Yap ı Kredi 9M12 Earnings Presentation Istanbul, 13 November 2012
Agenda Operating Environment 9M12 Results (BRSA Consolidated) Performance of Strategic Business Units & Subsidiaries Outlook / Strategy Outlook / Strategy 2
Macro and financial stability leading to Turkey’s achievement of investment grade Macroeconomic Environment Current Account Budget Deficit/ GDP Drivers Inflation Interest Rates Deficit GDP GDP Growth (y/y) 10% 12.5% CAD / GDP 5.0% 3.3% 2.9% CPI Inflation (eop) 11.5% 9.9% 7.5% O/N lending rate 10.6% 5% 10.0% 4.1% 4.0% 9.5% Effective rate 2 76.6 11.9% CAD (12m rolling, USD bln) ( S ) 58.9 2.3% 0% 8.4% Core Inflation 1 (eop) 7.8% 28.2 4Q11 1Q12 2Q12 5.8% Non-energy -5% 7.2 (12m rolling, USD bln) 6.1% 5.75% Policy rate Net Foreign Trade Stock Building Gov. Consumption Investment Jan-12 Oct-12 Jan-12 Oct-12 Jan-12 Aug-12 Turkey EU17 CEE Private Consumption (Sep’12) (2011) (2011) Rebalancing of the Inflation on a Interest rate corridor 3 CAD / GDP down to 7.5% Fiscal discipline economy continuing with downward trend despite tightened to support in Aug’12 (vs 9.9% in maintained despite moderation in GDP moderation in GDP temporary pick up in temporary pick-up in financial stability and financial stability and Jan 12) driven mainly by Jan’12) driven mainly by slight pick-up in budget slight pick up in budget growth. Ongoing positive Sept’12 due to tax hikes growth, also leading to positive trend in non- deficit / GDP in Sept’12 contribution from net (automotive, energy and 6.1pp easing in energy component (2.3% vs 1.4% at YE11) foreign trade supported real estate sectors). effective rate vs Jan’12 (moderating imports and by diversification of export Core inflation to 5.8% contribution of gold markets and slowing continuing to evolve exports) imports positively Note: Fitch ratings upgraded Turkey to investment grade on 5 November 2012 (1) Core inflation includes clothing, housing, furnishing, health, transport, communication, recreation, education, hotels, cafe, restaurant and other (excludes food, energy, alcohol, tobacco and gold) (2) Effective policy rate is the weighted average cost of outstanding funding of the CBRT via open market operations including O/N repo, one-week repo and one-month repo 3 (3) Interest rate corridor refers to difference between O/N lending rate and O/N borrowing rate
Sound banking system underpinning the investment grade rating Banking Sector Key Performance Balance Sheet Net Interest Margin Indicators Sep 12 Sep'12 1Q 1Q 2Q 2Q 3Q 3Q YTD YTD TL bln Cumulative Cumulative Quarterly Quarterly 2011 2011 1H12 1H12 9M12 9M12 Total Loans 1 716 2% 5% 2% 10% ROAE 15.4% 15.7% 15.4% 4.2% 3.9% 4.0% TL 518 4% 7% 3% 14% 4.0% 3.5% Loans/Deposits 94% 97% 97% FC ($) 114 4% 0% 2% 6% Loans/(Deposits+TL Bonds) 92% 94% 94% Total Deposits 736 0% 3% 2% 6% TL 482 0% 3% 5% 7% NPL Ratio 2.6% 2.6% 2.9% FC ($) 146 8% 3% -1% 11% CAR 15.4% 15.5% 15.7% Securities 277 0% 0% -2% -2% 2011 9M12 1Q12 2Q12 3Q12 Solid profitability, liquidity and Volume evolution in line with NIM expansion ... asset quality... soft-landing... � ROAE at 15.4% (stable vs YE11) � Cumulative NIM up to 4.0% � Loans +10% ytd with some ( 48bps vs YE11) mainly driven (+48bps vs YE11) mainly driven slowdown in 3Q (2%) slowdown in 3Q (2%) � Loans/Deposits ratio at 97% by upward loan repricing and (+3 pp vs 2011) decreased cost of funding � Deposits +6% ytd with same pace of growth vs loans in 3Q � NPL ratio at 2.9% (+30 bps vs � Quarterly NIM at 4.0% (-18bps (2%) 2011) mainly driven by retail 2011) mainly driven by retail q/q) due to lower security yields q/q) due to lower security yields segments (SMEs and GPL) (declining CPI linker yields) � Securities -2% ytd with despite stable loan yields and contraction in 3Q (-2%) driven by deposit costs both HTM and AFS portfolio sales Note: Sector balance sheet data based on weekly BRSA unconsolidated figures. Income statement KPIs based on BRSA monthly figures as of September 2012 (1) Total performing loans 4
Agenda Operating Environment 9M12 Results (BRSA Consolidated) Performance of Strategic Business Units & Subsidiaries Outlook / Strategy Outlook / Strategy 5
9M12 Yap ı Kredi Key Highlights Key Highlights Balance sheet evolution confirming customer business focus Selective lending growth focused on value generating TL loans driven by GPLs (2x sector) and credit cards � Strong TL deposit growth (+12% ytd) confirming solid gathering capability reinforced by 1-to-1 deposit pricing initiative � Robust improvement in commercial effectiveness indicators (loans, deposits, core revenues/employee +12/18%) � Solid above sector core revenue performance and continuous cost discipline Solid above sector core revenue performance and continuous cost discipline Core revenue growth (+17% y/y) on the back of: � Positive NIM evolution supported by dynamic loan / deposit pricing and effective mix management - Fee performance driven by increasing focus on fee generation, volume growth and repricing - Cost growth in line with average inflation � Comfortable funding, liquidity and capital position Loans / deposits ratio within comfortable band p � Continuing focus on funding diversification also via ongoing covered bond process � Capital strengthening actions in place � Asset quality trend in line with soft-landing of the economy q y g y Retail NPL inflows being mitigated by focused actions; corp/commercial resilient � Stable NPL coverage at 110% and <100bps cost of risk excluding regulatory impacts 1 � Ongoing enhancements to credit risk systems / processes � Notes: Core revenues indicate net interest income and fees NPL coverage indicates (specific + general provisions) / NPLs 6 (1) Excluding regulatory impacts on provisions: change in general purpose and rescheduled loans general provisioning requirements
9M12 KPIs at a Glance Key Performance Indicators Net Income (mln TL) Return on Average Equity 1 3 +11% 11% 1 835 1,835 1,653 20.8% 3 19.5% Tangible: 19.5% 21.2% 1,478 13.1% 13.2% Tangible: 15.5% +51% 16.8% 639 639 424 414 1Q12 2Q12 3Q12 9M11 9M12 9M11 9M12 1Q12 2Q12 3Q12 Return on Assets 2 Cost / Income 49% 48% 46% 46% 44% 40% 3 2.0% 1.9% 1.9% 1.4% 1.4% 1.6% 1Q12 2Q12 3Q12 9M11 9M12 1Q12 2Q12 3Q12 9M11 9M12 (1) Calculations based on the average of current period equity (excluding current period profit) and prior year equity. Annualised (2) Calculations based on net income / end of period total assets. Annualised (3) Excluding regulatory impacts: On fees, impact of change on loan-related fee deferrals, transfer to net interest income and decrease in regulatory cap of liquid fund management fees. 7 On provisions, impact of change on general purpose and rescheduled loan general provision levels Indicates reported figures
1,478 mln TL net income driven by robust core revenue performance and cost discipline Income Statement � Revenues +7% y/y (+10% excl. y/y excl. reg. regulatory impacts). Core 1Q12 2Q12 3Q12 9M11 9M12 y/y mln TL impacts 2 p revenues +17% y/y (+21% +17% / (+21% excl. regulatory impacts) driven Total Revenues 1,599 1,644 1,872 4,804 5,116 7% 10% by strong net interest income evolution Core Revenues 1,508 1,548 1,798 4,131 4,854 17% 21% o/w Net Interest Income 1,092 1,138 1,315 2,697 3,546 31% 29% � Costs +10% y/y , in line with average inflation o/w Fees & Comms. 416 410 483 1,434 1,308 -9% 7% � Provisions +36% y/y impacted Other Revenues 91 96 74 673 262 -61% by asset quality and regulatory by asset quality and regulatory Operating Costs 790 796 745 2,114 2,331 10% impact on general provisions � Net income at 1,478 mln TL Operating Income 809 848 1,127 2,690 2,785 4% 10% (-11% y/y, +11% excl. regulatory impacts) Provisions 279 274 319 642 871 36% o/w Loan Loss 227 300 237 510 763 50% � Quarterly net income at 639 Pre-tax income 530 574 808 2,048 1,914 -7% mln TL (+51% q/q) driven by mln TL (+51% q/q) driven by net interest income, account Net Income 1 414 424 639 1,653 1,478 -11% 11% maintenance fees and lower costs (1) Indicates net income before minority. 9M12 net income after minority: 1,470 mln TL (-11% y/y) (2) Excluding regulatory impacts: On fees, impact of change on loan-related fee deferrals, transfer to net interest income and decrease in regulatory cap of liquid fund management fees. On provisions, impact of change on general purpose and rescheduled loans on general provisions 8
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