Earnings Presentation BRSA Bank-Only 1H20 August 10, 2020
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS 1H20 Earnings and Ratios Pre-Provisioning Operating Income (TL million) Net Income (TL million) 4,177.4 3,765.6 7,943.1 3,241.4 10.9% 166.3% 218.2% 1,716.2 1,525.2 2,982.9 1,018.8 1Q20 2Q20 1H19 1H20 1H19 1H20 1Q20 2Q20 Proactively Coverage Increase (%) Annual ROAE (%) Quarterly ROAE (%) ROAE without Total NPL Stage II 18.6% 17.4% CET1 Coverage Ratio Coverage Ratio injection 16.9 110.5 20.6 vs. sector 12.0 vs. sector average of 15.8 average of 9.8 ppt 11.8% 11.4% 4.7 ppt TL 852 million 17.2 ppt free provisions 7.3 7.1 93.3 1H19 1H20 2Q19 2Q20 1Q20 2Q20 1Q20 2Q20 www.vakifbank.com.tr 2
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS Key Highlights of 2Q20 The best ROAE among peer banks • Quarterly bank-only net income came at TL 1,525 25 millio llion with an average ROE of 15.8%. Annual ROAE would be 18.6% without CET1 injection impact on equity. • 1H20 bank-only net income came at TL 3,241 41 milli llion despite of prudent provision increase; 1H20 net income is up by 218% 8% YoY vs. sector average of 24.6%, 1H20 average ROE came at 16.9% 9%; vs. sector average of 11.8%, 1H20 average ROA materialized at 1.35% 5% vs. sector average of 1.25%. Well managed NIM evolution • Quarterly NIM came at 4.96% 6% with a limited contraction than expected; thanks to lower deposit costs. • 1H20 NIM materialized at 5% 5% vs. 2019 annual NIM of 4.14%. • 1H20 swap adjusted NIM came at 4.35% 5% vs. 2019 annual swap adjusted NIM of 3.07% Proactive and prudent coverage increase maintained • Stage-II coverage further increased to 12% 12% in 2Q20 from 7.3% in 1Q20. • Stage-III coverage further increased to 73.1% in 2Q20 from 70.1% in 1Q20. • Total NPL coverage also further increased to 110. 0.5% 5% in 2Q20 from 93.3% in 1Q20. • TL 852 mill llion ion free provision is still in the balance sheet. Market share gains in both TL and FC deposits • Total deposits are up by 24.9% 9% QoQ and 56.7% 7% YoY; TL deposits are up by 27% 27% QoQ and 64.3% 3% YoY, FC deposits in dollar terms are up by 17. 17.3% QoQ and 24% 24% YoY. • Total deposit market share increased to 11% 11% in 2Q20 which was 9.6% in 1Q20; TL deposit market share increased to 12.5% in 2Q20 which was 11.2% in 1Q20, FC deposit market share increased to 9.4% 4% which was 8.2% in 1Q20. Solid solvency ratios thanks to timely CET1 injection • TL 7 billion CET1 injection was completed in 2Q20. Paid-in capital increased to TL 3.9 billi lion n from TL 2.5 billion, Total positive impact on solvency ratios is 182 bps as of 1H20. www.vakifbank.com.tr 3
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS Ownership structure change following CET1 injection BEFORE AFTER Free Float The Ministry (Group D) Free Float of Treasury 16.15% (Group D) and Finance 25.22% The Ministry (Group A-B) 0.10% of Treasury 37.46% Others and Finance (Group B-C) 0.17% (Group A-B) Others 58.51% 10.30% (Group B-C) Turkey VakıfBank Pension Fund Wealth Fund 16.10% (Group C) (Group D) VakıfBank 35.99% Pension Fund (Group C) In years, VakıfBank maintained its strong solvency ratios through various domestic and international Tier I and Tier II issuances, both in TL and foreign currency since 2012 and always aimed to provide long-term and cost-effective capital funding structure. Paid-in capital Total sales proceeds TL 5.6 bill llio ion n has been increased by (Total CET1 injection) reflected as share TL 1.4 billio llion n to TL 3.9 TL 7 billio llion premium mium bill llio ion www.vakifbank.com.tr 4
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS 1H20 P&L Details 2,993* 14,441* (3,892)* 168 1,765 (860) 10,375 (6,333) 1H20 (974) 3,241 Net Interest Net Fees and Dividend Net Trading Other Income Total Operating Provisions Taxes Net Income Income Commissions Income Income Revenue Expenses % vs +103% -4% +230% -24% +23% +74% +23% +62% +435% +218% 1H19 7,344* (2,042)* 1,336* 743 (218) 16 5,467 (3,215) 2Q20 (563) 1,525 Net Interest Net Fees and Dividend Net Trading Other Income Total Operating Provisions Taxes Net Income Income Commissions Income Income Revenue Expenses % vs +11% -27% -89% -66% 19% +3% +10% +3% +37% -11% 1Q20 www.vakifbank.com.tr 5 *Adjusted with TL 892.3 million write-off loans in 1H20 which boosted both OPEX and other income lines without any P&L impact, due to the Bank’s write off accounting methodology.
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS High quality revenue breakdown Total Revenues – Revenue Breakdown (TL million) 74.1% Dividend Dividend Other+Trading 1.2% 0.6% Other+Trading 15.6% 14,441* 14.8%* Net F&C Net F&C 12.2% 1H19 1H20 8,295 22.1% NII 71.8% NII 61.7% 1H19 1H20 Core Banking Revenues (TL million)** Net Fee & Commission Income Breakdown (%) Due to mainly 74.7% regulation impact Inquiry & Insurance Insurance (3.8%) Expertise 7% 13% 9% Inquiry & Cash Loans 42% Expertise 12,140 6% Other 1,834 1,765 4% Other Cash Loans 1% 35% 6,949 1H19 1H20 Payment Payment systems Non-Cash systems Loans 28% 20% 17% 18% Non-Cash Loans 1H19 1H20 1H19 1H20 *Adjusted with TL 892.3 million write-off loans in 1H20 which boosted both OPEX and other income lines without any P&L impact, due to the Bank’s write off accounting methodology. www.vakifbank.com.tr 6 **Core Banking Revenues= NII+NFC
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS Well-managed NIM evolution Swap Adjusted Net Interest Margin (%) Net Interest Margin (NIM %) 157 bps 193 bps 4.48 4.32 4.35 5.17 5.01 4.96 (16 bps) 4.14 3.07 (20 bps) 3.45 2.43 1H19 2019YE 1H20 1Q20 2Q20 1Q20 2Q20 1H19 2019YE 1H20 Core Spreads (%) CBRT Funding 18.5 16.5 5. 5.5 ppt ppt 13.7 TL sprea read 1Q20 2Q20 2Q19 3Q19 4Q19 12.1 15.0 TL Loan Yields 10.0 Total money TL Deposit 7.5 6.6 TL 45.3 TL 42.3 TL 42.6 TL 68.6 TL 68.0 Costs market billion billion billion billion billion 5. 5.3 ppt ppt 6.8 funding * 6.5 6.3 6.2 FC sprea ead FC Loan Yields 2.4 Cost of 1.4 24.02% 16.38% 11.25% 9.14% 7.34% 0.9 0.9 FC Deposit Funding Costs 14.3 12.7 11.8 11.2 TL 1,079 TL 985 TL 840 TL 652 TL 707 TL Security Swap Cost million million million million million Yields 5.3 4.0 3.9 4.5 FC Securities Yields** Average Swap TL 21.2 TL 23.6 TL 26.6 TL 27.2 TL 34.9 2Q19 4Q19 1Q20 2Q20 Usage billion billion billion billion billion *Including overnight and one-week repos, total short term cross currency swaps and interbank money market. www.vakifbank.com.tr 7 **MIS data.
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS Maintained low level of cost/income ratio Operating Expenses (TL million)* Breakdown of OPEX* 22.6% 943 938 5 branches have One-off Covid-19 been closed YtD related bonus payment August to employees impact 2019 2020 and one off donation to Covid-19 campaign impact: +4.9 ppt on 3,892 annual opex growth 3,174 58% 57% 2,041 42% 1,850 43% 10.3% 1H19 1H20 1H19 1Q20 2Q20 1H20 Cost*/Income (%) Quarterly OPEX Breakdown (TL million) 23.7% 21.8% (11.3 ppt) One off donation Covid-19 related to Covid-19 bonus payment to campaign employees impact: impact: +2.7 ppt +8 ppt 1,662 2,230 38.3 35.8 1,343 1,831 27.0 Non-HR Cost* HR Cost (8.8 ppt) 1H19 1H20 1H19 1H20 1H19 YE19 1H20 * Adjusted with TL 892.3 million write-off loans in 1H20 which boosted both OPEX and other income lines without any P&L impact, d ue to the Bank’s write off accounting methodology. www.vakifbank.com.tr 8
Earnings Presentation Bank-Only 1H20 INVESTOR RELATIONS Quarterly TL loan growth mainly driven by secured CGF lending Segment Breakdown of Loans (TL billion) Currency Breakdown of Loans (TL billion) Portfolio Breakdown (%) 369.5 369.5 25.5 16.0 27.8 SME 312.0 23.6 312.0 24.6 103.6 Retail 16.3 102.6 274.8 274.8 28% 250.0 16.3 75.3 98.4 250.0 Com.&Corp. 50.9 47.6 15.2 Other * 29.9 32% 66.0 89.3 25.2 63.7 32% SME 45.2 91.6 1H19 1H20 23.6 32.5 37% 19.0 Mortgage 29.2 Breakdown of FC Loans 24.7 GPC 265.9 213.6 72% Working Capital 185.5 175.8 162.7 and Other 158.4 68% 139.7 68% 127.4 Com.& 28% 63% Corp. 2Q19 4Q19 1Q20 2Q20 2Q19 4Q19 1Q20 2Q20 FC TL Export Loans Project Finance 12% VB Sector VB Sector 60% QoQ QoQ YoY YoY Quarterly Loan Growth Total Loan Growth 18% 28% 12% 48% GPC 39% 36% Mortgage 24% 68% 40% TL Loan Growth 17% FC Loans ($) 19% 16% 14% 11% Business Loans 8% 7% 1% 0% SME 1% 0% (5%) (7%) FC Loan Growth ($) 1Q20 2Q20 www.vakifbank.com.tr 9 * Other includes credit cards, overdraft and auto loans.
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