Şekerbank T.A.Ş. Presentation on the Consolidated Financial Results as of

Transcription

1 Şekerbank T.A.Ş. Presentation on the Consolidated Financial Results as of

2 Table of content 1. Şekerbank At a Glance 2 2. Balance Sheet Structure and Asset Quality Funding Structure and Liquidity Income Statement and Profitability Capital Adequacy

3 Şekerbank At a Glance

4 65 years of Experience in Community Banking Foundation and Strategy Our Vision To become the leading bank in financing small enterprises among Turkey s top ten private banks in terms of asset size. Our Vision With the Community Banking understanding from village to city, we are a modern bank that considers both local features and needs, introduces banking services to those who do not have any bank, grows by creating value together with its satisfied customers, employees and partners, and gains its strength from its deep rooted past. Shareholder Structure Founded on October 12, 1953, to finance the agricultural industry and rural development, Şekerbank has provided support to production for the past 65 years in line with its tradition of responsible banking. Free Floats : 34,2% (International Finance Corporation:6,1%) Şekerbank T.A.Ş. 9,4% Other 1,6% Samruk-Kazyna 19,4% Şekerbank T.A.Ş. Pension Fund 35,4% 3

5 Milestones Founded as the Sugar Beet Cooperative Bank in Eskişehir Initial Public Offering First Bank to receive Corporate Governance Rating in Turkey. First micro-finance propject within Turkey Transfer of BTA Group shares to Samruk Kazyna, the Sovereign Wealth Fund of Kazakhstan Turkey s first 5-year syndicated loan facility Signed the Declaration on Sustainable Finance İssued a 10-year, variablerate, lira-denominated domestic subordinated (Tier II) debt security Finalised Tier II transaction of 85 million USD Moved to Ankara and renamed as Şekerbank Initiation of Restructuring: Change from a traditional commercial bank to a multi channel, diversified financial institution based on customer and segment focused practices Partnership with international investor: (BTA Group, Kazakhstan became 33.9% shareholder) Equity investment of IFC: Personnel Social Security Foundation of Şekerbank and IFC signed an option agreement for IFC purchasing Şekerbank shares up to 5% First SME backed Covered Bond issuance in the world Launched Family Farming Banking Wins Leaders in Water Management Award Given the Best Syndication Loan Supporting Energy Efficiency prize 65th anniversary of the Bank 4

6 Well-Established Network İstanbul 49 Kastomunu Sinop Zonguldak Samsun Artvin Çankırı Ordu Trabzon Rize ÇorumAmasya Tokat Giresun G.Hane Çanakkale Bursa Bilecik Eskişehir Bayburt Ankara Erzurum Balıkesir Kırıkkale Ankara Erzincan Iğdır 28 Yozgat Sivas Ağrı Kütahya Kırşehir Tunceli Bingöl Muş Manisa Nevşehir Uşak Afyon Kayseri İzmir Malatya Elazığ İzmir Konya Aksaray Bitlis Van 15 Isparta Niğde K.Maraş Diyarbakır Siirt Aydın Denizli Adıyaman Burdur Şırnak Antalya Muğla Antalya Adana Mardin Antalya 11 Karaman p Ş.Urfa >10 Branches 6-10 Branches 2-5 Branches Single Branch No Branch 273 branches in Turkey (in 71 cities and 97 rural districts) Most of the branches have been located at the same place for over half a century 2 regional offices in Istanbul and 7 regional offices throughout Anatolia. 70% of branches are located outside the three big cities. Number of employees: Şekerbank Şeker Leasing Şeker Finance Şeker Factoring Zahlungsdienste GmbH Şekerbank (Kıbrıs) Şeker Securities Şekerbank International Banking Unit Şeker Project A.Ş. under transformation process to REIT * Bank Only Represents 95% of Consolidated Group 5

7 Strategy and Transformation Program Strategic Focus Areas SME Focus Prioritizing Small Business and Agricultural Banking while increasing productivity in Large SMEs Sustainable Development Banking Focus Financing Energy Efficiency and Expanding Financial Inclusion with a constant focus on innovation aligned with the UN SDGs Broad-based Retail Deposit Focus Enhancing the widespread and solid deposit structure by further diversifying the funding structure Community Banking with a Geographical Focus Enhancing local banking competency through deep-rooted branch network in Anatolia where profitability and asset quality is higher. Şekerbank initiated an extensive Transformation Program in July 2018 in order to better align with the niche strategy for a sustainable, strong and profitable growth 6 Building the infrastructure that will ensure strong and profitable growth 1. Target operating model for operations 2. Lean and agile IT 3. Data infrastructure set up and management 4. Multi channel strategy and digitalization 5. Lean and automated processes Improving competitive positioning with actions that will accelerate growth and profitability 6. Fair and sustainable deposit pricing 7. Growth in demand deposit 8. Effective reporting 9. New customer acquisition 10. Sales force effectiveness 11. Preparing for issuing green bonds 12. Customer churn management 13. Cross sell improvement Healthy growth in SME loans and improving asset quality & productivity 14. Fair and sustainable loan pricing 15. Credit analysis, allocation policy and processes, automated limit allocation models for SME&Agriculture segments, reestablishing all application scorecards. 16. Effective risk monitoring and control, early warning and collection models 17. Value-based loan management Lean organizational structure and effective cost management 18. Effective performance management systems 19. Effective OPEX management 20. Lean and agile HR

8 Key Financial Highlights 30 September 2018 (TRY MM) Consolidated Bank-Only Total Assets Net Loans SME Loans/Total Loans 55,8% 57,0% Deposits Loan/Deposit Ratio 96,7% 90,1% Shareholders Equity Return on Equity (ROE) 5,27% 4,64% Pre-Impairement Operating Profit/ Avg. Shareholders Equity 33,95% 30,95% Tier I Ratio 10,20% 10,66% Capital Adequacy Ratio (CAR) 13,41% 14,13% Liquidity Coverage Ratio (TL+FC) 119,52% 121,27% Liquidity Coverage Ratio (FC) 201,44% 182,42% NPL Ratio 5,01% 4,70% NPL Coverage Ratio 76,59% 76,74% 7

9 Balance Sheet Structure and Asset Quality

10 Loans Deposits Balance Sheet Structure Total Assets TL dominated loan structure Liabilities and Equity Solid and borad-based deposit structure Total Assets (TRY MM) ,4% 4,0% 12,7% Loans Breakdown 5,6% Liabilities and Equity (TRY MM) ,7% 6,8% 2,7% 3,7% Deposits Breakdown 10,1% 14,4% 38,6% 55,8% 13,3% 89,9% SME Corporate Retail Time Demand 66,5% 68,7% 34,6% 44,1% 55,9% 65,4% 2018 Q3 TL Loans FC Loans 2018 Q3 TL Deposits FC Deposits Other Non Current Assets and Investments in associates and subsidiaies Financial Assets (Net) Cash and cash equivalents Loans (Net) Other Shareholders` Equity Subordinated Debt Instruments Marketable Securities Issued (Net) Loans Received and MM Funds Deposits 9

11 Loan Structure Loan Growth Net Loans in Local & Foreign Currency and Total Loans Loan Type Evolution (TRY MM) 20,930 22,615 23,278 23, ,910 16,882 16,889 15, ,020 5,733 6,390 8,276 $1,331 $1,452 $1,401 $1, YE (*) 2018 Q Q Q YE (*) 2018 Q Q Q3 Cash Non-Cash Local Currency FC Net Loans in USD Foreign Currency Total Loans Highly Diversified Loan Book Focus on SME Cash Loans Breakdown by Sector (%) Cash Loan Breakdown by Segments (%) 9,5% 10,1% 2,5% 3,5% 10,6% 15,5% Agricultural Manufacturing Construction Services 7,1% 6,2% 5,9% 5,6% 45,9% 48,2% 35,8% 38,6% Wholesale and retails trade Tourism 47,0% 45,5% 58,3% 55,8% 15,1% 15,5% 17,7% Transportation Financial Institutions Other 2017 YE (*) 2018 Q Q Q3 SME (Inc. Large SME) Corporate Retail 10 (*) IFRS 9 standards implemented as of 01/01/2018

12 50, 0% ,0 % Loans and Provision Coverage Ratios (Bank Only) Provisions / Gross Loans Stage I Loans to Gross Loans 5,65% 5,65% 5,75% 6,09% 0,6% 0,6% 0,5% 0,6% 85,8% 86,5% 85,0% 83,2% 2017 YE * 2018 Q Q Q YE * 2018 Q Q Q3 Provisions / Gross Loans Stage I Loan Ratio Prov Coverage Ratio Stage II Loans to Gross Loans Stage III Loans to Gross Loans 17,7% 20,0% 17,8% 16,7% 72,0% 73,4% 74,5% 76,7% 9,4% 8,8% 10,4% 12,1% 4,8% 4,6% 4,6% 4,7% 2017 YE * 2018 Q Q Q3 Prov Coverage Ratio Stage II Loan Ratio 2017 YE * 2018 Q Q Q3 Prov Coverage Ratio Stage III Loan Ratio * 2017 YE figures are recasted for the IFRS 9 adoption 11

13 75, 0% 70, 0% 65, 0% 60, 0% 55, 0% 50, 0% 45, 0% 40, 0% 35, 0% 30, 0% 2,0 0% Asset Quality NPL Exposure Maintained Stable Bank-only Bank-only NPL MOVEMENT (MM TL) 3,2% 3,4% 3,3% 3,3% NPL 2017-YE Addition Collections NPL 2018-Q YE 2018 Q Q Q3 Total NPL (TRY MM) NPL/Total Assets 441 Hard Collateralisation Improving NPL Ratio Bank-only Bank-only 74,0% 72,5% 73,3% 73,2% 4,8% 4,6% 4,6% 4,7% ,2% 3,4% 3,3% 3,3% 2017 YE 2018 Q Q Q YE (*) 2018 Q Q Q3 Total Hard Collateral Amount (MM TL) Collateralisation NPL/Total Assets NPL/Gross Loans (*) IFRS 9 standards implemented as of 01/01/

14 Securities Securities/Assets Composition by Type ,6% 3,5% 3,0% 2,3% 3,7% 7,7% 9,4% 8,5% 9,1% 9,4% 10,5% 49,4% 48,0% 92,8% 89,3% 88,3% (*) The Bank has classified fair value through other comprehensive income amounting to TL 1,278 billion which were classified as available for sale financial asset as of 31 December 2017, as measured at amortised cost as of 1 January 2018 with the TFRS 9 transition YE (*) 2018 Q Q Q YE 2018 Q Q Q3 Fin. assets at amortised cost (Held to Maturity Portfolio) Fin. assets at FV through OCI (Available for Sale Portfolio) Fin. assets at FV through PL (Trading Portfolio) Composition by Currency as of 30 Sept 2018 Composition by Classification as of 30 Sept 2018 Fin. assets at FV through PL Fin. assets at amortised cost 12% Fin. assets at FV through OCI 6% TL 7,8% 33% 20,9% 67% 71,3% CPI Linker FRN Fixed 88% FC 94% 100,0% TL FC (*) IFRS 9 standards implemented as of 01/01/2018. The prior period financial statements are not restated as permitted by TFRS 9 transition rules. 13

15 Funding Structure and Liquidity

16 Funding Overview Total Liabilities Evolution (TRY MM ) Diversified Funding Source Base Deposits by Currency (Consolidated - %) Deposits by Currency (%) ,5% 43,3% 45,2% 44,1% 62,5% 56,7% 54,8% 55,9% YE 2018 Q Q Q3 Local Currency Foreign Currency Borrowings Breakdown Borrowings Breakdown (%) ,8% Funds borrowed 9,9% Money market balances Local bonds issued 2017 YE 2018 Q Q Q3 Deposits Borrowings Other Liabilities Total Equity 8,9% 2,6% 64,8% SME-backed covered bond Subordinated loans 15

17 Loan/Deposit Ratios Total Loan / Total Deposit (%) Total Loan / Deposit Ratio 111,0% 110,4% 108,1% 104,8% 104,2% 102,4% 96,7% 90,1% 2017 YE 2018 Q Q Q3 Bank-Only Consolidated TRY Loans / Deposits Ratio TRY Loans / TRY Deposits (%) 145,3% 143,2% 134,8% 138,0% 136,1% 127,7% 113,2% 107,1% 2017 YE 2018 Q Q Q3 FC Loans / Deposits Ratio FC Loans / FC Deposits (%) 75,9% 71,1% 64,6% 65,7% 69,2% 66,6% 60,2% 61,6% 2017 YE 2018 Q Q Q3 Bank-Only Consolidated Bank-Only Consolidated 16

18 Liquidity Overview Liquidity Coverage Ratio (TL +FC) (1)(2) 108,3% 103,7% 107,0% 101,3% 111,3% 108,5% 121,3% 119,5% 90% 90% 90% 80% Dec Mar June Sep LCR (TL+FC) (Bank Only) LCR (TL+FC) (Consolidated) Regulatory Limit (Min. Req.) Liquidity Coverage Ratio (FC) (1)(2) 351,2% 356,0% 340,9% 347,0% 289,3% 281,7% 182,4% 60% 70% 70% 201,4% 70% Dec Mar June Sep LCR (FC) (Bank Only) LCR (FC) (Consolidated) Regulatory Limit (Min. Req.) 1. The average of last three months liquidity coverage ratio calculated by monthly simple averages. 2. Foregoing of Collaterals Taken in Relation to Derivative Transaction until : positive effect on FC Liquidity Coverage Ratio by 20% and on Total Liquidity Coverage Ratio by %10. 17

19 Deposit Structure Deposit Structure and Durations TL Time Deposit Amounts (Monthly Average) 30 Sept 2018 Total Deposits Increased by 26,1% on solo basis and 24,3% on consolidated basis compared to 31 December % 54% Below TL M TL Above 1M TL Y-o-Y increase in Retail Deposit below 1 mn TL is 37,6% on a monthly average basis as of 30 September % Duration Loans 302 days 299 days 301 days Duration Total Assets 335 days 235 days 257 days Duration Time Deposits 40 days 38 days 43 days Duration Total Liabilities 113 days 114 days 140 days Duration GAP 7.1 months 3.9 months 3.4 months 18

20 Borrowings Balanced mix between retail and institutional funding through covered bonds, loans from IFIs, subordinated loans, trade finance and syndicated borrowings Proven Access to Diversified Sources of Funding Recent Issuances Summary June 2017: USD 85MM Tier 2 Private Placement December 2017: TRY 300MM Tier 2 Domestic Issuance December 2017: TRY 192MM SME Backed Covered Bond transaction with FMO May 2018: TRY 150MM Tier 2 Domestic Issuance Covered Bond Program Highlights The first ever Turkish covered bond transaction The first SME backed covered bond in the world The highest rating ever assigned to any Turkish transaction to date (Baa1) (International Scale Rating from Moody s) Designed as a program to create a sustainable longer term funding source for the SME portfolio Foreign Borrowings Breakdown Rating Agency SKBNK Covered Bond Programme Turkey Sovereign Şekerbank Ratings Overview Borrowings Breakdown by Purpose Ba1 Ba3 Caa1 Foreign Borrowings Bank Only (USD) Type of Funding Outstanding Amount Covered Bond (EIB, IFC, FMO) Tier 2 Bond + Subloan (KFW) Syndication Funds (GCPF) International Trade IFI's (AFD, EBRD, ETDB, IFC, OeEB) TOTAL Borrowings Breakdown by Purpose - Bank Only (%) 4,4% 17,3% Foreign Trade 41,7% Micro + SME Finance Energy Efficiency Women in Business 36,5% 19

21 Income Statement and Profitability

22 Profit and Loss TRY MM Consolidated (*) Change (%) Interest Income Interest Expense Net Interest Income ,5% Net fees and Commissions Income Personnel Expenses (-) Dividend Income 1 1 Net Trading Income/Loss Other Operating Income** Total Operating Profit ,6% Allowances for Expected Credit Losses (Provision for Loan Losses) Other Operating Expenses (-) Net Operating Income ,2% Tax Provisions Net Income ,1% (*) IFRS 9 standards implemented as of 01/01/2018. The prior period financial statements are not restated as permitted by IFRS 9 transition rules. (**) After IFRS9 implementation, expected loss provision reversals are netted off at Allowences for Expected Credit Lossess, in 2017 expected losses provision reversals were in the amount of 77 MM TRY (2018-5,5 MM TRY). 21

23 Revenues In Detail Net Interest Margin Net Interest Margin (%) Interest Income on Loans + Banking Services + Commissions /Avg. Loans (Bank Only) (%) 5,7% 5,4% 5,8% 5,9% 19,4% 19,7% 20,1% 21,7% 5,6% 5,2% 5,4% 5,6% 14,8% 15,7% 15,7% 16,7% 2017 YE 2018 Q Q Q YE 2018 Q Q Q3 Bank-only Consolidated Şekerbank Sector Pre-Impairement Operating Profit PIOP/Average Equity (Bank Only) (%) Quarterly Pre-Impairement Operating Profit (Bank Only) (TRY MM) 18,9% 25,4% 29,8% 31,0% 160,0 121,1 146,9 199,7 195, YE 2018 Q Q Q Q YE 2018 Q Q Q3 PIOP/Avg Equity 22

24 Ratios Cost to Income Ratio Cost / Income (%) Bank Only 61,9% 62,1% 58,4% 57,2% 2017 YE 2018 Q Q Q3 Cost of Risk NPL Coverage Cost of Risk (%) Bank Only NPL Coverage (%) Bank Only 1,4% 1,4% 1,8% 73,4% 74,5% 76,7% 2018 Q Q Q Q Q Q3 23

25 Capital Adequacy

26 Capital Adequacy Overview Bank-Only Consolidated Capital Adequacy Ratios (%) Capital Adequacy Ratios (%) 6,63% 6,46% 6,04% 5,77% 6,39% 6,17% 5,84% 5,66% ,4% 14,3% 13,7% 14,1% 12,1% 10,9% 10,8% 10,7% Min 12% CAR Recommendation Min. 8% CAR Requirement 14,3% 11,2% 12,8% 13,5% 13,4% 10,2% 10,3% 10,2% Min 12% CAR Recommendation Min. 8% CAR Requirement 2017 YE 2018 Q Q Q YE 2018 Q Q Q3 Tier I Ratio Capital Adequacy Ratio Tier I Ratio Capital Adequacy Ratio Leverage Ratio (%) RWA (Bn TL) 25

27 Contact Details Sekerbank T.A.Ş. Zeki Önder Executive Vice President Tel: Ali Kemal Küçükcan Head of Financial Institutions Tel: Barış Sunat Area Manager Tel: Financial Institutions Structured Finance & Investor Relations Oya Sarı Head of Structured Finance and Investor Relations Tel: İnci Kutsar Structured Finance and Investor Relations Junior Associate Tel:

28 Legal Notice For Investors The information in this document has been obtained by Sekerbank T.A.Ş. ( Sekerbank ) from sources believed to be reliable. However, Sekerbank 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 Sekerbank to the public and the relevant corporations are accepted to be the sole material. Sekerbank 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 Sekerbank and can be subject to change without notice. This document can not be interpreted as an advice to the investors and Sekerbank 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. 27