Yapı Kredi 9M19 Earnings Presentation 4 November 2019
Successful core performance and resilient fundamentals sustained despite challenging operating conditions Net Profit (TL mln) Net Profit at 3.3 bln with RoTE at 11.8% +11% 3,586 Reported Strong performance of PPP corresponding to 4.9% of the 3,337 -7% CPI inf 3,008 loan book; @11% 1 +20 bps ytd NIM widening (excl. CPI impact) +26% y/y fee increase Limited 13% y/y cost growth thanks to efficiency gains 9M18 9M19 Cumulative CoR at 2.53% 2 , with elevated flows in 3Q19 PPP (TL mln) +18% 9,193 Reported 8,450 +9% Backed by a strong balance sheet position; 7,792 CPI inf @11% 1 LCR 3 as high as 176%, FC LCR at 439% LDR further improves: 100% 4.9% PPP /Gross Tier 1 Ratio improved 222bps ytd at 13.6% with a 4.5% Loans strong buffer; thanks to ongoing internal capital generation 9M18 9M19 Notes: 1. 9M18 CPI assumption at 16% 2 2. Consolidated adjusted for FC hedge on ECL 3. Based on past three months averages
Key Financial Figures mln TL 2Q19 3Q19 q/q 9M18 9M19 y/y Volumes TL Loans 1 131,629 129,678 -1.5% 124,763 129,678 3.9% Healthy Volume growth in volatile environment FC Loans ($) 17,493 16,381 -6.4% 20,811 16,381 -21.3% • Decrease in loan book due to deleveraging in FC, with strong TL increase TL Customer Deposits 90,868 90,455 -0.5% 84,676 90,455 6.8% • Balanced deposit growth both in TL and FC FC Customer Deposits ($) 22,354 21,897 -2.0% 21,056 21,897 4.0% P/L 2 Core Revenues 3 4,556 4,600 1.0% 11,788 13,549 14.9% CPI adjusted net profit up by 11% y/y despite Opex 1,793 1,779 -0.8% 4,686 5,285 12.8% elevated level of ECLs, continuous y/y PPP 4 2,948 3,110 5.5% 7,792 9,193 18.0% improvement in PPP for the past 8 quarters thanks to execution of the strategy PPP (Reported) 2,890 3,110 7.6% 8,450 9,193 8.8% Sustainable improvement in core revenues ECL 4 1,577 1,785 13.2% 2,988 4,757 59.2% with widening in the NIM Contained opex increase through efficiency Net Profit 1,170 976 -16.6% 3,008 3,337 10.9% management Net Profit (Reported) 1,120 976 -12.8% 3,586 3,337 -7.0% Ratios Revenue Margin 4.6% 4.7% 8bps 4.7% 4.8% 12bps • Revenue Margin further improves despite NIM (swap adj) 3.3% 3.4% 2bps 3.6% 3.4% -11bps the negative linker impact CoR (bps) 5 2.42% 2.78% 36bps 1.80% 2.53% 73bps • CoR at 2.53% converging towards the Stage 3 Ratio 5.8% 6.7% 94bps 3.7% 6.7% 300bps guidance with NPL inflows RoTE 11.8% 10.1% -166bps 14.3% 11.8% -249bps Notes: 4. Adjusted for FC ECL hedge and collections All data based on BRSA consolidated financials unless otherwise stated. NIM based on bank-only financials 5. Including FC ECL Hedge and collections 1. Performing Loans, excluding Factoring and Leasing Receivables 3 2. Assuming CPI inflation at 11% for 2018 & CPI linker adjustment from 12% to 11% in 2Q19 3. Swap Adjusted
Strong TL loan growth at 7% ytd with ongoing deleveraging in FC loans Lending Loan volumes (TL bln) Yapı Kredi Private Banks 1 2% total loan growth on a ytd basis 9M19 q/q y/y ytd q/q y/y ytd Cash+Non-cash Loans 2 311.0 -4% -12% 2% -3% -12% -1% TL 3 157.3 -1% 3% 7% 0% -3% 1% 7% ytd increase in TL cash loans FC ($) 3 27.2 -5% -19% -10% -4% -16% -10% Cash Loans 2 222.4 -4% -11% 1% -3% -10% 0% TL 3 129.7 -1% 4% 7% 0% -3% 2% -14% ytd contraction in FC cash loans FC ($) 3 16.4 -6% -21% -14% -5% -14% -9% Segment Breakdown of Cash Loans 4 Sectoral Breakdown of Cash and Non-Cash Loans - bank only Other Business 25% Real Estate Real Estate Tourism 3% 3% 3% Health-Education 3% Individual Lending 56% Transportation & 17% 58% Communication 4% Wholesale and Retail Trade 44% 42% 4% Energy Energy Metals 12% 12% 4% 2018 9M19 Finance Retail Corporate & Commercial Infrastructure & other 4% Textiles construction Foods Notes: 5% 11% 1. Private banks based on BRSA weekly data as of 27 September 2019 5% 2. Cash Loans indicate performing loans excluding factoring and leasing receivables 4 3. TL and FC loans are adjusted for the FX indexed loans 4. Based on MIS data adjusted for FX, Retail includes individual, credit cards and SMEs
Strong demand deposit growth with an improved composition towards small tickets Funding Deposit volumes (TL bln) Deposit Breakdown (FX adjusted) 2 Private Banks 1 YKB Corporate & 9M19 q/q y/y ytd q/q y/y ytd 24% Commercial 31% 33% Time Deposits Customer Deposits 214.4 -2% 2% 7% 3% 3% 10% TL 90.5 0% 7% 4% 6% 5% 3% FC ($) 21.9 -2% 4% 2% 2% 7% 9% 54% Retail 51% Time Deposits 48% 85 bps market share gain in demand deposits in one year at 14.5% Demand ≈ 22% 193 bps market share gain in TL individual demand deposits 18% 18% Deposits at 15.9% 9M17 9M18 9M19 Liquidity LDR 3 LCR 5 POS adjusted 4 TL LDR 163% 129% 131% FC LCR 226% 375% 439% TL LDR: 118% 114% LDR: 95% 104% 176% 155% 100% 136% Short term FX Liquidity 6 : ~12 bln USD Run- off’s in 1 year: 4.3 bln USD 7 2017 2018 9M19 2018 1H19 9M19 Notes: 5 1. Private banks based on BRSA weekly data as of 27 September 2019 4. Adjusted for POS merchants blocked deposits 7. Excluding the Syndication that has already been 5. Based on past three months averages 2. Based on MIS data (weekly average) successfully rolled-over in October 3. LDR= Loans / (Deposits + TL Bonds) 6. MIS data 1 month liquidity
Revenue growth prevails with sustainable core revenue improvement thanks to strength in commercial activities Revenues Revenues 1;2 (TL mln) Core Revenue Margin Yearly Cumulative +16% -49bps Reported 14,478 +10% 13,136 CPI inf 12,478 @11% 3 5.3% 36 bps ytd improvement 4 4.8% Reported 13,549 +9% excluding CPI linkers Core 2 11,788 Other 1 690 929 9M18 9M19 2018 9M19 Quarterly 5 Quarterly +3% +8bps 4,889 4,848 4,741 4.7% 4.8% 4.6% 4,600 Core 2 4,556 4,392 Other 1 456 184 289 1Q19 2Q19 3Q19 1Q19 2Q19 3Q19 Notes: 1. Revenues and other revenues exclude ECL collection income and trading income to hedge FC ECL 5. 1Q19 and 2Q19 adjusted for the CPI assumption change from 12% to 11% in 2Q19 2. Core Revenues = NII + swap costs + Net fee income 6 3. 9M18 CPI at 16% 4. MIS, based on daily averages
CPI adjusted NIM widened 20 bps ytd, better than the guidance Revenues - NIM NIM Evolution Swap Adjusted NIM Cumulative -66bps CPI for 9M19 +37 bps valuation: 11% (2018: 25.2%) +118bps 4.1% 4.10% -38bps +29bps 3.4% -43bps 3.44% -86bps -46bps +20 bps higher NIM 1 excluding CPI linkers 2018 Loan Yield Deposit Swap Costs CPI linkers Securities Other 9M19 Cost financial 2018 9M19 ins. Quarterly +34 bps 3.6% 3.5% +11bps +2bps +49bps 3.3% 3.4% 3.36% 3.34% 3.1% 3.1% -34bps -26bps NIMs monthly evolution 2 Jun'19 Jul'19 Aug'19 Sep'19 2Q19 3Q19 2Q19 Loan Yield Deposit Cost Swap Costs Securities Other 3Q19 financial ins. Notes: Based on Bank-Only financials 7 1. MIS, based on daily averages 2. MIS, based on BRSA monthly data
Surge in loan-deposit spread via the successful execution of small ticket strategy and timely loan growth with environmental tailwind Loan-Deposit Spread Loan – Deposit Spread Evolution Loan Yields 1 Deposit Costs Loan-Deposit Spread (Quarterly) (Quarterly) (Quarterly) 80bps improvement in total cost of 65 bps wider Loan-Deposit spread deposits q/q thanks to decreasing Stable TL loan yields vs. 2Q19 on the back of 183 bps interest rate environment vs. 2Q19 thanks to optimised improvement in TL loan-deposit supported by successful ALM pricing spread q/q management Cum. TL yield Cum. TL spread Cum. TL cost 2018: 15.0% 9M19: 17.5% 2018: 1.4% 9M19 : 2.3% 2018: 13.5% 9M19 : 15.3% TL+FX TL TL TL TL+FX TL+FX 17.8% 16.2% 5.19% 15.8% 17.3% 17.2% 17.2% 4.59% 4.45% 4.54% 16.3% 14.0% 13.4% 15.4% 3.19% 2.07% 9.8% 12.9% 12.6% 12.4% 8.5% 12.2% 1.36% 1.05% 1.16% 8.0% 7.6% 7.2% 10.8% -1.55% 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Notes: Based on Bank-Only financials 1. Performing loan yields 8
Fee performance better than guidance supported by renewed service model, payment systems and transactional banking Revenues - Fees Net Fee Income (TL mln) Net Fees Composition 1 Yearly 26% Asset Mngmt Other Bancassurance 2% 2% 7% 3,942 Money Transfer Payment 10% Systems 3,121 42% Lending Related 38% 9M18 9M19 Quarterly +30% +7% • 1,337 Payment systems: +29% y/y 1,347 1,258 • 1,036 Lending Related: +28% y/y Non-cash: 49% y/y • Money Transfer: +40% y/y • Bancassurance: +18% y/y 1Q19 2Q19 3Q19 3Q18 9 Notes: 1. Based on Bank-Only financials
Cost growth better than guidance mainly due to high base of 2018 and continuous efficiency gains Costs Cost 1 / Income 2 (TL mln) Costs (TL mln) Yearly Cumulative +13% +0.8 pp vs 17% avg. inflation 5,285 +2.3 pp 4,686 36.5% 35.7% 34.2% 9M18 9M19 9M18 2018 9M19 Quarterly +6% -1% 1,793 1,779 1,712 1,683 Adjusted for the linkers impact on income Cost to Income ratio improves 1.1 pp y/y 2.9 pp ytd 3Q18 1Q19 2Q19 3Q19 Notes: 1. Excluding pension fund provision (4Q18: TL 230 mln) 10 2. Income adjusted for trading income to hedge FC ECL and collections
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