Yapı Kredi Fixed Income Investor Presentation October 2013
Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex Yapı Kredi - - Turkish Economy and Banking Sector 2
Executive Summary Environment Turkey, 17 th largest economy 1 in the world and a G20 member, is a dynamic country with favourable Operating demographics. The country has solid / improving macro fundamentals, also confirmed by achievement of sovereign investment grade 2 Turkish banking sector, 2 nd largest CEE banking system 3 , is underpenetrated, well-regulated with solid profitability and strong resilience to shocks 4 th largest private bank in Turkey with US$ 74 bln assets (TL 143 bln) operating in retail, private and corporate / commercial banking Customer-oriented balance sheet with natural market share of ~10% 4 Leading positions in value generating areas (market share between 16-20%), including credit Yapı Kredi cards, leasing, factoring, asset management, private pension funds and insurance Sustainable profitability driven by quality revenues and effective cost management Solid capital level for shock absorption and value creation Comfortable liquidity position with ongoing focus on funding diversification Conservative risk profile and disciplined asset quality management Strong and committed controlling shareholders (Koç Group and UniCredit) (1) Based on Turkish Statistical Institute and IMF World Economic Outlook. Data as of 2012 (2) Fitch Ratings upgrade of Turkey to investment grade on 5 November 2012. Moody’s upgrade of Turkey to investment grade on 16 May 2013. S&P also upgraded Turkey to BB+ in Mar’13, one notch below investment grade 3 (3) European Banking Federation data as of 2012 (4) Natural market share level indicates assets, loans, deposits, branches and revenues USD/TL: 1.9248 based on 30 June 2013 BRSA footnotes
Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex Yapı Kredi - - Turkish Economy and Banking Sector 4
Macro backdrop intact supported by flexible monetary policy Macro Acceleration in GDP growth in 2Q mainly driven by 2012 1Q13 2Q13 private consumption Key Macro Indicators 2.2% 2.9% 4.4% GDP Growth Temporary volatility in June followed by downward trend in Aug’13 (8.2%) mainly due to decline in 6.2% 7.3% 8.3% Inflation unprocessed food prices Industrial production slightly picking up 2.5% 2.5% 2.9% Industrial Production (IP) Consumer confidence index continuing to improve , Consumer Confidence Index 73.6 74.9 76.2 yet sustainability to be seen (eop) Current Account Deficit Current account deficit increasing due to decline in 6.1% 6.0% 6.6% (CAD)/GDP gold exports and weak exports 9.2% 9.2% 9.6% Unemployment Rate 1 Unemployment rate under control Till mid-2Q, CBRT focused on supporting growth via rate cuts (100bps cut in policy rate and 250 bps cut in Upper Band 9.00% (O/N Lending Monetary Policy 8.75% upper band of corridor) 8.50% Rate) 8.6% 7.75% Following FED announcements / domestic political 7.50% 7.25% developments at end-May, CBRT focused on 7.00% preventing TL depreciation via 6.50% Benchmark Rate 6.4% 6.1% Effective Rate 5.6% FX sale auctions (US$ 10.6 bln sale since 10 Jun’13) - Policy Rate 5.50% Lower Band 4.75% 125 bps increase in upper band of corridor 5.00% 5.00% - (O/N Borrowing 4.50% Rate) 4.50% 4.00% In the upcoming period, other available means of FX 3.50% liquidity could be used if necessary (ie changes to ROC, RRR, corridor, policy rate) Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 (1) Seasonally adjusted 5
Executive Summary Recent Macro Developments Yapı Kredi Overview Proposed Transaction Yapı Kredi Financial Performance Annex Yapı Kredi - - Turkish Economy and Banking Sector 6
Yapı Kredi: A leading financial services group Yapı Kredi Overview Assets Loans 74 45 4 th largest private bank and a deep rooted bln US$ bln US$ franchise (established in 1944) Deposits+ S hareholders’ Among top 10 most valuable brands 6 in Turkey TL Bonds 1 8.5 41 Equity bln US$ bln US$ Integrated network with widespread branch coverage and innovative alternative delivery channels Customers 2 Employees 9.6 17,851 mln Dedicated focus on customer satisfaction as a prerequisite for sustainable performance Share of Branches ADCs 3 Young and qualified workforce serving a wide 83% 932 customer base 2012 2012 Net Healthy ROAE level driven by quality revenues Tangible Income 1.2 and effective cost management ROAE 17.5% bln US$ Customer business focus and ALM profile ensuring favourable positioning Total NPL CAR 4 Coverage 5 109% 15.8% Conservative risk profile, sound capital base and funding capability Moody’s: Baa3 / Fitch: BBB / S&P: BB+ Ratings Note: Loans indicate performing loans. ROAE indicates Return on Average Equity Equivalents in TL: Total assets 143 bln TL, Total performing loans: 87 bln TL, Total deposits: 78 bln TL (USD/TL: 1.9248 based on 30 June 2013 BRSA footnotes) (1) Deposits: US$ 40.5 bln, TL Bonds: US$ 0.9 bln (2) Customers which meet the active customer criteria at least once and are assigned to a portfolio within the last 1 year 7 (3) Share of alternative delivery channels (ADCs) in total comparable transactions (4) Bank Capital Adequacy Ratio (CAR) based on Basel II. Group at 14.8% (5) Total NPL Coverage indicates (Specific + Generic Provisions)/NPLs Based on Brand Finance report ( Yapı Kredi ranked number 9) (6)
Leading positions in value generating services and products leveraging on innovative banking techologies Market Position Rank Market Share Loans 9.6% 5 Deposits 6 9.1% Total Bank Branches 8.8% 5 Mobile Banking - 12.3% Revenues 5 9.2% Credit Cards Outstanding 20.2% 1 Credit Cards Acquiring 1 19.3% Retail Number of Cards 17.2% 1 2 7 Consumer Loans 7.8% 3 Commercial Installment Loans 5 6.7% 4 Corporate Loans 8.7% 6 Leasing 1 16.3% Corporate Factoring 1 18.0% Cheque Clearing 11.1% 1 Mutual Funds 2 18.3% 5 Private ISE and TurkDEX Volume 1 17.0% Equity Transaction Volume 6.8% 3 Health Insurance 1 18.7% Insurance Non-Life Insurance 6.1% 6 and Private Life Insurance 6.5% 5 Pension 1 Private Pension Funds 3 17.4% Note: All ranking and market shares based on 1H13 data, except for revenues as of YE12. Market share and rankings based on: Capital Markets Board (for ISE and TurkDEX Volume and equity transaction volume), Rasyonet (for mutual funds), Turkish Factoring Association (for factoring), Turkish Leasing Association (for leasing), Pension Monitoring Center (for private pension funds) and Turkish Insurance and Reinsurers Association (for life, non-life and health insurance), Interbank Card Center (for credit card acquiring and number of cardholders), Central Bank Cheque Clearing System (for cheque clearing) If not specified, data based on BRSA bank-only data for YKB and BRSA weekly sector data excluding participation banks for banking sector (1) On 12 July 2013, sale of insurance businesses to Allianz finalised (94% stake in YK Sigorta which owns 100% of YK Emeklilik). 20% stake in YK Emeklilik is retained 8 (2) Including mortgages, general purpose and auto loans (3) Proxy for SME loans (4) Cash loans excluding credit card outstanding volume and consumer loans (5) Includes repo, reverse repo, treasury bill, government bond, equity and derivative transaction volumes. ISE indicates Istanbul Stock Exchange. TurkDEX indicates Turkish Derivatives Exchange
Well-diversified business mix on the back of a customer-oriented and divisionalised service model Revenues and Volumes by Business Unit 1 US$ 10.4 bln Mcap (1H13) L Retail 53% 55% 36% 45% Private Banking and Corporate and Individual (incl. Retail Banking Card Payment Wealth Management Commercial Banking 25% 26% Systems) 22 branches 40% 178 RMs 45% International / Card Corporate Commercial Multinationals Individual Payment 10% 3 branches 76 branches & SME 1 branch Systems 57 RMs 522 RMs 15 SME 28% 9.7 mln cards 2 825 branches Further headcount ~439K POS 3,244 RMs 909 segmented as 358K 2,847 ATMs mid / large 15% customers 23% companies merchants Private 3% Product Factories: Product Factories: 9% Corporate 16% 51% 25% 19% Commercial 3 International Operations Insurance Subsidiaries 29% Treasury 16% 16% and Other 4% L Revenues Loans Deposits Assets Total US$ 948 mln Mcap US$ 2.1 bln US$ 203 mln US$ 334 mln Under Assets Management Note: Market capitalisation (Mcap) figures as of 23 Sep 2013. Based on Istanbul Stock Exchange data. Calculated as share price*paid-in capital Branch numbers exclude three satellite, two free-zone, one off-shore branch. Total asset size of international operations based on BRSA consolidated financials as of 30 June 2013 (1) MIS data (2) Including 2.0 mln virtual cards 9 (3) On 12 July 2013, sale of insurance businesses to Allianz finalised (94% stake in YK Sigorta which owns 100% of YK Emeklilik). 20% stake in YK Emeklilik is retained L = Listed
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