2020 Earnings Presentation 2Q2020 BRSA Bank-only Results Macro - - PowerPoint PPT Presentation

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2020 Earnings Presentation 2Q2020 BRSA Bank-only Results Macro - - PowerPoint PPT Presentation

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2020 Earnings Presentation 2Q2020 BRSA Bank-only Results Macro Outlook Banking Sector Economy and Markets Recent CBRT loosening monetary policy and incentives for leading indicators such as PMI, confidence indicators,

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SLIDE 1

2020

Earnings Presentation

2Q2020 – BRSA Bank-only Results

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SLIDE 2

Macro Outlook

Source: BRSA, TSKB

*Foreign Currency

2

  • Recent

leading indicators such as PMI, confidence indicators, electricity consumption and foreign trade data signalled recovery in the economic activity.

  • We expect the economy to recover further during the

second half of the year and 2021, with the assumption that we won’t experience another COVID-19 wave.

  • Driven by the strong loan growth and recovery in

domestic consumption, we expect to see a positive GDP figure in 2020. Our estimated inflation figure points to high single digits.

  • In the 2H-20, no major change in the monetary policy is

expected from CBRT which cut the policy rate down further to 8.25% from 9.75% in the 2Q-20.

  • CBRT loosening monetary policy and incentives for

consumer loans and TL SME loans helped recovery in credit activity.

  • Accelaration in loan growth despite a challenging

backdrop; mainly driven by TL consumer loans. YTD FX adjusted loan growth reached 16% at June-end, compared to 3% at the same time of last year.

  • Contraction in FX corporate loans further continued in

2Q-20, with a ytd drop of 4%.

Economy and Markets Banking Sector

Loan Growth in 1H20 (FX-Adj., YTD)

16.0% 15.0%

Corporate Loan Growth (FX-Adj.)

27.0%

Consumer Loan Growth FC Corporate Loan Growth (FX Adj.)

  • 4.1%
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SLIDE 3

3

TSKB’s Key Highlights with respect to 2Q-20

*Net Cost of Risk is calculated for the first 6M of the year. **Excluding forbearance

YTD 9% TL Loan Growth Robust Liquidity Unchanged NPL 3.4% Stage2 @11% Strong and Stable NIM 4.3% Solid Solvency** CAR @16.6% Tier I @11.3% ROTE 12.4% Net CoR* 107 bps

▪ Sound liquidity supported by timely Eurobond issuance in January, successful roll-over of the syndicated loan and continuous DFI funding engagements ▪ FX-adjusted terms close to flat loan growth ▪ Transition to Turkish Accounting Standards 27 (TAS 27) regarding valuation of subsidiaries ▪ Asset quality remained intact ▪ Coverage ratio enhanced with extra provisioning ▪ Robust NIM, hoovering above 4% levels ▪ Strong solvency ratios ▪ Sustainability focus are being tackled with dedicated efforts resulting in new developments: Lowest ESG Risk rating in Turkey

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SLIDE 4

2020YE Guidance Revisions

4 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

Financial Guidance (Bank Only)

(%)

2Q20 Figures 2020E Guidance Revised Guidance

FX Adjusted Loan Growth

  • 1.5

3-5 Flat Loan/Assets 75 ~75 Confirmed Fees & Commissions Growth 128 >50 Confirmed OPEX Growth 8.0 <20 <15 Net Interest Margin (adj.) 4.3 ~4.0 Confirmed Return On Tangible Equity 12.4 >16 >14 Return On Assets 1.5 1.7 – 1.9 Confirmed Cost/Income Ratio 12.0 <15 Confirmed Capital Adequacy Ratio 16.6 >18 >17 Tier 1 Ratio 11.3 >12.5 >11.5 Stage 2 Loans Ratio 11.0 Flat Confirmed NPL Ratio 3.4 <3.5 Confirmed Net Cost of Risk 107 bps* <100 bps <150 bps

*Net Cost of Risk is calculated for the first 6M of the year.

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SLIDE 5

Comprehensive Income Statement

  • TMS 27 adjustments were applied for all given periods.
  • Based on MIS data
  • Interest expense of long and short term swaps, valuations of hedge positions for Eurobonds issued and exchange differences arising from rediscounts are adjusted under NII.
  • Interest Income from securities includes impairment expenses of marketable securities with provisions.
  • 2Q20 Provisions include Other Income, Deferred Tax and Expected Credit Losses in the audited P&L excluding impairment expenses of marketable securities

5 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

743 792 372 419 250 375 173 202

1H-19 1H-20 1Q-20 2Q-20

Net Banking Income vs Provisions

Net Banking Income Provisions

Strong NII generation Elevated Stage2 and Stage 3 Coverage Ratios

TL mn 1H-19 1H-20 YoY

1Q-20 2Q-20

QoQ Net Interest Income

770.7 797.8 4% 370.2 427.6

16% Trading Income

24.1 64.8 n.m 33.5 31.3

  • 6%

Net Commissions

13.0 29.6 n.m 21.5 8.1

n.m Dividend & Other

35.6 7.8 n.m 1.9 5.9

n.m Banking Income

843.4 899.9 7% 427.1 472.8

11% OPEX (-)

100.2 108.3 8% 54.9 53.5

  • 3%

Net Banking Income

743.2 791.6 7% 372.2 419.4

13% Provisions (-)

250.0 375.2 50% 173.4 201.8

16% Tax Provisions (-)

107.5 94.4

  • 12%

45.1 49.3

9% Net Profit

385.6 322.0

  • 16%

153.7 168.3

9%

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SLIDE 6

6

Strong NIM Generation

Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

3.1 3.1 3.1 3.2 3.3

2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 FX Loans

Quarterly FX Loan Spreads

3.5% 3.9% 4.1% 4.2% 4.1% 4.3% 2016 2017 2018* 2019 1Q-20 2Q-20

Annualized NIM

434

19.0% 17.2% 17.7% 16.0% 16.5% 17.2% 16.5% 14.5% 2Q-19 4Q-19 1Q-20 2Q-20 TL Sec. Yield TL Sec. Yield exc. CPI

TL Security Yields**

*CPI Normalized **Bank’s Oct.-Oct. CPI assumption is 9.5 percent

434

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SLIDE 7

Comfortable FX Liquidity and Maturity Profile

53% 53% 51% 53% 11% 12% 11% 11% 21% 17% 23% 18% 5% 5% 5% 5% 4% 4% 4% 4% 3% 7% 4% 4% 2Q-19 4Q-19 1Q-20 2Q-20

Funding / Total Liabilities (exc. equity)

  • T. Guarenteed DFI Funding

Unguarenteed DFI Funding Securities Issued Subordinated Debt Syndication & Other Repo &Money Market USD mn

6,137

$567 mn Non-Withdrawn DFI Funding

  • Inclusiveness

47%

  • Climate + Environment

30%

  • Sustainable Infrastructure

13%

  • Manufacturing Industry

11%

7

Maturity Profile of External Debt USD mn

* Syndication facility dated 9 July 2019 rolled-over. **Tier 2 bond has issuer call in 2022.

Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

6,343 6,068 6,382

  • 176 *
  • 103
  • 157
  • 511
  • 473
  • 418
  • 2,195
  • 300
  • 350
  • 400
  • 300 **
  • 300

3Q-20 2020 2021 2022 2023 >=2024 Syndication DFI Funding Eurobond Tier 2

Successful roll-over of the syndicated loan facility as of 9 July 2020. Roll-over ratio:85% Amount: 150 mio USD

4Q-20

New funding from AIIB as part

  • f the Covid-19 Credit Project

with an amount of USD 200 mio

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SLIDE 8

Resilient Asset Composition

Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

2Q-19 4Q-19 1Q-20 2Q-20

FX Loans ($) TRY Loans

TL bn

2.3 2.7

4.8$ 4.9$

4.7$

30.2 34.2 31.4 35.1

4.6$ 11% 89%

Currency Breakdown

Total Loans

3.0 74% 75% 73% 75% 14% 16% 15% 15% 9% 5% 6% 5% 3% 4% 6% 5% 2Q-19 4Q-19 1Q-20 2Q-20

Loans Securities Cash & MM Non IEAs & Other

41.4

TL bn

Asset Composition

47.2 42.0 46.8 4.0

USD; 48% EUR; 41% TL; 11% Investment Loans; 69% APEX; 8% Working Capital Loans; 23%

2Q Loans by Currency & Type

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SLIDE 9

Loan Portfolio in Detail

9 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

Inclusive Finance (Support Women’s Employment & the Economy in Refugee-Impacted Areas) $168 mio Financing 2Q Loans by Sector

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SLIDE 10

Intact Asset Quality

10 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

Gross Amount Share in Total Coverage Ratio Provisions (-)

Stage 1 30,018 85.6% 1% 300 Stage 2 3,839 11% 12.96% 498 Stage 3 1,195 3.4% 37.69% 450

Gross Loans 35,052 100.0% 3.56% 1,249

10.6% 11.0% 11.5% 12.96%

0.0% 2.0% 1Q-20 2Q-20 Stage 2 Loans

3.4% 3.4% 33.6% 37.69%

10.0% 20.0% 30.0%

0.5% 5.5%

1Q-20 2Q-20 Stage 3 Loans

Coverage Ratio 1H-2020 Net CoR * 107 bps Share in Stage 2 Coverage

Electricity Generation 26.8% 7.0%

REL 22.3%

5.0%

Not REL 2.7%

28.5% Electricity/Gas Distribution 14.2% 23.8%

TL 220 mio free provision FX provisions are long positioned 72% of Stage2, 60% of Stage3, 69% of Stage2&3 restructured

*Net Cost of Risk is calculated for the first 6M of the year.

86.0% 85.6%

0.82% 1.00%

78.0% 1Q-20 2Q-20

Stage 1 Loans

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SLIDE 11

Security Book

4,043 4,432 4,528 4,601 309$ 376$ 408$ 384$ 2Q-19 4Q-19 1Q-20 2Q-20 TL (mn) FX($ mn) %64 %68 Floating

TL Securities Portfolio Breakdown

Securities / Assets : 15.4%

▪ Remaining maturity: 1.8 yrs in Fixed bonds, 1.2 yrs in Floating bonds, 2.8 yrs in CPIs in TL Sec. Portfolio. ▪ 68% is in Financial Assets at Fair Value Through Other Comprehensive Income portfolio and the rest 32% is Financial Assets Measured at Amortized Cost. ▪ Private sector bonds: 3.1% of total portfolio ▪ Free Capital/IEA Ratio: 9.6%

Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

TL 5.8 bn TL 6.7 bn TL 7.2 bn

11

TL 7.2 bn

Float %19 Float %18 Float %17 Float %17 CPI %43 CPI %49 CPI %51 CPI %51 Fixed %38 Fixed %33 Fixed %32 Fixed %32 2Q-19 4Q-19 1Q-20 2Q-20

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SLIDE 12

Strong Solvency Metrics

11.1% 12.4% 10.7% 11.3% 16,4% 17,8% 15,8% 2Q-19 2019 1Q-20* 2Q-20* Tier I (CET 1) CAR

12.0% 8.5%

41.2 42.6 49.5 48.8 4.6 5.3 5.3 5.5 6.8 7.6 7.8 8.1 2Q-19 2019 1Q-20 2Q-20

Evolution of RWA and Equity

RWA Core Equity Total Capital

TL bn

12 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

Solvency Limits (%) 2020 Capital Conservation Buffer 2.500 Counter Cyclical Buffer 0.010 CET 1 7.010 Tier 1 Ratio 8.510 CAR 10.510

16.6%

11.3

  • 1.6
  • 0.2

12.4 0.7

4Q-19 Δ RWA Δ MtM 2Q- Net Income 2Q-20

Tier 1 (CET1) Evolution

*Excluding Forbearance

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SLIDE 13

13

  • GRI G4 Sustainability Report
  • BIST Sustainability Index
  • Women’s Empowerment Principles
  • First ever green bond out of

Turkey & CEEMEA

  • Publication of TSKB Declaration
  • n Climate Change
  • Inclusion in the FTSE4GOOD

Emerging Market Index

  • First Integrated Report of the

Turkish finance sector

  • Globally first Sustainable Tier II

Bond Issuance

  • Gender Equality Certification by

KAGDER and IBRD

  • “Social Impact Assessment Analysis”

and “Gender Equality” Working Groups

  • Second Integrated Report with third

party assurance

  • Allocation and Impact Reporting with

assurance of E&Y

  • Founding Signatories of the ‘Principles for

Responsible Banking’ developed by UNEP FI

  • 10th member of the Steering Committee of the

IDFC

  • Integrated Report with assurance for financial

and non financial datas

  • Best CDP score in Turkish Finance Sector
  • Lowest ESG Risk Rating

Score in Turkey by Sustainalytics

TSKB’s Sustainability Journey

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SLIDE 14

2020

TSKB Financial Institutions & Investor Relations

Meclisi Mebusan Cad. 81 Fındıklı 34427 İstanbul ir@tskb.com.tr www.tskb.com

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SLIDE 15

Appendix

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SLIDE 16

Appendix: Balance Sheet

(TRY mn) 30/06/2019 31/12/2019 31/06/2020 TRY FX TOTAL TRY FX TOTAL TRY FX TOTAL Cash and Banks 1,210 1,728 2,938 526 881 1,408 1,478 959 2,437 Securities 4,051 1,790 5,840 4,432 2,223 6,655 4,604 2,612 7,216 Loans (Gross) 2,036 28,225 30,291 2,709 28,716 31,424 3,993 31,059 35,052 Provisions

  • 87
  • 613
  • 699
  • 273
  • 607
  • 880
  • 350
  • 902
  • 1,252

Subsidiaries 809 45 854 907 54 961 935 63 998 Other 1,013 1,198 2,211 961 972 1,933 1,024 1,354 2,378 Total 9,032 32,403 41,435 9,262 32,238 41,500 11,684 35,146 46,830 ST Funds

  • 1,501

1,501

  • 1,423

1,423

  • 1,667

1,667 LT Funds

  • 23,309

23,309

  • 23,456

23,456

  • 26,615

26,615 Securities Issued

  • 7,901

7,901

  • 6,023

6,023

  • 7,529

7,529 Repo&MM 191 913 1,104 985 1,514 2,499 879 935 1,813 Other 836 398 1,234 756 345 1,101 830 716 1,545 Tier 2

  • 1,786

1,786

  • 1,830

1,830

  • 2,153

2,153 Equity 4,667

  • 67

4,600 5,171 3 5,167 5,551

  • 43

5,508 Total 5,694 35,741 41,435 6,911 34,589 41,500 7,260 39,570 46,830

16 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

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SLIDE 17

Detailed Income Statement

17 Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-20

1Q-20 2Q-20 QoQ Net Interest Income including swap cost 370.2 427.6 16% Net Interest Income 390.3 457.2 17% CPI Linkers 82.5 69.3

  • 16%

Swap Costs (-) 20.2 29.6 47% Net Commissions 21.5 8.1 n.m Other Income 1.9 5.9 n.m From Subsidiaries

  • 3.4

4.8 n.m Dividends 4.3 0.1 n.m Other 1.0 1.0

  • Trading & FX gains/losses

33.5 31.3

  • 6%

FX gains/losses 39.8 24.9

  • 38%

MtM gains/losses

  • 42.8
  • 1.1

n.m Trading gains/losses 36.4 7.5 n.m Banking Income 427.1 472.8 11% OPEX (-) 54.9 53.5

  • 3%

Net Banking Income 372.2 419.4 13% ECL (-) 173.3 201.9 17% Stage I 68.0 59.9

  • 12%

Stage II 65.8 81.1 23% Stage III 38.0 58.9 55% Other Provisions 1.5 2.0 33% ECL Hedging 39.8 24.9

  • 38%

Pre-Tax Income 198.9 217.5 9% Tax (-) 45.1 49.3 9% Net Income 153.8 168.3 9%

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SLIDE 18

2020

TSKB Financial Institutions & Investor Relations

Meclisi Mebusan Cad. 81 Fındıklı 34427 İstanbul ir@tskb.com.tr www.tskb.com