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9M19 IR Release

On 4 November 2019, Yapı Kredi announced its consolidated results for the first nine months of 2019 based on Turkish accounting standards (Banking Regulation and Supervision Agency). The Bank’s cash and non-cash loans reached TL 311.0 billion while total deposits rose to TL 218.5 billion. The Bank’s net income reached TL 3,337 million indicating a return on average tangible equity of 11.8%.

Local currency driven loan and deposit growth with a strong balance sheet

In the first nine months the Bank experienced 1% year-to-date growth in loans reaching to TL 222.4 billion, compared to stable loans in private banks mainly due to subdued loan growth impacted by the operating environment as well as the currency movements. The Bank’s TL loan growth was strong at 7% over end 2018 when compared with a limited 2% increase of the private banks. During the same period, the Bank’s customer deposit growth was above the loan growth at 7% and reached TL 214.4 billion. Deposit growth was driven by both TL and FX denominated customer deposits, while the period was marked by strong performance in small tickets and demand deposits with ongoing focus on cost of funding. Accordingly, the Bank increased its individual TL time deposit market share by 79 bps to 14.0% and individual TL demand deposit market share by 115 bps to 15.3%. As a result, loan-to-deposits plus TL bonds ratio improved by 4 percentage points to 100%. 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 176% and 439%, respectively.

Solid operational performance and revenue generation

In the first nine months of 2019, Yapı Kredi increased its core banking revenues by 9% year-over-year, adjusted for the elevated level of CPI linker gains in 2018, core revenues imply an increase of 15%, in the same time frame. In the third quarter of the year, the NIM was slightly up by 2 bps thanks to the surge in loan-deposit spread supported by the operating environment and successful asset-liability management resulting with a limited 15 bps decline in loan yields versus 80 bps improvement in total cost of deposits on a quarterly basis. Accordingly, the consolidated net interest income increased by 12% year-over-year, significantly supporting the top-line performance. Strong and above guidance yearly fee growth of 26% was achieved in the period through the renewed service model, strength in payment systems and transactional banking. Furthermore; discipline in cost management was sustained and cost growth realized at 13% on a yearly basis, better than guidance with ongoing cost cautious approach. Accordingly, cost-to-income ratio (income adjusted for trading income to hedge FC ECL and collections, cost adjusted for pension fund provision) realized at 36.5%. All in all, the Bank achieved a net income of TL 3,337 million and 11.8% return on average tangible equity.

Proactive asset quality approach maintained in a challenging environment

In the first nine months of 2019, Yapı Kredi maintained its proactive approach in terms of asset quality. During this period, Yapı Kredi sold non-performing loan portfolios amounting 2.6 billion in principal amount (-94 bps NPL ratio impact) within the scope of continued active stock management. The NPL ratio materialized at 6.7%, with further deterioration in the third quarter mainly due to challenging operating environment and macro conditions. Accordingly, cost of risk (adjusted for hedged FX impact) improved by 3 bps to 253 basis points year-to-date. The Bank’s provisions to gross loans further increased to 6.5%, emphasizing the prudent asset quality approach of the Bank.

Strong capital ratios through issuances, ongoing internal capital generation and profitability

In the third quarter 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 and sub-debt issuances executed in January and July respectively as well as the ongoing internal capital generation. Hence, consolidated Capital Adequacy Ratio, Tier-1 ratio and Common Equity Tier-1 ratio realized at 16.7%, 13.6% and 12.5%, respectively.

Yapı Kredi / 04 Nov 2019

 
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