ISBANK INVESTOR PRESENTATION 2018

Transcription

1 ISBANK INVESTOR PRESENTATION 2018

2 Contents Isbank at a Glance 4 Financial Highlights 8 Appendix 25 2

3 Isbank at a Glance 4 Financial Highlights 8 Appendix 25 3

4 Isbank in Brief Widespread shareholder base Free Float 31.44% Isbank Pension Fund 40.47% Ataturk Shares 28.09% Stocks are quoted at BIST and also traded at LSE in the form of GDRs. Largest stake owned by employees via pension fund 1,333 domestic branches country-wide (largest among private banks), and 22 foreign branches 6,560 ATMs (largest ATM network among private banks) ~ 7.2 mn digital customers Nationwide coverage International coverage Isbank Branches in Northern Cyprus HO + 10 Isbank AG Branches in Germany Bank Subsidiary 5 1 Representative Office in Shang-hai, China Isbank Branches in London, UK. 1 Isbank AG Branch in Amsterdam, the Netherlands 1 Representative Office in Cairo, Egypt Number of Branches 1,358 1,377 1,374 1,364 1, Branch in Manama, Bahrain 1 Isbank AG Branch in Paris, France 2 Branches in Arbil and Baghdad, Iraq HO + 3 Isbank Russia Branches in Russia Bank Subsidiary 2 Branches in Pristine and Prizren, Kosovo HO + 2 Isbank Georgia Branches in Georgia Bank Subsidiary 4

5 Main Business Lines Banking Services Other Financial Services Corporate Banking Commercial Banking Retail Banking Private Banking Capital Market Operations Other Banking Services Insurance Private Pension Asset Management Venture Capital Investment Banking REIT Leasing & Factoring Brokerage & Custody 5

6 The Largest Private Bank Market Share (%) 2018 Rank (2) Main Balance Sheet Items (1) Total Assets st Total Loans st TL Loans nd FX Loans st Consumer Loans (3) nd Non-Retail Loans st Total Deposits st TL Deposits st FX Deposits st Demand Deposits st Other Products & Distribution Network Number of POS (4) rd Acquiring Volume (4) rd Number of Credit Cards (4) rd Issuing Volume (4) rd Volume of Debit Cards (4) nd Number of Branches st Number of ATMs 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-sector banks (3) Including retail overdraft accounts (4) Market share calculations are based on Interbank Card Center (BKM) data. 6

7 Isbank at a Glance 4 Financial Highlights 8 Appendix 25 7

8 Growth Performance Total Assets (TL mn.) 14.9% Loans (TL mn.) 8.7% 237, , , , , , , , , , Deposits (TL mn.) 133, , , , % 245, Shareholders Equity (TL mn.) 29,311 32,035 37,409 42, % 49,

9 Asset Structure Main Balance Sheet Items Asset Composition (TL mn.) Change Cash & Banks 38,424 48, % Securities (Net) 57,352 68, % Loans 239, , % Participations (Net) 13,802 17, % Fixed Assets (Net) 5,163 5, % Other Assets 8,095 15, % Total Assets 362, , % Interest Earning Assets / Total Assets 10.6% 11.7% 15.8% 16.4% 66.1% 62.5% 3.8% 4.2% 3.7% 5.2% Loans / Assets Cash & Banks Securities Loans Participations Fixed & Other Assets 92.3% 91.3% 91.1% 91.5% 89.3% 65.3% 64.2% 64.9% 66.1% 62.5%

10 Solid Lending Franchise Loan Portfolio QoQ Change (TL mn.) Loans / Deposits -10.6% -5.4% -16.4% 291, , % 115.0% 106.1% 104.0% 152, , , ,407 TL FX * Total 2018 Q (*)-5.0% change in FX loans when adjusted for the change in exchange rate. Loan Portfolio YtD Change (TL mn.) -2.4% 260, , % 8.7% 2018 Q Loans/Deposits Loans/Deposits (Adj.)* (*) TL securities issued added to deposits. TL / FX Mix of Loans 35.4% 36.1% 39.8% 38.4% 44.7% 147, ,909 91, , % 63.9% 60.2% 61.6% 55.3% TL FX * Total (*) -9.5% change in FX loans when adjusted for the change in exchange rate TL FX 10

11 Diversified Loan Portfolio 45% comprised of retail and SME loans. Total Loans (TL mn.) Consumer Loans (TL mn.) 239, ,316 44,882 44, % 17.3% Retail Loans 5.0% 5.1% 23.0% 22.8% 22.4% Consumer (1) 50.5% 50.5% General Purpose Consumer Loans Auto Loans Credit Cards (2) 1.5% 1.7% Housing Loans 53.2% 54.9% SME (3) Commercial & Corporate 46.5% 45.4% Retail Overdraft 1.6% 2.4% (1) Includes retail overdraft accounts. (2) Includes 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 companies with number of employees < 250 and turnover or total assets <= TL 125 mn. for

12 1, , ,137 2,577 1,781 4,738 6,519 Lowest NPL Ratio Among Peers (1) NPL Ratios by Loan Categories (2018YE) Total Loans Corp. And Comm. SME Credit Cards Consumer Isbank Coverage Ratios Performing Loans NPL Private Sector Banks 4.1% 4.6% 3.9% 3.1% 2.3% 3.7% 5.5% 4.9% 5.3% 7.5% 2018 Q Q Q Stage 1 0.7% 0.8% 0.9% 0.8% Stage 2 8.8% 9.8% 10.9% 8.9% Stage % 65.8% 57.5% 58.7% Stage 3 (Total) (3) 157.6% 143.6% 128.5% 111.8% By 2018 year-end: Share of Stage 2 Loans in Total Performing Loans: 12.5% Specific Gross CoR (4) : 149 bps NPL Trends (Quarterly) (TL mn.) 2.29% 3.73% 2.58% 18 Q2 18 Q3 18 Q4 Additions to NPLs Recoveries Net NPL Formation Net Cost of Risk (2) Net NPL Formation Rate Quarterly Cumulative Provisions (TL mn) 18 Q1 18 Q2 18 Q3 18 Q Stage Stage , ,106 Stage ,228 1,298 3,882 Reversals (TL mn) (-) 18 Q1 18 Q2 18 Q3 18 Q Stage Stage Net CoR (5) 194 bps (1) Adjusted for the NPL sales made by peer group banks in the quarter. (2) Net NPL Formation (annualized)/ Average Performing Loans (3) (Provisions for Stage Free Provisions) / Non-performing Loans (4) (Stage Expected Credit Losses-Reversals) / Average Performing Loans (5) Stage 3 Expected Credit Losses / Average Performing Loans 12

13 Securities Portfolio Breakdown of TL & FX Securities Share in Total Sec. TL FX 78.9% 21.1% 47.9% 13.7% 38.4% % 99.9% CPI Linkers Floating (excl. CPI linkers) Fixed Yield of Securities (Quarterly) 18 Q3 18 Q4 Classification of Securities % 59.9% 0.6% 0.9% 39.2% 13.3% Measured at Fair Value through Profit/Loss Measured at Fair Value through OCI Measured at Amortised Cost Government bonds and treasury bills constitute. 98% of total portfolio % 14.77% TL Securities 5.26% 6.56% FX Securities Average durations 1.5 years for TL Securities 5.5 years for FX Securities CPI Linkers (Quarterly) 18 Q3 18 Q4 Yield 18.05% 23.90% Interest Income (TL mn.) 1,019 1,400 13

14 Strong Fund Generation Capability Main Balance Sheet Items Liabilities Composition (TL mn.) Change Deposits 203, , % REPOs & Money Market 19,834 9, % Funds Borrowed 38,424 44, % Securities Issued 25,911 29, % Other* 31,338 38, % Equity 42,984 49, % Total Liabilities & Equity 362, , % Largest TL funding base among private-sector banks 11.9% 11.9% 8.7% 9.1% 7.2% 7.1% 10.6% 10.8% 5.5% 2.2% 56.2% 58.9% Equity Other* Securities Issued Funds Borrowed REPOs&Money Market Deposits (*) Includes subordinated debt of USD 1.9 bn plus TL 1.1 bn as of 2017 and

15 Largest Deposits Franchise a clear indicator of customer trust. Deposits QoQ Change (TL mn.) Share of Demand Deposits (in Total Deposits) 0.9% 12.7% -7.4% 243, , % 22.6% 24.6% 26.3% 24.4% 100, , , ,214 TL FX * Total 2018 Q (*) 5.2% change in FX deposits when adjusted for the change in exchange rate. Deposits YtD Change (TL mn.) 16.5% 113,055 97, % 132, , , % TL FX * Total ,269 (*)-11.4% change in FX deposits when adjusted for the change in exchange rate Largest market share in total, TL, FX, demand and savings deposits among private sector banks Highest share of demand deposits (*) In total deposits: 24.4% In TL deposits : 19.9% In FX deposits : 28.8% Market share in demand deposits: 13.7% TL savings deposits account for 28.9% of total deposits. (*) Among peers. Excluding bank deposits for TL and FX portions. 15

16 Sufficient Capitalization Comfortable level of capital, well above the regulatory limit Capital Ratios (%) Basel III Buffers & Legal Requirements CAR Tier I Ratio Min. Legal Requirements (%) * * CAR 8 8 Tier 1 Ratio 6 6 CET 1 Ratio Buffers (%) Q Q Q (*) Without the impact of BRSA forebearance measures. Change in CAR Capital Conservation Buffer Counter Cyclical Buffer SIFI Buffer* - Group (*) Taken into consideration only on a consolidated basis 2018 Q3 Net Income 0.61% 14.41% 2019 Minimum Requirements (%) Bank-Only Consolidated Currency Impact on RWA Change in RWA (exc. curr. imp.)* Currency Impact on Subdebt MtM Losses in the period -0.34% 1.06% 0.50% 0.21% CAR Tier 1 Ratio CET 1 Ratio Other 0.03% 2018 Q % (*) Includes the impact on capital due to the general provision cap on Tier 2 capital, as well. 16

17 Margin & Spreads (1) NIM (Cumulative) (2) TL Loan-Deposit Spread (Quarterly) 17.80% 20.04% NIM NIM - Swap Adjusted 4.8% 4.7% 3.9% 3.7% 11.61% 6.19% 16.87% Loan Yield Deposit Cost TL Spread 3.17% NIM (Quarterly) (2) NIM NIM - Swap Adjusted 5.0% 3.7% 4.4% 2.9% 18 Q3 18 Q4 FX Loan-Deposit Spread (Quarterly) 7.54% 5.39% 1.68% 1.70% Loan Yield Deposit Cost 5.86% FX Spread 3.69% 18 Q3 18 Q4 18 Q3 18 Q4 (1) Based on MIS data (2) Interest earning assets include Central Bank reserves. 17

18 Fee Income Performance Fees & Commissions Income (Net) (TL thousand) YoY Cash Loans 418, , % Non-cash Loans 594, , % Mutual Fund Man. & Other Inv. Acc. Fees 279, , % Payment Systems 1,326,018 1,920, % (*) Other 755, , % Net Fees & Commissions 3,373,715 4,405, % Composition of Net Fees & Comm. Net Fees & Comm. Income Growth (YoY) 19.2% 18.9% 18.8% 30.6% Fees & Comm. Income Coverage 30.0% 29.4% 8.3% 7.0% 39.3% 43.6% 22.4% 20.0% Lending Related Fees Mutual Fund Man. & Other Inv. Acc. Fees Payment Systems Other (*) Net Fees & Comm. / OPEX Net Fees & Comm. / HR Expenses 119.9% 99.3% 54.8% 45.6% (*) Including Fund Transfer, Insurance, Account Keeping and Other fees. 18

19 Effective Cost Management Cost / Income (1) Employees per Branch 42.3% 40.5% 37.2% 36.4% (2) Cost / Income Cost vs. Assets Cost / Income (Adjusted) (3) İşbank Cost Structure Peer Average (4) Cost/Av. Assets 2.2% 2.1% Cost/Av. Assets (Adjusted) 2.0% 1.9% (3) 10.3% 11.1% 4.4% 4.6% 8.3% 6.8% 31.1% 31.8% 46.0% 45.7% Other SDIF Fees Depreciation Other Op. Expenses HR Expenses (2) (1) Income figures include income from participations according to IAS 27. As for 2018, income figure excludes +504 mn TL of IFRS 9 impact on other operating income. (2) Calculated using restated figures according to IAS 27. (3) Adjusted for non-recurring and other items. (4) Peer banks are defined as the closest 3 private sector banks. 19

20 Income Statement Highlights (TL mn.) 18 Q3 18 Q4 QoQ YoY Net Interest Income 5,040 4, % 13,208 17, % (-) SWAP Cost (1) 1,191 1, % 1,602 3, % Net Interest Income Incl. Swap Cost 3,849 2, % 11,606 13, % Net Fees & Commissions 1,123 1, % 3,374 4, % Net Trading Gains/Losses Excl. Swap Cost % % Other Operating Income % 1,158 1, % Total Operating Income 5,162 4, % 15,861 19, % (-) Released free provisions NM NM Total Operating Income - Adj. 5,162 4, % 15,861 18, % HR Expenses % 3,399 3, % Non-HR Expenses 1, % 3,997 4, % Total Operating Expenses 2,045 1, % 7,396 8, % (-) Provision for pension fund NM % (-) Pre-provision for pension fund NM 0 0 NM Total Operating Expenses - Adj. 1,895 1, % 7,147 7, % Operating Profit 3,116 2, % 8,465 11, % Operating Profit - Adj. 3,266 2, % 8,714 11, % Stage 3 Expected Credit Losses 1,228 1, % 1,943 3, % Stage 1+2 Expected Credit Losses 1, % 482 2, % Other Provision Charges NM % Total Provision Charges 2, % 2,633 6, % (-) Free provisions NM NM Total Provision Charges - Adj. 2, % 2,523 6, % Income from Participations % 1,610 2, % Tax Provisions NM 1, % Net Income 1,238 2, % 6,201 6, % NM: Not meaningful (1) Based on MIS data (2) 504 mn TL of this figure is resulting from IFRS 9 impact on other income. (2) 20

21 Profitability Ratios Return on Assets Return on Equity RoAA RoATA (1) RoAE RoATE (1) 15.4% 16.3% 14.8% 15.5% 1.84% 1.85% 1.70% 1.71% (2) (2) (1) Tangible Equity (TE) and Tangible Assets (TA) are calculated by the deduction of M-t-M valuation differences regarding AFS (Fin. Assets Measured at FV through OCI) portfolio and real estates from shareholders equity and total assets. (2) Calculated using restated figures according to IAS

22 Strong Focus on Digitalisation 207 5,218 6,741 1,620 2,792 2,687 Evolution of Share of Transactions per Channel Digital Banking Number of Customers ( 000) 74.8% Internet Banking Mobile Banking ATM Total Non-Branch 86.2% 88.5% ~ 7.2 mn digital customers 52.9% 37.6% 39.9% 22.6% 18.4% 30.3% 2.2% 21.1% 13.7% Mobile Banking Internet Banking Mobile Banking Market Shares * Share of Digital Channels in Retail Sales * # Transactions Investment 28.2% Credit Cards 17.2% Money Transfer 14.3% Payments 13.9% 63.9% 72.5% TL Time Deposits GPLs (*) Source: The Banks Association of Turkey, as of 2018 Q3. (*) Number of sales in 2018 Q4 22

23 Processes Policies Sustainability Senior level commitment in sustainability management Corporate Governance Committee Efficient governance structure for ESG activities Sustainability Management System Sustainability Policy Sustainability Coordinator Environmental and Social Impacts Policy Human Rights and Human Resources Policy Anti-bribery and Anticorruption Policy Gifts and Hospitality Policy Sustainability Service (Investor Relations Division) Sustainability Team - Evaluation of Environmental and Social Impacts Caused by Lending Activities - Evaluation of Internal Environmental Impacts - Calculation of GHG emissions - Training and Improving Internal Capacity - Reporting - Internal Audit and Internal Control - Management Review Environment-friendly buildings Head Office Atlas Data Center Tuzla Technology and Operations Center Risk assessment via Environmental and Social Risk Evaluation Tool for new investment projects worth more than USD 10 million İşbank Exclusion List of activities which are not financed Declaration of Sustainable Finance Strong support for renewable energy RE share in total energy projects portfolio %40 (As of ) Strong rights contributing to employee satisfaction (As of ) Unionized employees 99% Turnover rate 2% Return from maternity leave 98% Female employees 51% Female managers 41% 23

24 Isbank at a Glance 4 Financial Highlights 8 Appendix 25 24

25 Credit Card Business Over 334,912 Maximum Sales Points and over 392,500 chains are included in Maximum loyalty programme. The number of Maximum cards reached 13.7 million, 7.7 million of which are issued to Bank s own customers. Largest e-commerce acquirer in Turkey. 13 alternative payment methods (Ideal, Giropay, EPS, Alipay, QIWI, Mybank, Sofort, Entercash, Bancontact, Multibanco, P24, Trustpay, Safetypay) in e-commerce. Online merchants are able to accept these payment methods thanks to Isbank s strong e-commerce API. Acceptance of Visa, Mastercard, American Express, JCB and Union Pay branded cards. Merchant acquiring in UK and Georgia in addition to Turkey. Issuing debit cards in Iraq, UK, Georgia and Kosovo in addition to Turkey. (TL million) (*) Change Issuing Volume 96, , % Issuing Volume Market Share 14.2% 14.4% 20 bps Acquiring Volume 115, , % Acquiring Volume Market Share 16.9% 17.5% 63 bps Balance 15,050 17,119 14% Number of Credit Cards (000) 7,392 7, % Number of P.O.S. Terminals 461, , % (*) According to Interbank Card Center data 25

26 Isbank and Its Participations as one of the biggest conglomerates in Turkey. Isbank Banking Services Corporate Banking Commercial Banking Retail Banking Private Banking Capital Market Operations Other Banking Services Core Business Financial Participations Insurance Private Pension Asset Management Venture Capital Investment Banking REIT Leasing & Factoring Non-core Business Non-financial Participations Glass Others Brokerage & Custody 26

27 A Diversified Equity Participation Portfolio Sectoral Breakdown Participation Mix Glass 47.9% Other 4.1% Banks 20.5% 13.0% 14.5% Insurance Financial Ins. Non-Financial 52.0% Financial 48.0% As of 2018 year-end, Isbank has 17 participations. Share of participations in total assets is 4.2%. Since 2002, a total of 43 participations has been divested. Non - Listed 23.3% Listed 76.7% 27

28 Glass General Information Market/Production Shares (%)* Turkey Europe 2,3 World 3 A leading flat glass, glassware, glass packaging, glass fibre, soda ash and chromium chemicals producer in the domestic market. Backed by its vision, Şişecam expands its production Flat Glass Glassware Glass Packaging Soda Ash 4, Chromium Chemicals 5, operations into neighbouring countries % share of Şişecam is held by İşbank. Financial Information (Con., IFRS) USD (Million) M M Total Assets 4,968 5,767 Shareholders Equity 2,895 3,534 Net Sales 1,863 2,257 International Sales Gross Profit EBITDA (*) As of September (1) Includes exports and sales from production abroad. (2) Market shares including Turkey. For Flat Glass, Glassware and Soda Ash, European market does not include Russia and Ukraine. (3) Production/capacity shares. (4) Soda products are based on heavy soda ash and light soda ash in the domestic, European and Global market. Soda ash sales within Turkey and BiH are considered in European market share. (5) Chromium chemicals are based on Basic Chromium Sulphate. (6) Market share in terms of units. (7) Market share in terms of revenue. (8) Market share in terms of tonnage. 28

29 Production Plants of Şişecam The Group enlarges its business area by expanding its operations to the fastest-growing countries in its region. 29

30 List of Financial Participations Company Name Field of Activity Bank s Direct Share(%) Risk Group Share (%) Shareholders Assets (USD Market 000) (3) Equity (USD 000) (3) Share (%) (3) Basis for Market Share Türkiye Sınai Kalkınma Bankası A.Ş. Investment Bank ,319, , Total Assets İşbank AG Banking ,069, ,694 N/A JSC İşbank Banking ,968 57,941 N/A JSC Isbank Georgia Banking ,738 28,336 0,66 Total Assets Anadolu Anonim Türk Sigorta Şirketi Insurance ,338, ,057 12,00 Premium Income Anadolu Hayat Emeklilik A.Ş. Life Insurance & Private Pension ,334, , / 8.8 (1) Management / Life Premium Private Pension Funds Under Income Milli Reasürans T.A.Ş. Reinsurance , , (2) Premium Income İş Yatırım Menkul Değerler A.Ş. (4) Brokerage House ,285, , Transaction Volume Yatırım Finansman Menkul Değerler A.Ş. (4) Brokerage House ,742 15, Transaction Volume İş Yatırım Ortaklığı A.Ş. Trust Company ,380 38, NAV İş Portföy Yönetimi A.Ş. Portfolio Mngt ,712 16, Funds Under Management İş Finansal Kiralama A.Ş. (4) Leasing ,540, , Lease Receivables İş Faktoring A.Ş. Factoring ,632 46, Factoring Receivables İş Gayrimenkul Yatırım Ortaklığı A.Ş. REIT 47,44 63,24 984, ,530 4,3 Market Value İş Girişim Sermayesi Yatırım Ortaklığı A.Ş. Risk Venture ,898 43,573 - Efes Varlık Yönetim A.Ş. Asset Management ,840 5,278 TOTAL 18,559,900 2,900,278 (1) As of September 30, 2018; total amount of funds (including state contribution) managed within private pension system is TL 86,9 billion while Anadolu Hayat Emeklilik accounts for %18.7 of this figure. The company s market share in life insurance market is %8.8 as of the same date. (2) Milli Reasürans T.A.Ş. is the only reinsurance company backed by national capital operating in Turkey with a market share of 6.2%. The rest 93.8% is shared by foreign reinsurance companies. (3) As of September 30, 2018 (4) Consolidated amount 30 -

31 Disclaimer Statement The information in this document has been obtained by Turkiye Is Bankasi A.S. ( 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 or consequential loss arising from any use of this document or its contents due to the misleading information in this document. All estimations contained in this document are the opinions of Isbank and can be subject to change without notice. This document can not be interpreted as an advice to the investors 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 or shared with third parties for any purpose. 31

32 Investor Relations Contact Details Süleyman H. Özcan Head of Investor Relations Division Phone: İşbank Investor Relations Türkiye İş Bankası Head Office İş Kuleleri Kule Levent/Istanbul - Turkey investorrelations@isbank.com.tr Alper Turgal Unit Manager Phone: Alper.Turgal@isbank.com.tr For the soft copy of this presentation, please follow the QR code: Özge Han Mercimekçi Assistant Manager Phone: Ozge.Han@isbank.com.tr 32