Yapi Ve Kredi Bankasi A.s. · BIST:YKBNK
Yapi Ve Kredi Bankasi A.s — Yapı Kredi — Non-Deal Roadshow (April 2007)
55 slides from Yapi Ve Kredi Bankasi A.s's roadshow presentation, Apr 4, 2007
Slide 1: Yapı Kredi: Managing a Successful Revival
Yapı Kredi: Managing a Successful Revival London/Edinburgh Roadshow, 2-4 April 2007 1
Slide 2: Agenda
Agenda Macroeconomic & Banking Environment The New Bank Shareholding & Organizational Structure 2006YE Results 2007 Outlook Annexes 2
Slide 3: Turkey is a big and attractive country, rapidly and structurally recovering
Turkey is a big and attractive country, rapidly and structurally recovering from recent financial turmoils … Year 2005 Turkey Turkey is one of the biggest markets in the European and Mediterranean area Population, mln 72 Population is young (avg 29.5 years) and is concentrated in Avg. age popula
Slide 4: Sustained GDP growth + sharp decrease of inflation and market rates
… and now sustained GDP growth + sharp decrease of inflation and market rates confirm the attractiveness of the country GDP Growth (%) Turkey has been enjoying high growth 8.9 7.9 rates in the aftermath of 2001 crisis, 7.4 5.8 helping economy to stabilize… 5.2 5.4 …and it is expected to continue
Slide 5: Turkish banking system has become healthier; competition expected to increase
Turkish banking system has become healthier in the last three Years; as a result, competition is expected to increase 2000 - 2001 2002 2003 - 2004 2005 - 2006 •Economic crisis led by • IMF reform program • Sale and merging • Privatization of state- political conflicts: process of SDIF- owned banks •
Slide 6: The sector is among the most attractive in new Europe
The sector is among the most attractive in new Europe in terms of size and growth prospects... Financial intermediation is Branches per mln inhabitants (Loans+Deposits)/GDP significantly low 540 Banks already recovered from the last financial crisis (2001) 275% The crises served as filter: tot
Slide 7: Specific areas where high growth is expected
…and with specific areas where high growth is expected In 2006, 79% yoy growth, reached 4% of GDP (only 4% growth in 2007 YTD*) Room for further growth vs GDP ratio of CEE benchmarks: 5.5% in Poland, 7.6% in Czech Republic, 9.6% in Hungary, and 46% for EU-25. Boom expected when rates below 10% M
Slide 8: Agenda
Agenda Macroeconomic & Banking Environment The New Bank Shareholding & Organizational Structure 2006YE Results 2007 Outlook Annexes 8
Slide 9: Yapı Kredi Merger is the biggest M&A project in Turkish banking history
Yapı Kredi Merger is the biggest M&A project in the history of the Turkish banking sector FINANCIAL HIGHLIGHTS (BRSA Bank-Only Figures in YTL, December 2006) Total Assets (bln) 48.9 Performing Loans (net, bln) 22.2 Deposits (bln) 31.1 Creation of one of the most dynamic and experienced institution
Slide 10: Strategic rationale
Strategic rationale Significant scale increase, building one of the top four banking groups in DIMENSIONAL (1) Turkey, with Euro 30 billion of consolidated assets, Euro 13.8 billion of GROWTH customer loans and over 13 million clients Creation of a group with strong distribution/production platf
Slide 11: Main steps of the merger
Main steps of the merger 16 JANUARY 2005 Exclusive Negotiations 31 JANUARY 2005 Share Transfer Agreement 8 MAY 2005 Share Purchase Agreement 28 SEPTEMBER 2005 Transfer of 57.4% of Yapı Kredi Shares to Koçbank 23 FEB.- 9 MAR. 2006 Tender Offer Process for Yapı Kredi Minority Shares (complet
Slide 12: The merger creates complementarity combining strong competitive advantages
The merger creates the basis for complementarity allowing both banks to combine their strong competitive advantages Dedicated service model for each segment Large private/affluent customer base Excellence in mutual fund business Effective cost and risk management Restructuring and profitab
Slide 13: Extensive domestic distribution network of 607 branches
Extensive domestic distribution network of 607 branches with over 12% market share in top 10 cities in Turkey Kırklareli 3 Kastamonu 1 Edirne 4 Bartın 1 Sinop Artvin Tekirdağ 5 Karabük 1 Ardahan İstanbul 262 Zonguldak 4 Samsun 4 Rize 1 Kocaeli 11 Düzce 1 Çankırı Ordu 1 Giresun 1 Trabzon 3 Yalova 1 B
Slide 14: Yapı Kredi aims at becoming market leader in sustainable profitability and growth
Yapı Kredi aims at becoming market leader in terms of achieving sustainable profitability and growth To become the perceived leader in the market in terms MISSION of sustainable value creation and growth, being the first choice of customers and employees Leader in the segment/business with higher
Slide 15: Key strategic targets based on growth, efficiency and profitability
Key strategic targets based on ensuring growth, efficiency and profitability KEY STRATEGIC GUIDELINES Focus on 5 main business targets: 9 Consolidate leadership in cards and become leader in consumer finance 9 Become leader in Asset Gathering and 1st choice for High Net Worth Individuals 9 Bring m
Slide 16: Agenda
Agenda Macroeconomic & Banking Environment The New Bank Shareholding & Organizational Structure 2006YE Results 2007 Outlook Annexes 16
Slide 17: Koç Financial Services (KFS) is an integrated, well capitalized provider
Koç Financial Services (KFS) is an integrated and well capitalized financial services provider € billion, IFRS Consolidated Figures, December 2006 50% 50% Total Assets 30.3 Deposits 18.8 Net Cash Loans 13.8 PARTNERS SHARE A COMMON VISION AND GOAL Loans/Deposits, % 73 KFS significantly grows its fina
Slide 18: Strong and dedicated support of its shareholders
… with strong and dedicated support of its shareholders… Koç Holding Turkey’s leading industrial UniCredit International banking group, and services Group; a flagship of the leader in Central and Eastern Europe (CEE) Turkish economy and high-growing with presence in 20 countries consumer demand in T
Slide 19: A proven positive track record during its first four years
…and a proven positive track record during its first four years KFS - Combined Net Profit +21% KFS - ROE (Consolidated) - % 755 mln YTL 625 26(2) +3 ppts 24 24 23 21(4) 360 265 231 New KFS New KFS 9 1 2002(1) 2003 2004 2005 2005N 2006 2002(1) 2003 2004 2005 2005N 2006 KFS - NPL Ratio - % KFS - Cost
Slide 20: Post-merger ownership structure
Post-merger ownership structure PRE-MERGER OWNERSHIP STRUCTURE POST-MERGER OWNERSHIP STRUCTURE 50% 50% (1) KFS Subsidiaries 80.18% 19.82% Minorities Yapı Kredi and Koçbank formally merged on 2 October 2006 by virtue of dissolution of Koçbank and transfer of all its rights, receivables, liabilities a
Slide 21: Four core subsidiaries of KFS and YKB merged
Four core subsidiaries of KFS and YKB in leasing, factoring, asset management, inv. banking/brokerage merged in Dec ‘06/Jan ‘07 so as to fully capitalize on Group synergies % ownership L Listed % 2006 revenues % 2006 net profit 1. Through 35.3% in YKY which is holding 87.3% in YK Portföy. 2. Through
Slide 22: Efficient new organizational structure with local and international talent
Efficient new organizational structure with outstanding local and international managerial talent BOARD OF DIRECTORS INTERNAL CONTROL (2) RISK MANAGEMENT INTERNAL AUDIT (1) (1) CEO/GM COO CORPORATE IDENTITY AND OPERATIONS ORGANIZATION COMMUNICATION FINANCIAL PLANNING, ALTERNATIVE ADMINISTRATION AND
Slide 23: Agenda
Agenda Macroeconomic & Banking Environment The New Bank Shareholding & Organizational Structure 2006YE Results (BRSA Bank-only) 2007 Outlook Annexes 23
Slide 24: Important Disclosure on 2006YE Results
Important Disclosure on 2006YE Results The legal merger of Yapı Kredi (YKB) and Koçbank (KB) took place on 2 October 2006. The financials announced on 12 March 2007 based on 2006YE results are the first financials of the new merged Bank Since the merger, the new entity carries in its assets a go
Slide 25: 2006 Key Highlights (BRSA Bank-only)
2006 Key Highlights (BRSA Bank-only) Successfully completed legal and IT merger 12 months after the acquisition YTL 512 mln of net income and ROE of 18% in a year of integration and market turmoil (At KFS level, combined net income of YTL 755 mln; consolidated ROE of 24%) Capital adequacy rati
Slide 26: Back to profitability in the integration year
In the integration year, Yapı Kredi is back to profitability with clear improvement also vs. 2005 normalized results Net Income (mln YTL) ROE 28% on 512 tangible 51% 18% equity 339 7% Of which: YKB: (1,543) KB : 239 2005 2005 2005 N 2006 2005 2005 2005 N 2006 -1,304 -28% Cost / Income Net Income / A
Slide 27: Completed restructuring of full capital base in 12 months
Completed restructuring of full capital base in 12 months No major impact on equity due 12 months ahead of to May-June 2006 market Merger with Sub-loan of the original plan turmoil. Decrease in CAR mainly Koçbank €500 mln (1) driven by one-off deferred tax effect due to decrease in 12.3% Transfer fr
Slide 28: Performance driven by revenue growth, cost control and risk management
Performance driven by 9% revenue growth, cost control (core non-HR down by 5% absorbing integration costs) and risk management (net provisions up by 2%) 2005 2005 2006 YoY % YoY % +13% (mln YTL) Pro-forma Normalized Normalized(1) Excluding 2,802 acquisition and Total Revenues 3,936 3,047 -23% +9% su
Slide 29: Commercial strategy focused on increasing revenue market share
Commercial strategy focused on increasing revenue market share through a healthy earnings structure Composition of Revenues (mln YTL) Revenue(1) Market Share (%, Yearly) 9.7 9.8 9% 3,047 2,802 12% 2005 2006 38% Other Oper. Inc. 2% 10% Net Trading Inc. + FX gain/(loss) 6% -68% Revenue Composition – Y
Slide 30: Share of IEAs in total assets increased to 92%
Share of IEAs in total assets increased by +3 ppts up to 92% due to disposal of non-core assets and collection of receivables Since the acquisition at Composition Of Assets (mln YTL) TL/FC Breakdown of Assets (mln YTL) end-2005, secured 3.2 bln YTL of cash inflow, of which 29% 48,887 29% 48,887 1.
Slide 31: 96% of securities portfolio in Held-to-Maturity
96% of securities portfolio invested in Held-to-Maturity, aimed at stable revenue generation and limited capital at risk Securities Composition Securities Composition by Type (mln YTL) by Currency (mln YTL) 16,470 66% 66% 16,470 1% 3% 9,951 9,951 60% Available For Sale 8% -79% 84% Trading 12% 54% (1
Slide 32: Interest income mainly driven by loans rather than securities
Interest income mainly driven by loans rather than securities income Composition of Interest Income (mln YTL) Cash Loans by SBU* Corporate (52%) Retail (48%) 23% 4,986 25% 27% 11% 10% 26% 1% 5% 4,066 54% Large Medium Retail SME Credit Cards Private Other 4% 1% 26% Corporate Corporate Securities 32%
Slide 33: Uninterrupted leadership in credit cards since 1991
Uninterrupted leadership in credit cards since 1991 further reinforced in 2006 despite the challenges of integration Market Share in Market Share in 2005 2006 YoY% No of CCs Issuing Volume (eop) CE CE # of merchants 160,776 168,235 +5% +15 bps 25.8% # of POS 184,097 194,400 +6% 25.6% 21.3%-160 bps K
Slide 34: Significant room for growth in consumer loans and mortgages
Significant room for growth in consumer loans; promising potential in mortgages and general purpose loans Housing Loans (mln YTL) Composition of Consumer 1,547 66% 2006 Market Share Loans & Credit Cards (mln YTL) 930 Consumer loans 6.0% - Housing 7.0% 35% 8,346 2005 2006 - General Purpose 3.9% 6,184
Slide 35: Healthier liability structure and customer asset gathering
Healthier liability structure thanks to international funding access and strong focus on customer asset gathering Composition of Liabilities Composition of Customer Assets (mln YTL) (mln YTL) Market Share 21% 51,491 in Mutual Funds 29% 48,887 7% 438% 10% 42,655 10% 32% Repo(2) 1% 2.6 ppts 37,768 7%
Slide 36: Growth and diversification focus in funding base
Growth and diversification focus in funding base freed from pre-merger high cost deposits totalling 1.8 bln YTL TL Deposits (mln YTL) Deposits by SBU* (Mln YTL) 16% 16,167 13,899 TL/FC Breakdown of Demand Dep./ 22% Retail (64%) Private Deposits (mln YTL) Total Deposits 17% 31,127 31,127 2005 2006 Re
Slide 37: Solid fee & commission growth
Solid fee & commission growth on the back of enhanced leadership positions in credit cards, asset management and non-cash loans Fees & Commission Income Fees & Commission 18% YoY growth in fee and (mln YTL) Composition commissions, indicating continued focus on Paid Net Received 20% Cash Loans sus
Slide 38: Well diversified revenue mix focused on profitable business lines
Well diversified revenue mix focused on high growth and profitable business lines for a superior return vs. peers 2006 Net Revenues Revenues / Average IEAs 35% of revenues Quarterly Annual (3) generated by (1) Private Other most profitable 12% 3% 9.0%(4) 7.9% Large credit card Corporate 6% 17% Ret
Slide 39: Strategic presence in most attractive segments
…with strategic presence in most attractive segments 39 (1) Total deposit since total retail deposits for all banks are not disclosed separately (2) Excluding credit card loans, (3) Outstanding balance market share, (4) Through Koç Allianz which is not a KFS subsidiary (Koç Group subsidiary), (5) Eq
Slide 40: HR costs up 12% while core non-HR declined 5%
HR costs up by 12% y-o-y driven by full introduction of MBO* system, ETB and vacation rights while core non-HR declined by 5% y-o-y on a normalized basis HR related Non-HR Total HR Costs Total Non HR Costs (151 mln YTL) (mln YTL) (mln YTL) 9% 3,274 Other 10% 1,361 25% 12% 1,244 11% 58% Vacation 788
Slide 41: Substantial reorganization of the sales force
Substantial reorganization of the sales force leading to improved productivity and operational efficiency Headcount 2006 Headcount Flows Customer Business per head* (ths YTL) 24% 4,006 -275 Headoffice -722 13,753 13,478 3,228 FO Branches +447 51% 19,70% 54% 19,70% Branch Front Office +358 BO 49% 46%
Slide 42: From operating income to net income
From operating income to net income (mln YTL) • Current tax expense of YTL 58 mln • Deferred tax expense of YTL 139 mln including the effect of: • One off tax gain of YTL 109 mln YTL (Koçbank) • YTL 135 mln tax expense --one off due to corporate tax reduction from 30% to 20% 1,049 • Remaining YTL 11
Slide 43: Constantly improving asset quality with decreasing NPL ratio
Constantly improving trend in asset quality with decreasing NPL ratio coupled with more than adequate provisioning level NPL Ratio Coverage Ratio Gross Net NPL Watch Loan Standard 80.7% 81.8% 7.2% 7.2% 6.7%(1) 11.4% 11.1% 1.6% 1.5% 1.9% 2.0% 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 Gross
Slide 44: Major 2006 Integration Accomplishments
Major 2006 Integration Accomplishments Focus on the key segments / products: Cards (leadership reinforced and Business Strategy consolidated), Retail (upper mass, strategically positioned in consumer lending/mortgages, decreased Mass cost to serve), Private, Small Business, Mid-Large Corporate.
Slide 45: Agenda
Agenda Macroeconomic & Banking Environment The New Bank Shareholding & Organizational Structure 2006YE Results 2007 Outlook Annexes 45
Slide 46: 2007 IFRS Financial Guidance
2007 IFRS Financial Guidance 2007 Banking Sector Growth Forecasts 2007 Yapı Kredi Performance Key Focus Areas Further increase in IEAs (sale of ~400 mln YTL Assets 17% ; SECTOR OUTPERFORM non-core) Less capital absorbing products/reinforce Loans 24% ; SECTOR OUTPERFORM leadership in cards Remix towa
Slide 47: Agenda
Agenda Key Highlights of 2006 Results 2006 Financial and Business Performance 2006 Post-Merger Integration Achievements 2007 Outlook Annexes 47
Slide 48: YKB - BRSA Bank-only Summary P&L
YKB - BRSA Bank-only Summary P&L 2005 2005 2005 2005 2005 2006 YoY YoY KB YKB KB+YKB YKB KB+YKB YKB % % Original Original Pro- Adjust. Normalized forma (mln YTL) (a) (b) (c) (d) (e) (f) (g) (h) a+b c-d f/c f/e Total Revenues 921 3,016 3,937 1,135(1) 2,802 3,047 -23 +9 Operating Expenses (443) (3,445
Slide 49: YKB - BRSA Bank-only Summary Balance Sheet
YKB - BRSA Bank-only Summary Balance Sheet (mln YTL) FY05 FY05 FY05 FY06 YoY % KB YKB Pro-forma Assets 14,792 23,840 37,768 48,887 +29 Loans 7,238 11,421 18,659 22,504 +21 Securities 3,976 5,975 9,951 16,470 +66 Fixed Assets & Participations 2,068 1,860 3,064 3,069(1) - Deposits 9,593 17,079 26,672
Slide 50: YKB - BRSA Bank-only 2006 Quarterly P&L Trends
YKB - BRSA Bank-only 2006 Quarterly P&L Trends (mln YTL) 1Q06 2Q06 3Q06 4Q06 QoQ 1H06 2H06 HoH % Revenues 753 711 741 842 +14 1,465 1,583 +8 Interest Income 391 487 422 459 +9 878 881 - Non-Interest Income 362 224 318 383 +20 587 702 +20 Costs (437) (477) (451) (633) +40 (914) (1,084) +19 HR Costs (
Slide 51: YKB - IFRS Selected Balance Sheet and P&L Items
YKB - IFRS Selected Balance Sheet and P&L Items SELECTED P&L ITEMS YoY N % +18% (mln YTL) 2005(1) 2005N 2006 Excluding Total Revenues 3,676 2,519 2,869 +14% acquisition and 1,650 sub-loan Net Interest Income 1,650 1,749 +6% financial costs Non-Interest Income 2,026 869 1,120 +29% o/w Fees & Comm. 75
Slide 52: KFS – IFRS Summary P&L
KFS – IFRS Summary P&L 2005(1) 2005(2) 2005(3) 2006 YoY % (mln YTL) Normalized Normalized +13% Total Revenues 1,533 4,210 3,053 3,352 +10% Excluding acquisition and Net Interest Income 1,015 1,917 1,917 2,038 +6% sub-loan financial costs Non-Interest Income 518 2,293 1,136 1,314 +16% o/w Fees & Comm
Slide 53: KFS - IFRS Summary Balance Sheet
KFS - IFRS Summary Balance Sheet (mln YTL) 2005 2006 YoY % Assets 42,797 54,845 +28 Loans 20,579 25,077 +22 Securities 11,536 18,462 +60 Fixed Assets & Participations(1) 2,890 2,774 -4 Deposits 28,643 35,875 +25 Borrowings and Debt Securities in Issue 5,107 8,733 +71 Equity 4,116 4,330 +5 Assets und
Slide 54: KFS - IFRS 2006 Quarterly P&L Trends
KFS - IFRS 2006 Quarterly P&L Trends (mln YTL) 1Q 2Q 3Q 4Q QoQ 1 H* 2H HoH % % Revenues 757 825 841 929 +10 1,582 1,770 +12 Interest Income 456 526 503 554 +10 982 1,056 +8 Non-Interest Income 301 299 338 375 +11 600 714 +19 Costs (430) (416) (390) (532) +36 (814) (922) +13 HR Costs (201) (208) (206
Slide 55: For enquiries please contact: Yapı Kredi Investor Relations
For enquiries please contact: Yapı Kredi Investor Relations yapikredi_investorrelations@yapikredi.com.tr Carlo Vivaldi Hale Tunaboylu Chief Financial Officer Head of Investor Relations Tel. +90 212 339 7045 Tel. +90 212 339 7647 E-mail: carlo.vivaldi@yapikredi.com.tr E-mail: hale.tunaboylu@yapikredi