VakıfBank IR App. Avail ilab able le at at Earnings Presentation BRSA Bank-Only 1H 2019 August 9, 2019
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS 1H19 Earnings and Ratios Net Income (TL million) Pre-Provisioning Operating Profit (TL million)* 651.2 3,806 With sustained 2,983 367.6 TL 917 917 million lion free provisions in the balance sheet 1H18 1H19 1Q19 2Q19 Strong coverage ratios maintained 2,125.3 Stage III Total NPL Sector Stage III Coverage Ratio Coverage Ratio Coverage Ratio 1,018.8 101.1% 74.5% 67.6% 10.2% better than sector 1H18 1H19 www.vakifbank.com.tr *PPOP=NII+NFC+Dividend+Trading+Other Income-OPEX-Provision Reversals 2
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Key Highlights of 1H19 Muted ed quarterl rterly lendi ding ng growt owth • TL loans are flattish QoQ. • FX loans are up by 1.7% QoQ in USD terms. • Retail loans are up by 1.8% QoQ. Business loans are up by 1. 1.4% QoQ. • Strong ng quarter arterly y deposit sit growt wth Total deposits are up by 8.2% QoQ. • • TL deposits are up by 7.4% QoQ. • Retail deposits are up by 7.9% QoQ. • CPI linker deposits amounted TL10 10 billio llion .* Furth rther er incre reased ased liqu quidi idity ty and impro proved ved LtD ratios tios Total LCR increased to 142.3%* vs 118.9% in 1Q19. • • FX LCR reached all time high level at 562 562.3% 3%* . • Total LtD came down to 116.7% 7% vs 124.3% in 1Q19. • TL LtD improved around 10 ppt to 136% 136% from 146% a quarter ago. Lower er than expected ted NPL inflo lows ws and better ter Net CoR fig igure res • NPL ratio materialized at 4.74% 4% in 1H19 vs 4.65% in 2018YE. • Net CoR came at 151 bps , significantly lower than the initial guidance. • NPL specific coverage remained solid at 74.5% 5% vs sector average of 67.6%. Stellar ar fee income ome generation neration capacit acity y despite pite muted ted lending ing grow owth th • 92 92% annual fee income growth. • All time high Fee/Total Revenues at 22.1% 1% in 1H19. www.vakifbank.com.tr *Current figures as of early August 2019 3
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS 1H19 P&L Details 2,431 8,295 (3,174) (1,135) 51 1,834 5,115 (3,920) 1H19 1,019 (182) Net Interest Net Fees and Dividend Net Trading Other Income Total Operating Provisions Taxes Net Income Income Commissions Income Income Revenue Expenses % vs +5% +92% -57% -477% +200% +17% +21% +119% -66% -52% 1H18 (1,264) 49 855 1,061 3,472 (1,626) 2,770 2Q19 (1,427) (52) 368 Net Interest Net Fees and Dividend Net Trading Other Income Total Operating Provisions Taxes Net Income Income Commissions Income Income Revenue Expenses % vs +18% -13% +100% -100% -23% -28% +5% -43% -60% -44% 1Q19 www.vakifbank.com.tr 4
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Revenue breakdown Total Revenues – Revenue Breakdown (TL million) 17.5% Trading Trading Dividend Dividend -13.7 Other 1.6 0.6 4.3 8,295 7,062 29.3 11.5 Other 61.7 NII NII 1H19 1H18 69.1 Net F&C Net F&C 22.1 13.5 1H18 1H19 Core Banking Revenues (TL million)* 19.1% Share of high 83.8% .8% 6,949 quality core banking revenues 5,833 in total 1H18 1H19 www.vakifbank.com.tr * Core Banking Revenues= NII+NFC 5
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS NIM, Spreads & Swap Net Interest Margin (NIM %) Swap Adjusted Net Interest Margin (%) Swap adj. NIM will be higher 4.30 4.30 backed by lower cost of funding >4 3.55 3.45 3.22 >3 2.67 33 bps 2.45 2.16 2018 1Q19 2Q19 1H19 2H19E 2018 1Q19 2Q19 1H19 2H19E Swap Cost Core Spreads (%) 32 32 bps bps 349 49 bps bps QoQ TL spread 18.70 18.50 17.00 improvement 17.60 1Q19 2Q19 15.01 on TL core TL Loan 17.32 spreads Yields 15.01 14.44 Swap Cost TL 398 million TL 1,083 million 13.40 TL Deposit 10.23 Costs 7.89 434 4 bps bps 31 31 bps bps 6.78 6.61 FC spread FC ad 6.64 Average Swap QoQ 5.39 TL 6.9 billion TL 17.9 billion FC Loan Usage improvement 3.36 Yields 2.36 on FC core FC Deposit 2.44 3.10 spreads 2.61 Costs 2Q18 3Q18 4Q18 1Q19 2Q19 www.vakifbank.com.tr 6
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Stellar fee income generation capacity despite muted lending growth Net Fee & Commission Income (TL million) – Fee Breakdown 92% Insurance Inquiry & Insurance Inquiry & 1,834 Expertise 7% 7% Expertise 11% 9% Cash Loans Other 36% 1% Other 1% 955 31% 1H19 1H18 Cash Loans 30% 28% 19% Payment Non-Cash systems Payment Loans Non-Cash systems 20% Loans 1H18 1H19 Fee/Total Revenue (%) Fee/Operating Expense (%) 22.1 All time 57.8 best fee 14.4 ratios 39.0 13.5 36.5 1H18 2018 1H19 1H18 2018 1H19 www.vakifbank.com.tr 7
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Opex breakdown and Cost/Income Ratios Operating Expenses (TL million) Breakdown of OPEX 38.3 37.0 1H18 1H19 C/I Ratio (%) Annual Opex 3,174.1 Growth 21.4% 2,614.0 60% 58% 40% 42% HR Cost Non-HR Cost HR Cost Non-HR Cost 1H18 1H19 27.9% 18.5% Quarterly Opex Growth 5% 689 1,626.1 971 1,548.1 655 860 838 1,350.4 (4.9%) 13% 512 HR Cost Non HR Cost 2Q18 1Q19 2Q19 2Q18 1Q19 2Q19 2Q18 1Q19 2Q19 www.vakifbank.com.tr 8
Earnings Presentation Bank Only 1Q19 INVESTOR RELATIONS Well diversified & stable loan breakdown Segment Breakdown of Loans (TL billion) Portfolio Breakdown (%) Asset Quality Breakdown (TL billion) 25.1 25.5 SME 262.4 258.1 250.0 Gross Loans 246.3 12.4 Stage III 15.2 11.9 14.2 23.5 26.7 221.6 Retail 27.3 24.7 210.1 Stage II 14.8 12.9 63.7 Other 1 63.5 Com.&Corp. 51.0 48.2 58.7 52.8 SME 19.0 19.2 Stage I 24.7 1H18 1H19 19.4 24.5 Mortgage 20.9 21.2 QoQ YoY 22.2 GPC 221.5 222.7 1.5% 19.0% Total Loan Growth 127.4 124.9 Com.& 107.5 101.3 Corp. 0.2% TL Loan Growth 10.4% 1H18 YE18 1Q19 1H19 FC Loan Growth ($) 1Q19 2Q19 1.7% 9.3% CGF Loans CurrencyBreakdown of Loans (TL billion) Breakdown of FC Loans 246.3 250.0 221.6 210.1 $15.6 $15.9 27% $15.4 $14.5 (TL bn) 2018 1Q19 2Q19 36% 37% 37% 32% FC Total CGF 25.3 29.8 31.9 11% 62% Guarantee Limit TL 158.1 158.4 143.6 140.2 26.6 32.8 35.4 Originated Amount 63% 64% 68% 63% Project Finance Outstanding Amount After 21.4 23.1 21.8 Export Loans Redemptions 1H18 YE18 1Q19 1H19 Working Capital and Other www.vakifbank.com.tr 9 1 Other includes credit cards, overdraft and auto loans.
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Breakdown of Loan Portfolio Breakdown of Construction Loans Sector Breakdown of Cash Loans Manufacturing Retail Loans 14% 19% Stage III TL 1.6 billion 5.8% Stage II Construction TL 6.3 billion 10% 23.2% Stage I TL 19.3 billion Other 1H19 1H19 13% Energy 8% 70.9% Limited concentration Real Estate in retail developers 4% Wholesale & Retail Trade 15% Selective approach to Logistic& Tourism 13% construction Transportation 4% Breakdown of Energy Loans Breakdown of Project Finance Other Service (Including tourism, health, 10% education) Distribution 10% 32% Breakdown of Production Energy 1H19 Share of Renewable: 50% 1H19 36% Share of Local Coal: 42 42% 68% Share of Other: 8% 44% Infrastructure Production www.vakifbank.com.tr 10
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Lower than expected NPL inflows NPL (TL million)* Sector Breakdown of Stage III Loans 1,343 770 Construction 12,447 11,874 Wholesale & Retail 12.8% Manufacturing Trade 16.7% 24.9% Real Estate NPL 1Q19 New NPL Collections NPL 2Q19 4.8% 4.65 4.60 Other 4.74 3.89 14.5% 4.7% NPL Ratio (%)* Logistic & Tourism Transportation 1.5% 20.1% Retail Loans 2Q18 4Q18 1Q19 2Q19 Stage II Loans Breakdown (TL million) Sector Breakdown of Stage II Loans Construction 10.91% 10.02% Wholesale & Retail 23.2% 8.96% 4.05% Trade Share in total Manufacturing loans 19.9% 15.5% 27,279 24,681 19,854 12,826 10,294 Real Estate Total Stage II 47% 8,517 5,932 Other Loans 7.3% 42% 30% Restructured 1,910 11.6% 4,659 5,636 6,678 22% 17% Past Due Logistic & 28% 27% 4,535 30 Days Transportation 53% 7.3% 9,794 8,286 7,709 6.8% Tourism 2.2% 2,072 36% 6.2% SICR 42% 31% 25% Retail Loans Energy 2Q18 4Q18 1Q19 2Q19 www.vakifbank.com.tr * Accumulated NPL, no write off&no asset sale 11
Earnings Presentation Bank Only 1H19 INVESTOR RELATIONS Better than expected CoR and above than sector specific coverage ratio Net Expected Credit Losses Net Cost of Risk (bps) 1H19 (Thousand and TL) 169 151 228 Expected ted Credit dit Losses 3,874,57 ,579 65 Stage I 867,910 Stage II 1,182,605 Cumulative Quarterly Stage III 1,824,064 Provis ision on Revers rsals als unde der other r 1Q19 2Q19 YE18 1H19 2,138,35 ,359 incom ome NPL Specific Coverage Ratios (%) Stage I 732,154 Stage II 852,365 73.8 74.5 Total Coverage 67.6 Stage III 553,840 Ratio remained Net Expecte ted d Credit it Losses 1,736,22 ,220 solid at 101% 101% Net CoR 151 bps 151 bps 1Q19 2Q19 Sector www.vakifbank.com.tr 12
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