Yap Kredi Investor Presentation Yap Kredi Investor Presentation KDB - - PowerPoint PPT Presentation
Yap Kredi Investor Presentation Yap Kredi Investor Presentation KDB Daewoo Securities and KRX Turkish Corporate Days ae oo Secu t es a d u s Co po ate ays Seoul, 16-17 April 2012 Agenda Yap Kredi Overview Turkish Economy
Seoul, 16-17 April 2012
Note: Throughout the presentation, US$/TL translation at 1.8417 has been made for convenience and illustrative purposes
2
g p p p
3
(1) According to 2010 data published by the Turkish Statistical Institute and IMF
founding year
Deep-rooted private bank with a nationwide presence
loans/assets
Highest in the sector due to customer-business focus. Lowest securities / assets (18%)
Solid deposit base with high contribution of retail,
merger year
Largest merger in the Turkish banking sector
US$ bln assets
Fourth largest private bank with leading positions in key segments / products
deposits/assets
strong demand deposit share (17%) and lengthening maturity
market share
Natural market share level (number of branches, assets, loans, deposits)
US$ bln loans
Strong loan book with focus on value generating segments
L l t b
market share
Strong market position in key segments / products (credit cards, asset management, leasing, factoring, private pension and health insurance)
Highest in the sector driven by focus on efficiency
mln customers
Loyal customer base
branches
Fifth largest branch network created via successfully executed branch expansion (+49% since 2007)
fees/opex
g y y and sustainability
US$ bln net income
Strong net income evolution since 2007 (+22% CAGR vs 7% sector). Only bank to increase net income in 2011 y/y
headcount
Young, dynamic and highly qualified workforce managed effectively (+3% since 2007)
Focus on technology to improve customer
ROAE
Highest among private peers in 2011 and consistently above 20% since the merger (highest tangible ROAE: 24%)
Solid provisioning level and sound asset quality confirming conservative risk profile
share of ADC1
gy p satisfaction and decrease cost to serve
US$ bln mcap2
Among the top 30 stocks trading on the Istanbul Stock Exchange; listed since 1987
Total coverage3
confirming conservative risk profile (NPL ratio at 3.0%)
CAR
Sound capitalisation level
4
(1) Share of alternative delivery channels (including ATMs, internet, call center and mobile banking) in total transactions (2) Market capitalisation as of 11 April 2012 (3) (Specific + general provisions) / NPL
Koç Holding is one of the most deep-rooted companies in Turkey with solid
positions in energy, automotive, consumer durables, finance and 81 thousand
U iC dit t i 22 t i ith 160 th d l i 9
50% 50%
Shareholding Structure
UniCredit operates in 22 countries with over 160 thousand employees via 9
thousand branches and has the largest network in CEE. The Group provides international banking expertise and access to a large commercial banking network
Shareholding structure providing stability, ensuring sustainable / profitable growth
50% 50% 81.8%1
Local management / strong local relationships Independent decision making process / Bank run at arm’s length
Strong inherent culture of core banking focus and value generation
Strong partnership with
committed shareholders is one
L
Strong inherent culture of core banking focus and value generation Short “time to market” for flagship products / “in-house” investment banking
support
Leverage on UniCredit know-how and expertise in credit, market, liquidity risk
management and cost control / efficiency
advantages:
Bank has access to an
Joint HR / training initiatives with Koç Holding and UniCredit including international
career opportunities
Shareholders capable and committed to supporting the capital base if and when
needed
established industrial group
No history of capital extraction (no dividend payments) Limited reliance on UniCredit funding Local regulators monitoring / avoiding any capital leakage between jurisdictions
Via UniCredit, the Bank receives know-how and best practice transfer from a leading global banking group
(1) Remaining 18.2% held by minority shareholders L = Listed
5
Healthy and consistent growth via focus on core banking activities – Loan growth focused on value generating segments / products: high margin SME, consumer in TL and project
– Deposit growth to ensure adequate levels of liquidity coupled with diversification of long-term funding through
– Continued branch expansion Strong and sustainable profitability via customer business focus, strict cost control and efficiency gains – Revenues to be driven by emphasis on product penetration / innovation and fee generation in view of low
– Cost growth to remain in line with inflation also incorporating growth initiatives
Superior and long lasting customer satisfaction – Simplification of processes together with product and delivery channel improvements – Strengthening of customer centric business model
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(2011)
L 37%
Retail (including 53% 50%
3 branches 66 RMs 100 branches 568 RMs
Commercial Corporate
31 branches 192 RMs 8.3 mln cards1 ~432K POS 334 direct 767 branches 3,620 RMs 2,697 ATMs
Individual & SME Credit Cards
(including individual, SME and card payment systems) 7% 19% 3% 27% #1 in Factoring2 #1 in Leasing2 Mcap: US$ 1,046 mln
Product Factories:
L
#2 in Mutual Funds2 #3 in Brokerage2 #1 in ISE and TurkDEX Volume3
Product Factories:
Mass Affluent SME sales force
329K
merchants Private Corporate
21% 31% 20% #5 in Non-life Insurance2 #4 i P i t
p
L
Commercial 16% 16% Revenues Loans Deposits #5 in Non life Insurance #1 in Health Insurance2 US$ 528 mln premiums Mcap: US$676 mln #4 in Private Pension Funds2 #5 in Life Insurance2
L
Treasury and Other US$ 243 mln US$ 182 mln US$ 2.3 bln
Total Assets
Note: Branch numbers by segment exclude 2 free zone, 1 off-shore and 3 mobile branches. Segment figures as of Dec’ 2011, market capitalisations as of 11 April 2012 (1) Including 1.4 mln virtual cards (2) Rankings are based on: Capital Markets Board (for brokerage), Rasyonet (for asset management), 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). (3) Includes repo, reverse repo, treasury bill, government bond, equity and derivative transaction volumes. ISE indicates İstanbul Stock Exchange. TurkDEX indicates Turkish Derivatives Exchange (4) Based on MIS data. Credit card payment system revenues excluding POS revenues L = Listed
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Merger and Integration
Legal merger of Yapı Kredi and Koçbank Merger of the two banks’ core subsidiaries operating in the same sectors
(factoring, leasing, asset management and brokerage)
Restructuring of the capital base
Net Income (US$ mln) Return on Average Equity1
g p
Integration of information technology systems
Restructuring
Launch of branch expansion Completion of segment based service model Streamlining governance through bringing subsidiaries under the Bank
Effi i i iti ti i t d
553 687 843 1,224 1,244 25.5% 25.7% 22.5% 26.7% 21.7%
Tangible ROAE: 24%
Efficiency initiatives in systems and processes
Relaunch of Growth
Acceleration of branch expansion Innovation in product, service and delivery channels Tight cost management and emphasis on decreasing cost to serve Strengthening of capital base via capital increase
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Strengthening of capital base via capital increase Global Crisis
Temporary suspension of branch expansion Continuous support for customers Tight cost management and efficiency efforts Proactive credit risk management
Between 2007 and 2011:
Revenues +14% CAGR Costs +6% CAGR vs average annual inflation of 8% Number of branches +49%, ATMs +60% vs headcount +3%
Return on Assets2 Cost / Income
Back to Growth
Re-launch of branch expansion Innovation, new product development and customer acquisition Above sector growth and cost discipline Simplification of processes and improvement in efficiency
Fl ibl A h
1.8% 1.8% 2.2% 2.4% 2.0% 59.0% 53.3% 41.3% 40.5% 43.8%
Return on Assets Cost / Income
Flexible Approach
Continuation of branch expansion Selective and continual growth in value generating segments and products Sustainable revenue generation and tight cost control Constant focus on asset quality Diversification of funding and emphasis on liquidity
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
8
(1) Calculations based on the average of current period equity (excluding current period profit) and prior year equity. Annualised (2) Calculations based on net income / end of period total assets. Annualised
Key Ratios
December 2010 December 2011
Summary Balance Sheet,
US$ bln
2010 2011 y/y Total Assets 50 4 63 8 27%
Loans / Assets Securities / Assets
Total Assets 50.4 63.8 27% Loans 29.5 37.6 28% TL 18.8 24.2 29% FC 13 1 13 4 3%
58% 59% 21% 18%
Loans / Deposits Loans / (Deposits + TL Bonds)
FC 13.1 13.4 3% Securities 10.8 11.6 7% Deposits 30.0 35.9 20%
18% 98% 105% 98% 103%
Deposits / Assets Leverage2
TL 17.5 19.0 9% FC 15.2 16.9 11% Repo 1.7 3.2 84%
103% 59% 56% 7.6x
Borrowings3 / Liabilities Group CAR4
Borrowings 7.4 11.1 51% TL 1.1 1.3 22% FC 7.7 9.8 27%
8.3x 15% 17% 15.4% 14 9%
p Group Tier I
Shareholders' Equity 5.8 6.9 18% Assets Under Management1 4.9 4.4
14.9% 11.7% 11.3%
9
Note: Loan figures indicate performing loans (1) Management Information System data (2) Leverage ratio: (Total assets – equity) / equity (3) Includes funds borrowed, sub-loan and marketable securities issued (4) A sub-loan agreement was signed with UniCredit Bank Austria AG of US$ 585 million (10NC5) at a rate of 3-months Libor+8.30%. This sub-loan has been utilised as Tier-II in the calculation of 2011 CAR by the authorisation of BRSA dated February 20, 2012
US$ mln 2010 2011 y/y Total Revenues1 3,610 3,609 0%
Revenues stable y/y driven by
disciplined NIM management and sound fee growth Total Revenues 3,610 3,609 0% Net Interest Income 1,945 2,034 5% Non-Interest Income 1,665 1,577
sound fee growth
Costs +8% y/y, below inflation, driven
by tight cost control , ,
944 1,069 13% Operating Costs2 1,462 1,581 8%
Provisions -26% y/y, driven by asset
quality improvement Net income at US$ 1 2 bln (+2% y/y) p g Operating Income3 2,148 2,029
Provisions 631 467
Net income at US$ 1.2 bln (+2% y/y)
608 402
Pre-tax Income 1,517 1,562 3% Net Income4 1,224 1,244 2% 10
(1) Total revenues include net interest income, net fees and commissions, dividend income, trading income, other operating income and income from investments accounted based on equity method as per BRSA footnotes (2) Operating costs indicate the other operating expenses line as per BRSA footnotes (3) Operating income indicates difference between total revenues and operating costs (4) Indicates net income before minority
11
(1) Including off-balance sheet items
Note: Throughout the presentation, US$/TL translation at 1.8417 has been made for convenience and illustrative purposes
12
g p p p
8th2 largest in Europe, 17th2 largest in the World Turkey EU Population (mln) 73 502
g p , g
Favourable demographics (43% under 25 years vs
28% in EU) with a rapidly growing population (15% vs 5% in EU)2
29 43 Population Growth1 15% 5% % of Population <25 years 43% 28% Sound relations with neighbouring countries, EU and
NATO
Solid political and economic prospects
Source: Data as of 2011 for Turkey (source: Turkish Statistical Institute), 2010 for EU-17 (source: Eurostat)
GDP (US$ bln) 773 17,081 Per Capita GDP (US$) 10,341 33,993
government since 2002 enabling fast and effective decision making Government focused on sustainable growth with Demographic Composition by Age (%)
30 43 70 57
Slovakia Turkey
increased support for domestic investments in competitive areas
Sovereign ratings of Ba2/BB/BB+ by
M d ’ /S&P/Fit h3 L l i ti
27 27 30 29 73 73 70 71
Czech Republic Hungary Poland Romania
Moody’s/S&P/Fitch3. Local currency sovereign rating upgraded to investment grade (BBB-) by S&P in Sep’11
Source: Eurostat as of 2010 28 26 72 74
EU (27 countries) Bulgaria Age 0-24 Age 25+
13
Note: EU indicates EU27 countries (1) Nominal growth between 2000 and 2011 for Turkey and 2000-2010 for Eurozone (2) According to 2010 data published by Turkish Statistical Institute, IMF and Eurostat (3) In November 2011, Fitch Ratings revised the outlook of Turkey’s sovereign rating to stable from positive
4Q11 / Recent Trend
t t f ft l di f 4Q11 d
2008 2009 2010
GDP Growth
2011
Soft landing fi d
0.7% 9.2%
8.5%
10.1% 6 5%
10.4%
start of soft-landing from 4Q11 onwards
and increased taxes / prices on certain goods. M ’12 i fl ti t 10 4%
Growth
(y/y)
Inflation
(eop y/y)
confirmed Increasing but controlled
5.7% 2 2% 6.5%
10.0%
6.5% 6.4%
Mar’12 inflation at 10.4% (eop, y/y)
CAD / GDP
but improving since Nov’11 (CAD at US$ 77.2 bln in 2011)
co t o ed Under pressure but improvement expected
1.8% 5.5% 3.6%
1.4%
2.2%
Budget Deficit / GDP
( $ )
low budget deficit / GDP (1.4%)
expected Strong trend sustained
GDP Monetary
Weighted Avg TL RRR
in 2011 (mainly through prudential measures1) with differentiation among quarters to manage current account deficit, growth, inflation and currency depreciation Low policy rate
dor
8.9% 12.5% O/N Lending Rate 10.5% 2010 average 11.5% 10.5%
2010 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12
Monetary Policy
Policy Rate
and currency depreciation. Low policy rate maintained (5.75%)
policy decisions, positive core inflation / CAD evolution
Corrid
5.4% 5.0% O/N Borrowing Rate 5.75% 6.8% 5.6% 5.0% 5.75%
2010 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12
14
Notes: CAD: Current account deficit RRR: Reserve requirement ratio (1) Reserve requirement changes, interest rate corridor, repo / FX sale auctions
AUM / GDP D it / GDP
Loans / GDP
Penetration data
Deposits and AUM / GDP
Significant long-term growth potential on the back of positive
demographics and underpenetrated market
Highly resilient thanks to solid banking sector fundamentals
L i d bt d
Corporate Loans / GDP 46% AUM / GDP Deposits / GDP
– Low consumer indebtedness – Healthy regulatory environment – Robust profitability – Well capitalised system
69% 136% 76% p Retail Loans / GDP 55% 53% 115% 2% 4% TR CEE EU
– Solid asset quality with well-developed credit culture – Limited reliance on wholesale funding – Low short FX position risk
Total assets at US$ 631 bln (20%), loans at US$ 353 bln
$
51% 69% 17% 30% 60% 34% 39% TR CEE EU 118%
Turkey (2011) CEE (2010) EU (2010)
Comparison of Key Performance Indicators
Source: ECB data as of 2011 for Turkey, 2010 for CEE and EU Note: Total loan figures includes retail, corporate and other. Retail loans include total household lending which covers housing loans, consumer lending and other household lending (including credit cards, excluding SMEs). AUM: Asset Under Management
(30%) and deposits at US$ 375 bln (13%) in 2011
15% 15% 94% 11% 16% 14.1% 102% 14% 3.5% 2.6% 3.1% 5% 1.9% 6.3%
ROAE NIM CAR NPL Ratio Loans / Deposits
TR TR TR TR TR
Note: EU indicates EU27 countries. Data as of 2011 for Turkey (source: balance sheet data based on BRSA weekly, profitability data based on BRSA monthly financials), 2010 for CEE and EU (source: ECB, IMF and UniCredit). ROE used for CEE and EU instead of ROAE. CEE countries include Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovenia and Slovakia
15
Note: Throughout the presentation, US$/TL translation at 1.8417 has been made for convenience and illustrative purposes
16
g p p p
GDP Growth
Positive / moderated growth driven by d ti d d
Loans
Positive volume evolution
Growth
domestic demand
End of Year inflation
Controlled inflation with decline from 2H12 onwards
Average inflation
Stable evolution with continuation of upward loan repricing actions offsetting pressure on cost of funding
Net Interest Margin Deposits
Policy Rate
Low / stable policy rate accompanied by flexible monetary policy via interest rate corridor p g
Net Cost of Risk
Slight asset quality deterioration
SME and FC project finance
credit card business strengthening
monitoring processes
17
Note: Macroeconomic expectations based on Yapı Kredi Economic Research estimates as of 5 April 2012
Tactical above sector growth in Optimisation of deposit pricing / mix
Tactical above sector growth in
value generating segments
Increased commercial effectiveness
(customer penetration, activation, cross-sell)
Optimisation of deposit pricing / mix Accelerated focus on funding
diversification
Effective use of capital
Organic expansion
Disciplined NIM management Maintained focus on asset quality to
Strong focus on fee generation Lean costs and optimisation of cost
to serve minimise pressure on cost of risk
Effective management of interest
rate / liquidity risk 18
Note: Throughout the presentation, US$/TL translation at 1.8417 has been made for convenience and illustrative purposes
19
g p p p
Rank 5
9.3%
Assets
(31 Dec 2011)
(BRSA in US$, 31 Dec 2011)
Total Assets (bln)
4th largest among private banks
Total 5 6 5
10.3% 9.2% 9.2% 9.3%
Loans Deposits Branches Assets
Total Assets (bln)
Loans (bln)
Deposits (bln)
7
p
Retail 7 1 AuM + Brokerage 2 3
5.7% 17.4% 18.3% 8.2%
Brokerage Asset Management Credit Cards Consumer Loans
p ( )
AUM (bln)1
7 8 9
Corporate 4 1 1 1
19.6% 13.6% 10.0%
Leasing Non-Cash Loans Cash Loans
10
1 Insurance 5 4 5
6.7% 16.1% 6.4% 17.7%
Non-Life Private Pension Life Factoring
1
20.7%
Health
Market Capitalisation (bln)6
(1)Management Information Systems data (2)Including 1.4 mln virtual cards (3)Bank-only, MIS data (4)Bank-only including 1 off-shore branch (5)Bank: 14,859 (6)Market capitalisation as of 11 April 2012 (7) Including mortgages, general purpose and auto loans (8) Credit card outstanding volume (9) Equity trading volume (10) Cash loans excluding credit card outstanding volume and consumer loans (11) In Nov’11, Fitch revised the rating outlook of all Turkish banks, including Yapı Kredi, to stable from positive following the same revision in Turkey’s sovereign rating
20
21
US$ 37.6 bln
2% 5% 8% 8% 10%
By Product
By Currency
Mortgage General Purpose Auto
Company Loans by Sector
Financial Institutions 12% Construction 10% Transport./ Comm. 8% Wholesale/ Retail 8% Textiles 7%
US$ 10.7bln US$ 13.4 bln US$ 29.5 bln
FC
16% 23% 15% 9% 14% 2% TL C i
US$ 64 bln
36% 36% 28% 3%
(in US$)
Credit Cards
Utilities 7% Food 7% Metals 6% Other4 33%
US$ 18.8 bln US$ 24.2 bln
TL
32% 35% 21% 16% TL Companies FC Companies
59%
Sector: 56%
Loans
Peer Avg 62% 64% 64% 29%
Ship Building/ Auto Comp.3%
2010 2011
2007 2011
B C
Sector: 24%
B T Healthy loan composition with significant share of higher yielding TL lending Significant presence in value generating loan segments such as SME, retail individual in TL and project finance in FC
By Currency 2011 18% By Type
Turkey sovereign exposure in total securities portfolio: >99%
Securities
29% 37% 5% 3% Trading AFS
4% 19% 2011
Other IEAs1 Other Assets2
TL 49% FC 51% (1% FRN) (52% FRN)
66% 60% 2010 2011 HTM
22
Note: Loan figures indicate performing loans (1) Other interest earning assets (IEAs) include cash and balances with the Central Bank of Turkey, trading financial assets, banks and other financial institutions, money markets, available for sale financial assets, held to maturity securities, factoring receivables, financial lease receivables (2) Other assets include other marketable securities, 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) Proxy for SME loans as per BRSA reporting (4) Other includes various sectors, all with less than 4% share (agriculture, tourism, chemical products, machinery, health and education, furniture, glass, rubber, etc.)
By Currency
US$ 64 bln
5% 17%
Repo Borrowings1
42% 47% FC
Share of Retail2:46% Share of Retail2:47%
17% 15% Demand Deposit Volume (US$ bln) Demand / Total Deposits 5.2 6.0 +16%
2% 2%
$
2010 2011
Bank Customer
5%
Repo
58% 53% 2010 2011 TL
Share of Retail2:68% Share of Retail2:76%
YKB Sector +16%
98% 98%
Demand Deposits: US$ 6 bln (17% of total deposits)
1% 1% 2% 5%
+12M
2010 2011
56% By Maturity Deposits contributing 56% of total liabilities with 53% in local currency
Deposits
5% 15% YKB Sector 55% 57% 2% 9% 1% 1%
+12M 6-12M 3-6M 1-3M
11% 53% in local currency Significant share of retail deposits (76% of TL deposits, 46% of FC deposits) Strong emphasis on demand deposits and lengthening maturity
Other Liabilities3
40% 28% 2010 2011
<1M
11% 2011
15% (vs 5% at YE10)
SHE
23
(1) Includes funds borrowed, sub-loan and marketable securities issued (2) Retail includes SME, mass, affluent and private. Based on MIS data (3) Other liabilities include trading derivative financial liabilities, miscellaneous payables, hedging derivative financial liabilities, provisions, tax liabilities and other liabilities
10%
~US$ 1,275 mln Securitisations
Dec 06 and Mar 07: ~US$ 305 mln, 6 wrapped notes, 7-8 years, Libor+18-35 bps
S$ Securitisations
US$ 64 bl
17%
23%
~USD 2.7 bln Syndications
Apr 11: ~US$ 1.45 bln, Libor +1.1% p.a. all-in cost, 1 year Sept 11: US$ 285 mln and €687 mln Libor + 1 0% p a all-in cost 1 year Aug 10: DPR Exchange: ~US$ 460 mln, 5 unwrapped notes, 5 years Aug 11: ~US$ 410 mln, 4 unwrapped notes, 5 years Sep 11: ~€75 mln, 1 unwrapped note, 12 years
Syndications Borrowings1
US$ 64 bln
5%
7% 12%
Sept 11: US$ 285 mln and €687 mln, Libor + 1.0% p.a. all-in cost, 1 year
US$ 750 mln Loan Participation Note (LPN) FC Bonds Sub-loan €1,050 mln Sub-loan
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.
Repo Additional sub-loan received from UniCredit Feb 12: US$ 585 mln, 10NC5, 3-month Libor+8.30% Eurobond
56%
5% 8%
US$ 750 mln Loan Participation Note (LPN)
Oct 10: 5.1875% (cost), 5 years
LC Bonds Supranationals/ Multilaterals ~€529 mln Supranationals / Multilaterals
EIB Loan - Jul 08-Dec 10: €380 mln, 5-15 years IBRD (World Bank) Loan - Nov 08: US$ 25 mln, Libor+1.50% p.a, 6 years S
L J 07 €100 l ll i E ib +1 20% 5 Deposits Eurobond Feb 12: US$ 500 mln, 6.75% (coupon rate), 5 years
11%
35%
Other3 TL 1.15 bln Bond Issuance (~US$ 624 mln)
Oct 11: TL 150 mln, 9.08% compounded cost,
368 days maturity
Dec 11: TL 1 bln 10 92% compounded cost Sace Loan - Jan 07: €100 mln, all-in Euribor+1.20% p.a, 5 years EBRD Loan - Aug 11: €30 mln, 5 years
Other Liabilities2 Feb 12: TL 400 mln, 10.22% compounded cost,161 days maturity; TL 150 mln, 10.21% compounded cost, 368 days maturity
11% 2011
Dec 11: TL 1 bln, 10.92% compounded cost,
168 days maturity
Healthy liability composition with limited reliance on wholesale funding Limited reliance on UniCredit funding (EUR 770 mln4)
SHE Mar 12: TL 150 mln, 10.49% compounded cost, 374 days maturity
24
(1) Includes funds borrowed, sub-loan and marketable securities issued (2) Other liabilities include trading derivative financial liabilities, miscellaneous payables, hedging derivative financial liabilities, provisions, tax liabilities and other liabilities (3) Other includes foreign trade related borrowings and borrowings of subsidiaries (4) Excluding sub-loan of US$ 585 mln received in Feb’12
Capital Evolution (US$ bln) Capital Adequacy Ratio and Tier 1 Ratio
US$ 64 bln
1 5 1.6 1.6 2.2
Tier 2 Tier 1
17%
Repo Borrowings1 2007-2011 CAGR 23% 15%
Share of FC: 63% (sector:39%)
12 8% 14.9% Tier 1 Ratio CAR
3
$
2.8 3.0 3.8 5.0 6.4 1.3 1.5
2007 2008 2009 2010 2011
5%
Repo
10.9% 11.3% 12.8%
2007 2008 2009 2010 2011
RWA Growth
25% 3% 31% 31%
56%
Risk Weighted Asset (RWA) Evolution (US$ bln)
Capital adequacy ratio at 14.9% incorporating positive impact of ~US$ 585 mln sub-loan3. Capital evolution supported by: – Retaining profits to finance future growth
Deposits
Loan Growth
35% 0% 40% 28%
1 0 2.1 4 2 4.9 5.3
25.4 31.7 32.8 43.0 56.2
Op Risk RWA Market RWA Credit RWA
11% – Growth in value generating loan segments Capitalisation level able to absorb potential Basel II requirements (~150 / 170 bps impact on CAR) – Basel II to be effective in Turkey from 2012. Impact to halve when Turkey becomes
Other Liabilities2
22.4 27.7 27.6 37.1 48.8 0.3 0.5 1.0 1.0 2.7 3.5 4.2
2007 2008 2009 2010 2011
11% 2011 p y investment grade High share of foreign currency in Tier 2, providing buffer in case of TL devaluation
SHE
25
(1) Includes funds borrowed, sub-loan and marketable securities issued (2) Other liabilities include trading derivative financial liabilities, miscellaneous payables, hedging derivative financial liabilities, provisions, tax liabilities and other liabilities (3) A sub-loan agreement was signed with UniCredit Bank Austria AG of US$ 585 million (10NC5) at a rate of 3-months Libor+8.30%. This sub-loan has been utilised as Tier-II in the calculation of 2011 CAR by the authorisation of BRSA dated February 20, 2012
Duration Analysis1 (days) Asset and Liability Composition (US$ bln) Currency Matching (2011, US$ bln)
Local Currency Foreign Currency
761 35 29 33 31
3.2 11.1
Demand
Repo Borrowings
215 318 79 178 539 124 360 29
37.6 Loans
Deposits: US$ 6 bln (17% of total deposits)
Loans / Deposits Ratio
2007 2011
TL Assets TL Liabilities
2007 2011
FC Assets FC Liabilities
TL FC
Assets Liabilities
11 6 35.9
Solid balance sheet structure focused on customer business together with increasing diversification of the funding base
Securities Deposits
p
YKB: +7 pp
105% 102% 105%
12.0 11.6 6.7
Effective management of duration gap via utilisation of swap funding Balanced currency composition S t i t YKB l l i
Securities Other IEAs Other Liabilities
Sector: +12 pp
98% 82% 94%
2.6 Assets 6.9 Liabilities
Sector converging to YKB levels in terms of Loans / Deposits Ratio resulting from increasing focus on core customer business vs securities
Other Assets SHE
2010 2011 YKB Sector CEE
26
(1) Including off-balance sheet items
(quarterly)
(quarterly)
(quarterly)
Repo Sub-debt Funds Borrowed YKB Sector YKB Sector
4.8% 3.6% 3.6% 3 3% 4.2% 4.6% 4.6% 4.3% 4.6% 4.3% 4.0% 5.6% 5.5% 5.6% 6.1% 6.0% 4.2% 4.5% 4.7% 4.7% 4.7% 5.1% 5.2% 5.2% 3.3% 3.6% 3.3%
1Q11 2Q11 3Q11 4Q11
5.0% 5.2% 5.2%
1Q11 2Q11 3Q11 4Q11
4.2%
1Q11 2Q11 3Q11 4Q11 Total cost of funding (also including wholesale borrowings) at 4.7% as of 2011 vs 5.2% sector 1Q11 2Q11 3Q11 4Q11 1Q11 2Q11 3Q11 4Q11 1Q11 2Q11 3Q11 4Q11
27
Note: YKB data based on BRSA bank-only financials. Sector data based on BRSA monthly data
YKB Sector
NPL Ratio
6.5% 5.3% 5.3% 4.1% 3.4% 3.3%
3.72% 4.3% 6.3% 3.4% 3.0% Sector2: 2.6% 1.39% 0.81% 1 09% 3.14% Total Cost of Risk S ifi C t f Ri k
2008 2009 2010 2011 LLP / Operating Income 25% 45% 28% 20%
0.58% 1.09% 0.68% 0.23%
2008 2009 2010 2011
Specific Cost of Risk
NPL Volume
(US$ bln)
0.9 1.4 1.0 1.2 NPL Growth
50%
12% Loan Growth 35% 0% 40% 28%
94% 115% 117% 111%
collections loan growth and NPL sale (US$ 157 mln credit card and
115% excluding impact of NPL sale
Sector4: 119%
Income Loan Growth 35% 0% 40% 28%
84% 31% 31% 40% 46% 94%
100% collections, loan growth and NPL sale (US$ 157 mln credit card and individual NPL portfolio in Nov’11)
impact)
sale 69% excluding impact of NPL
63% 84% 77% 65%
2008 2009 2010 2011
–
Specific coverage at 65% impacted by transfer of few corporate files from watch loan category3 and NPL sale (excluding: 69%)
impact of NPL sale
28
(1) Cost of risk = (total loan loss provisions-collections) / total gross loans (2) Sector data based on BRSA weekly data (3) Excluding transfer of a few corporate files from watch loan category into NPL (US$162 mln in 2011; US$50 mln in 2010) (4) As of Sep’11 Note: Specific coverage= specific provisions / NPL, Generic coverage= (Standard+watch provisions) / NPL LLP indicates loan loss provisions
% 12.6%
Consumer Loans¹ Credit Cards SME² Corporate & Comm.²
NPL Composition of Company Loans NPL Ratio
17.1% Ship Building/Auto Comp. Share in Performing Loans 3%
4
Ship Building/ Auto Comp. 20% Transport./ Comm. 9% Textile 9% Wholesale/ Retail
4.3% 7.7% 4.4% 3 4% 6.3% 10.0% 5.3% 5.2% 3.5% 6.8% 5.1% 3.9% 3.9% 2 8% 3.1% 3.7% 3.3%
Transport/Comm. Textile Wholesale/Retail Food 8% 7% 8% 7%
4
Other 36% 8% Food 7% Construction 6% Metals 3%
l )
3.4% 2.6% 2.5% 3.0% 2.0% 1.9% 2.6%
2008 2009 2010 1Q11 2Q11 3Q11 2011
0.1% 1.6% 2.0% 2.8%
Food Construction Metals
1.8% excluding transferred files3 7% 10% 6% 12%
5 5
Utilities 0.4% Financial Institutions 0.3%
1,483 1,112 990 927
NPL Inflows Collections
3.2% 0.2%
Other 5 Utilities transferred files 7% 33%
Credit card and consumer NPL ratio at 3.5% and 2.6%, respectively,
impacted by US$ 157 mln NPL sale in Nov’11
SME NPL ratio relatively stable at 3.9% Corporate / commercial NPL ratio at 2.6%, impacted by one-off transfer 820 990 457 927 866 731
p , p y
Collections / NPL inflows at 88%3 on the back of lower NPL inflows and
solid collections performance
2008 2009 2010 2011 Net Inflows
(US$ mln)
363 555 196 97 Collections/ Inflows 56% 63% 82% 88%
29
(1) Including cross default. If excluding, 4Q11: 2.0% (2) As per YKB’s internal segment definition, SMEs: companies with annual turnover <5 mln US$. Corporate & commercial: companies with annual turnover >5 mln US$ (3) Excluding impact of a few commercial positions being transferred from watch loans category to NPL impacting 3Q10 (US$50 mln), 3Q11 (US$65 mln) and 4Q11 figures (US$97mln) (4) “Ship building / auto companies” include mainly ship building companies’ NPLs (~US$134 mln). Auto companies’ NPLs are immaterial (~US$8 mln) (5) Other includes various industries, all with less than 4% share (agriculture, tourism, chemical products, machinery, health and education, furniture, glass, rubber, etc.)
(US$ mln)
Composition of Bank Fees & Commissions Received1 Fees / Operating Costs
68%
Sector: 51%
3 610 3 609
Y/Y 20% 14%
(Dividend, Trading & Other)
Other 65% 68%
3,610 3,609
0%
Credit Cards 41% Asset Management 5% Insurance 2% Other² 16%
26% 30%
1
Net Fees & Comms.
2010 2011
13%
Lending Related 36%
Net Interest Margin (NIM) Evolution1
Cumulative Quarterly
5.7% 1.6% Core NIM 3.0% 2.5% 2.1% 2.0% 2.1% 2.1% 2.3%
54% 56%
Net Interest Income
4.5% 5.7% 4.6% 3.5% 3.6% 3.4% 3.3% 3.8%
5% 2010 2011
2008 2009 2010 2011 1Q11 2Q11 3Q11 4Q11
30
(1) Based on BRSA unconsolidated financials as of 2011 (2) Other includes account maintenance, money transfers, equity trading, campaign fees, product bundle fees etc. NIM: Net Interest Income / Average Interest Earning Assets Core NIM: (Interest income on loans – interest expense on deposits) / Average (loans + deposits)
Non-HR HR Other
growth strategy driven by
6% 8% Total
19% 15% y/y y/y Sector 46% 44% 13% 5%
growth strategy driven by branch expansion accompanied by effective headcount management
6%
8% 8% 1% 15%
9% 7% 8% 5% 15% 11% 41% 51%
2007 2011 CAGR*
cost/income, from 59% in 2007 down to 44%, incorporating 47% increase in branch network
8% 4%
2008 2009 2010 2011 2010-2011
∆
despite impact of currency depreciation and rising inflation in 4Q
∆
59%
Cost / Income Cost / Income (Sector)
27%
Branch Headcount
y y Number of employees at 14,859 (+448 vs YE10)
Number of branches at 907 (+39 net openings in
59% 53% 41% 41% 44% 42% 45% 11%
4% 4% 6% 4% 3%
907 (+39 net openings in 2011)
41% 44% 42% 45% 36% 42%
2007 2008 2009 2010 2011
4%
1%
2007 2008 2009 2010 2011
* 2007-2011 CAGR
31
Loans / Employee
(US$ ths)
Deposits / Employee
(US$ ths)
Core Revenues / Employee
(US$ ths)
Retail Cross Sell Ratio1
+25% in 2011 182 191 2,450 1,928 2,321 3.69 4.00
YKB
+17% in 2011 +6% in 2011 162 152 2009 2010 2011 1,419 1,162 2009 2010 2011 1,547 1,537 1,964 2009 2010 2011 3.30 2009 2010 2011
YKB Sector YKB Sector Sector
customers (112% of 2011 target)
(58 ths per month)
(1 6 mln customers)
manager (~US$ 45 mln)
activation:
(5% of total private customer base)
(outstanding at US$ 5.8 bln)
activation in commercial segment:
(7% of total commercial customer base) (1.6 mln customers)
account customers (223 ths)
applications (11 ths) (5% of total private customer base)
(2% of total private customer base) (7% of total commercial customer base)
(3% of total commercial customer base)
(1) Retail cross sell ratio: number of products used per customer (including card only and new customers)
32
Market Risk
rate TL loans (e.g. mortgages) and TL deposits (structurally short term) via swap funding (US$1.9 bln cross currency IRS as of YE11). TL duration gap at 140 days and FC at 180 days1 Securities
through high portion of HTM (60% at YE11)
Interest Rate y y
FX: profit/loss effect capped at <20% of capital (11% as of YE11)
As of YE11, BPV at €3.0 mln (vs max limit of €4.8 mln) Securities Portfolio
manage liquidity risk arising from regulatory changes
FC lending approach FX Position
by the treasury. FX position daily VaR €880K (38% limit usage)
monitored on a daily basis
Liquidity / Capital
limits put in place by the Turkish regulator
expected to start in 2H12 Credit Risk
– Limited intra-group exposure, significantly below BRSA limits (13% of capital as of YE11 vs BRSA limit of 20%) – Diversified lending book toward less risky sectors and avoidance of concentration (top 20 loans account for 15% of book) Lending Activities Diversified lending book toward less risky sectors and avoidance of concentration (top 20 loans account for 15% of book) – Continuous focus on infrastructure improvements to enhance processes and lending response times
follow-up after 150 days overdue
Operational Risk
Basel-II Ops Risk Project
33
(1) Duration gap includes both on and off-balance sheet items (2) Including off-balance sheet items
Note: Throughout the presentation, US$/TL translation at 1.8417 has been made for convenience and illustrative purposes
34
g p p p
terms of turnover and exports with 81 thousand employees
company in Europe Total Assets (bln) 52.2
(in US$, 31 Dec 2011)
company in Europe
automotive, consumer durables and finance sectors
Revenues (bln) 45.4 Net Income (bln) 1.3
Total Sales / GDP
9% 11% 15%
Number of Employees 80,987 Market Capitalisation (bln) 9.6
Finance Other 5%
Energy 63% Automotive Durables 11% Finance 8%
#1 in LPG distribution (29% market share)
13%
(refrigerators, washing machines, ovens, TVs, conditioners)
35
(1) According to Fortune Global 500 Note: Market shares as of 2011; Market capitalisation as of 11 April 2012
subsequent combination with the German HVB Group and the Italian Capitalia Group. UniCredit is:
(in US$, 31 Dec 2011)
A major international financial institution based in Italy with operations in 22 countries and 50 financial markets Total Assets (bln) 1,199 Loans (bln) 724 Deposits and Debt Securities Issued (bln) 726
Bulgaria
thousand branches and outlets p ( ) Revenues (bln) 32.6 Net Income (bln)1 1.4
Bulgaria
Slovenia, Hungary and Serbia
9,496
160,360
Ukraine
Revenue Composition (%) Employee Composition (%) Branch Composition (%)
Tier 1 Ratio 9.32% Capital Adequacy Ratio 12.37% Market Capitalisation (bln) 24.4
36
Note: Market capitalisation as of 11 April 2012 (1) Net of one-offs in US$ (-401 mln Greek bonds impairment ,-238 mln Severance, +114 mln Moscow Stock Exchange, -621 mln for Goodwill implicit in Strategic Investments, -11,216 Goodwill impairment, -856 mln for Trademarks impairment and -129 mln for write-off in HVB-BA). Including one-offs, net income/loss at US$ -11,910 mln
Equity Fixed Income
Autonomous Research Geoffrey Elliott Corinne Cunningham Bank of America Merrill Lynch Ecem Nalbantgil Tolu Alamutu Barclays Capital Cristina Marzea Antoine Yacoub Citigroup Emre Izgi Rodney Thomas Credit Suisse Ateş Buldur Bernhard Obenhuber Credit Suisse Ateş Buldur Bernhard Obenhuber Deutsche Securities Kazım Andaç Tala Boulos Goldman Sachs Dmitry Trembovolsky Pavel Mamai HSBC Tamer Şengün Olga Fedotova JP Morgan Paul Formanko Anne-Marie Hendriks Morgan Stanley Magdalena Stoklosa Sait Erda UBS Serhan Gök Kathleen Middlemiss Ak I t t H k A ü Ak Investment Hakan Aygün Ata Investment Nergis Kasabalı BGC Partners Müge Dağıstan Bank of Singapore Natalia Smirnova Commerzbank Marina Vlasenko Eczacıbaşı Menkul Değerler Sercan Soylu EFG Securities Duygun Kutucu Ekspres Yatırım Can Demir Equita Giovanni Razzoli Erste Securities Sevda Sarp Finans Invest Aykut Sarıbıyık Fuh Hw a Ryan Chang Garanti Securities Recep Demir Global Securities Sevgi Onur Global Securities Sevgi Onur ING Başak Yeltekin Investment Bank of Greece Konstantinos Manolopoulos İş Invest Bülent Şengönül KBW Ronny Rehn Nomura Anna Marshall Oyak Securities Alpay Dinçkoç R i C it l Y U Renaissance Capital Yavuz Uzay Societe Generale Alan Webborn Standart Ünlü Ercan Uysal Şeker Yatırım Derya Güzel TEB Investment Mete Yüksel Tera Brokers Hasan Demir Yatırım Finansman Sadrettin Bağcı
37
ğ