIVE YoY QoQ 9M23 ROAE 57.6 +49% 5.0 + 41.1% +30% 38.7 23.8 18.4 3.0 52.6 +34%* 9M23 ROAA Free provision 2.0 + reversal + +27%* 38.7 20.8 16.4 4.5% 2Q23 3Q2

  6. Slide 6: Asset growth remains to be driven by customer activity

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 6 ASSET GROWTH REMAINS TO BE DRIVEN BY CUSTOMER ACTIVITY ASSET BREAKDOWN PERFORMING LOANS (TL, US $ billion) QoQ YtD 1,069.9 9% 44% 978.9 $4.8 $4.9 742.1 $9.9 0% 1% FC (subsidiaries) $5.2 $9.9 Fixed Assets & FC (bank-only) $9.3 Subs. ; 1.3% Other*; 5.7% C

  7. Slide 7: TL loan growth cut pace due to lower consumer loan originations

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 7 TL LOAN GROWTH CUT PACE DUE TO LOWER CONSUMER LOAN ORIGINATIONS TL PERFORMING LOAN BREAKDOWN TL PERFORMING LOAN GROWTH (63% of total performing loans) Consumer (exc. CCs) TL Business Credit Cards Mortgage, 5% vs. 5% in 2Q Auto, 2% vs. 2% in 2Q 91% Busin

  8. Slide 8: Increasing SICR portion reflects prudency

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 8 INCREASING SICR PORTION REFLECTS PRUDENCY COVERAGE RATIO REMAINED SOLID LOANS & RECEIVABLES PORTFOLIO STAGE-2 BREAKDOWN (TL bn) BREAKDOWN (TL Billion ) 135.5bn 138.0bn excl. currency impact2 120.4bn 118.2 bn TL in Sep’23 107.2bn 116.0 bn TL in June’23 S

  9. Slide 9: Limited NPL inflow & robust collection performance

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 9 LIMITED NPL INFLOW & ROBUST COLLECTION PERFORMANCE SECTOR’S HIGHEST TOTAL PROVISIONS MAINTAINED NPL EVOLUTION COVERAGE RATIOS (TL million) Net NPL Flow 267 1,726 -885 3Q23 3Q23 (adj. w/ WD*) Net NPL Flow Adj. w/ curr. impact, 854 832 248 Total Provision

  10. Slide 10: Loan provision coverages stand firm

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 10 LOAN PROVISION COVERAGES STAND FIRM NET COR FARING BETTER THAN EXPECTATIONS NET PROVISIONS excl. CURRENCY (TL bn) NET CoR TREND excl. CURRENCY CUMULATIVE -20% YoY -58% YoY* 4,882 2.49% 2.31% 3,911 2,058 1.30% 4,882 Earthquake 1.06% 1,853 related 0.55%

  11. Slide 11: Strategically managed funding structure

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 11 STRATEGICALLY MANAGED FUNDING STRUCTURE - THE BACKBONE OF OUR SUCCESS LIABILITIES & SHE BREAKDOWN EXTERNAL DEBT VS. FC QUICK LIQUIDITY2 (US$ bn) Total Demand Other ; Deposits; 31.2% FC liquidity buffer External Debt 4.4% SHE; 10.9% ST portion of 4.8 4.

  12. Slide 12: Key funding pillar: high share of demand & sticky retail deposits

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 12 OUR KEY FUNDING PILLAR: HIGH SHARE OF DEMAND & STICKY RETAIL DEPOSITS TL CUST. DEPOSITS (in TL bn) STRONG ZERO-COST DEMAND (54% of total deposits) QoQ YtD DEPOSIT BASE 760 772 2% 82% 424 623 622 0% 100% 43% Cust. demand deposits 311 share in total vs.

  13. Slide 13: Navigating margin challenges through active spread management

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 13 NAVIGATING MARGIN CHALLENGES – THROUGH ACTIVE SPREAD MANAGEMENT NIM INCL. SWAP COST* QUARTERLY QoQ CUMULATIVE YtD 10.2% 6.9% 5.8% 6.0% +18 bps 4.7% 6.2% -397 bps CPI Impact 2.5% 2.2% 2.8% 3.5% Core NIM 5.4% 4.4% 3.6% 3.4% -204 bps 2.5% -113 bps 1Q23 2Q

  14. Slide 14: Fee growth continues to exceed expectations

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 14 FEE GROWTH CONTINUE TO EXCEED EXPECTATIONS - WITH STRONG CONTRIBUTION FROM PAYMENT SYSTEMS NET FEES & COMMISSIONS (TL bn) NET F&C BREAKDOWN1 QUARTERLY CUMULATIVE Cash Non-Cash Loans, +61% QoQ +121% YoY 12.7% Loans, 8.8% Other, 26.6 4.3% Global Markets,

  15. Slide 15: Focus on productivity and efficiency

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 15 FOCUS ON PRODUCTIVITY AND EFFICIENCY EFFICIENCY METRICS CONTINUE TO IMPROVE YTD, EVEN AFTER ONE-OFFS OPERATING EXPENSES (TL bn) QUARTERLY QoQ CUMULATIVE YoY 38.8 110% 96% 14% 14.3 Adj. for earthquake 12.5 related donations 10% 24.2 (4%) 117% 8.7 Non-HR

  16. Slide 16: Sound capital metrics reflect internal capital generation ability

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 16 SOUND CAPITAL METRICS REFLECT INTERNAL CAPITAL GENERATION ABILITY SOLVENCY RATIOS (without BRSA’s forbearance) CET1 CAR CAR inc free prov. ~2.1% ~39bps BRSA CAR sensitivity to 17.5% Forbearance 10% TL 16.3% 16.8% 15.8% 16.5% 16.7% Impact on CAR depreci

  17. Slide 17: Clear upside to our 2023 anticipated ROE

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 17 CLEAR UPSIDE TO OUR 2023 ANTICIPATED ROE 2023 OP TL Loan growth pace faring lower than expected TL Loan Growth (YoY) ~avg. CPI due to regulatory growth caps FC Loan Growth (in US$, YoY) Flattish Net Cost of Risk (excl. currency impact) ~100bps Core NIM

  18. Slide 18: Value creation in non-financial KPIs

    FIRST BANK TO ANNOUNCE INTERIM DECARBONISATIONS TARGETS FOR 2030 TO ACHIEVE NET ZERO BY 2050 CARBON NEUTRAL SINCE 2020 (scope 1&2 and flight emissions) DOW JONES SUSTAINABILITY INDEX ONLY COMPANY FROM TURKEY THAT HAS BEEN IN PLACE FOR THE 8TH CONSECUTIVE VALUE YEAR CREATION IN CONTRIBUTION TO COMMUN

  19. Slide 19: Garanti BBVA's unique value creation: community investments & human capital

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 19 GARANTI BBVA’S UNIQUE VALUE CREATION -COMMUNITY INVESTMENTS & FINANCIAL INCLUSION & HUMAN CAPITAL FINANCIAL INCLUSION IN HONOR OF 100TH ANNIVERSARY OF THE TURKISH REPUBLIC WOMEN WHO KNOW THEIR ACCOUNTS A Hundred Years Ago, A Hundred Years Later: Online

  20. Slide 20: Garanti BBVA's unique value creation: sustainable finance

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 20 GARANTI BBVA’S UNIQUE VALUE CREATION -SUSTAINABLE FINANCE COMMITTED TO PORTFOLIO ALIGNMENT CONTRIBUTION TO SUSTAINABLE FINANCE (TL bn) WITH THE PARIS AGREEMENT GOALS Green Social 2030 decarbonization targets set in selected carbon-intensive industries

  21. Slide 21: Our commitment to ESG is recognized by various agencies

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 21 OUR COMMITMENT TO ESG IS RECOGNIZED BY VARIOUS AGENCIES CDP Moody’s BIST Indices DJSI CLIMATE CDP MSCI ESG FTSE4GOOD SUSTAINALYTICS BLOOMBERG SUSTAINABILITY WATER Credit Impact ESG RISK GENDER EQUALITY CHANGE INDEX 25 Score Scoring 1-5 0-40+ Range 0-10

  22. Slide 22: Appendix

    Appendix P G . 23 Sector Breakdown of Gross Loans P G . 28 Summary Balance Sheet P G . 24 FC Loan Breakdown P G . 29 Summary P&L P G . 25 Maturity Profile of External Debt P G . 30 Key Financial Ratios P G . 26 Adjusted L/D and Liquidity P G . 31 Quarterly & Cumulative Net Coverage Ratios, Cost of R

  23. Slide 23: Appendix: Sector breakdown of gross loans

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 23 APPENDIX: SECTOR BREAKDOWN OF GROSS LOANS % SHARE COVERAGE RATIO SECTOR BREAKDOWN OF GROSS LOANS1 Key Sectors Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 TL 966.4bn Retail 85% 12% 2% 0,6% 5,3% 58,9% Energy 58% 37% 5% 0,5% 29,7% 76,8% Construction 8

  24. Slide 24: Appendix: Closely monitored and well-provisioned FC loans

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 24 APPENDIX: CLOSELY MONITORED AND WELL-PROVISIONED FC LOANS FC PERFORMING LOANS (37% of total performıng loans) MITIGATION OF FX RISK - US$ 14.7 bn TIMELY DELEVERAGING (in $ bn) = US$ GBI and GB Romania loan placements 4.8bn Natural hedge 1701 Sector 154

  25. Slide 25: Appendix: Maturity profile of external debt

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 25 APPENDIX: MATURITY PROFILE OF EXTERNAL DEBT MATURITY PROFILE OF EXTERNAL DEBT (US$ billion) 0.75 0.2 Sub ordinated Debt Post Finance Bilateral Covered Bond $2.67 DPR Secured Finance MTN Eurobond 0.75 Syndicated Loan 1.82 $0.54 $0.57 0.41 $0.08 0.43 $0.

  26. Slide 26: Appendix: Adjusted LDR and liquidity coverage ratios

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 26 APPENDIX: ADJUSTED LDR AND LIQUIDITY COVERAGE RATIOS Loans funded via long-term on B/S alternative funding sources ease LDR (TL billion) 1,437 1,437 Total Loans / 74% Adjusted 64% 1,070 -0.2 - 2.3 - 51.4 - 9.1 - 87.8 Deposits: LDR 919 TL MM TL Loans /

  27. Slide 27: Appendix: Market shares

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 27 APPENDIX: MARKET SHARES Market Shares1 Jun-23 Sept-23 QoQ D Rank Consumer Loans inc. Consumer CCs 14.5% 14,7% 21 bps #1* Cons. Mortgage Loans 8.2% 8,7% 54 bps #2* Consumer Auto Loans 15.3% 15,1% -23 bps #2* Cons. General Purpose Loans 13.6% 13,2% -35 b

  28. Slide 28: Appendix: Securities portfolio

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 28 APPENDIX: SECURITIES PORTFOLIO TOTAL SECURITIES (TL billion) TL SECURITIES (TL billion) FC SECURITIES (US$ billion) 15% of Total Assets 12% 9% +12% (4%) 19% (1%) +9% +2% 6% 296.3 +29% 180.9 +7% 265.6 +10% 161.5 4.8 167.8 243.8 39% 2.5 + 3.7 129.9 176.2

  29. Slide 29: Appendix: Summary balance sheet

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 29 APPENDIX: SUMMARY BALANCE SHEET (TL billion) ASSETS 30.09.2022 31.12.2022 31.03.2023 30.06.2023 30.09.2023 Cash & Cash Equivalents 170,1 158,4 166,8 294,2 188,5 Balances at CBRT 123,3 114,0 157,5 149,9 284,2 Securities 187,7 204,7 243,8 265,6 296,3 Gro

  30. Slide 30: Appendix: Summary P&L

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 30 APPENDIX: SUMMARY P&L QUARTERLY P&L CUMULATIVE P&L TL Million 2Q23 3Q23 QoQ 9M22 9M23 YoY (+) Net Interest Income including Swap costs 18.315 22.149 21% 49.084 58.414 19% (+) NII excluding CPI linkers' income 12.278 12.649 3% 39.719 38.020 -4% (+) Inco

  31. Slide 31: Appendix: Key financial ratios

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 31 APPENDIX: KEY FINANCIAL RATIOS Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Profitability ratios ROAE (Cumulative)1 49,0% 51,0% 38,2% 38,3% 41,1% ROAA (Cumulative)1 5,0% 5,4% 4,5% 4,2% 4,5% Cost/Income 24,3% 23,9% 37,9% 37,2% 35,1% Liquidity ratios Loans / Depos

  32. Slide 32: Appendix: Quarterly & cumulative net CoR

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 32 APPENDIX: QUARTERLY & CUMULATIVE NET CoR (Million TL) (Million TL) Quarterly Net Expected Credit Loss 4Q22 1Q23 2Q23 3Q23 Cumulative Net Expected Credit Loss 9M23 (-) Expected Credit Losses 6.302 10.345 11.997 7.395 (-) Expected Credit Losses 29.737 St

  33. Slide 33: Disclaimer statement

    9M23 BRSA CONSOLIDATED EARNINGS PRESENTATION 33 DISCLAIMER STATEMENT Türkiye Garanti Bankasi A.Ş. (“Garanti BBVA”) has prepared this presentation document (the “Document”) thereto for the sole purposes of providing information which include forward looking projections and statements relating to Gara

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