Yap Kredi 2018 Earnings Presentation 1 February 2019 Improved - PowerPoint PPT Presentation

Yapı Kredi 2018 Earnings Presentation 1 February 2019

Improved profitability achieved via strong top-line while maintaining a prudent asset quality approach Summary Net Profit (TL mln) RoTE Quarterly Cumulative Highest growth among peers +29% +58bps +23% 14.2% 4,668 -3% 13.6% 3,614 1,081 1,115 880 4Q17 3Q18 4Q18 2017 2018 2017 2018 Pre-Provision Profit 3 CoR (TL mln) +73% Highest growth +344bps among peers +168bps +204bps 12,409 1 4.48% 2 2.74% 7,180 Adjusted for 1 2.56% 2.44% FX impact 1.06% 1.04% PPP/Avg. 3.4% 5.1% Gross Loans 4Q17 3Q18 4Q18 2017 2018 2017 2018 Notes: 1. Adjusted for hedged FX impact 2 2. Adjusted for cheques following the change in regulation in 1H18 3. Pre-Provision Profit figures exclude ECL collection income, trading income to hedge FC ECL and pension fund provisions reserved in 4Q18 Peers include private banks that have released their financials as of 1 Feb 2019

Strong managerial focus on solid liquidity and decisive improvement in capital ratios Summary Liquidity LCR 2 LDR 1 163% 142% 129% 245% 197% 226% TL LDR FC LCR 136% 114% 112% 104% Short term Liquidity: 122% 120% ~11 bln USD Upcoming run- off’s: TL Duration Gap 2.9 2.7 2.3 4.3 bln USD (months) 2 2017 9M18 2018 2017 Sep'18 2018 Capital Tier 1 Ratio CAR +156bps +152bps +153bps +144bps 12.5% 15.7% 11.4% 14.8% Pro-forma T-1 3 13.4% 13.3% 3 with new AT-1 9.9% 9.8% 2018 2018 2017 9M18 2018 2017 9M18 2018 Pro-forma 4 Pro-forma 4 Notes: 1. LDR: LDR= Loans / (Deposits + TL Bonds) 2. Based on past three months averages 3 3. Tier 1 ratio is presented without the forbearance actions as of 9M18 (with forbearance: 12.1%) 4. Including 650 mln USD AT1 issuance finalised in January 2019 and 200 mln USD Tier 2 payment

Subdued loan growth driven by market conditions Lending Loan volumes (TL bln) 10% total loan growth Private Banks 1 Yapı Kredi with ~40bps market share gain in TL Loans, within private banks 2018 y/y q/q y/y q/q Total Cash+Non-cash Loans 2 306.3 10% -13% 7% -11% -14% contraction in FC Loans TL 3 147.1 0% -3% -1% -4% FC ($) 3 30.3 -14% -10% -14% -7% -5% FX adjusted cash loan growth Total Cash Loans (FX adjusted) 220.5 -5% -6% -7% -5% Sectoral Breakdown of Cash and Non-Cash Loans - bank only Tourism Other Business Health-Education 3% 26% 3% Real Estate Real Estate 3% 3% Energy Transportation / Energy 12% Communication 12% 4% Wholesale and Retail Trade 4% Metals Infrastructure & other 4% construction 11% Finance 4% Textiles Consumer Loans Notes: 5% 9% 1. Private banks based on BRSA weekly data as of 28 December 2018 Foods 4 Credit Cards 2. Cash Loans indicate performing loans excluding factoring and leasing receivables 5% 3. TL and FC loans are adjusted for the FX indexed loans 8%

Focus on small ticket retail deposits paying off Funding Deposit volumes (TL bln) Deposit Breakdown (FX adjusted) 2 Private Banks 1 YKB 2018 y/y q/q y/y q/q Customer Deposits 199.9 22% -5% 16% -7% Corporate & Commercial 31% 35% Customer Deposits (FX adjusted) 0% 2% -2% 0% Time Deposits TL 86.9 19% 3% 11% 2% FC ($) 21.5 -11% 2% -13% -2% Retail Deposit market share 3 Time Deposits 52% 47% 2017 2018 chg y/y Customer Deposits 15.4% 15.9% 51bps o/w Individual Time 12.4% 13.3% 90bps Demand 18% 17% Deposits o/w Individual TL demand 14.0% 14.1% 10bps 2017 2018 Notes: 1. Private banks based on BRSA weekly data as of 28 December 2018 5 2. Based on MIS data 3. Market Share vs. Private Banks based data on 28 December 2018

Strong revenue growth and improved revenue margin, driven by sustainable core-spread, fee generation and CPI linkers Revenues Revenues (TL mln) Revenue Margin 2 Quarterly Cumulative Quarterly Cumulative CPI Adjusted 3,169 4,870 4,145 Core Revenue 1,2 +45% +49% 20,037 +132bps -11% +30bps +110bps 6,056 13,779 5,420 5.8% 5.5% 5.4% 17,800 3,627 4.5% 5,040 4.3% 12,298 5,354 Core 1 3,364 1,017 66 2,237 Other 1,481 263 4Q17 3Q18 4Q18 2017 2018 2017 2018 4Q17 3Q18 4Q18 Revenue margin would have been 4.6% , keeping CPI linkers’ inflation at 2017 level (11.9%) Notes: 1. Core Revenues = NII + swap costs + Net fee income 6 2. Period end CPI linkers adjustments are distributed to each quarter evenly (period end adjustments: 4Q17: 260mln, 3Q18: 859mln, 4Q18: 1,613mln) 3. Revenue margin= Core Revenues / average IEAs; Based on bank-only financials

Improvement in quarterly NIM driven by CPI linker income, whereas yearly core-spread evolution still positive at 23bps Revenues - NIM Swap Adjusted NIM Quarterly Cumulative +23 bps excl. +124bps CPI realization: 25.2% linker impact (prv. CPI for valuation: 16%) +99bps +22bps 4.6% 4.3% 4.0% 3.1% 3.3% 4Q17 3Q18 4Q18 2017 2018 • +99bps yearly improvement: • +22bps quarterly improvement: ‐ +76bps from CPI adjustment ‐ +121bps from CPI adjustment ‐ +23bps from core spread evolution ‐ -99bps from core spread evolution due to the • 2018 NIM would have been 3.5% , keeping CPI hike in TL funding costs linkers’ marginal impact only for the last 4 months to offset the increase in funding costs Notes: 7 Based on Bank-Only financials

Wider annual loan-deposit spread with ongoing loan repricing offsetting the hike in deposit costs Loan-Deposit Spread Loan – Deposit Spread Evolution Loan Yields 1 Deposit Costs Loan-Deposit Spread (Cumulative) (Cumulative) (Cumulative) 214bps yearly increase in total Increase in total cost of deposits Wider Loan-Deposit spread loan yields on a cumulative basis (+176 bps, yearly) due to the hike despite the decline in TL core spread vs. 2017 thanks to ongoing loan in TL deposit costs (+368 bps) arising from jump in TL deposit costs repricing through the year TL TL TL+FX TL+FX TL+FX TL 15.0% 4.4% 4.4% 4.3% 13.5% 14.1% 4.0% 13.3% 3.6% 13.1% 11.7% 11.4% 10.6% 12.0% 11.7% 9.8% 10.9% 10.6% 10.5% 7.7% 9.6% 6.5% 2.5% 6.2% 6.1% 2.4% 5.9% 2.2% 1.9% 1.4% 2017 1Q18 1H18 9M18 2018 2017 1Q18 1H18 9M18 2018 2017 1Q18 1H18 9M18 2018 Notes: Based on Bank-Only financials 1. Performing Loan yields 8

Fee increased 28% y/y driven by leading position in card business and transactional banking Revenues - Fees Net Fee income (TL mln) Fees Received Composition Quarterly Cumulative +28% Other Asset Mngmt Bancassurance 4,236 2% 2% 5% Money +33% Money Transfer Transfer 3,315 7% 7% 8% 1,116 1,036 841 Lending Card Payment Related Systems 28% 55% 4Q17 3Q18 4Q18 2017 2018 • Money Transfer: +57% y/y • Card Payment systems: +41% y/y • Lending Related: +24% y/y (non-cash: 37%) 9

Cost increase well below inflation thanks to ongoing cost discipline Costs Cost 1 / Income 2 (TL mln) Costs 1 (TL mln) Quarterly Cumulative avg. CPI at 16% -833bps +13% +15% -10 pp +5% 6,454 1,768 1,683 5,697 44.2% 1,543 42.5% 53% Non-HR 55% 34.2% HR 47% 45% 2016 2017 2018 4Q17 3Q18 4Q18 2017 2018 Notes: 1. Excluding pension fund provision (4Q18: TL 230 mln; 4Q17: TL 123 mln). Reported cost growth (including pension fund provisions ) at15% y/y 10 2. 2018 Income adjusted for trading income to hedge FC ECL and collections

Digital transformation fully on track Cost to Serve per channel 1 (TL) Number of Digital Customers (mln) +1.1 mln 40x lower 7.00 70% 61% 6.00 60% 5.60 51% 5.00 50% 40% Penetration 4.00 40% 34% 3.00 30% 5.44 2.25 4.35 2.00 20% 3.30 2.59 1.00 10% 0.14 0.00 0% Non-Digital Half Digital Full Digital 2015 2016 2017 2018 Share of digital in main products 2 sold Transaction 3 per channel +12% y/y +5.3 pp 31% Branch 9% -9% 9% Automatic Payments -2% 11% 26% 10% 20% 40% +8% ATM 41% 13% +26% Digital 42% 38% 2015 2016 2017 2018 2017 2018 Notes: Based on MIS data 1. Total Cost to Serve and Cost to Serve per channel are calculated based on direct costs of each sales channels 11 11 2. Main Products; GPL, CC, Time Deposit, and Flexible Account 3. Transactions include, Money Transfers, Payments, Deposit, Cash Loans, Non-cash Loans, Insurance, Money withdrawal, Investment products, Credit Cards

Prudent provisioning in challenging operating conditions Asset Quality Total Cost of Risk 1 Quarterly Cumulative +344bps +168bps +204bps 2 4.48% 3 2.74% Adjusted for 2 2.56% 2.44% FX impact 1.06% 1.04% 4Q17 3Q18 4Q18 2017 2018 Specific CoR Specific CoR 0.92% 1.88% 0.77% 1.87% 3.31% Cost of Risk composition (4th Quarter) +280bps 448bps 388bps -14bps -60bps +181bps Stage I & II Stage III Collections CoR TL Apprc. CoR (reported) Notes: 1. Cost of Risk = (Total Expected Credit Loss- Collections)/Total Gross Loans; 12 2. Adjusted for hedged FX impact 3. Adjusted for cheques following the change in regulation in 1H18