9M15 Earnings Release
Resilient commercial performance in a challenging environment
On 27 October 2015, Yapı Kredi announced its consolidated 9M15 results based on Turkish accounting standards (BRSA), reporting TL 1,274 million net income. Net income evolution was negatively impacted by one-offs related to market volatility and regulations during this period. Excluding these impacts, net income growth was 5% y/y and tangible ROAE at 10.6%.
Strong focus on revenue generation and discipline in cost management with growth investments substantially completed
In 9M15, Yapı Kredi improved its core revenues by 19% y/y (vs 16% private banks) supported by 19% y/y growth in both net interest income and fees & commissions. In 3Q, through effective pricing and remix, loan-deposit spread expanded by 15bps.Cost growth was pressuredby currency depreciation and impact of fee rebates. Accordingly, cost growth remained at 23% y/y with deceleration expected in upcoming periods.
While physical investments are substantially completed with 12 new branches, ~980 increase in headcount ytd as of Sep’15, the Bank is continuing its strong focus on digitalization in order to lead sector transformation and decrease costs to serve. Accordingly, in internet andmobile banking, the number of active customers continues to grow rapidly with 41% and 113% y/y, respectively as of Sep’15.
Ongoing growth with emphasis on loan book remix and profitability while maintaining resilient fundamentals
Total cash loans grew 22% ytd (vs 20% sector) corresponding to a 24bps market share gain to 10.5%. Outperformance was more evident vs private banks with 75bps increase in market share. Loan book remix continued towards high-value generating segments driven by SME loans (+34% ytd) and general purpose loans (30% ytd). Accordingly, share of retail loans (including SME) increased by 2pps ytd to 29% on an FX-adjusted basis.
In 3Q15, NPL ratio remained flat at 3.6% while restructured loan ratio decreased by 4bps to 1.1% showing YKB’s focus on quality growth. At the same time, NPL coverage remained flat at 72%.
In terms of deposits, above sector performance continued and the Bank recorded 27% ytd growth (vs 20% sector), leading to decrease of 3pps ytd in loan-deposit ratio to 109%. Deposit growth was mainly driven by foreign currency deposits due to shift by companies in order to manage the volatile environment while individual deposit growth continues to be driven by local currency. During this period, demand deposit growth significantly outpaced sector (47% ytd vs 18% sector) leading to 214bps market share gain and increase of demand deposit share in total deposits by 3pp to 18%.
Diversification of the funding base also continued and on September 30th, YKB successfully signed a 367-day syndicated loan agreement comprised of a US Dollar tranche of 295 million and a Euro tranche of 810.5 million with a roll-over ratio of 101% and a cost 15bps lower y/y. The Bank also received $575 mln under its DPR securitisation program with 5-12 year maturity.
Capital adequacy ratio was impacted by the peak of volatility during Sep’15 and was recorded as 12.9%. Excluding currency and marked-to-market impact on available for sale securities, CAR would have been ~15% level. As of October 2015, CAR has recovered by ~40bps in less than one month due to normalisation in market dynamics.
Istanbul, 27 October 2015
Enquiries: Yapı Kredi Investor Relations
Tel: (90) (212) 339 6770
Email: yapikredi_investorrelations@yapikredi.com.tr
Yapı Kredi / 27 Oct 2015