Yap Kredi Fixed Income Investor Presentation October 2013 - - PowerPoint PPT Presentation

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



Turkey, 17th largest economy1 in the world and a G20 member, is a dynamic country with favourable

• demographics. The country has solid / improving macro fundamentals, also confirmed by achievement
• f sovereign investment grade2



Turkish banking sector, 2nd largest CEE banking system3, is underpenetrated, well-regulated with solid profitability and strong resilience to shocks Operating Environment Yapı Kredi



4th 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 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) 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

3

 Executive Summary  Recent Macro Developments  Yapı Kredi Overview  Yapı Kredi Financial Performance  Annex

• Yapı Kredi
• Turkish Economy and Banking Sector

4

9.00% 8.75% 8.50% 7.50% 7.00% 6.50% 7.25% 7.75% 5.00% 4.75% 4.50% 4.00% 3.50% 6.1% 8.6% 5.6% 6.4% 5.50% 5.00% 4.50%

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

2012 1Q13 2Q13

GDP Growth

2.2% 2.9% 4.4%

Inflation

6.2% 7.3% 8.3%

Industrial Production (IP)

2.5% 2.5% 2.9%

Consumer Confidence Index (eop)

73.6 74.9 76.2

Current Account Deficit (CAD)/GDP

6.1% 6.0% 6.6%

Unemployment Rate1

9.2% 9.2% 9.6%

Policy Rate Upper Band (O/N Lending Rate) Effective Rate Lower Band (O/N Borrowing Rate)

5

Macro

Benchmark Rate



Acceleration in GDP growth in 2Q mainly driven by private consumption



Temporary volatility in June followed by downward trend in Aug’13 (8.2%) mainly due to decline in unprocessed food prices



Industrial production slightly picking up



Consumer confidence index continuing to improve, yet sustainability to be seen



Current account deficit increasing due to decline in gold exports and weak exports



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 of corridor)

 Following FED announcements / domestic political

developments at end-May, CBRT focused on preventing TL depreciation via

• FX sale auctions (US$ 10.6 bln sale since 10 Jun’13)
• 125 bps increase in upper band of corridor

 In the upcoming period, other available means of FX

liquidity could be used if necessary (ie changes to ROC, RRR, corridor, policy rate)

(1) Seasonally adjusted

Key Macro Indicators Monetary Policy

Macro backdrop intact supported by flexible monetary policy

 Executive Summary  Recent Macro Developments  Yapı Kredi Overview  Proposed Transaction  Yapı Kredi Financial Performance  Annex

• Yapı Kredi
• Turkish Economy and Banking Sector

6

7

Yapı Kredi: A leading financial services group

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 (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 (6) Based on Brand Finance report (Yapı Kredi ranked number 9)

74 bln US$

Assets

45 bln US$

Loans

41 bln US$

Deposits+ TL Bonds1

1.2 bln US$

2012 Net Income

8.5 bln US$ 15.8%

CAR4

9.6 mln

Customers2

932

Branches

83%

Share of ADCs3

17,851

Employees

17.5%

2012 Tangible ROAE

109%

Total NPL Coverage5

Ratings Moody’s: Baa3 / Fitch: BBB / S&P: BB+  4th largest private bank and a deep rooted

franchise (established in 1944)

 Among top 10 most valuable brands6 in Turkey  Integrated network with widespread branch

coverage and innovative alternative delivery channels

 Dedicated focus on customer satisfaction as a

prerequisite for sustainable performance

 Young and qualified workforce serving a wide

customer base

 Healthy ROAE level driven by quality revenues

and effective cost management

 Customer business focus and ALM profile

ensuring favourable positioning

 Conservative risk profile, sound capital base and

funding capability

Shareholders’ Equity

Yapı Kredi Overview

8

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 (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

Total Bank Retail Private Corporate Insurance and Private Pension1

Rank Market Share

5 6 5 1 1 1 7 5 1 6 1 1 2 1 3 1 6 5 3

2 5 3 4

• 5

Leading positions in value generating services and products leveraging

• n innovative banking techologies

Market Position

9.6% 9.1% 8.8% 12.3% 9.2% 20.2% 19.3% 17.2% 7.8% 6.7% 8.7% 16.3% 18.0% 11.1% 18.3% 17.0% 6.8% 18.7% 6.1% 6.5% 17.4%

Loans Deposits Branches Mobile Banking Revenues Credit Cards Outstanding Credit Cards Acquiring Number of Cards Consumer Loans Commercial Installment Loans Corporate Loans Leasing Factoring Cheque Clearing Mutual Funds ISE and TurkDEX Volume Equity Transaction Volume Health Insurance Non-Life Insurance Life Insurance Private Pension Funds

16% 19% 29% 16% 4% 9% 16% 25% 3% 23% 51%

28% 15% 10% 25% 40% 26% 45%

Revenues Loans Deposits Assets Under Management

L = Listed

Well-diversified business mix on the back of a customer-oriented and divisionalised service model

9

Revenues and Volumes by Business Unit1

(1H13)

SME

Private Corporate Commercial Treasury and Other

Individual (incl. Card Payment Systems)

Retail 53% 55% 36%

Private Banking and Wealth Management

Product Factories:

International Operations Insurance Subsidiaries

Corporate and Commercial Banking

Commercial Corporate

Product Factories:

Retail Banking

Individual & SME Card Payment Systems

L US$ 334 mln US$ 203 mln US$ 2.1 bln

L

US$ 10.4 bln Mcap US$ 948 mln Mcap

• 9.7 mln cards2
• ~439K POS
• 358K

merchants

• 825 branches
• 3,244 RMs
• 2,847 ATMs
• 3 branches
• 57 RMs
• 76 branches
• 522 RMs
• Further

segmented as mid / large companies

• 22 branches
• 178 RMs

Total Assets

International / Multinationals

3 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 (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

• 1 branch
• 15

headcount

• 909

customers

45%

d

Strong and committed shareholders

50% 50% 81.8%2

Note: All information and figures (unless otherwise stated) regarding UniCredit and Koç Group taken from public data on company investor relations websites. Financial data as of 30 June 2013 (1) According to Fortune Global 500 (2) Remaining 18.2% listed on the Istanbul Stock Exchange and Global Depository Receipts that represent the Bank’s shares are quoted on the London Stock Exchange (3) Excluding US$ 585 mln sub-debt

10

 Established in 1926, largest

conglomerate in Turkey and 222nd in Fortune Global 5001

 Long-standing leadership in

core sectors (automotive, finance, energy, consumer durables)

 5 out of top 10 companies in

Turkey part of the Koç Group

 Best proxy to the Turkish

market (total sales/GDP: 7%, total exports/Turkey’s exports: 10%)

 Largest distribution and after-

sales network in Turkey

 Share of intragroup lending in

total capital at 6.6% (max regulatory limit 20%)

Stable, long-term focused shareholding structure supporting YKB’s balanced growth and sustainable performance



Systemically important Italian financial institution in Europe with roots dating back to 1870



Full service group engaged in a wide range of banking, financial and related activities



Extensive international presence with strong roots in 22 European countries and presence in 50 other markets



Leader in Austria, #2 in Italy, #3 in Germany, #1 in CEE with more than 4,000 branches



Turkey among top 4 long-term growth markets in CEE



Providing €1.7 bln funding to YKB3 (o/w 80% for subsidiaries)

YKB considered a key long-term strategic asset by both shareholders

Total Assets (US$ bln) 28.1 Revenues (US$ bln) 16.3 Net Income (US$ mln) 574 Number of Employees 86,070 Total Assets (US$ bln) 1,162 Revenues (US$ bln) 16.3 Net Income (US$ mln) 1,058 Number of Employees 150,787

11

Successful execution of strategy resulting in delivery of strong results 2006

Merger and Integration

2007

Restructuring

2008

Relaunch of Growth

2009

Global Crisis

2010

Back to Growth

2011 2012

Smart Growth Between 2007 and 2012

Revenues +13% Costs +7%

(vs average inflation of 8%)

Number of branches +53% Number of ATMs +65% Number of employees +4% Average Tangible ROAE

1 27% Note: Compounded annual growth rates used for revenues and costs. Increase in number of branches and ATMs calculated from beginning of 2007 (1) Net Income/Average Shareholder’ Equity. Average Shareholders’ Equity is calculated by subtracting TL 979 mln of goodwill generated from the merger of Koçbank and Yapı Kredi in 2006

10% 8%

YKB Sector

61% 59%

YKB Peer Avg

2.9% 2.4% YKB Peer Avg 30% 26%

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

461 396

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

• 2%

7% 8% 10%1 7% 9%1 5% 15% 11% 13% 18% 17%

2009 2010 2011 2012 1Q13 1H13

Retail share: 47% (peers: 44%)

FC Companies 32.8% TL Companies 20.1% Comm. Install 8.0%Mortgage 9.5% GPL 8.7% A uto 1.3% Credit Cards 19.6%

12 Loan-Deposit Spread

(1H13)

Fees/Revenues

(1H13)

Profitability

Sustainable revenues via strong NIM and fee generation Benchmark in cost discipline

Customer Business Focus Value Generating Growth

Loans/Assets

(1H13)

Securities/Assets

(1H13)

Individual Loans3

(y/y)

Local Currency Deposit Growth

(ytd)

Core Revenues/Employee4

(ths TL)

Relentless focus on customer business Well-diversified loan composition Retail exposure comparable to peers Consistent

• utperformance in

value generating local currency business Sustained productivity gains

Sector YKB YKB Sector

Loan Composition2

(1H13)

Profitability, customer business focus and value generating growth as key areas of strength

Note: Peers indicate top three private banks. Data based on publicly available quarterly BRSA consolidated financials. Sector data based on publicly available monthly BRSA financials, excluding participation banks. Core revenues indicate net interest income and net fees and commissions (1) YE12 cost growth excluding pension fund charge (52 mln TL) and growth initiatives in Azerbaijan (11 mln TL). 1H13 cost growth excluding impact of retail business expansion in Azerbaijan and regulatory costs, including increase in SDIF premiums (2) Based on BRSA consolidated footnotes (3) Individual loan (consumer loans and credit cards) year-on-year growth according to BRSA weekly data for sector and BRSA bank-only for YKB (4) Based on BRSA bank-only figures

Cost Growth

(y/y)

YKB Sector

15% 22%

YKB Peer Avg

25% 19%

YKB Peer Avg

GDP Growth

3.72% 0.81% 0.58% 1.35% 1.06% 1.14%

2009 2010 2011 2012 1Q13 1H13

14.4% 14.8% 14.5% 15.8% 2Q12 2Q13 Bank Group

13

Capital Liquidity Cost of Risk

 Management of LDR within comfortable band  Early mover in effective LDR management (1-to-1

deposit pricing, growing LDR culture in network)

 Early identification of funding diversification as

a key long-term strategic priority (>400 fixed income investor meetings in 2 years)

 Conservative credit risk management in changing

environments

 Highly diversified loan book (weight of top 20

loans in total at 13%; no industry >10% share in corporate loan book)

 Timely focus on credit infrastructure / process

enhancements (Retail / SME scoring, collections, monitoring)

Capital Adequacy Ratio (CAR)

Solid capital level, comfortable liquidity and conservative risk profile

 Early mover in capital discipline (EVA at

customer / product level, value generating growth)

 Strengthened capital on the back of clear

roadmap announced early in 2012

 Sale of insurance business finalised in Jul’131

with expected positive CAR impact of ~80/90 bps

Note: Data based on publicly available quarterly BRSA consolidated financials for YKB (unless otherwise stated) Specific Cost of Risk=(Total specific provisions–collections)/Total gross loans Leverage=(Total assets–equity)/equity (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 (2) Yapı Kredi Research Estimate for 2013 GDP growth

Loans/Deposits Ratio (LDR) Total Cost of Risk

Hard Landing

• 4.8%

Strong Growth Avg 8.9% Soft-landing 2.2% Through the cycle CoR

EU: 114%

Acceleration 3.4%2

Bank Group Peers YKB 8.2x 7.8x Leverage 90% 112% 75% 109% 2009 2010 2011 2012 1Q13 1H13

Previous Current

GDP Growth

Slower growth vs previous guidance due to lower contribution of net exports and weaker domestic demand 4.8%

3.4%

Inflation

Controlled despite higher impact of currency pass-through and unprocessed food/energy prices 6.4%

7.2%

Benchmark Rate

Higher vs previous guidance parallel to volatility in global markets and domestic political developments 5.7/6.0%

8.7%

CAD / GDP

Slightly increased pressure due to weaker exports and volatility in global markets 6.6%

6.9%

14

Yapı Kredi

2013 Guidance

MACRO

Outlook for the remainder of 2013

Loan Growth

In line with sector loan growth incorporating seasonal slowdown in 3Q followed by pick-up in 4Q 18%

18%

Deposit Growth

Above sector growth with flexible deposit gathering strategy 17%

17%

NIM

Positive 1H13 trend supporting NIM, subject to funding costs Stable/Slightly Down

Slightly Down

Fees

Continuation of focused approach supported by volumes 17%

17%

Cost

Normalisation in 3Q followed by seasonal pick up in 4Q 9%

9%

Cost of Risk

Specific CoR controlled, general CoR dependent on volumes Stable / Slightly Down

Stable / Slightly Down

Key investment highlights

15

 Large, young and growing population. Solid and improving fundamentals providing high

resilience to shocks Turkey

 Underpenetrated, profitable, well regulated and well capitalised

Banking Sector

 Sizeable financial services group and reputable banking franchise  Leading positions in value generating services and products leveraging on innovative

banking technologies

 Diversified business mix and dedication to customer satisfaction  Solid governance structure with strong and committed shareholders, Koç Group and

UniCredit

 Successful execution of strategy resulting in delivery of consistently solid results  Profitability, customer business focus and value generating growth as key areas of

strength

 Solid capital level for shock absorbtion and value generation  Comfortable liquidity position and conservative risk profile

Yapı Kredi

 Executive Summary  Recent Macro Developments  Yapı Kredi Overview  Yapı Kredi Financial Performance  Annex

• Yapı Kredi
• Turkish Economy and Banking Sector

16

4% 20% 15% 61% 1H13

26% 28% 70% 67% 4% 5% 2012 1H13 TL 57% FC 43% 70% 67% 30% 33% 2012 1H13

by sector (1H13)

Customer business focused asset composition with a well-diversified loan book

17

Note: Loan figures indicate performing loans. Loan by sector and concentration information based on risk management data. Peers indicate Garanti, Ak and İş HTM indicates held to maturity; AFS indicates available for sale (1) Other interest earning assets (IEAs) include cash and balances with the Central Bank of Turkey, banks and other financial institutions, money markets, factoring receivables, financial lease receivables (2) Other assets include investments in associates, subsidiaries, joint ventures, hedging derivative financial assets, property and equipment, intangible assets, tax assets, assets held for resale and related to discontinued operations (net) and other (3) FC loan growth in US$ terms (4) Excluding commercial installment loans

Total Assets

TL 143 bln

Loans

Loans Securities Other IEAs1 Other Assets2

Securities

Trading AFS HTM

Peers: 22%

by currency by currency (1H13) by type

Total Loans: TL 86.9 bln

Loan composition:



Healthy with high share of value generating TL loans



Diversified with avoidance of concentration (top 20 loans/total loans 13%) Securities composition:



Balanced in terms of currency



Higher share of AFS portfolio driven by focus on effective liquidity management



CPI-linkers TL 2.2 bln (10% of securities)

+12%

• 5%

+11% 0%

Financial Inst:6% Construction:6% Wholesale: 5% Trans/Comm:5% Utilities:6% Textile: 5% Metals: 3% Food: 4% Other: 22% Retail4: 38%

Asset Composition

FC TL ytd∆ ytd∆ +10%3 +8%

58% 58% 42% 42% 2012 1H13

Solid deposit base backed by focused and innovative approach

18

Total Liabilities and Shareholders’ Equity Deposits

Deposits Shareholders’ Equity Other Liabilities1 Borrowings TL 143 bln +10% +50% +2%

• 3%

1-to-1 Deposit Pricing Approach 1-to-1 deposit pricing2 launched in Feb’12, allowing cost-effective TL time deposit rate offers based on customer price sensitivity

Note: TL deposit market share and cost based on publicly available BRSA bank-only financials for Yapı Kredi and monthly BRSA financials for sector (1) Other liabilities include retirement benefit obligations, insurance technical reserves, other provisions, hedging derivatives, deferred and current tax liability and other (2) Covers TL time deposits for individuals (3) Based on monthly BRSA data as of Jun’13 (4) FC deposit growth in US$ terms

Repos +12%

Currency Composition

FC TL

Deposits

ytd∆ ytd∆

• 2%4

+10%

Total Deposits: TL 77.9 bln

8.2% 8.4% Dec'12 Jun'13

Solid deposit base:

Market share gain in TL deposits

accompanied by significant improvement in deposit cost also thanks to 1-to-1 deposit pricing approach

• Since Dec’12, +15 bps market share gain with

better than sector deposit cost evolution (-211bps vs -139bps sector3)

Weekly deposit pricing committee meetings

to ensure disciplined pricing

7.5% 5.4% Dec'12 Jun'13 TL Deposit Market Share

+15 bps

TL Cost of Deposits

• 211 bps

(vs -139 sector3)

11% 12% 5% 18% 54% 1H13

16% 14% 16% 15% 15% 19% 19% 19% 22% 22% 7% 6% 5% 5% 2012 1H13

11% 12% 5% 18% 54% 1H13

Continuation of funding diversification as a key long-term strategic priority

19

Total Liabilities and Shareholders’ Equity

Deposits Shareholders’ Equity Borrowings +10% Repos

Borrowing Composition

Supranational Securitisations Sub-debt Syndications TLBonds+ Eurobonds

(incl. LPN)

Other2

Funding secured in 2013:

 ~US$ 585 mln sub-debt3 (10yr) in Jan’13  US$ 500 mln Eurobond (7yr) in Jan’13  ~US$ 1.5 bln syndication (1yr) in Apr’13  ~US$ 505 mln securitisation (5-13yr) in Jul’13  TL 1.4 bln outstanding local currency

bonds (6-12mth)

Note: Please see annex for details on borrowings (1) Other liabilities include retirement benefit obligations, insurance technical reserves, other provisions, hedging derivatives, deferred and current tax liability and other (2) Other borrowings include foreign trade related borrowings (3) In Jan’13, sub-debt was repaid in full and replaced with a new sub-debt of US$ 585 mln at 5.5% coupon rate

Funding Diversification

Other Liabilities1 TL 143 bln +12% +2%

• 3%

+50% Subsidiaries ytd∆

68.3 89.9 115.6 122.5 1.9 3.8 2.8 3.0 9.0 9.8 10.7 11.4

2010 2011 2012 1H13 12.2% 10.9% 16.1% 15.8% 2010 2011 2012 1H13

11% 12% 5% 18% 54% 1H13

Risk Weighted Assets Evolution (TL bln)

20

(1) Other liabilities include trading derivative financial liabilities, miscellaneous payables, hedging derivative financial liabilities, provisions, tax liabilities and other liabilities (2) 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

2010-1H13 CAGR Tier 1 21% Tier 2 27%

Capital base supporting business growth

TL 143 bln Tier 1 Tier 2

Tier I Ratio CAR Credit Market Op Risk RWA Growth

31% 31% 25%

Loan Growth

40% 28% 12% 79 129 137 Capital

Capital Evolution Capital Adequacy Ratio and Tier 1 Ratio (Bank)

 Basel II Bank capital adequacy ratio at

15.8% at Bank level (14.8% on a consolidated basis). Capital evolution supported by:

• Focus on value generating segments
• Strengthening actions in 2012

 Sale of insurance business finalised in

Jul’132 with expected positive CAR impact of ~80/90 bps

Total Liabilities and Shareholders’ Equity

Basel I

+10% +12% +2%

• 3%

+50% Deposits Shareholders’ Equity Borrowings Repos Other Liabilities1

Basel II

ytd∆

9.3 11.7 14.0 15.1 3.0 4.0 6.0 5.5 2010 2011 2012 1H13 6% 12% 103

Credit Cards 47% Lending Related 30% A sset Management 3% Insurance 4% A ccount Maintanance and Other3 16%

1% 8% 27% 25% 72% 67% 1H12 1H13

High quality and sustainable revenues

21

Revenue Composition

(TL mln)

Note: Sector Loan-Deposit Spread data based on publicly available monthly BRSA financials NIM: Net Interest Income/Average Interest Earning Assets Loan-Deposit Spread: (Interest Income on loans – Interest expense on deposits)/Average(loans+deposits) Core revenues: Net Interest Income + Net Fees and Commissions (1) Other revenues include dividend, trading and other (2) Adjusted to exclude 57 mln TL sub-debt early repayment penalty in net interest income (3) Other fees and commissions received include account maintenance, money transfers, equity trading, campaign fees, product bundle fees etc (4) In 2013, account maintenance in fees collected in 2Q and 4Q (vs 3Q and 4Q in previous years)

Net Fees & Comms. Net Interest Income Other1 Core Revenues 3,646 3,025

Evolution of Net Interest Margin (NIM) (bank-only)

Successful NIM performance:

 Effective mix management

• Value generating lending

growth

• Focus on demand deposits

 Disciplined pricing

approach

Composition of Fees and Commissions Received (1H13, bank-only)

Strong fee generation capability:

 Diversified composition

(solid share of credit card and lending related fees)

 Focus on new products/

services

 High fee coverage of costs

(59% as of 1H13)

+21%

Loan-Deposit Spread: Yapı Kredi: 2.9% Sector: 2.7%

Revenues

3,975 3,067 +30%

4.6% 3.5% 4.1% 4.0%

2

2010 2011 2012 1H13

+21% +20% +675%

Growth (y/y)

Lending Related 26% Asset Management +43% Insurance +25% Card Payment Systems

• 3%

Acc. Maintenance4 & Other +64%

84% 77% 65% 62% 64% 66% 31% 40% 46% 49% 46% 43% 115% 117% 111% 111% 110% 109% 2009 2010 2011 2012 1Q13 1H13

6.3% 3.4% 3.0% 3.2% 3.4% 3.5% 2009 2010 2011 2012 1Q13 1H13

Capability to manage asset quality in changing market conditions

22

Note: Specific coverage = specific provisions/NPL; Generic coverage = (Standard + Watch Provisions)/NPL (1) Yapı Kredi Research Estimate for 2013 GDP growth

Specific and Generic Coverage of NPLs

100%



Conservative loan classification approach, including booking of cross- defaults as NPL



Stable credit approval ratios



Proactive and conservative coverage (>100%)



1H13 asset quality evolution indicating relatively stable credit cards/consumer loans and resilient corporate/commercial. SME inflows starting to stabilise from June onwards and better vs 2H12

Specific provisions/NPL General provisions/NPL

NPL Ratio

Asset Quality Hard Landing

• 4.8%

Strong Growth Avg 8.9% Soft- landing 2.2% GDP Growth Acceleration 3.4%

1

2Q13

Cross Currency IRS (bln)

US$ 2.4 bln

Foreign Currency HTM securities

US$ 1.4 bln

23

Strong risk management policies

 FX position squared at the end of each day  Effective hedging of interest rate risk via swap funding  Securities portfolio outlier vs. peers due to conservative FC lending approach  Strict regulatory liquidity limits (aligned with Basel III liquidity funding ratio)

Market Risk

 Fully compliant to Basel II standard approach; ready to implement Basel II Advanced Measurement Approach  Leader in operational risk management (regular monitoring of risk maps and action plans)

Operational Risk



Limited intra-group exposure (6.6% of capital vs 20% regulatory limit)



Strong collections capability (both in-house and outsourced)



Dynamic NPL portfolio management



Loan growth not driven by relaxation of credit policies (stable / conservative loan approval rates since 2008)

Continuous enhancement of credit infrastructure

• Utilisation of internally developed scorecards in

individual + SME lending

• Launch of new monitoring tool for commercial

lending

• Further development of behavioural rating

Credit Risk

Risk Management

 Executive Summary  Recent Macro Developments  Yapı Kredi Overview  Yapı Kredi Financial Performance  Annex

• Yapı Kredi
• Turkish Economy and Banking Sector

24

TL mln 1H12 1H13 y/y TL bln 2012 2Q13 YTD∆ Total Revenues 3,067 3,975 30% Total Assets 131.5 143.2 9% Core Revenues 3,025 3,646 21% Loans 77.8 86.9 12%

• /w Net Interest Income

2,206 2,663 21% TL 54.4 58.5 8%

• /w Fees & Comms.

819 983 20% FC (in US$) 13.5 14.8 10% Other Revenues 43 330 675% Securities 22.5 21.4

• 5%

Operating Costs 1,497 1,675 12% Deposits 71.1 77.9 10% Operating Income 1,570 2,300 46% TL 41.0 45.1 10% Provisions 553 717 30% FC (in US$) 17.3 17.0

• 2%
• /w Loan Loss Provisions

527 623 18% Shareholders' Equity 16.0 16.3 2% Pre-tax Income 1,017 1,582 56% Discontinued Operations1 78 53

• 32%

Net Income 838 1,296 55% Loans/Assets 59% 61% Return on Tangible Average Equity 14.3% 17.8% Securities/Assets 17% 15% Return on Average Equity 13.2% 16.7% Loans/Deposits 109% 112% Return on Assets 1.3% 1.8% Loans/(Deposits + TL Bonds) 107% 109% Cost/Income 49% 42%

25

Summary Financials (BRSA Consolidated)

Note: Loans indicate total performing loans (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. Insurance subsidiaries have been classified as "discontinued operations" in BRSA financials. 1H12 results have been restated for comparability purposes (2) Comparable basis: 1H13 adjusted to exclude 57 mln TL sub-debt early repayment penalty in net interest income (1Q13) and competition board fine in other provisions (1Q13). Comparable ROAE calculation based on: (average 2012 shareholders equity + 1H13 shareholders equity) to exclude mtm impact of transfer to AFS (from HTM) in 4Q12

64%2 19.2%2

26

Key strategic guidelines

Growth & Commercial Effectiveness

Value generating loan growth Continuation of

• rganic growth

Fee generation and customer penetration

Efficiency & Cost Optimisation Sustainability Funding & Capital Risk Management

Disciplined cost approach and lower cost to serve Optimisation of physical presence Multi-channel approach Customer/employee satisfaction and loyalty Investments in technology and innovation Enhance easy to work with approach Emphasis on deposit base and funding diversification Effective loans/deposits ratio management Efficient capital utilisation Dynamic and proactive portfolio management Investments to maintain through the cycle cost of risk Early collections via capacity increase

Borrowings

International Domestic

Syndications

~ US$ 2.7 bln outstanding

 Apr’13: US$ 437 mln and €759.5 mln, Libor +1.00% p.a. all-in cost, 1 year, participation of 52 banks from 20 countries  Sep’12: US$ 322 mln and €618 mln, Libor + 1.35% p.a. all-in cost, 1 year, participation of 37 banks from 16 countries

Securitisations

~ US$ 1.8 bln outstanding

 Dec’06 and Mar’07: ~US$ 650 mln, 6 wrapped notes, 7-8 years, Libor+18-35 bps  Aug’10 - DPR Exchange: ~US$ 189 mln, 5 unwrapped notes, 5 years  Aug’11: ~US$ 400 mln, 4 unwrapped notes, 5 years  Sep’11: ~€75 mln, 1 unwrapped note, 12 years  Jul’13: US$ 505 mln, 5 unwrapped notes, 5-13 years

Subordinated Loans

~€ 2.3 bln outstanding

 Mar’06: €500 mln, 10NC5, Libor+2.00% p.a.  Apr’06: €350 mln, 10NC5, Libor+2.25% p.a.  Jun’07: €200 mln, 10NC5, Libor+1.85% p.a  Dec’12: US$ 1.0 bln, 10 years, 5.5% (coupon rate)  Jan’13: US$ 585 mln, 10NC5, 5.5% fixed rate

Foreign Currency Bonds / Bills

US$ 750 mln Loan Participation Note (LPN)

 Oct’10: 5.1875% (coupon rate), 5 years

US$ 1 bln Eurobond outstanding

 Feb’12: US$ 500 mln, 6.75% (coupon rate), 5 years  Jan’13: US$ 500 mln, 4.00% (coupon rate), 7 years

Covered Bond

TL 458 mln first tranche

 Nov’12: SME-backed with maturity between 3-5 years; highest Moody’s rating (A3) for Turkish bonds

Multilateral Loans

 EIB Loan - Jul’08 / Dec’10: €525 mln, 5-15 years  EBRD Loan - Aug’11: €30 mln, 5 years, Jul’13: $80 mln  CEB Loan - Jul’13: €100 mln

Local Currency Bonds / Bills

TL 1.4 bln outstanding

 Feb’13: TL 59 mln, 6.51% compounded rate, 286 days maturity  Apr’13: TL 328 mln, 6.49% compounded rate, 179 days maturity & TL 22 mln, 6.66% compounded rate, 294 days maturity  May’13: TL 377 mln, 4.96% compounded rate, 176 days maturity & TL 23 mln, 5.43% compounded rate, 294 days maturity  Jun’13: TL 200 mln, 6.70% compounded rate, 122 days maturity & TL 50 mln, 7.40% compounded rate, 360 days maturity  Jul’13: TL 300 mln, 8.80% compounded rate, 139 days maturity & TL 50 mln, 9.44% compounded rate, 322 days maturity

27

Note: Information on borrowings current as of the date of this presentation

Call Center

28

Branch and alternative delivery channel network

Internet / Mobile Banking Branches ATMs

2007 1H13

56%

Share of Non-Branch Channels in Total Banking Transactions

83%

• 2,847 ATMs, fifth largest network
• 84% of ATMs with cash deposit features;

84% coin dispensing

• 457 ATMs designed for disabled

customers (first in the sector)

• ~520K product sales/year
• 48% increase in ATM network

since 2007

• 932 branches, fifth largest network
• Strong focus on retail and SME
• Network covering all regions of Turkey
• Emphasis on increased efficiency to further

support sales activities

• 53% increase in branch network since 2007
• Award-winning internet bank tailored

for retail and corporate customers

• 2.8 mln internet banking customers
• 5.4 mln transactions/month
• ~337K product sales/year
• Leading mobile banking applications

with 12.3% market share

47%

• f

Transactions

17%

• f

Transactions

1%

• f

Transactions

23%

• f

Transactions

Note: All data based on Yapı Kredi alternative delivery channel information. Branch and ATM rakings based on publicly available BRSA data Compounded annual growth rates used for revenues and costs. Increase in number of branches and ATMs calculated from beginning of 2007 Transactions indicate all comparable banking transactions. Of the 83% non-branch share, ~10% via other channels including post office and centralised automated transaction channels

• Two award-winning call centers
• ~40 mln contacts/year
• 44% self-service usage
• ~440K credit card retention/year
• ~2.4 mln product sales/year

Other2 34% Ship Building 13% Wholesale/ Retail 12% Construction 11% Food 10% Textile 9% Transport./ Comm. 6% Metals 4% Utilities 0.7% Financial Institutions 0.3% 3.4% 0.1% 0.2% 2.3% 2.7% 3.7% 3.9% 4.9% 5.0% 58.2%

7.7% 4.4% 10.0% 3.3% 12.6% 5.8% 3.0% 2.4%

2009 2010 2011 2012 1Q13 1H13

NPL Ratio by Segment

29

(1) As per YKB’s internal segment definition, SMEs: companies with annual turnover < US$ 5 mln. Corporate & Commercial: companies with annual turnover > US$ 5 mln (2) Other includes various industries, all with less than 4% share (automotive companies, agriculture, tourism, chemical products, machinery, health and education, furniture, glass, rubber, etc.)

Asset Quality

Credit Cards SME1 Consumer Corporate& Comm.1

 NPL ratio at 3.5% (vs 3.4% in 1Q13) driven by solid evolution in all segments also thanks to monitoring, delinquency management and scoring

• SME inflows starting to stabilise from June onwards and better vs 2H12
• Credit cards / consumer loans relatively stable
• Corporate / commercial resilient

 Diversified loan book supporting asset quality evolution

NPL by Sector (1H13)

NPL Composition of Company Loans

Other2 Ship Building Transport/Comm. Textile Wholesale/Retail Food Construction Metals Utilities

• Fin. Institutions

NPL Ratio

Share in Performing Company Loans 1% 7% 8% 8% 8% 7% 5% 10% 10% 35%

30

• Sole petroleum refiner in Turkey
• #1 in LPG distribution (29% market share)
• #2 in petroleum products distribution (19% market share)
• #1 in total automotive (27% market share)
• #1 in passenger cars (17% market share)
• #1 in commercial vehicles (49% market share)
• #1 in consumer durables (50% market share)

(refrigerators, washing machines, ovens, TVs, conditioners)

• #4 in total banking assets among private banks (9.4% market share)
• #1 in factoring and leasing; #2 in asset management
• Established in 1926, Turkey's largest industrial and services group in

terms of turnover and exports with 82 thousand employees

• 222nd largest company in the world1
• Leading positions with strong competitive advantages in energy,

automotive, consumer durables and finance sectors

• Largest distribution and after-sales network

Total Sales/GDP  Total Exports/Turkey’s Exports  Total Share in Istanbul Stock Exchange 7% 10% 15%

Note: Market shares of Koç Group companies as of 2012 based on publicly available Koç Group information. All data and information presented on this page publicly available on Koç Group investor relations website and presentations Market capitalisation as of 23 September 2013. Based on Istanbul Stock Exchange data. Calculated as share price * paid-in capital (1) According to Fortune Global 500

Revenue Composition (1H13) Market Positions Financial Highlights

(in US$, 30 June 2013)

Total Assets (bln) 28.1 Revenues (bln) 16.3 Net Income (mln) 574 Number of Employees 86,070 Market Capitalisation (bln) 12.5

Energy 51% Automotive 21% Durables 10% Finance 12% Other 6%

32% 14% 12% 11% 6% 25% 47% 9% 3% 30% 11% 41% 20% 7% 24% 8%

• Leader in Austria with 15% market share
• #2 in Italy with 13% market share
• #3 in Germany with 3% market share
• #1 in CEE region with 6% market share

31

• Azerbaijan
• Bosnia-H.
• Bulgaria
• Croatia
• Czech Republic
• Estonia
• Hungary
• Kazakhstan
• Kyrgyzstan
• Latvia
• Lithuania
• Poland
• Romania
• Russia
• Serbia
• Slovakia
• Slovenia
• Turkey
• Ukraine
• Roots dating back to 1870. Created through the merger of 9 of Italy's largest

banks and the subsequent combination with the German HVB Group and the Italian Capitalia Group

• A major international financial institution based in Italy with operations in 22

countries and 50 financial markets

• Leader in Bosnia, Bulgaria and Croatia
• In the Top 5 in Serbia, Slovakia, Turkey,

Czech Rep., Poland and Kazakhstan

• In the Top 10 in Romania, Baltics, Russia,

Slovenia, Hungary and Ukraine

• Largest international banking network in the CEE region with more than 4

thousand branches and outlets

Revenue Composition Employee Composition Branch Composition

Financial Highlights

(in US$, 30 June 2013)

Italy CEE Poland Germany Austria CEE Poland Italy Germany Poland Turkey Austria Other

Note: Financial information based on publicly available UniCredit financials. 30 June 2013 EUR/USD parity: 1.3060. All data and information presented on this page publicly available on UniCredit investor relations website and presentations. Revenue, branch and employee composition as of 1Q13 Market capitalisation as of 23 September 2013. Calculated as share price * paid-in capital

Total Assets (bln) 1,162 Loans (bln) 696 Deposits and Debt Securities Issued (bln) 738 Revenues (bln) 16.3 Net Income (mln)1 1,058

• No. of Branches

9,079

• No. of Employees

150,787 Tier 1 Ratio 11.4% Capital Adequacy Ratio 15.1% Market Capitalisation (bln) 38.1

Italy Germany Austria

 Executive Summary  Recent Macro Developments  Yapı Kredi Overview  Yapı Kredi Financial Performance  Annex

• Yapı Kredi
• Turkish Economy and Banking Sector

32

99-01 Avg 02-07 Avg 2011 2012 20134 GDP Growth

• 0.8%

6.8% 8.8% 2.2% 3.4% Inflation (eop) 58.8% 13.3% 10.4% 6.2% 7.2% Benchmark Rate 69.1% 25.6% 11.0% 6.2% 8.7% Unemployment 8.1% 10.6% 9.8% 9.2% 9.3% CAD/GDP 0.7% 3.8% 10.0% 6.0% 6.9%

• /w energy

3.2% 3.9% 6.2% 6.7%

• Public Debt/GDP

51% 54% 40% 38% 36% Private Debt/GDP 35% 40% 80% 82%

• Turkey: Overview

33



Europe’s 7th largest economy1 and a member of G20



Young, dynamic, large and growing population



Single party government since 2002



Sovereign ratings of Baa32/BB+2/BBB- by Moody’s/ S&P/Fitch. First investment grade achieved in Nov’12 (Fitch). Second investment grade achieved in May’13 (Moody’s)



2023 Ambition: To become the 10th largest world economy

Turkey



Converging economy (from BRSA establishment in 2001) with positive growth environment except for crisis periods



According to IMF, Turkey to be among top 3 fastest growing economies in OECD (2013-2018 avg growth of 4.1%)



Transition from double digit to single digit inflation



Improvement in the still unbalanced structural current account deficit

TR 2012 TR 2023 EU 2012 Population (mln) 76 84 504 Median Age 30 34 42 Population Growth

(CAGR 2000-2012)

1.4% 0.9% 0.4% GDP (€ bln) 612 1,767 12,898 World Ranking 17 10 3

• Per Capita GDP (€)

8,092 20,900 25,607 World Ranking 63 53

• Notes: EU indicates EU27 countries (source: population and macro data based on Turkish Statistical Institute)

(1) Based on Turkish Statistical Institute and IMF World Economic Outlook (2) Upgraded by one notch to Baa3 (investment grade) by Moody’s in May 2013. Upgraded by one notch to BB+ (one notch below investment grade) by S&P in March 2013 (3) Ranking based on the government’s 2023 target (4) Based on YK Economic Research estimates (5) Total private debt/GDP of 82% includes domestic debt of 53% (o/w Households 18%, Companies 35%) and external debt of companies/financial institutions of 29%

Macro

5

 Significant growth potential (mainly retail driven)  Well regulated (BRSA est. in 2001) with solid capital/liquidity  Best practices in technology: payment systems and

qualified workforce

 High technology usage  Healthy profitability and solid volume growth

Banking Sector

34

Banking Sector: Overview

Recent Developments

 Increase in M&A activity  Tax incentives on long-term deposits / new pension system  Draft Basel III with min. leverage ratio (3%), Core Tier 1 (4.5%)  Competition Board Case: 12 banks fined TL 1.1bln (€474 mln)  Consumer Protection Law with possible impact on fees  Tighter monetary policy / higher regulatory intervention  Compressing margins  Pricing competition on funding (and short maturities)  Geopolitical uncertainties (conflict in neighbouring countries)

Challenges

2007 2011 2012 2013F Banks #

46 44 46

• Branches #

7,618 9,834 10,234 10,602

Loans/GDP

32% 50% 53% 56%

Deposits/GDP

42% 53% 54% 55%

Loans/Assets

49% 56% 58% 59%

Loans/Deposits

78% 94% 98% 103%

NPL Ratio

3.5% 2.6% 2.8% 3.0%

CAR

17.4% 15.4% 17.3% 16.5%

Loan Growth

26% 30% 15% 18%

Deposit Growth

14% 13% 11% 12%

ROAE

25% 15% 16% 15%

ROA

2.6% 1.6% 1.7% 1.8%

NIM

5.0% 3.5% 4.2% 4.1%

Date Target Bank Majority Shareholder Acquirer Name Acquired Stake Deal Price (€ mln)

Apr-12 EFG Eurobank EFG Burgan 99% 277 Jun-12 Deniz Dexia Sberbank 100% 3004 Mar-13 ABank Anadolu Group CB of Qatar 71% 359

Nominal

bln TL

2Q13 1Q13 2Q13 1H13 Total Loans1 873 5% 11% 16% TL 628 6% 9% 15% FC ($) 127 0% 8% 8% Total Deposits 830 3% 5% 8% TL 547 3% 5% 8% FC ($) 147

• 2%

0%

• 3%

Total Securities 271

• 1%

1% 0% 2.9% 2.7% 16.7% 15.6% 100% 105% NIM (quarterly) 4.3% 4.0% 15.5% 15.6%

Quarterly Growth

NPL Ratio CAR Loans/Deposits Ratio ROAE (cumulative)

35

Banking Sector



Loans +16% ytd (14% currency adjusted) with acceleration in 2Q driven by balanced growth in TL and FC



Deposits +8% ytd (currency adjusted: 6%) with acceleration in 2Q purely driven by TL deposits



Resilient asset quality, also supported by NPL sales (TL 1,247 mln in 1H13)



Loans / deposits ratio up to 105% (+5 pp q/q) due to acceleration in loan growth in 2Q

(1) Indicate performing loans Note: NIM, ROAE and CAR based on Jun’13 BRSA monthly financials. Volumes based on BRSA weekly data

Banking Sector Volumes and KPIs

Banking Sector Excl.NPL sales 2.8% Curr.adj 14% Curr.adj 6%

Yapı Kredi

Head Office Yapı Kredi Plaza D Blok Levent 34330 Istanbul - TURKEY Tel: +90(212) 339 73 23 Email: yapikredi_investorrelations@yapikredi.com.tr Web: www.yapikredi.com.tr/investorRelations

Contact Investor Relations

Strong Analyst Coverage

14 Fixed Income Analysts 33 Equity Analysts >400 fixed income meetings and

participation in 10 fixed income conferences / roadshows in US, UK, Europe, Middle-East

and Asia over the past 2 years Quarterly Fixed Income Bulletins

36

#3 in Best IR Team Category #2 in Best IR Officer Category