Alternatif Bank. International Financial Institutions, June 2018

Transcription

1 Alternatif Bank International Financial Institutions, June 2018

2 Contents 1. Turkish Macroeconomy and Regulatory Environment 2. Alternatif Bank Overview 3. Ownership 4. Business Strategy 5. Financial Overview 6. Balance Sheet and Income Statement

3 1. Turkish Macroeconomy and Regulatory Environment 3

4 Macroeconomic Indicators Key Highligts Stable economic growth with 4.8% CAGR over the last decade The fastest growing economy among OECD countries during with an average annual real GDP growth rate of 5.7% More than six-fold decrease in Public Net Debt Stock as a percentage of GDP since Global EM sell off has recently stabilized and TRY performance is stonger New Economic Plan projects CPI to be at 20.8% level by y/e 2018, while the surge in CPI to 24.5% requires a tighter monetary and fiscal policy stance. 3,5 3,0 2,5 2,0 1,5 1,0 0,5 GDP of Turkey (Current Prices, TL tn) 0,6 0,7 0,8 0,9 1,0 1,0 1,2 1,4 1,6 1,8 2,0 2,3 2,6 3,0 Turkey Inflation (%) Public Debt Net Stock / GDP (%) CPI PPI Sound macroeconomic and prudent fiscal policies combined with vigorous economic reforms have enabled Turkey to present remarkable growth performance over the last decade Source: Turkish Statistical Institute (TUIK), OECD, Undersecreteriat of Treasury, Alternatif Bank Economist 50% 40% 30% 20% 10% 0% 49% 42% 34%29% 28% 33% 27% 21% 15%11% 9% 7% 8% 9%

5 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Sep-18 Macroeconomic Indicators Turkish External Debt Redemptions * 12,0 Real Effective Exchange Rate ,0 8,0 6,0 4,0 2,0 0,0 0,85 1,36 5,53 Sep ,71 1,89 7,04 Oct ,51 1,31 2,71 Nov ,38 1,65 5,31 Dec ,35 0,41 1,49 1,20 1,57 1,75 Jan 2019 Feb ,82 1,17 2,47 Mar ,45 1,12 4,97 Apr 2019 Financial Non-Financial Public * Excluding commercial loans 0,50 1,53 6,32 May ,35 2,08 3,38 Jun ,6 60 * Spet. 2018; Lowest Since 1994 Source: Alternatif Bank Economist

6 Turkish Regulatory Environment Turkish banks are already prepared to meet the new capital requirements of Basel III. Regulatory capital requirements are as follows: Capital Adequacy Ratios Capitalization Total Capital Ratio 8.00% 8.63% 9.25% 9.88% 10.50% Tier 1 Ratio 6.00% 6.63% 7.25% 7.88% 8.50% Tangible Common Equity Ratio 4.50% 5.13% 5.75% 6.38% 7.00% Capital Conservation Buffer 0.00% 0.63% 1.25% 1.88% 2.50% Regulation on Systemically Important Financial Institutions (SIFI) has been implemented gradually starting from March 2016 to 2019, and Bank s classification has been determined by BRSA. Leverage ratio was set at 3% minimum and is being reported for informative purposes since the beginning of Lending Exposure Limits Single obligor exposure limit: < 25% of total equity Related party exposure limit: < 20% of total equity Liquidity Total liquidity coverage ratio is set 90% for 2018 and will be increased by 10% for 2019 reaching 100%. Net Stable Funding Ratio (NSFR), one of the Basel III liquidity requirements, has not been regulated in Turkey yet. Source: Banking Regulation and Supervision Agency (BRSA)

7 Turkish Regulatory Environment The Reserve Requirement Ratios for liabilities other than deposits/participation funds has been revised as follows: Turkish Central Bank s Reserve Requirement Ratios Maturities up to (and including) 1 year: 20% Maturities up to (and including) 2 years: 15% Maturities up to (and including) 3 years: 10% Maturities up to (and including) 5 years: 6% Maturities longer than 5 years: 4% IFRS 9 Alternatif Bank became IFRS 9 compliant as of January Source: Central Bank Of The Republic Of Turkey

8 Turkish Regulatory Environment The New Economic Programme has been introduced Substantial policy rate increase by Central Bank (Latest on 13 Sep2018 by 6.25% to 24%) AFS portfolio mark-to-market changes to be excluded in CAR calculations. The higher of last one year's average USD/TL FX rate compared to 30/06/2018 (4,56) rate to be used in CAR calculations. Regulatory Forbearance Measures Foreign-exchange reserves held at the central bank to have 0% risk weights Small and medium-sized enterprise lending under the Credit Guarantee Fund to have 0% risk weights Banks to use alternative rating agencies (that still rate the sovereign at investment grade) for their sovereign bond exposures BRSA Restriction on swap contracts by 25 percent of banks equity they hold. Export revenues will be transferred directly and without delay to Turkey Prohibiton of Foreign Currency Contracts between Turkish Residents Signing of Framework Agreement by Turkish Banks for loan restructuring

9 2. Alternatif Bank Overview 9

10 Brief History of Alternatif Bank Alternatif Bank was incorporated as a joint stock company November 1991 Share trading started on the Istanbul Stock Exchange July 1995 The Commercial Bank acquired 70.84% of Alternatif Bank s shares July 2013 In 2015 «Transformation Project» strategy kicked off and transformation started The Commercial Bank initiated squeeze-out process of 0.75% shares July 2014 Squeeze-out process of 0.75% shares finalized and The Commercial Bank shares reached 75% July 2015 On 6 March 2018 Alternatif Bank launched its rebranding to bring more visibility of The Commercial Bank ownership Alternatif Bank commenced operations February 1992 Alternatif Bank began to operate under the majority ownership of the Anadolu Group 1996 The Commercial Bank acquired additional equity interest of 3.40% September 2013 On 19 December 2016 The Commercial Bank has acquired the remaining 25% shares from Anadolu Endüstri Holding A.Ş. and Alternatif Bank became 100% subsidiary of the CB

11 Key Figures Key Figures As of 30 June Total Assets TL 25.6 bn Cash Loans and Leasing Receivables TL 17.3 bn Net Profit / (Loss) TL mio Total Deposits TL 14 bn Shareholders Equity TL 1.4 bn CAR 15.9% Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations Note: As of 30 Jun 2018, 1 USD = TL

12 Ratings Alternatif Bank s Ratings From Moody s Alternatif Bank s Ratings From Fitch Moody s LT Rating ST Outlook Fitch LT Rating ST Outlook Foreign Currency Deposit B2 NP Negative Local Currency Deposit Ba3 NP Negative National Aa1.tr TR-1 - Foreign Currency IDR BB- B Negative Local Currency IDR BB B Negative National (LT) AA (tur) Stable Both Fitch and Moody s emphasize The Commercial Bank s strong support potential to Alternatif Bank. Ratings of The Commercial Bank - Qatar Foreign Currency Rating Agency Outlook LT ST Moody s A3 P-2 Stable S&P BBB+ A-2 Negative Fitch A F1 Stable Source: Alternatif Bank Investor Relations; Alternatif Bank and The Commercial Bank Rating Reports sourced from Moody s, S&P and Fitch

13 3. Ownership 13

14 Alternatif Bank - Ownership The Commercial Bank (CB) acquired 70.84% on 18 July 2013 and an additional equity interest of 3.40% in September On 2 July 2014 CB has initiated squeeze out process to procure the remaining publicly held shares of 0.75% in Alternatif Bank. The process has been completed in July 2015 and CB ownership reached 75%. On 19 December 2016 The Commercial Bank has acquired the remaining 25% shares from Anadolu Endüstri Holding A.Ş. and Alternatif Bank became 100% subsidiary of the CB. 100% The Commercial Bank Ownership

15 The Commercial Bank Qatar Key Facts Highlights Key Figures as of 30 June 2018 Qatar s first private bank founded in 1975, and one of the largest conventional bank in terms of total assets. Proven strength in Retail Banking and a leading credit card provider. Leading corporate and trade finance bank in Qatar. Major issuer of Guarantees for large projects in Qatar. Wide distribution network with 30 full service branches and 173 ATMs. Presence in Turkey, UAE and Oman through Alternatif Bank, National Bank of Oman and United Arab Bank. Diversified funding and large investor base through GDR and EMTN programme listings in London, as well as Swiss Franc bond issuance in Switzerland. Systemic importance to the Qatari banking sector given the Bank s scale. Relationships with majority of large Corporates in Qatar and strong market shares across all sectors. Recognized for high quality corporate banking services; including trade finance, structured finance, cash management, origination and syndications, investment banking services and treasury solutions Total Assets $ 38 Bn Total Loans $ 24 Bn Net Profit $ 235mio CAR 14.5 % Total Deposits $ 20.6 Bn Total Equity $ 5.3 Bn ROAE 8.5% Strong credit ratings; Moody s: A3, Fitch: A, S&P: BBB+ Note: As of 30June 2018: 1 USD=3,6243QAR

16 4. Business Strategy

17 Business Segments Corporate Banking Commercial Banking Affluent Banking Serves the companies with annual turnover of TL 300 million and above with the objective of managing; The Capital Structure (Structured Finance/ Working Capital Solutions) Liquidity risk (Cash management services) Supply and Payment cycle (Trade Finance services) FX, Commodity& Interest Rate Risk (Hedging solutions) Leveraging client relationship with CB and Alliance Banks synergies. Companies with up to TL 300 million turnover, with particular focus between TL 10 million TL 300 million turnover. Cross-sell opportunities and diversified income generation capabilities to be pursued. Focus on collecting and sustaining individual deposits from affluent customers. Prioritization of Deposit and Investment Products Providing High Quality Service with X-sell Products Leverage alternative channels for acquisition and extending loans through strategic partnerships Exclusive Banking to target customers of Alliance Banks. 17

18 Branch Network An efficient network of 48 branches covering major industrialized regions of Turkey, where more than 85% of the GDP is generated. Well equipped branches servicing customers in all business segments. 4 Branches are specially designated as Corporate Branches. Corporate Branches ISTANBUL İstanbul and Kozyatağı Tekirdağ (1) Istanbul (24) İzmir (3) Manisa (1) Kocaeli (1) Bursa (1) Sakarya (1) Ankara (4) Eskişehir (1) Aydın (1) Konya (1) Denizli (1) Muğla (1) Antalya (1) Mersin (1) Samsun (1) Trabzon (1) Kayseri (1) Adana (1) Gaziantep (1) ANKARA Ankara Branch IZMIR Ege Branch

19 Financial Subsidiaries Alternatif Lease Summary Established in 1997 and became a wholly owned subsidiary of Alternatif Bank in November 2013 Mid-sized leasing company, with a market share of 3.1% as of December 2017 in lease portfolio basis among 25 firms Alternatif Lease activity is also supervised by Alternatif Bank through common risk, audit and asset and liabilities management committees Alternatif Lease benefits from the Bank s distribution network (37% of Alternatif Lease s sales were realized by Alternatif Bank s branches), technology and other operational functions Alternatif Lease has 3 branches located in Ankara, İzmir and Adana and diversifies its delivery channels via vendors and direct marketing Alternatif Lease s Ratings from Fitch TL mio Jun 17 Dec 17 Jun 18 Net Lease Receivables Total Assets Borrowings Total Equity Interest Income,net Income Before Tax Net Income for the period YoY Change 1, , , % 1, , , % 1, , , % % % % % FOREIGN CURRENCY Long-Term Short- Term Support Rating TURKISH LIRA Long-Term Short- Term National BB- (Negative) B 3 BB (Negative) Source: Company information, included in BRSA Consolidated Financial Statements B AA (tur) (Stable)

20 Financial Subsidiaries Alternatif Menkul Summary Established in 1997 and is a wholly owned subsidiary of Alternatif Bank Key Financials TL mio Jun-17 Dec-17 Jun-18 YoY Change Alternatif Menkul provides boutique investment banking services to its Total Assets % clients as well as Corporate Finance, Investment Advisory and Discretionary Portfolio Management services. Commission Income Interest Income, net % % Net Income % Source: Company information, included in BRSA Consolidated Financial Statements

21 5. Alternatif Bank Overview 21

22 Key Financials Total Assets (TL mio) Cash Loans (TL mio)* 38% 45% % % Jun 2017 Dec 2018 Jun 2017 Jun 2017 Dec 2018 Jun (*) Including leasing receivables Net Profit (TL mio) Deposits (TL mio) 95% 52% 70,1 88, % Jun 2017 Dec 2018 Jun Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations 2017 Jun 2017 Dec 2018 Jun

23 Key Financials Balance Sheet TL mio Jun-17 Dec-17 Jun-18 Total Assets 18,526 20,785 25,619 Cash Loans & Leasing Rec** 11,884 14,304 17,254 Deposits 9,193 11,242 14,011 Shareholders' Equity 1,388 1,681 1,426 Subordinated Loan 1,503 1,330 1,609 Performance Ratios Jun-17 Dec-17 Jun-18 ROAE 10.6% 6.0% 17.6% ROAA 0.8% 0.5% 1.2% NPL Ratio 4.3% 4.4% 3.3% Coverage Ratio 58.1% 56.6% 169.4% Loan to Deposits Ratio 114.2% 114.0% 110.4% * Loan to deposit ratio: Leasing receivables excluded Capital Jun-17 Dec-17 Jun-18 CAR 18.7% 17.1% 15.88% Tier 1 ratio 8.4% 9.1% 7.9% Shareholders' Equity (TL m) 1,388 1,681 1,426 Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations

24 Balance Sheet Composition Asset Composition Liabilities Composition 3% 3% 4% 65% 70% 66% 18% 15% 17% 7% 8% 6% 22% 19% 20% 3% 3% 3% 14% 13% 12% 18% 14% 18% 2017 Jun 2017 Dec 2018 Jun Cash Securities Loans & Leasing Rec Other 50% 54% 55% 2017 Jun 2017 Dec 2018 Jun Deposits Money Markets Funds Borrowed Equity Other Other assets include: tangible and intangible assets, assets for tax and other assets. Other liabilities include: other liabilities, provisions and miscellaneous payables Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations

25 Capitalization Summary Shareholders equity is million TL as of 30 June Total capital adequacy ratio of 15.88% as of 30 June 2018, well above regulatory minimum. USD 75 million Additional Tier 1 in July 2017.* USD 50 million capital injection from the CB in January Risk Weighted Assets (TL mio) Shareholders Equity (TL mio) , Jun 2017 Dec 2018 Jun Capital Adequacy Ratio Credit Risk Market Risk Operational Risk ,74% 17,07% 15,88% 2017 Jun 2017 Dec 2018 Jun Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations * USD 75 million tranche of the USD 125 million subordinated loan which has originally been received in June 2015 has been converted to AT1 on 31 July Jun 2017 Dec 2018 Jun

26 Loan Portfolio Composition (Q2 2018) Chemical Products; 1,5%; Other; 5,9% Electrical Equipment; 1,7%; Construction; 17,1%; Plastic and Rubber; 1,8% Mining; 2,3% Food; 2,8%; Banking; 3,6%; Textile; 4,4% Other Manufacturing; 4,5% Metal Industry; 5,2% Energy; 5,2%; Logistic; 6,7% Non-Banking; 9,6%; Services; 9,6% Wholesale Trading; 9,1% Retail Trading; 9,0% Breakdown of «Other» 5,9% Machinery 1,1% Automotive 1,1% Tourism and Hotels 1,0% Communication 0,9% Health and Social Services 0,7% Forest Products and Paper 0,6% Agriculture 0,5% Education 0,1% Public Services 0,0% The loan portfolio is well diversified across industry sectors. We pay particular attention to more effective utilisation of capital, and maintaining a high level of asset quality within the context of Basel III compliance Source: Based on consolidated financial statements as of 30 June 2018 in accordance with BRSA regulations

27 Alternatif Bank Funding Sources Q Funding Structure Deposits; 59% Syndicated & Bilateral Loans; 12% Loans from the DFIs; 3% Senior Eurobond; 5% Subordianted & AT1 Bonds & Loans; 8% Other *; 9% MM - Repos - Local Bonds; 4% * Other include Alternatif Lease s funds borrowed as well as Alternatif Bank s other sources of funds apart from those indicated on the piechart Loan name 28% Share of Funds From International Markets as of Q Tenor Outstanding as of Q (USD mio) Bilateral Loans 6m - 1 yr 305 Syndicated Loan 1 & 2 yrs 227 LT Bilateral Loans 1-3 yrs 60 Loans from the DFIs 1-10 yrs 133 Eurobond (Senior) 5 yrs 250 Subordinated Instr. 10 yrs 350 AT1 Loan Perpetual 75 TOTAL AT1 Loan Conversion in July 2017 USD 75m Tier 2 Loan from Associate Banks in June 2015 USD 50m Basel III compliant Tier 2 Eurobond issuance in April 2016 USD 300m Syndicated Loan facility renewed in August 2018 with the support of 11 banks USD 134m Alternatif Bank s funding strategy aims to lengthen the maturity profile, diversify the resources and reduce costs Source: Alternartif Bank Investor Relations; Alternatif Bank BRSA Consolidated Financial Statements as of 30 June

28 Alternatif Bank s Succesful Tier 2 Eurobond Issuance Transaction Highlights In April 2016, Alternatifbank A.Ş. issued a US$300m 10NC5 RegS Only Subordinated Basel III Compliant Tier 2 offering The transaction was preceded by a comprehensive roadshow during which Alternatif Bank s senior management met accounts across the Middle East, Asia, UK and Switzerland The deal received broad appetite from over 160 international investors and was closed with 4.2 times oversubscription stemming from a high investor demand. The momentum in the order book enabled Alternatif Bank to achieve an attractive coupon pricing and deal was closed at considerably inside of IPTs of 10% area. Initial demand reaching USD 500 million shortly after the opening of the books and total order book exceeding USD 1.3 billion just before closing displayed the intensity of investor interest. The pricing has been revised in three steps leading to an overall tightening of around 100bp. On the back of strong investor appetite, final pricing has reached at 9% (MS + 783) with coupon materialized at 8.75%. The transaction highlights the investor interest in Turkish capital market transactions as well as in Alternatif Bank as an important subsidiary of The Commercial Bank PSQC This is Alternatif Bank s second issuance in the Eurobond market, following the inaugural USD 250mn 5yr senior unsecured CB-guaranteed transaction in July Breakdown of Investor Base Fund Managers 47% Insurance / Pension 3% Transaction Banks / Private Banks 50% Middle East 16% Asia 14% Rest of Europe 17% Other 2% UK 27% Switzerland 24% Issuer: Alternatifbank A.Ş. Issue Ratings: B1 / BB- (Moody's / Fitch) Format: Reg S Only Regulatory Treatment: Basel III Tier 2 Capital Maturity: 10NC5 due April 2026 Size: USD 300mn Coupon: 8.750% Reoffer Yield: 9.000% Reoffer M/S Spread: 783.3bp Reoffer Price: 99.01% Min. Denoms.: USD 200,000 x USD 1,000 Listing: Irish Stock Exchange Bookrunners: BAML /Citi /Commerzbank

29 6. Balance Sheet & Income Statement

30 Balance Sheet Assets (TL 000) Dec-17 Jun-18 Change (%) Liabilities (TL 000) Dec-17 Jun-18 Change (%) CASH AND BALANCES WITH CENTRAL BANK 2,287,411 2,807,803 23% DEPOSITS 11,241,898 14,011,263 25% FINANCIAL ASSETS AT FVTPL 95, , % DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING 166, ,330 32% BANKS 351, ,379 56% FUNDS BORROWED 4,019,045 5,249,945 31% MONEY MARKETS PLACEMENTS 350,122 1,330, % MONEY MARKET FUNDS 625, ,142 7% FINANCIAL ASSETS AVAILABLE-FOR-SALE 1,648,746 1,742,884 6% MARKETABLE SECURITIES ISSUED 1,197,506 1,739,882 45% LOANS 12,989,175 14,924,835 15% MISCELLANEOUS PAYABLES 280, ,751 75% Loans 12,704,816 15,327,779 21% OTHER LIABILITIES 78,259 74,383-5% Non Performing Loans 655, ,708-11% DERIVATIVE FOR HEDGING 0 0 0% Specific Provisions (-) 371, , % PROVISIONS 120,774 84,058-30% LEASE RECEIVABLES (Net) 1,599,132 1,926,128 20% TAX LIABILITY 37,565 33,682-10% TANGIBLE ASSETS (Net) 38, , % PAYABLES FOR AHRS 5,873 7,336 25% INTANGIBLE ASSETS (Net) 93,041 96,854 4% SUBORDINATED LOANS 1,330,146 1,609,152 21% TAX ASSET 47, , % LIABILITIES 19,104,006 24,192,924 27% OTHER ASSETS 400, ,514-26% SHAREHOLDERS' EQUITY 1,681,015 1,426,065-15% TOTAL ASSETS 20,785,021 25,618,989 23% TOTAL LIABILITIES 20,785,021 25,618,989 23% 30

31 Income Statement Consolidated Income Statement (TL 000) Jun-17 Jun-18 Change (%) Interest Income 677, ,566 45% Interest Expense (427,555) (661,801) 55% Net Interest Income 249, ,765 29% Net Fee and Commission Income 30,262 25,330-16% Trading Income / Loss (Net) 5,838 48, % Other Operating Income 149, ,969 43% Total Operating Income 435, ,341 40% Provision for loan losses and other receivables (97,637) (192,816) 97% Other Operating Expenses (255,884) (270,033) 6% Net Operating Income 81, ,492 78% Income Tax (11,633) (8,891) -24% NET INCOME 70, ,601 95%

32 alternatifbank.com.tr Alternatif Bank Alternatifbank A.Ş. Head Office Cumhuriyet Caddesi No: Elmadağ, Istanbul, Turkey