ISBANK EARNINGS PRESENTATION 2018 Q2

Transcription

1 ISBANK EARNINGS PRESENTATION 2018 Q2

2 2018 H1 Recent Developments in the Economy Global Outlook Main Indicators of Turkey US Robust economic activity Continued rate hikes from the Fed Growing uncertainties over trade policies Calendar Adjusted Industrial Production (yoy, %) Current Account Deficit (12-m, bn USD) EA Slight slowdown in economic growth Upward trend in inflation Agenda set for the exit from the QE EM Sustained economic performance Fall in capital flows Concerns over the impact of protectionist policies / / / / Domestic Outlook Resilient economic activity No sign of hard landing Supportive fiscal policies ahead of elections Widening in current account deficit Higher energy bill Strong tourism revenues Elevated inflation rates High volatility in FX market Simplification of monetary policy One week repo rate set as the policy rate 500 bps increase in the funding rate in Q Exchange Rates USD/TRY EUR/TRY / / / / CPI Inflation vs CBRT WACF* (%) WACF* Annual CPI 6 01/ / / /2018 (*) 30-day MAof weighted average cost of funding 2

3 Period s Highlights Strong growth in core revenue items continued: o 9.3% QoQ increase in SWAP Adj. Net Interest Income o Robust fee generation performance sustained 15.7% QoQ and 22.8% YoY growth in Net Fees and Commissions SWAP Adj. NIM maintained at 4.03% - above the full year guidance o Share of demand deposits in total deposits reached 27% o Blended cost of TL deposits remained at 9.2% in Q2 while upward repricing in loans continued Lowest NPL ratio among peers Comfortable level of CAR at 15.9% 3

4 Strong Growth in Major Revenue Items Maintained 2018 Q2 Revenue Growth & OPEX QoQ YoY (1) Profitability Ratios (3) RoAA & RoATA RoAE & RoATE 16.3% 15.4% 15.8% 15.1% NII NII (Swap adj.) 13.4% 9.3% 24.4% 16.7% 1.84% 1.85% 1.77% 1.78% Net F&C Total Op. Income (2) 15.7% 16.7% 22.8% 19.6% (4) (5) (4) H1 RoAA RoATA Cost / Income H1 RoAE RoATE (5) 42.3% 40.5% 39.9% 37.5% OPEX 11.2% 16.3% (4) (2)(5) H1 (6) Reported Adjusted (1) 2017 H1 vs 2018 H1 (2) 2018 Q1 and H1 income figures include income from participations according to IAS 27 and excludes 504 mn TL of IFRS 9 impact on other operating income (3) Tangible Equity (TE) and Tangible Assets (TA) are calculated by the deduction of M-t-M valuation differences regarding AFS (FVOCI) portfolio and real estates from shareholders equity and total assets. (4) Calculated using restated figures according to IAS 27 (5) Half-year figures are annualized. 4 (6) Adjusted for non-recurring and other items

5 Selective Growth Funded with a Cost-Oriented Approach Assets Loans QoQ Growth. YtD Growth. Liabilities QoQ Growth. 9.0% 5.9% 5.9% 2.1% 3.1% -3.8% -2.0% -0.7% Deposits -3.7% YtD Growth. 7.5% 0.8% -6.0% Securities Total IEA (1) -7.4% -3.8% 3.5% 2.5% 3.1% 6.6% 9.1% 8.9% -9.2% 10.0% 5.3% -3.4% Non- Deposit (2) Funding -1.0% 14.9% 14.5% 19.8% 15.7% 0.3% Total Assets -1.7% 3.0% Total TL FX (USD) 7.4% 10.0% Shareholders Equity (3) (3) Highest market share in total loans Largest demand deposits 4.9% -2.6% Total TL FX (USD) Share of loans in total assets is at 65.5%. Share of demand deposits: 27.0% in total 26.6% in TL, 28.0% in FX deposits IEAs make up 91.6% of total assets as of 2018 Q2. Strong FX LCR at 244.5% for Q2 average. 0.7% (4) 4.9% (4) (1) Interest earning assets include Central Bank reserves. (2) Non-deposit funding includes repo&money market, funds borrowed, securities issued and subordinated debt. (3) Among private sector banks (4) Excluding interbank deposits. 5

6 Solid NIM Performance Maintained Net Interest Income (TL mn.) NIM (Quarterly) (1)(2) 3, % 9.3% 4,251 3,238 3,539 6, % 16.7% 8,000 5,806 6, % NIM NIM - Swap Adjusted 4.86% 4.03% 4.03% 2018 Q Q2 NII NII (incl. swap cost) Swap Adjusted NIM Evolution 2017 H H1 +48 bps +27 bps +2 bp -11 bps -44 bps 4.03% -24 bp 4.03% 18 Q1 18 Q2 Yield/Cost (Quarterly) (1) TL 14.07% 14.31% 14.67% 15.28% 15.71% 11.88% 10.87% 10.00% 10.15% 10.61% Loan Yield FX 8.54% 9.22% 9.20% 9.16% 9.22% 5.26% 5.52% 5.73% 6.02% 6.56% 5.26% 4.07% 4.28% 4.71% 4.76% Securities Yield Deposit (3) Cost (1) Based on MIS data. (2) Interest earning assets include Central Bank reserves. NPL accruals are excluded. (3) Including demand deposits. 1.34% 1.36% 1.35% 1.41% 1.44% 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 6

7 Robust Fee Income Performance Sustained Net Fees & Commissions (TL mn.) Net Fees & Commissions Composition 15.7% 22.8% 30.2% 29.7% Lending Related Fees 921 1,066 1,618 1, % 7.8% 37.7% 41.0% Mutual Fund Man. & Other Inv. Acc. Fees Credit Cards 24.2% 21.5% Other 2018 Q Q H H H H1 F&C Growth (2018 Q2) Growth QoQ YoY Lending Related Fees 10.6% 20.8% Mutual Fund Man. & Other Inv. Acc. Fees -2.2% 21.5% Credit Cards (Net) 29.2% 33.4% Other 6.4% 9.3% Total F&C (Net) 15.7% 22.8% Share of net F&C income in total operating income* is 19.1% as of 2018 H1. OPEX coverage of Net F&C income reached 47.9% as of 2018 H1. * Total operating income includes income from participations according to IAS 27. IFRS 9 impact of 504 mn TL on other operating income in 2018H1 is excluded. 7

8 ,453 1,861 Lowest NPL Ratio Among Peers (1) NPL Ratios by Loan Categories (2018 Q2) NPL Trends (Quarterly) SME Corp. & Comm. Credit Cards Consumer Coverage Ratios Performing Loans NPL Total Isbank 2.7% 3.4% 2.3% 2.3% 2.0% Private-Sector Banks 3.6% 3.3% 4.8% 4.7% 5.4% Coverage Ratios 2018 Q Q2 Stage 1 0.7% 0.8% Stage 2 8.8% 9.8% Stage % (3) 65.8% (3) Stage 3-Total 157.6% (4) 143.6% (4) (1) Adjusted for the NPL sales made by peer group banks in the period. (2) Net NPL Formation / Average Performing Loans (3) Provisions for Stage 3 Expected Credit Losses / Non-performing Loans (4) (Provisions for Stage Expected Credit Losses + Free Provisions) / Non-performing Loans (5) (Stage Expected Credit Losses-Reversals) / Average Performing Loans (6) Stage 3 Expected Credit Losses / Average Performing Loans (7) Collections / (Prior period ending balance NPL + Additions) (TL mn.) 0.08% 0.57% 17 Q4 18 Q1 18 Q2 Net NPL Formation Rate Net Cost of Risk (5) Specific Gross CoR (6) is 109 bps by 2018 H1. Share of Stage 2 Loans is 8.6%. 2.29% Additions Recoveries Net NPL Formation Prov. for Exp. Credit Loss. (TL mn) Q1 Q2 H1 Stage Stage Stage ,356 Reversals (TL mn) (-) Q1 Q2 H1 Stage Stage Net CoR 2018 H1 124 bps 8

9 Strong Capitalization 280, % 46, % 286, % 48, % 303, % 13.99% 50, % 320, % 52, % 340, % 54,089 Capital Adequacy Ratio -63 bps Change in CAR 2018 Q1 Net Income 0.42% 16.51% M-t-M Differences -0.33% Stage 1+2 Exp LLPs 0.08% RWA Growth exc. TL Dep. TL Dep. Impact -0.12% -0.84% Other 0.16% 17 Q2 17 Q Q1 18 Q2 CAR Tier I Ratio RWAs vs. Regulatory Capital (TL mn.) 2018 Q2 (%) Capital Conservation Buffer (1) Counter Cyclical Buffer SIFI Buffer (2) Min. Legal Requirement for CAR 8 8 CAR (Bank-only) CAR (Consolidated) Max. Max % 17 Q2 17 Q Q1 18 Q2 RWAs Regulatory Capital Capital adequacy ratio is well above the regulatory limit. Comfortable level of capital (1) As of 2018 Q2, %0.04 on a bank-only basis (2) Taken into consideration only on a consolidated basis 9

10 Strong Focus on Digitalisation Evolution of Share of Transactions per Channel Digital Banking Number of Customers ( 000) 74.8% Internet Banking ATM Mobile Banking Total Non-Branch 88.2% 5,596 5,925 5,218 ~ 6.5 mn digital customers 50.5% 37.6% 30.3% 19.3% 2.2% 14.6% Q Q2 2,7922,788 2,753 1, Mobile Banking Internet Banking Q Q2 Mobile Banking Market Shares * Share of Digital Channels in Retail Sales * # Transactions Mobile Banking Investment 33.1% Credit Cards 18.0% Money Transfer 14.9% Payments 14.8% 67.3% TL Time Deposits 53.5% GPLs (*) Source: Turkish Banking A, as of 2018 Q1 (*) Number of sales in 2018 Q2 10

11 Appendix Page 12 Asset Structure Page 13 Loans Page 14 Loan Composition Page 15 Securities Page 16 Liabilities Structure Page 17 Deposits Page 18 Income Statement Highlights Page 19 Fees & Commissions Income Page 20 Market Shares 11

12 Asset Structure Assets (TL mn.) Q Q2 QoQ YtD Cash & Banks 38,424 38,540 44, % 16.8% Securities (Net) 57,352 60,466 62, % 9.1% Loans 239, , , % 9.0% Participations (Net) 13,802 14,007 14, % 7.5% Fixed Assets (Net) 5,163 5,114 5, % -0.1% Other Assets 8,095 6,317 9, % 21.6% Total Assets 362, , , % 10.0% TL Assets 221, , , % 4.9% FX Assets 141, , , % 17.9% FX Assets (USD mn.) 37,671 37,349 36, % -2.6% Asset Composition 91.5% 92.2% 91.6% 10.6% 10.4% 11.3% 15.8% 16.3% 15.7% 66.1% 66.5% 65.5% IEA / Total Assets Cash & Banks Securities Loans Participations & Other Assets 7.5% 6.9% 7.5% Q Q2 12

13 Loan Portfolio Loans (TL mn.) Q Q2 QoQ YtD Total Loans 239, , , % 9.0% TL Loans 147, , , % 3.1% Retail Loans 56,913 57,670 58, % 2.1% Housing Loans 20,852 21,548 21, % 2.5% Auto Loans % 3.5% GPLs (1) 23,354 23,570 23, % 2.2% Credit Card Loans 12,031 11,857 12, % 1.1% Non-Retail Loans 90,529 91,171 93, % 3.7% SME Loans (2) 51,611 51,303 59, % 15.2% Commercial and Corporate Loans 38,918 39,868 34, % -11.5% FX Loans 91,967 97, , % 18.6% SME Loans (2) 3,457 3,612 7, % 113.6% Commercial and Corporate Loans 88,510 94, , % 14.9% FX Loans (USD mn.) 24,557 25,036 24, % -2.0% SME Loans (2) , % 76.6% Commercial and Corporate Loans 23,634 24,110 22, % -5.0% (1) Including overdraft accounts (2) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. for 2017 and 2018 Q1; companies with number of employees < 250 and turnover or total assets <= TL 125 mn. for 2018 Q2. 13

14 Loan Composition Currency Mix Loan Composition - Total Loans 38.4% 39.6% 41.8% FX 18.7% 18.6% 17.6% 5.0% 4.8% 4.7% 23.0% 22.3% 25.6% Consumer (1) Credit Cards (2) 61.6% 60.4% 58.2% Q Q2 TL 53.2% 54.3% 52.1% Q Q2 SME (3) Commercial & Corporate Loan Composition - TL Loans Loan Composition - FX Loans 38.6% 38.7% 38.2% Retail (4) 3.8% 3.7% 6.8% SME (3) 35.0% 34.5% 39.1% 26.4% 26.8% 22.7% SME (3) Commercial & Corporate 96.2% 96.3% 93.2% Commercial & Corporate Q Q Q Q2 (1) Including retail overdraft accounts (2) Shows retail credit card balances only (3) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. for 2017 and 2018 Q1; companies with number of employees < 250 and turnover or total assets <= TL 125 mn. for Q2. (4) Including retail credit cards and overdraft accounts 14

15 Securities Securities (TL mn.) Q Q2 QoQ YtD Total Securities 57,352 60,466 62, % 9.1% TL Securities 46,069 48,949 50, % 8.9% FX Securities 11,283 11,517 12, % 9.9% Composition of Securities 2018 Q TL FX 86.1% 57.4% 13.3% 99.9% 2018 Q2 Held FVTPL for trading AFS FVOCI HTM FVMaAC FX Securities (USD mn) 3,013 2,953 2, % -9.2% 42.6% 59.2% 40.1% Yield of Securities (Quarterly)(*) Floating Fixed 10.00% 10.15% 10.87% 10.61% 11.88% 4.07% 4.28% 4.71% 4.76% 5.26% 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 35.4% share of CPI linkers in total portfolio in 2018 Q mn TL interest revenue and 13.5% quarterly yield on CPI linkers portfolio As of 2018 Q2 expected inflations on the CBRT survey are 10.47% for 12 months (vs 9.24% in Q1) and 9.18% for 24 months (vs 8.31% in Q1) Average durations: 1.67 years for TL securities 5.75 years for FX securities TL Securities FX Securities (*) Based on MIS data 15

16 Liabilities Structure Liabilities (TL mn.) Q Q2 QoQ YtD Deposits 203, , , % 7.5% REPOs & Money Market 19,834 20,326 25, % 28.2% Funds Borrowed 38,424 40,386 45, % 18.3% Securities Issued 25,911 26,993 30, % 16.1% Other (*) 31,338 31,559 33, % 5.9% Equity 42,984 44,763 45, % 4.9% Total Liabilities & Equity 362, , , % 10.0% TL Liabilities 184, , , % 3.5% FX Liabilities 177, , , % 16.7% FX Liabilities (USD bn.) 47,344 46,717 45, % -3.5% Liabilities Composition 81.8% 81.8% 82.8% 56.2% 55.8% 55.0% 5.5% 5.5% 6.4% 10.6% 10.9% 11.4% 7.2% 7.3% 7.6% 11.9% 12.1% 11.3% 8.7% 8.5% 8.3% Q Q2 (*) Includes subordinated debt. IBL / Total Liabilities Deposits Repos & Money Market Funds Borrowed Securities Issued Equity Other (*) 16

17 Deposit Base 25.0% 27.2% 25.8% 25.4% 28.1% 26.4% 25.4% 27.4% 26.3% 25.3% 26.0% 25.3% 26.6% 28.0% 27.0% Deposits (TL mn.) Q Q2 QoQ YtD Total Deposits 203, , , % 7.5% TL Deposits 97,050 98,496 97, % 0.8% TL Saving Deposits 66,682 68,256 68, % 2.3% TL Commercial Deposits 25,045 25,302 25, % 0.9% Other TL Deposits 5,323 4,938 4, % -19.0% FX Deposits 106, , , % 13.7% FX Deposits (USD mn.) 28,492 27,796 26, % -6.0% Demand Deposits 53,501 52,360 59, % 10.4% Demand Deposits / Total Deposits Demand Deposits Market Share 15.1% 15.3% 15.5% 14.7% 14.5% 17 Q2 17 Q Q1 18 Q2 (*) (*) TL FX Total 17 Q2 17 Q Q1 18 Q2 (*) Excluding interbank deposits 17

18 Income Statement Highlights (TL mn.) 2018 Q Q2 QoQ 2017 H H1 YoY Net Interest Income 3,750 4, % 6,434 8, % (1) (-) SWAP Cost % 628 1, % Net Interest Income Incl. Swap Cost 3,238 3, % 5,806 6, % Net Fees & Commissions 921 1, % 1,618 1, % Net Trading Gains/Losses Excl. Swap Cost % % Other Operating Income (2) % 629 (2) 1, % Total Operating Income 4,790 4, % 7,903 9, % HR Expenses 914 1, % 1,681 1, % Non-HR Expenses 1,049 1, % 1,884 2, % Total Operating Expenses 1,963 2, % 3,565 4, % (-) Pre-provision for pension fund % % Total Operating Expenses - Adj. 1,873 2, % 3,445 3, % Operating Profit 2,827 2, % 4,339 5, % Operating Profit - Adj. 2,917 2, % 4,459 5, % Stage 3 Expected Credit Losses % 1,109 1, % Stage 1+2 Expected Credit Losses % 264 1, % Other Provision Charges NM % Total Provision Charges 1,130 1, % 1,429 2, % (-) Free Provisions NM NM Total Provision Charges - Adj. 1,130 1, % 1,429 2, % Income from Participations % 784 1, % Tax Provisions % % Net Income 1,807 1, % 3,056 3, % NM: Not meaningful (1) Based on MIS data (2) 504 mn TL of this figure is resulting from IFRS 9 impact on other income. 18

19 Fees & Commissions Income (TL thousand) 2018 Q Q2 QoQ 2017 H H1 YoY Non-Cash Loans 165, , % 277, , % Cash Loans 115, , % 211, , % Mutual Fund Man. & Other Inv. Acc. Fees 78,422 76, % 127, , % Credit Cards (Net) 355, , % 610, , % * Other 206, , % 390, , % Total Fees & Commissions Income (Net) 920,905 1,065, % 1,617,591 1,986, % Total Fees & Commissions Income (Gross) 1,104,276 1,298, % 1,923,729 2,402, % * Including fund transfer, insurance, account keeping and other fees 19

20 Market Shares Largest Private Bank Market Shares (%) (1) Rank (2) Q Q2 Total Assets st 1 st Total Loans st 1 st TL Loans st 2 nd FX Loans st 1 st Consumer Loans (3) nd 2 nd Non-Retail Loans st 1 st Total Deposits st 1 st TL Deposits st 2 nd FX Deposits st 1 st Demand Deposits st 1 st (1) Market share calculations are based on weekly BRSA data excluding participation banks. Total assets market share is based on monthly BRSA data. (2) Ranking among private banks. (3) Including retail overdraft accounts 20

21 Disclaimer The information in this document has been obtained by Türkiye İş Bankası A.Ş. ( Isbank ) from sources believed to be reliable, however, Isbank cannot guarantee the accuracy, completeness, or correctness of such information. This document has been issued for information purposes only. The financial reports and statements announced by Isbank to the public and the relevant corporations are accepted to be the sole material. Isbank does not accept any liability whatsoever for any direct, indirect or consequential loss arising from any use of this document or its contents due to the misleading information in this document. All estimations, opinion, all forward looking statements and projections expressed, implied, contained in this document are the current beliefs or expectations of Isbank s management as of the date of this document and are subject to significant risks, uncertainties and changes in circumstances. Actual results, performance or events could differ materially from those expressed or implied in the estimations, opinions and forward-looking statements in this document. All estimations, opinions and forward-looking statements contained in this document can be subject to change without notice. Isbank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any estimations, opinions, forward-looking statements contained in this document to reflect any change in Isbank s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. This document can not be interpreted as an advice to the investors or as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services and Isbank can not be held responsible for the results of investment decisions made on account of this document. This document has been issued specially to the person, whom the document is concerned and may not be reproduced, distributed, published or shared with third parties for any purpose. All rights of Isbank are reserved. 21

22 Contact Information: Türkiye İş Bankası A.Ş. Head Office Investor Relations Division Phone: Fax: investorrelations@isbank.com.tr 22