Yap ı Kredi Investor Presentation Yap ı Kredi Investor Presentation Ata Invest 4th Turkish Investor Conference Ata Invest 4th Turkish Investor Conference New York, 6-7 October 2008
AGENDA � Current Macro and Sector Outlook � Current Macro and Sector Outlook � Competitive Positioning & Strategy � 1H08 Results (BRSA Consolidated) � 1H08 Results (BRSA Consolidated) � Performance by Business Unit (Bank-only) � 3 Year Strategic Plan � 3 Year Strategic Plan � Annex 2
A young and fast growing country Current Macro and Sector Outlook Turkey 2007 Population, mln 71 Avg. age of population 29 GDP, Euro bn GDP Euro bn 477.9 477 9 Per capita GDP, Euro 6,769 Inflation (CPI) 8.4% COUNTRY RATINGS Delta vs 2002 - S&P BB- - Fitch BB- - Moody’s Ba3 One of the fastest growing markets, 17th largest economy in the world � � Large and young population, concentrated in top 10 cities (44%) � Single party government since December 2002 with strong Parliamentary majority (two-third) enables government to react promptly � EU and IMF key anchors for sustainable growth; the nature of the relationship with the IMF to be dete determined around November following the completion of the last stand-by arrangement ed a ou d o e be o o g t e co p et o o t e ast sta d by a a ge e t 3
Underpenetrated banking sector, an opportunity for fast growth Current Macro and Sector Outlook Underpenetrated Banking Sector in Terms of Both Individual Banking Branches Per Products and Commercial Lending Million Inhabitants Million Inhabitants 573 Total Loans (1) /GDP Loans to non-financial companies /GDP 140% 50% 120% 40% 100% 100% 30% 80% 107 60% 20% 40% 10% Eurozone Turkey 20% 2006 2006 2007 2007 0% 0% 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Hungary Poland MU12 Turkey (Loans+Deposits)/GDP Hungary Poland MU12 Turkey Housing Loans / GDP Loans to Households (2) /GDP 40% 60% 50% 30% 237% 40% 20% 30% 20% 20% 10% 73% 10% 0% 0% Turkey Eurozone 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2007 2006 Hungary Poland MU12 Turkey Hungary Poland MU12 Turkey (1) Excluding lending to credit institutions 4 (2) Excluding credit cards
Growth and inflation impacted by global and political uncertainties Current Macro and Sector Outlook GDP and CPI inflation y/y growth (%) � Uncertainties in global and local political environment led to a slowdown political environment led to a slowdown 18.4 in the economy in 2007 11.0 9.7 9.3 8.4 7.7 � Further economic slowdown in 2008; 7.8 9.4 8.4 strong export performance expected to g p p p 4.6 6.9 5.3 4.5 4 5 4.2 contribute to GDP growth of ~ 4% 2003 2004 2005 2006 2007 2008F 2009F � Halt in disinflationary trend due to high GDP growth CPI energy and commodity prices � Current account deficit expected to Current Account Deficit (as % of GDP) remain high, along with economic growth and high international C/A Deficit C/A Deficit, FDI adj. commodity prices. Contribution of 6.7 6.5 6.1 5.7 FDI expected to continue to help finance 5.4 5.3 4.6 3.7 the deficit 3.2 2.7 2.7 2.5 2.4 2.1 � Ongoing global economic imbalances hindering full realization of growth 2003 2004 2005 2006 2007 2008F 2009F potential 5
Operating environment in 1H08 Current Macro and Sector Outlook 1Q08 � Expansion of the financial turmoil internationally Expansion of the financial turmoil internationally � Global tightening in liquidity � Generally favorable operating conditions in Turkey � Still declining interest rate trend � Strong lending growth, no negative signs of deterioration in asset quality � Upward shift in interest rate trend towards the end of 1Q � Loans repricing both on retail and corporate 2Q08 � Continuation of adverse global liquidity conditions � � Less favorable operating conditions in Turkey mostly driven by political uncertainty Less favorable operating conditions in Turkey mostly driven by political uncertainty � Some signs of slowing economy , increasing inflation , declining consumer confidence � Start of tightening cycle (+100 bps increase in CBT policy rate to 16.25% (1) ) in parallel with interest rate increases internationally � Slowdown in retail lending , with some slight signal of deterioration in asset quality trend Sl d i t il l di ith li ht i l f d t i ti i t lit t d (i.e. SME) � Higher cost of funding due to reversal of interest rate trend putting pressure on NIM despite loans repricing upward (1) As of end of June 2008. Latest CBT policy rate: 16.75% 6
AGENDA � Current Macro and Sector Outlook � Current Macro and Sector Outlook � Competitive Positioning & Strategy � 1H08 Results (BRSA Consolidated) � 1H08 Results (BRSA Consolidated) � Performance by Business Unit (Bank-only) � 3 Year Strategic Plan � 3 Year Strategic Plan � Annex 7
Yap ı Kredi at a glance Competitive Positioning FINANCIAL HIGHLIGHTS Unique competitive advantages (BRSA Consolidated Figures in YTL, 30 June 2008) Total Assets (bln) 64.6 � LARGE NETWORK & LEADING BRAND Performing Loans (bln) 34.1 � LEADERSHIP IN KEY SEGMENTS/PRODUCTS Deposits (bln) 39.5 � SEGMENT FOCUSED ORGANISATION ALREADY IN AUM (bln) AUM (bln) 6 2 6.2 PLACE PLACE No. of Credit Cards (mln) 7.3 � SOLID RISK PROFILE No. of Active Customers (mln) (1) 5.9 � QUALITY REVENUE GENERATION... � ... WITH LARGE CUSTOMER BASE NOT YET No. of Branches (2) 858 FULLY EXPLORED No. of ATMs 2,220 � FOCUS ON EFFICIENCY AND CUSTOMER SERVICE FOCUS ON EFFICIENCY AND CUSTOMER SERVICE No. of Employees (3) 17,323 � STRONG SHAREHOLDERS Paid-in Capital (mln) 3,427 (1) Bank-only (2) Bank: 791 including 1 off-shore branch in Bahrain 8 (3) Bank: 14,821
Divisional structure, with business lines and product factories, implemented in 2007 implemented in 2007 Competitive Positioning � No 1 in credit cards (23.0%) No 1 in credit cards (23.0%) L NO 1 PLAYER IN THE MARKET Credit Product Retail Private Corporate Commercial #1 in Factoring Cards � Factories (market share: 19.4%) (market share: 19 4%) � 7.3 M cards** 7 3 M d ** � 628 branches 628 b h � 27 branches 27 b h � 7 branches 7 b h � 121 branches 121 b h � ~289K POS � 3,245 RMs � 238 RMs � 88 RMs � 530 RMs � #1 in Leasing � 354 direct � 2,220 ATMs sales force (market share: 15.1%) L � ~240K Mcap: YTL 748,7 mln merchants LEADING POSITION LEADING POSITION Affluent Mass � #2 in Mutual Funds Upper HNW Mass (market share: 18.5%) UHNW SME � #3 in Private Pension Funds (market share: 15.2%) � #4 in Life Insurance (market share: 7.0%) #4 in Brokerage � International Operations (market share: 4.3%) � #7 in Non-life Insurance (market share: 5.9%) L Mcap: YTL 1,184 mln L = Listed Li t d Branch numbers by segment exclude 2 Free Zone, 1 off-shore and mobile branches Market shares as of 30 June 2008, market capitalisations as of 23 September 2008 9 HNW= High Net Worth UHNW=Ultra High Net Worth **Including 1.3 mln virtual cards
Leadership in key segments/products on the back of a strengthened franchise, large network and leading brand g g g Competitive Positioning POSITIONING – June ´08 Mkt. Sh. % Rank Key Competitors - % # of Branches 3 9.7 Zir 15, İş 12, Ak 9 TOTAL 5 Deposits 9.6 Zir 19, İş 14, Ak 11, Gar 11, Halk 9 4 10.3 Ak 14, Garan 14, İş 13 Loans Assets 5 9.2 Zir 14, İş 14, Ak 13, Gar 12 (1) Consumer Loans 6 7.0 Ziraat 15, Ak 13, İş 13, Gar 12, Vak 9 Retail (2) Credit Cards 1 23.0 Gar 22, Ak 15, İş 13, Finans 10 AuM + Asset Management 2 18.5 İş 21, Gar 14 Yap ı Kredi Brokerage B k Brokerage 4 4.3 İş 6, Finans 5, RJ 5, TEB 4, Ak 4 (3) Fourth Largest Private Bank by (4) Cash Loans 4 9.6 Ak 14, Garanti 13, İş 13 Assets 1 15.0 Gar 14, İş 11 Corporate Non Cash Loans 1 15.1 Gar 14, Deniz 11 Leasing 1 Factoring 19.4 Gar 15, TEB 9, Fiba 7 Life Life 5 5 7 0 7.0 Ba ş ak 22, Anadolu 21, Avivasa 9 Ba ş ak 22 Anadolu 21 Avivasa 9 Insurance Pension 3 15.2 Avivasa 23, Anadolu 20 7 Non-Life 5.9 AxaOyak 12, Anadolu 11, KoçAllianz 9 (1) Excluding credit card loans (2) Outstanding balance market share 10 (3) Equity trading volumes (4) Cash Loans excluding credit card outstanding and consumer loans
Strategy focused on ensuring accelerated growth, profitability and efficiency and efficiency Strategic Guidelines Key Objectives Key Objectives Key Strategic Guidelines Key Strategic Guidelines FOCUS ON 5 MAIN BUSINESS TARGETS: � Leadership in the higher � Expand branch network significantly return on capital and growth segments/businesses � Maintain leadership in Credit Cards with growing focus on profitability � Strong investment in g � Growth in SME Banking on the back of � Growth in SME Banking on the back of network development and underpenetrated SME market customer satisfaction � Bring individuals segment towards higher profitability fit bilit � Efficient cost/income, most � reactivating dormant/low activity client base effective sales force and � increasing penetration through cross selling outstanding risk g � expanding consumer lending mainly through di l di i l th h management development of the mortgage market � Strong focus on cost & efficiency 11
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