2008 YE Earnings Release
Yapı Kredi reported TL 1,261 mln of consolidated net income in 2008, up 45% y/y, confirming profitable growth through constant focus on revenues, customer satisfaction and accelerated branch expansion. Significant improvement in Cost/Income thanks to efficiency actions to support expansion plan. Strong capital base with CAR at 14.2% at Group level.
On 6 March 2009, Yapı Kredi announced its consolidated 2008 year-end results based on Turkish accounting standards (BRSA), reporting TL 1,261 mln of consolidated net income, up 45% y/y (42% y/y on a normalised basis) and ROAE of 24.6% (24.1% on a normalised basis) driven by positive commercial performance and rigid cost management, despite significant worsening of market conditions towards year-end. Strong level of capitalisation, liquidity and funding was maintained in order to cope with increased market volatility. CAR increased to 15.7% at Bank level and 14.2% at Group level, also benefiting from the cash capital increase of TL 920 mln registered in December 2008. Yapı Kredi maintained comfortable funding and sound liquidity position with Loans/Deposits ratio at 88% at YE08 (vs.85% at YE07).
The Bank posted TL 4,785 mln of revenues, up 21%y/y (15% y/y on a normalised basis), mainly driven by 14% y/y growth in net interest income and 30% y/y growth in fees and commissions, as a result of significant improvement in customer satisfaction and deepening relationships with clients.
In 2008, Yapı Kredi achieved the highest number of branch openings (+185 branches) in the sector, positioned as the fourth largest branch network in Turkey with 861 branches and 9.9% market share. Branch expansion plan was accompanied by a disciplined approach ensuring cost containment, effective headcount management and strong efficiency efforts. As a result, Cost/Income improved to 53% (vs 58% at YE07), despite branch openings. Headcount at Bank level increased only 4% y/y despite 27% y/y growth of the branch network, also due to efficiency improvements including accelerated release of ~750 headcount from operational back office to be redeployed in new branches.
Yapı Kredi confirmed a healthy balance sheet evolution in 2008 as a result of balanced growth in lending and deposit gathering. Due to increased focus on key strategic segments/products, strong growth in both lending and deposit gathering was achieved. Above sector growth on the lending side (35% y/y) was accompanied with robust deposit growth (31% y/y), both driven by local currency (TL loan growth at 28% y/y, TL deposit growth at 31% y/y). As a result, total loan market share increased to 10.6% at YE08 (vs.10.2% at YE07) and total deposits market share increased to 9.8% in YE08 (vs. 9.4% at YE07). Asset quality improved y/y (NPL ratio: 4.3% at YE08 vs. 5.8% at YE07), benefitting from portfolio disposals, write-offs and collections. Some deterioration started in 2H08, accelerating in 4Q driven by credit cards, SMEs and consumer loans, on the back of sharp macroeconomic slowdown.
Significant improvement was achieved through the migration of transactions to alternative delivery channels (ADC), including installation of 678 advanced ATMs and first time introduction in Turkey of innovative products such as barcode based ATM bill payment system, bringing Yapı Kredi to a leading position in innovation and technology as well as enhancing efficiency and improving customer satisfaction. Share of ADCs in total banking transactions increased to 69% at YE08 from 61% in July 07.
2008 was a very successful year in which Yapı Kredi recorded healthy growth, market share gains, strong customer satisfaction improvement and sustained profitability, making significant steps in its path towards leadership. As a result of initiatives taken in terms of strengthening capital, liquidity and funding position, as well as further containing its cost base, Yapı Kredi is well prepared to face the serious worsening of the operating environment that started from the fourth quarter of 2008.
İstanbul, 06 March 2009
Enquiries:
Yapı Kredi Investor Relations
Tel: (90) (212) 339 7647
Email: yapikredi_investorrelations@yapikredi.com.tr
Note: Throughout the text, normalisations refer to the exclusion of the one-off effects of pension fund provisions on costs, general provision release on revenues and tax settlement expense on tax provisions in 1Q08. Normalisation was also carried out to exclude one-off tax risk expense under other operating expenses in 4Q08 (reclassified from other provisions in 2Q08). 2Q07 was normalised to exclude the gross-up effect of Superonline write-off on revenues and provisions.
Yapı Kredi / 06 Mar 2009