On 29 July 2020, Yapı Kredi announced its consolidated results for the first six months of 2020 based on Turkish accounting standards (Banking Regulation and Supervision Agency). The Bank’s cash and non-cash loans reached TL 349.0 billion while total deposits reached to TL 249.2 billion. The Bank’s net income reached TL 2,461 million indicating a return on average tangible equity of 12.1%.
Local currency driven loan and deposit growth with a solid liquidity
In the second quarter, The Bank achieved 11.0% year-to-date growth in loans to TL 254.7 billion, mainly driven by Turkish Lira loans. During the same period, the Bank’s customer deposit growth was at 8.1% year-to-date and reached TL 244.4 billion. Also, the Bank increased its Turkish Lira demand deposit market share by 123 basis points to 16.7% and foreign currency demand deposit market share by 94 basis points to 14.4% on a year-to-date basis within the scope of focusing on small tickets in deposit gathering. Accordingly, loan-to-deposits plus Turkish Lira bonds ratio reached to 99.8%. The Bank’s total and foreign currency liquidity coverage ratios realized at 162% and 306%, respectively. The Bank had ample level of liquidity as of the end of the second quarter of 2020 corresponding to 3.5 times above the short-term foreign currency debt.
Prudent and conservative asset quality approach
In the second quarter of 2020, Yapı Kredi maintained its precautious approach in terms of asset quality. The Bank’s non-performing loan ratio materialized at 6.6%. Non-performing loan inflows declined in all segments with strength in collections resulting in improvement in cost of risk despite increasing coverages. Accordingly, cost of risk (adjusted for hedged foreign currency impact) improved by 40 basis points to 252 basis points year-to-date. With the ongoing conservative provisioning approach of Yapı Kredi, provisions to gross loans further increased to 7.3%.
Strong capital ratios and ongoing internal capital generation
In the second quarter of 2020, despite the negative impact coming from the market volatility the capital ratios of the Bank were supported by ongoing internal capital generation. Hence, consolidated Capital Adequacy Ratio, Tier-1 ratio and Common Equity Tier-1 ratio realised at 15.7%, 13.0%and 11.8%, respectively, excluding regulatory forbearances.
Solid top-line within conservative asset quality approach and liquidity
In the second quarter of 2020, Yapı Kredi increased its core banking revenues by 13.4% year-over-year driven by double-digit growth in net interest income. Thanks to execution of sound asset liability management strategy within the quarter, a successful loan-deposit spread was achieved, resulting in improvement in swap adjusted net interest margin compared to 2019 by 26 basis points to 3.7%. Cost-to-income ratio (income adjusted for trading income to hedge foreign currency expected credit loss and collections, costs adjusted for pension fund provisions) realized at 36.8%. All in all, the Bank achieved a net income of TL 2,461 million and 12.1% return on average tangible equity.