4Q Earnings Release
INVESTOR RELATIONS RELEASE
In the year of the merger and integration, Yapı Kredi reports net income of YTL 512 mln, ROE of 18% and CAR at 12.3%, confirming the quick capital base restructuring
On 12 March 2007, Yapı Kredi announced its 2006 year-end results based on Turkish accounting standards (BRSA bank-only), reporting a net income of YTL 512 mln in a year of post-merger integration and financial turmoil. The release of 2006 year-end results marks the first time announcement of the financials of Yapı Kredi as a merged entity, following its legal merger with Koçbank on 2 October 2006.
Since the merger, the new entity carries in its assets a goodwill of YTL 979 mln, which is subject to annual impairment test (in line with the new TR GAAP principles as well as international practices).
Due to a number remarkable achievements, 2006 stands out as a milestone year in Yapı Kredi’s corporate history. Following the successful legal merger with Koçbank, integration of their IT systems was completed at the end of October.
Capital adequacy ratio (CAR) increased from 7.2% at end-2005 to 12.3% at end-2006 as a result of quick capital base restructuring, 12 months ahead of the original plan (year-end equity at YTL 3,344 mln). Due to conservative risk management policies, there was no major impact on the Bank’s P/L and equity resulting from May-June 2006 financial turmoil. Yapı Kredi successfully repositioned itself in the international markets, receiving in 2006 USD 1.3 bln of syndication and USD 1.2 bln of securitization, the biggest DPR (Diversified Payment Rights) securitization in the world achieved in one single shot.
Since the acquisition at end-2005, Yapı Kredi secured a total of 3.2 bln YTL of cash inflow, of which 1.6 bln YTL was from the sale of non-core assets and collection of receivables (Turkcell, A-tel, Fintur/Digiturk and Fiskobirlik). As a result, the share of interest earning assets in its total assets increased to 92% (+4 ppts vs. 2005).
Driven by its commercial strategy focusing on healthy and consistent growth, Yapı Kredi reported a normalized revenue growth of 13%(1) y-o-y, increasing consequently the revenue market share up to 10% as of 11M2006 (from 9.7% in 2005). 2006YE results also confirmed Yapı Kredi’s firm strategic positioning in the sector. The Bank further reinforced its no 1 position in the credit card business (26% issuing volume market share) and achieved no 1 position in mutual funds (23% market share). The Bank confirms to rank no 4 among private banks per total assets (YTL 49 bln), no 4 per total cash loans (YTL 22.5 bln, +21% y-o-y), no 1 in non-cash loans (YTL 15bln, +16% y-o-y) and no 3 among private banks per total deposits (YTL 31 bln, +17% y-o-y).
Core non-HR costs declined by 5% including the absorption of the integration costs while cost/income stood at 66%. Non-Performing Loan (NPL) ratio went down by 0.5 ppts y-o-y to 6.7% excluding the new regulation impact (7.2% including), with 82% provisioning coverage.
Yapı Kredi, with its 13,478 employees and 608 branches (including one off-shore), successfully completed its transformational post-merger integration process at the end of 2006. Additional ~450 employees were shifted to branches from back office due to HQ rationalization, leading to an improvement in Front Office ratio of +3 ppts (up to 54%), and further 20 branches were opened.
(1) Normalized for acquisition adjustments + financial cost of acquisition and sub-loan.
İstanbul, 12 March 2007.
Enquiries:
Yapı Kredi Investor Relations
Tel: (90) (212) 339 7647
Email: yapikredi_investorrelations@yapikredi.com.tr
Yapı Kredi / 12 Mar 2007