1H19 IR Release
On 1 August 2019, Yapı Kredi announced its consolidated results for the first six months of 2019 based on Turkish accounting standards (Banking Regulation and Supervision Agency). The Bank’s cash and non-cash loans reached TL 323.1 billion while total deposits rose to TL 225.9 billion. The Bank’s net income reached TL 2,361 million indicating a return on average tangible equity of 12.5%.
Local currency driven loan and deposit growth with a strong balance sheet
In the first half, the Bank achieved 5% year-to-date growth in loans reaching to TL 232.3 billion, mainly driven by TL loans supported by CGF, while FC loans declined within the period. Total loan growth was higher than the private banks’ growth of 3% in the same period. During first half 2019, the Bank’s customer deposit growth was above the loan growth at 10% year-to-date and above that of private banks’ and reached TL 219.5 billion. Deposit growth was driven by both TL and FX denominated customer deposits, while the second quarter of the year was marked by strong TL deposit growth with ongoing market share gain in small tickets and demand deposits. Accordingly, the Bank increased its individual TL time deposit market share by 45 bps to 14.2% and TL demand deposit market share by 93 bps to 15.0%. As a result, loan-to-deposits plus TL bonds ratio improved by 3 pp to 101%. Following the volatile period during the second half of 2018 and the election period in the first half of 2019, Yapı Kredi continued to maintain its well-positioned liquidity levels. Accordingly, the Bank’s total and FC liquidity coverage ratios realized at 155% and 375%, respectively.
Solid operational performance and revenue generation
In the first half of 2019, Yapı Kredi increased its core banking revenues by 21% year-over-year driven by double digit growth in both fees and net interest income. In the second quarter of the year, the NIM was flat on a quarterly basis thanks to the positive evolution in TL core spread on back of the ease in TL deposit costs compensating for the decline in TL loan yields within the same period. Additionally, despite the change of inflation assumption in the calculation of the CPI linked securities from 12% to 11%, the consolidated net interest income increased 24% year-over-year, significantly supporting the top-line performance. Strong and above guidance yearly fee growth of 24% was achieved in the period through the strength in payment systems and transactional banking, despite a quarterly decline due to the slowdown in lending. On the other hand, discipline in cost management was sustained with 17% yearly growth, still below the average CPI inflation levels. Accordingly, cost-to-income ratio (income adjusted for trading income to hedge FC ECL and collections, cost adjusted for pension fund provision) realized at 36.6%. All in all, the Bank achieved a net income of TL 2,361 million and 12.5% return on average tangible equity.
Prudent and conservative asset quality approach
In the first half of 2019, Yapı Kredi maintained its precautious approach in terms of asset quality. During this period, Yapı Kredi sold non-performing loan portfolios amounting 2.14 billion in principal amount (-74 bps NPL ratio impact) within the scope of continued active stock management. Hence, the NPL ratio materialized at 5.8%. Accordingly, cost of risk (adjusted for hedged FX impact) improved by 22 bps to 233 basis points year-to-date. With the ongoing conservative provisioning approach of Yapı Kredi, provisions to gross loans further realized at 5.9%.
Strong capital ratios through AT-1 issuance, ongoing internal capital generation and profitability
In the first half of 2019, despite the negative impact coming from the market volatility and uncertainty in the operating environment, the capital ratios of the Bank supported through AT-1 issuance executed in January and ongoing internal capital generation. Hence, consolidated Capital Adequacy Ratio, Tier-1 ratio and Common Equity Tier-1 ratio realized at 15.6%, 12.8% and 11.6%, respectively.
Yapı Kredi / 01 Aug 2019