1Q10 Earnings Release
Yapı Kredi confirms robust profitability with TL 564 mln net income in 1Q10 (+20% y/y) driven by above market loan growth, sound core revenue performance and significant asset quality improvement (ROAE at 27%, NPL ratio at 4.9%)
On 12 May 2010, Yapı Kredi announced its consolidated 1Q10 results based on Turkish accounting standards (BRSA), reporting TL 564 mln of net income (+20% y/y). The Bank recorded 27% Return on Average Equity (ROAE) driven by above market loan growth, sound core revenue performance and significant asset quality improvement.
The Bank posted TL 1,573 mln revenues (+2% y/y) driven by net interest income (4% y/y) and fees and commissions (15% y/y). Total costs increased 16% y/y, however, with significant one-off effects (branch tax being the most significant). Core cost growth was maintained below inflation at 6% y/y. Cost/Income of 43% remained at 41% excluding the one-off effects. Provisions declined 50% y/y driven by decrease in specific provisions due to continued asset quality improvement.
In 1Q10, Yapı Kredi recorded above sector loan growth focusing on higher yielding TL loans driven primarily by retail, followed by mid-corporate, also on the back of increased commercial effectiveness. Loan volume increased 9% ytd to TL 42.5 bln driven by TL loans (11% ytd). TL loan growth was driven by mortgages (9% ytd), general purpose loans (10% ytd), commercial installment loans (11% ytd) and TL commercial loans (11% ytd). In credit cards, Yapı Kredi grew above sector (2% ytd) maintaining its leading position with 20.5% outstanding volume market share. In terms of FC loans, Yapı Kredi focused on higher yielding project finance and provided financing of USD 558 mln for two major projects in 1Q10.
In line with TL driven loan evolution at Yapı Kredi, above sector deposit growth was registered driven by TL deposits. Total deposit volume increased 4% ytd to 44.9 bln driven by TL deposits (7% ytd). The Bank maintained its solid demand deposit base with weight of demand deposits in total at 18% (vs 14% sector). Yapı Kredi grew its assets under management (AUM) volume above sector 5% ytd driven by new product offerings and low interest rate environment. The Bank maintained its #2 position in AUM volumes with 18% market share in 1Q10.
Asset quality improvement accelerated in 1Q10 driven by slowdown in non-performing loan (NPL) inflows, strong collections and NPL portfolio sale. In March 2010, Yapı Kredi sold a 681 mln TL portfolio of credit card, SME and individual NPLs, recording a gross P&L impact of 12 mln TL. Also on the back of solid volume growth, NPL ratio decreased to 4.9% from 6.3% at YE09, aligned with sector level (4.9%). Driven by continued asset quality improvement, specific provisioning coverage declined to 78% (vs 84% at YE09).
Yapı Kredi maintained its comfortable capital and liquidity position in 1Q10 with capital adequacy ratio of 16.9% at Bank level and 15.7% at Group level and loans to deposits ratio of 95%. The Bank successfully secured a USD 1 bln one-year syndication at an all-in cost of Libor+1.5%, indicating a 240% rollover of its USD 410 mln syndication from April 2009. In view of the expected rise in interest rates in the upcoming period, Yapı Kredi significantly decreased its TL duration gap to 76 days (vs 147 days in 1Q09) through extending the duration of its TL liabilities via swap funding.
As of 1Q10, Yapı Kredi has the fourth largest branch network in Turkey with 838 branches and 9.3% market share. Yapı Kredi’s branch expansion plan, which was put on temporary stand-by at the beginning of 2009, was resumed in 4Q09 with 7 retail branch openings and continued in 1Q10 with 4 new branch openings. The Bank is targeting to open a total of ~60 new branches in 2010.
Istanbul, 12 May 2010
Enquiries:
Yapı Kredi Investor Relations
Tel: (90) (212) 339 7647
Email: yapikredi_investorrelations@yapikredi.com.tr
Yapı Kredi / 12 May 2010