Key fundamentals further reinforced in 9M 2013
On 4 November 2013, Yapı Kredi announced its consolidated 9M13 results based on Turkish accounting standards (BRSA), reporting TL 3,118 mln net income and 29.3% return on average tangible equity (ROATE). Excluding capital gain of 1,284 million TL1 (post tax) from sale of insurance business, net income was realised at TL 1,834 mln (+24% y/y) corresponding to ROATE of 16.9%.
In the first nine months of 2013, Yapı Kredi further reinforced its positioning in 4 key areas, namely capital base, liquidity, cost management and revenue generation.
In terms of capital, the Bank’s resilient base was further strengthened via finalisation of insurance business sale. Bank capital adequacy ratio and Tier-1 ratio reached 16.4% and 11.7%, respectively (vs 15.8% and 10.7%, respectively in 2Q).
In terms of liquidity, the Bank effectively managed its position through balanced growth in loans and deposits. In lending, the Bank continued its Smart Growth strategy with strong focus on value generation. Total loans increased 20% ytd (14% currency adjusted3) mainly driven mainly by credit cards (28%), mortgages (21%) and SME lending (34%). Loans to assets ratio was maintained at 61% confirming the Bank’s ongoing customer-business focus while securities to assets declined further to 14% (vs 15% in 2Q13). In deposits, Yapı Kredi recorded 17% ytd growth (9% currency adjusted3) with significant increase in share of demand deposit up to 17.8% (vs 16.2% in 2Q). Accordingly, loans to deposit ratio remained stable at 112%.
In terms of revenue generation, Yapı Kredi maintained its consistent growth trend. Total revenues reached TL 5,931 mln, indicating 21% y/y growth (25% y/y on a comparable basis2) driven by solid contribution of core revenues (90% of total revenues) and positive impact of other income. Net interest margin was realised at 3.8%3 with limited annual contraction (-15 bps y/y) despite quarterly pressure thanks to ongoing disciplined pricing leveraging on 1to1 deposit pricing approach. Fee growth of 15% y/y was driven by lending activity, asset management and bancassurance.
In terms of cost management, evolution confirmed the Bank’s focus on discipline and efficiency gains. Cost growth was realised as 13% y/y (9% y/y on a comparable basis2). Accordingly, cost to income ratio decreased to 43% (vs 46% in 9M12).
Asset quality evolution was on track with NPL ratio at 3.7% (+20bps vs 2Q13). Cost of risk (net of collections) was realised at 1.20% (vs 1.35% at YE12) while specific coverage increased to 67% (vs 62% at YE12).
As of 3Q13, Yapı Kredi had 939 branches with 8.7% market share covering all regions of Turkey. The Bank handled 83% of transactions through its alternative delivery channels (ADCs) which comprise 2,893 ATMs, innovative internet banking, leading mobile banking and two award winning call centres.
Istanbul, 4 November 2013
Enquiries: Yapı Kredi Investor Relations
Tel: (90) (212) 339 7323
Email: yapikredi_investorrelations@yapikredi.com.tr
- On 12 July 2013, sale of insurance business to Allianz was finalised. Accordingly, YKB sold its 94% stake in YK Sigorta which owns 100% of YK Emeklilik. 20% stake in YK Emeklilik is retained. Consolidated capital gain is TL 1,284 mln post 5% capital gain tax (bank-only capital gain is TL 1,174 mln post-tax). Previous periods have been restated to reflect insurance business sale for comparability purposes.
- Comparable basis: Revenues excluding: (1) TL 57 mln sub-debt early repayment penalty (2) TL 165 mln impact of regulations (introduction of cap rate on overdrafts as of Jul’13 and reduction of cap rate on business cards as of Aug’13). Costs excluding: (1) TL 32 mln TL competition board fine in 3Q (2) impact of retail business expansion in Azerbaijan and (3) regulatory costs (ie increase in SDIF premiums)
- Assumes no change in US$/TL vs 2012 (YKB balance sheet US$/TL rate in 2012: 1.7380; 3Q13: 2.0342)