Yapı Kredi 1H18 Earnings Presentation 31 July 2018
Continuous improvement in profitability with strong balance sheet fundamentals Profitability Net Profit (TL mln) Evolution of RoTE 1 Quarterly Cumulative +165bps +31% +169bps +38% 2,471 +238bps 16.4% -73bps -1% 14.7% -150bps -20bps 1,893 1,244 1,227 892 2Q17 1Q18 2Q18 1H17 1H18 1H17 Core Costs ECL Other Other 1H18 Revenues Provisions 2 CET1 Ratio LDR Improving trend in C/I & CoR supporting RoTE +82bps C/I 45% +73bps Bubble 43% Size: CoR 10.7% 114% 114% 113% 41% 10.0% 9.9% 2016 1H17 39% 2017 37% 35% 33% 1H18 31% 11% 12% 13% 14% 15% 16% 2017 1Q18 1H18 2017 1Q18 1H18 RoTE Notes: 2 Other Provisions for Risks and Charges are at 288 mln TL gross as of 1H18 1. RoTE calculation excludes TL 4.1billion of rights issue which was realized as of 29 June 2018 2. LDR = Performing Loans / (Deposits + TL Bills sold to individuals)
Shift in loan mix towards smaller tickets Loans Loan Mix (FX adjusted) 4 Loan growth (TL bln) Private Banks 1 YKB Portion of SME and GPL lending is 1H18 y/y ytd q/q y/y ytd q/q increasing in FX adjusted terms Total Loans 2 222.2 20% 11% 8% 17% 9% 6% TL 3 123.0 11% 2% 4% 12% 5% 3% FC ($) 3 21.7 2% 3% -1% -4% -3% -4% 31% 30% TL bln 2017 1Q18 1H18 CGF Utilisation 12.8 14.9 19.5 CGF Stock 9.5 10.5 13.4 25% Market Share 5.8% 6.1% 7.1% 27% 12% FC Loans 12% 7% 7% 11% 10% ~35% of Project Finance loans are backed by government guarantee 15% 13% 1H17 1H18 3 FC Lending Breakdown FC Loans SMEs GPLs 45% Share y/y Consumer (excl. GPLS) Credit Cards Project Finance 59% 0% Commercial Corporate LT Investments 30% 23% ST Loans 5% -22% Financial institutions 6% -28% Notes: 1. Private banks based on BRSA weekly data as of 29 June 18 2. Loans indicate performing loans excluding factoring and leasing receivables 3 3. TL and FC loans are adjusted for the FX indexed loans 4. Based on MIS data
Diversification towards lower cost funding sources Funding Deposit growth (TL bln) Deposit Breakdown (FX adjusted) 2 Private Banks 1 YKB 1H18 y/y ytd q/q y/y ytd q/q Total Deposits 192.8 17% 11% 7% 16% 10% 6% TL 80.1 -1% 5% -6% 10% 4% 0% 32% 35% FC ($) 24.7 4% -4% 3% -7% -4% -3% Customer Deposits 180.1 14% 10% 8% 17% 10% 6% TL 76.7 -2% 5% -6% 11% 4% 0% FC ($) 22.7 0% 0% 5% -6% -4% -2% Demand Deposits 36.6 22% 15% 12% 23% 14% 12% 48% 47% Ongoing diversification in the funding mix 20% 18% • 500 mln USD Eurobond in March 2018 • 2017 1H18 111% roll-over ratio in syndication in May 2018 Demand Time - Retail Time - Corporate & Commercial • 215 mln USD Securitization in 1H18 • 639 mln TL Covered in February and May 2018 Notes: 1. Private banks based on BRSA weekly data as of 29 Jun r’18 4 2. Based on MIS data
Strong revenue growth via core revenue increase leading to improvement in revenue margin Revenues Revenues (TL mln) Revenue Margin 2 Quarterly Cumulative +24% Revenue Margin improved +13bps y/y with 8,561 +34% 24% increase both in swap adjusted NII and Fees +11% 6,892 4,507 4,054 3,363 7,406 Quarterly Cumulative 5,981 3,829 +49bps 3,577 Core 1 +13bps 2,915 +16bps 4.7% 4.5% 4.5% 4.4% 1,155 Other 678 911 477 4.2% 447 2Q17 1Q18 2Q18 1H17 1H18 2Q17 1Q18 2Q18 1H17 1H18 mln TL Other Revenues 447 477 678 911 1,155 Other Income 323 466 403 686 869 2Q17 1Q18 2Q18 1H17 1H18 Collections 247 330 363 509 693 Income From Subs 19 28 25 47 53 Dividend Income 8 4 8 10 12 Trading & FX (net) 125 11 275 225 286 Notes: 5 1. Core Revenues = NII + swap costs + Net fee income 2. Revenue margin= Core Revenues / average IEAs; Based on bank-only financials
23bps q/q increase in NIM through wider core spreads Revenues - NIM Swap Adjusted NIM NIM waterfall Quarterly Quarterly +35bps +3bps +44bps 3.37% -8bps +23bps -7bps 3.14% 3.4% 3.1% 2.9% 1Q18 Loan Yield Deposit Cost Swap Costs Other financial 2Q18 1Q18 2Q17 1Q18 2Q18 2Q18 instruments Cumulative Cumulative +75bps +10bps 3.21% -42bps +14bps 3.10% 3.2% 3.1% -37bps 1H17 Loan Yield Deposit Cost Swap Costs Other financial 1H18 1H17 1H18 1H17 1H18 instruments Notes: 6 Based on Bank-Only financials
Increase in Loan-Deposit spread thanks to ongoing loan repricing Loan-Deposit Spread Loan Yields 1 Deposit Costs Loan-Deposit Spread (Quarterly) (Quarterly) (Quarterly) Another 55 bps increase in Increase in blended cost of Loan-Deposit spread improved blended loan yield while loan deposits (+27 bps) due to upward +28 bps through loan repricing repricing efforts sustains trend in the rates Blended Blended Blended TL TL TL 4.6% 11.2% 13.7% 10.8% 4.3% 10.6% 10.6% 13.1% 4.0% 9.9% 3.4% 3.3% 12.0% 11.9% 11.9% 11.0% 2.6% 2.5% 10.5% 6.4% 6.3% 6.2% 6.1% 2.0% 9.9% 5.9% 9.7% 9.5% 1.4% 1.1% 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Change q/q based on daily averages 2 3Q17 4Q17 1Q18 2Q18 3Q17 4Q17 1Q18 2Q18 3Q17 4Q17 1Q18 2Q18 TL 19bps 25bps 65bps 44bps TL -24bps 57bps 34bps 19bps TL 43bps -32bps 31bps 25bps FC 27bps 30bps 5bps 65bps FC 25bps 28bps 7bps 61bps FC 2bps 3bps -2bps 4bps Notes: Based on Bank-Only financials 7 1. Performing Loan yields 2. Based on MIS data
Fee increase at 24% y/y thanks to core business fee generation Revenues - Fees Net Fee income (TL mln) Fees Received Composition Quarterly Cumulative +24% 7% 7% 6% 7% 2,085 +27% 32% 33% 1,675 +2% 1,051 1,034 826 50% 49% 2Q17 1Q18 2Q18 1H17 1H18 Fees / Opex 1H17 1H18 Card Payment Systems Lending Related Money Transfer +10pp Bancassurance Asset Mngmt Other +9pp 69% Diversification efforts on the top of ongoing 60% 59% support from Card payment systems: • Money Transfer: +47% y/y • Bancassurance: 23% y/y 1H16 1H17 1H18 • Card Payment systems: +28% y/y 8
Cost discipline on track with y/y increase well below inflation Costs Cost Breakdown 2 Costs (TL mln) Quarterly Cumulative vs. CPI at 15% 8% 9% 13% +8% 12% +9% 3,003 2,791 +7% 32% 35% 1,554 1,450 1,422 46% 44% 2Q17 1Q18 2Q18 1H17 1H18 Cost / Income 1H17 1H18 Costs / Average Assets 1 HR Ordinary non-HR Business Growth Related Regulatory -606bps -41bps -539bps -26bps Ordinary non-HR cost share is coming down; 41.2% 2.2% 40.5% 2.0% HR cost increase due to variable compensation 1.8% 35.1% HR costs: +12% y/y (# of FTE 3 : -2%) • • Ordinary non-HR costs: Stable y/y 1H16 1H17 1H18 1H16 1H17 1H18 Business growth related costs 4 : +23% y/y • Notes: 1. 1H17 and 1H16 assets are recasted for the IFRS 9 adoption (reclassification of general provisions) 2. Based on MIS data 9 3. FTE: Full Time Equivalent 4. Includes Advertisement, Payroll Charity, World Points
Digital transformation fully on track Number of Digital Costomers (mln) Number of Mobile Banking Costomers (mln) +1.1 mln y/y +1.2 mln y/y 7.00 60% 57% 4.25 6.00 51% 3.68 50% 45% 3.01 5.00 40% 40% 2.44 Penetration 34% 4.00 30% 3.00 1.50 4.89 20% 4.35 2.00 3.77 3.30 2.59 10% 1.00 0.00 0% 2015 2016 1H17 2017 1H18 2015 2016 1H17 2017 1H18 Share of digital in main products 2 sold +7.2 pp 30% 26% 23% 20% 13% 2015 2016 1H17 2017 1H18 10 Notes: 1. Main Products; GPL, CC, Time Deposit, and Flexible Account
Strong Stage I coverage enabling comfort-zone for further Stage 2 worsening; increase in NPL inflows through a couple of big tickets Asset Quality Stage I loans to Gross Loans Stage II loans to Gross Loans 1.4% 1.3% 0.9% 0.9% 11.0% Coverage 97% 0 6 % 2 % 1 10.1% 96% 0% 6 % 0 95% 0 % 1 93% 93% 94% 5 % 0 -2% 92% 4.4% 93% 0 8 % 92% 0 5 % 92% 4.0% 4.8% -4% 91% 4.4% 0 4 % 0 6 % Coverage 90% 4 % 0 -6% 89% 0 4 % 88% 0 3 % 2.6% 2.5% -8% 87% 2 % 0 0 3 % 86% 85% -10% Solid coverage over 2 % 0 0 % 0 1H17 2017 1Q18 1H18 1H17 2017 1Q18 1H18 gross loans 4 4.8% NPL & Coverage Ratio Net NPL inflows (TL mln) 86% 0 6 % 1 0 0 % 1,130 82% 1,200 1 ,2 0 0 1,064 77% 77% 9 0 % 0 6 % Coverage 8 0 % 880 1 ,0 0 0 1,000 0 5 % 2 796 7 0 % 4.3% 4.3% 0 5 % 800 8 0 0 4.0% 6 0 % -54% y/y in 3.8% 0 4 % 5 0 % 1H18 6 0 0 600 2 4 0 % 402 0 4 % 400 4 0 0 3 0 % 0 3 % 2 0 % 2 0 0 200 0 3 % 1 0 % 0 2 % 0 0 % 0 0 3 1 1 1H17 2H17 1H18 1H17 2017 1Q18 1H18 Notes: TL 1.6 bln NPL sales in 1H18 (628 mln in 1Q18; 1 bln in 2Q18) 1. For homogenous comparison Factoring and Leasing included 2. Adjusted for big ticket NPLs 11 3. For homogenous calculation 1H18 exclude interest accruals 4. Based on Bank-only; consolidated coverage (including Leasing and Factoring) at 4.4%
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