Earnings Presentation BRSA Bank-Only 1Q 2020 May 8, 2020
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS 1Q20 Earnings and Ratios Net Income (TL million) Further Strengthened Coverage Ratios (%) 163.5% Stage II Total Coverage Coverage Ratio Ratio 1,716.2 93.34 7.30 34.0% 1,280.3 5.88 90.35 299 bps 142 bps 651.2 4Q19 1Q20 4Q19 1Q20 1Q19 4Q19 1Q20 Quarterly ROAE (%) Quarterly ROAA (%) vs. sector vs. sector 1.55 average of average of 20.6 12.7% 1.35% 1.27 16.1 TL 852 million free provisions in the balance sheet 4Q19 1Q20 4Q19 1Q20 www.vakifbank.com.tr 2
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Key Highlights of 1Q20 A A stron ong start rt to to 2020 0 with th good level el of profita ofitability bility Quarterly bank-only net income came at TL 1,716 16 millio lion ; one of the highest among peer banks. • Quarterly net income is up by 34% 34% QoQ vs. sector average of 14.2%, Quarterly net income is up by 163.5% 5% YoY vs. sector average of 26.2%, 1Q20 average ROE came at 20.6% 6% vs sector average of 12.7%, 1Q20 average ROA materialized at 1.55% 5% vs. sector average of 1.35%. NIM IM is in line ne with th the guida idance • 1Q20 NIM came at 5.17% 7% indicating the strongest figure during 2020 due to expected downward trend on core spreads from its high base. Swap adjusted NIM materialized at 4.48 % vs. 4.40% in 4Q19, up by 8 bps s QoQ thanks to decline in swap costs. • Provi visioning sioning level els furth rther er incre reased ased proact actively ively NPL ratio decreased to 5.3% vs. 5.9% in 4Q19 thanks to both denominator effect and TL 888 million write-off for the first time.* • • Stage-2 provisioning further increased to 7.3% in 1Q20 from 5.9% in 2019YE. • Total NPL coverage increased to 93.3% 3% in 1Q20 from 90.4% in 2019YE. • Maintained level of TL 852 millio lion free provision in the balance sheet. Disci cipli pline ned liquidit uidity levels • Liquidity ratios were above regulatory thresholds; 1Q20 FC LCR came at 469 469% . 1Q20 total LCR came at 113% 113%. The high ighes est amoun unt of inte tern rnatio tional al fundi unding provi vided ded YtD in n Turkish sh Bank nking secto tor • In January, the largest ever amount of the Eurobond transaction so far, amounting USD D 750 millio lion n with a maturity of 5 years. • In April, USD D 325 millio lion n 3 year- term loan from ICBC Turkey to VakıfBank with 130% roll over ratio. • In April, USD D 950 millio lion n syndication loan with the participation of 33 banks from 16 countries with 90% roll-over ratio which is one of the highest so far. Bilateral and post-financing transactions with correspondent banks amounting ~ USD D 470 millio lion n YtD.** • *In 1Q20, TL 888 million write-off loans 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 3 **As of early May.
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS 1Q20 P&L Details 7,097* (1,850)* 1,657* 151 1,021 (642) 4,908 (3,118) 1Q20 (412) 1,716 Net Interest Net Fees and Dividend Net Trading Other Income Total Operating Provisions Taxes Net Income Income Commissions Income Income Revenue Expenses % vs +109% +4% - -598% +21% +47% +20% +25% +216% +164% 1Q19 % vs +7% -2% - -14% +111% +21% +4% +29% +4% +34% 4Q19 www.vakifbank.com.tr 4 *In 1Q20, TL 888 million write-off loans 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 1Q20 INVESTOR RELATIONS High quality revenue breakdown Total Revenues * – Revenue Breakdown (TL million) 47.1% Other+Trading * Dividend Dividend Other+Trading* 0.0% 2.1% 14.3% 31.1% 7,097 Net F&C Net F&C 14.4% 4,823 1Q19 1Q20 20.3% NII NII 69.2% 48.6% 1Q19 1Q20 Core Banking Revenues (TL million)** Free provisions 78.4% 1Q19 1Q19 2Q19 2Q19 3Q19 3Q19 4Q19 4Q19 1Q20 1Q20 5,930 5,645 Outstanding TL 1,030 TL 917 TL 852 TL 852 TL 852 5% amount million million million million million 3,323 Free provision TL 113 TL 65 - - - releases million million 1Q19 4Q19 1Q20 *In 1Q20, TL 888 million write-off loans 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 5 **Core Banking Revenues= NII+NFC
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Solid start to the year with strong NIM Net Interest Margin (NIM %) Swap Adjusted Net Interest Margin (%) 195 bps 186 bps 5.38 5.17 4.14 4.40 4.48 3.22 3.07 2.62 1Q19 4Q19 2019YE 1Q20 1Q19 4Q19 2019YE 1Q20 TL Core Spreads (%) FC Core Spreads (%) Security Yields (%) Cost of Funding TL loan yields FC loan yields TL security yields 16.51 1Q19 2Q19 3Q19 4Q19 1Q20 12.71 6.47 6.25 11.77 13.68 Total money TL 46.2 TL 45.3 TL 42.3 TL 42.6 TL 68.6 market billion billion billion billion billion funding * 4Q19 1Q20 4Q19 1Q20 Cost of 4Q19 1Q20 535 5 bps bps 25.08% 24.02% 16.38% 11.25% 9.14% 621 1 bps bps Funding TL FC FC FC deposit cost FC security yields** TL deposit cost spread spread 4.45 1.42 3.99 TL 435 TL 1,079 TL 985 TL 840 TL 652 10.01 Swap Cost million million million million million 7.46 0.90 Average Swap TL 10.1 TL 21.2 TL 23.6 TL 26.6 TL 27.2 Usage billion billion billion billion billion 4Q19 1Q20 4Q19 1Q20 4Q19 1Q20 *Including overnight and one-week repos, total short term cross currency swaps and interbank money market. www.vakifbank.com.tr 6 **MIS data.
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Net Fee&Commission Income Net Fee & Commission Income (TL million) – Fee Breakdown 4.4% Insurance Inquiry & Expertise Insurance 1,021.3 13% 11% 8% Inquiry & Expertise 978.6 Cash Loans 8% 43% Other Other 4% 2% 1Q20 Payment 1Q19 Cash Loans systems 36% Payment Non-Cash 26% Loans systems Non-Cash 16% Loans 19% 15% 1Q19 1Q20 QoQ YoY Lending Related -5% +24% will be supportive for 2Q 2020 fee growth Positive growth of fee Payment Systems -11% -25% income maintained YoY impacted by regulatory changes despite regulatory Inquiry & Expertise 13% -27% headwinds Insurance +48% +76% supported by new loan originations www.vakifbank.com.tr 7
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Further improved cost/income ratio Operating Expenses (TL million)* Breakdown of OPEX* 19.5% 950 943 940 3 branches have been closed in 1Q20 One-off donation 1Q19 2019 1Q20 to Covid-19 1,850 campaign impact: 1,772 +3.2 ppt ppt on annual opex 4.4% growth 1,548 56% 58% 44% 42% 1Q19 1Q20 1Q19 4Q19 1Q20 Cost*/Income (%) Quarterly OPEX Breakdown (TL million) 13.3% 24.5% (602 bps) 1,071 32.1 1,026 780 30.2 4.3% 26.1 746 4.5% (411 bps) 860 HR Cost Non-HR Cost* 689 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 *In 1Q20, TL 888 million write-off loans 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 8 *Including TL 50 million donation to Covid-19 related national campaign
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Well diversified & stable loan breakdown Segment Breakdown of Loans (TL billion) Currency Breakdown of Loans (TL billion) Portfolio Breakdown (%) 312.0 24.1 25.8 SME 312.0 16.3 274.8 23.8 23.5 274.8 16.3 Retail 250.0 246.3 75.3 250.0 98.4 15.2 246.3 Other * 14.2 32% 66.0 89.3 52.1 Com.&Corp. 50.7 25.2 63.7 SME 63.5 32% 91.6 88.2 23.6 32.5 37% 36% 19.0 1Q19 1Q20 Mortgage 19.2 29.2 24.7 24.5 GPC Breakdown of FC Loans 213.6 185.5 68% Working Capital 162.7 Com.& 158.1 158.4 139.7 and Other 68% 127.4 124.9 Corp. 63% 64% 27% 1Q19 2Q19 4Q19 1Q20 1Q19 2Q19 4Q19 1Q20 FC TL Export Loans Project Finance 14% VB Sector VB Sector 59% QoQ QoQ YoY YoY Quarterly Loan Growth Total Loan Growth 14% 15% 9% 27% 16% 16% 16% GPC 12% 11% 15% 35% 19% TL Loan Growth 10% Mortgage 7% 7% 6% FC Loans ($) 2% 2% 1% 1% 0% (2%) (4%) (7%) 0% Business Loans -1% 0% FC Loan Growth ($) -1% 1Q19 2Q19 4Q19 1Q20 www.vakifbank.com.tr 9 * Other includes credit cards, overdraft and auto loans.
Earnings Presentation Bank-Only 1Q20 INVESTOR RELATIONS Breakdown of loan portfolio Sector Breakdown of Cash Loans Breakdown of Construction Loans Manufacturing Retail Loans 18.0% 19.9% Stage III Stage II TL 3.0 billion TL 8.3 billion Construction 10.1% Limited concentration Other (inc. 8.6% in retail developers business and retail credit cards) 27.8% Selective approach to 1Q20 1Q20 12.4% construction Energy 6.7% 62.2% Stage I Real Estate TL 18.6 billion Wholesale & Retail 4.8% Trade 3.3% 13.5% 12.9% Logistic& Tourism Transportation Breakdown of Project Finance Breakdown of Energy Loans Other Service (Including Energy 23% Breakdown of Production tourism, health, 25% education) Share of Renewable: 54% 29% Distribution 9% Share of Local Coal: 45 45% 1Q20 1Q20 Share of Other: 1% 75% Production 39% Infrastructure www.vakifbank.com.tr 10
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