1Q21 Financial Results IR Release
On 30 April 2021, Yapı Kredi announced its consolidated results for the first three months of 2021 based on Turkish accounting standards (Banking Regulation and Supervision Agency). The Bank’s cash and non-cash loans reached TL 421.5 billion while total deposits reached to TL 295.8 billion. The Bank’s net income reached TL 1,453 million indicating a return on average tangible equity of 12.3%.
Local currency driven loan and deposit growth with a solid liquidity
In the first quarter, The Bank achieved 8.4% year-to-date growth in loans to TL 305.4 billion, mainly driven by Turkish Lira loans. During the same period, the Bank’s customer deposit growth was at 12.3% year-to-date and reached TL 291.1 billion. Also, the Bank increased its individual Turkish Lira demand deposit market share by 129 basis points to 17.6% on a year-to-date basis within the scope of continued focus on small tickets in deposit gathering. Accordingly, loan-to-deposits plus Turkish Lira bonds ratio reached to 102%. The Bank’s total and foreign currency liquidity coverage ratios realized at 149% and 462%, respectively. The Bank had ample level of liquidity as of the end of the first quarter of 2021 corresponding to 2.7 times above the short-term foreign currency debt.
Prudent and conservative asset quality approach
In the first quarter of 2021, Yapı Kredi maintained its precautious approach in terms of asset quality. The Bank’s non-performing loan ratio materialized at 5.3% (Comparable: 5.6%). Compared to 2020, non-performing loan inflows declined with strength in collections, resulting in improvement in cost of risk despite increasing coverages. Accordingly, cumulative cost of risk (adjusted for hedged foreign currency impact) improved by 155 basis points to 96 basis points year-to-date. With the ongoing conservative provisioning approach of Yapı Kredi, provisions to gross loans reached to 7.4%.
Strong capital ratios and ongoing internal capital generation
In the first three months of 2021, despite the negative impact coming from the market and currency volatility the capital ratios of the Bank were supported by ongoing internal capital generation through profitability and optimization efforts. Hence, consolidated Capital Adequacy Ratio, Tier-1 ratio and Common Equity Tier-1 ratio realised at 15.4%, 12.6% and 11.3%, respectively, excluding regulatory forbearances.
Solid top-line within conservative asset quality approach and liquidity
In the first three months of 2021, Yapı Kredi recorded TL 4,501 million of core banking revenues. With the increasing interest rate environment further pressuring TL deposit costs, TL loan-deposit spread tightened in 1Q21. Accordingly, swap adjusted net interest margin decreased by 165 basis points to 2.13% compared to year end 2020 on a cumulative basis. In spite of this, thanks to the execution of sound, timely and proactive asset liability management strategy, the quarterly loan-deposit spread improved by 40 basis points compared to the last quarter. First quarter 2021 witnessed a substantial improvement in y/y fee growth across the board thanks to ongoing diversification efforts. Operating costs increased by 12% year over year -below average inflation- to TL 2,299 million. All in all, the Bank achieved a net income of TL 1,453 million and 12.3% return on average tangible equity.