Yapı Kredi Fixed Income Investor Presentation. BoAML Emerging Markets Corporate Conference 2013

Transcription

1 Yapı Kredi Fixed Income Investor Presentation BoAML Emerging Markets Corporate Conference 2013 Miami, May 2013

2 Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 2

3 Yapı Kredi Operating Environment Executive Summary Turkey, 17 th largest economy 1 in the world and a G20 member, is a dynamic country with favourable demographics. The country has solid / improving macro fundamentals, also confirmed by achievement of sovereign investment grade 2 Turkish banking sector, 2 nd largest CEE banking system 3, is underpenetrated, well-regulated with solid profitability and strong resilience to shocks 4 th largest private bank in Turkey with US$ 75 bln assets (TL 135 bln) operating in retail, private and corporate / commercial banking Customer-oriented balance sheet with natural market share of ~10% 4 Leading positions in value generating areas (market share between 14-20%), including credit cards, leasing, factoring, asset management, private pension funds and insurance Sustainable profitability driven by quality revenues and effective cost management Solid capital level for shock absorption and value creation Comfortable liquidity position with ongoing focus on funding diversification Conservative risk profile and disciplined asset quality management Strong and committed controlling shareholders (Koç Group and UniCredit) 3 (1) Based on Turkish Statistical Institute and IMF World Economic Outlook. Data as of 2012 (2) Fitch Ratings upgrade of Turkey to investment grade on 5 November Moody s upgrade of Turkey to investment grade on 16 May S&P also upgraded Turkey to BB+ in Mar 13, one notch below investment grade (3) European Banking Federation data as of 2012 (4) Natural market share level indicates assets, loans, deposits, branches and revenues USD/TL: based on 31 March 2013 BRSA footnotes

4 Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 4

5 Supportive macro environment with sound fundamentals and positive growth trend backed by proactive monetary policy Key Macro Indicators Q13 Monetary Policy Indicators Macro GDP Growth 2.2% 2.8% Inflation 6.2% 7.3% Benchmark Rate 6.2% 6.3% Industrial Production (IP) 2.5% 2.5% Consumer Confidence Index Current Account Deficit (CAD)/GDP 6.0% 5.8% Unemployment Rate 1 9.5% 9.2% Upper Band (O/N Lending Rate) 9.00% 5.6% Effective Rate % Policy Rate % Lower Band (O/N Borrowing Rate) 8.75% 4.75% 8.50% 4.50% 7.50% 7.00% 5.00% 4.00% 6.50% 5.0% 4.50% 3.50% 2012 May 13 Improving growth dynamics with recovery in consumer confidence Pick-up in inflation in Mar 13 followed by normalisation in Apr 13 (6.1%) driven by food prices Low / stable interest rate environment Sustained single-digit unemployment rate Proactive / flexible monetary policy with multiple objectives of managing growth, CAD and inflation Policy rate decreased by 100 bps since Mar 13 to 4.50% aimed at supporting growth, also reflected in declining effective rate 5 Notes: 1Q13 GDP growth expectation refers to YK Economic research estimates (1) Seasonally adjusted (2) Effective rate is the weighted average cost of outstanding funding of the CBRT via open market operations including O/N repo, one-week repo and one-month repo (3) One-week repo rate

6 Executive Summary Recent Macro Developments Yapı Kredi Overview Proposed Transaction Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 6

7 Yapı Kredi: A leading financial services group Yapı Kredi Overview Assets 75 bln US$ Loans 45 bln US$ 4 th largest private bank and a deep rooted franchise (established in 1944) Shareholders Equity Customers 8.9 bln US$ 6.5 mln 929 Deposits+ TL Bonds 1 Employees 42 bln US$ 17,538 Branches Share of ADCs 2 81% Among top 10 most valuable brands 5 in Turkey Integrated network with widespread branch coverage and innovative alternative delivery channels Dedicated focus on customer satisfaction as a prerequisite for sustainable performance Young and qualified workforce serving a wide customer base 2012 Net Income CAR 3 Ratings 1.2 bln US$ 16.0% 2012 Tangible ROAE Total NPL Coverage 4 Moody s: Baa3 / Fitch: BBB / S&P: BB+ 17.5% 110% Healthy ROAE level driven by quality revenues and effective cost management Customer business focus and ALM profile ensuring favourable positioning in new low / stable interest rate environment Conservative risk profile, sound capital base and funding capability 7 Note: Loans indicate performing loans. ROAE indicates Return on Average Equity Equivalents in TL: Total assets 135 bln TL, Total performing loans: 81 bln TL, Total deposits: 74 bln TL (USD/TL: based on 31 March 2013 BRSA footnotes) (1) Deposits: US$ 40.8 bln, TL Bonds: US$ 0.9 bln (2) Share of alternative delivery channels (ADCs) in total comparable transactions (3) Bank Capital Adequacy Ratio (CAR) based on Basel II. Group at 14.7% (4) Total NPL Coverage indicates (Specific + Generic Provisions)/NPLs (5) Based on Brand Finance report (Yapı Kredi ranked number 9)

8 Leading positions in value generating services and products leveraging on innovative banking techologies Total Bank Retail Corporate Private Insurance and Private Pension 1 Loans Deposits Branches Mobile Banking Revenues Credit Cards Outstanding Credit Cards Acquiring Number of Cards Consumer Loans Commercial Installment Loans Corporate Loans Leasing Factoring Cheque Clearing Mutual Funds ISE and TurkDEX Volume Equity Transaction Volume Health Insurance Non-Life Insurance Life Insurance Private Pension Funds Market Share 6.3% 6.3% 9.8% 9.0% 8.9% 8.1% 7.5% 7.3% 9.2% 9.0% 11.4% 13.2% 15.7% 17.1% 17.6% 16.9% 17.3% 19.4% 19.0% 18.5% 19.1% Market Position Rank #1 with 19.5% market share at Mar 13 8 Note: All ranking and market shares based on 1Q13 data, except for revenues as of YE12. Market share and rankings based on: Capital Markets Board (for ISE and TurkDEX Volume and equity transaction volume), Rasyonet (for mutual funds), Turkish Factoring Association (fo factoring), Turkish Leasing Association (for leasing), Pension Monitoring Center (for private pension funds) and Turkish Insurance and Reinsurers Association (for life, non-life and health insurance), Interbank Card Center (for credit card acquiring and number of cardholders), Central Bank Cheque Clearing System (for cheque clearing). If not specified, data based on BRSA bank-only data for YKB and BRSA weekly sector data excluding participation banks for banking sector. (1) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13 (2) Including mortgages, general purpose and auto loans (3) Proxy for SME loans (4) Cash loans excluding credit card outstanding volume and consumer loans (5) Includes repo, reverse repo, treasury bill, government bond, equity and derivative transaction volumes. ISE indicates Istanbul Stock Exchange. TurkDEX indicates Turkish Derivatives Exchange

9 Well-diversified business mix on the back of a customer-oriented and divisionalised service model Revenues and Volumes by Business Unit 1 (1Q13) Retail 52% 56% 38% L US$ 14.6 bln Mcap Individual (incl. Card Payment Systems) 23% 40% 28% Retail Banking Card Payment Systems Individual & SME Private Banking and Wealth Management 22 branches 155 RMs Corporate and Commercial Banking Corporate Commercial International / Multinationals SME Private Corporate 10% 29% 16% 2% 25% 9% 16% 9.5 mln cards 2 ~449K POS 347K merchants 821 branches 3,254 RMs 2,837 ATMs Product Factories: 3 branches 55 RMs 77 branches 506 RMs Further segmented as mid/large companies Product Factories: 1 branch 13 headcount 900 customers Commercial 20% 20% Treasury and Other 17% 28% 17% Insurance Subsidiaries 3 International Operations L Revenues Loans Deposits US$ 1.0 bln Mcap Total Assets US$ 2.2 bln US$ 182 mln US$ 327 mln 9 Note: Market capitalisation (Mcap) figures as of 23 May Based on Istanbul Stock Exchange data. Calculated as share price*paid-in capital Branch numbers exclude three satellite, two free-zone, one off-shore branch. Total asset size of international operations based on BRSA consolidated financials as of 31 March 2013 (1) Based on MIS reporting (2) Including 1.9 mln virtual cards (3) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13 L = Listed

10 Solid governance structure with strong and committed shareholders Stable, long-term focused shareholding structure supporting YKB s balanced growth and sustainable performance Established in 1926, largest conglomerate in Turkey and 222 nd in Fortune Global Long-standing leadership in core sectors (automotive, finance, energy, consumer durables) 5 out of top 10 companies in Turkey part of the Koç Group Best proxy to the Turkish market (total sales/gdp: 7%, total exports/turkey s exports: 10%) Largest distribution and aftersales network in Turkey Share of intragroup lending in total capital at 6.6% (max regulatory limit 20%) Total Assets (US$ bln) 61.2 Revenues (US$ bln) 47.3 Net Income (US$ mln) 1,291 Number of Employees 82,158 50% 50% d 81.8% 2 YKB considered a key long-term strategic asset by both shareholders Systemically important Italian financial institution in Europe with roots dating back to 1870 Full service group engaged in a wide range of banking, financial and related activities Extensive international presence with strong roots in 22 European countries and presence in 50 other markets Leader in CEE with more than 4,000 branches Turkey among top 4 long-term growth markets in CEE Providing 1.8 bln funding to YKB 3 (o/w 70% for subsidiaries) Total Assets (US$ bln) 1,223 Revenues (US$ bln) 33.1 Net Income (US$ mln) 1,142 Number of Employees 156, Note: All information and figures (unless otherwise stated) regarding UniCredit and Koç Group taken from public data on company investor relations websites. Financial data as of 31 December 2012 (1) According to Fortune Global 500 (2) Remaining 18.2% listed on the Istanbul Stock Exchange and Global Depository Receipts that represent the Bank s shares are quoted on the London Stock Exchange (3) Excluding US$ 585 mln sub-debt

11 Successful execution of strategy resulting in delivery of strong results 2006 Merger and Integration 2007 Restructuring 2008 Relaunch of Growth 2009 Global Crisis 2010 Back to Growth Smart Growth Between 2007 and 2012 Revenues +13% Costs +7% (vs average inflation of 8%) Number of branches +53% Number of ATMs +65% Number of employees +4% Average Tangible ROAE 1 27% 11 Note: Compounded annual growth rates used for revenues and costs. Increase in number of branches and ATMs calculated from beginning of 2007 (1) Net Income/Average Shareholder Equity. Average Shareholders Equity is calculated by subtracting TL 979 mln of goodwill generated from the merger of Koçbank and Yapı Kredi in 2006

12 Profitability, customer business focus and value generating growth as key areas of strength Profitability Loan-Deposit Spread (1Q13) 2.9% YKB 2.4% Peers Fees/Revenues 26% YKB (1Q13) 18% Peers 5% Sector Cost Growth (y/y) 15% 7% 8% 11% 13% 18% 10% 1 7% YKB -2% Q13 Sustainable revenues via strong NIM and fee generation Benchmark in cost discipline Customer Business Focus Loans/Assets (1Q13) 60% YKB 57% Peers Securities/Assets (1Q13) 15% YKB 23% Peers Loan Composition 2 Retail share: 48% (peers: 45%) TL Companies 20.7% FC Companies 31.2% (1Q13) Comm. Install 9.1% Mortgage 9.7% Credit Cards 18.9% GPL 9.0% Auto 1.4% Relentless focus on customer business Well-diversified loan composition Retail exposure comparable to peers Value Generating Growth Individual Loans 3 YKB 27% Sector 21% Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 YKB Sector Local Currency Core Revenues/Employee 4 Deposits 3 (ths TL) 23% 16% Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 YKB Sector Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Consistent outperformance in value generating local currency business Sustained productivity gains 12 Note: Peers indicate top three private banks. Data based on publicly available quarterly BRSA consolidated financials. Sector data based on publicly available monthly BRSA financials, excluding participation banks. Core revenues indicate net interest income and net fees and commissions (1) Core cost growth excluding pension fund charge (52 mln TL) and growth initiatives in Azerbaijan (11 mln TL) (2) Based on BRSA consolidated footnotes (3) Individual loan (consumer loans and credit cards) and deposit year-on-year growth according to BRSA weekly data for sector and BRSA bank-only for YKB (4) Based on BRSA bank-only figures

13 Solid capital level, comfortable liquidity and conservative risk profile Capital Capital Adequacy Ratio (CAR) Leverage 7.8x 7.4x 14.6% 14.8% 14.7% 16.0% Early mover in capital discipline (EVA at customer / product level, value generating growth) Capital evolution supported by profit retention to finance value generating growth Strengthened capital on the back of clear roadmap announced early in 2012 Group Bank 1Q12 Group Bank 1Q13 Expected finalisation of insurance sale process in 2H13 to further strengthen CAR by 80/90bps 1 Loans/Deposits Ratio (LDR) EU: 114% Management of LDR within comfortable band Liquidity 109% YKB 90% 105% Peers 75% Q13 Early mover in effective LDR management (1-to-1 deposit pricing, growing LDR culture in network) Early identification of funding diversification as a key long-term strategic priority (>400 fixed income investor meetings in 2 years) Cost of Risk Total Cost of Risk GDP Growth Hard Landing -4.8% 3.72% 0.81% Strong Growth Avg 8.9% Through the cycle CoR 0.58% Soft-landing 2.2% 1.35% Acceleration 2.8% % Q13 Conservative credit risk management in changing environments Highly diversified loan book (weight of top 20 loans in total at 11%; no industry >10% share in corporate loan book) Timely focus on credit infrastructure / process enhancements (Retail / SME scoring, collections, monitoring) 13 Note: Data based on publicly available quarterly BRSA consolidated financials for YKB (unless otherwise stated) Specific Cost of Risk=(Total specific provisions collections)/total gross loans Leverage=(Total assets equity)/equity (1) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13 (2) Yapı Kredi Research Estimate for 1Q13 GDP growth GDP growth estimate 4.8%

14 Comfortable capital adequacy level with Basel II Bank CAR at 16% supported by ongoing initiatives Evolution of Capital Base and Capital Adequacy Ratio (CAR), Bank CAR Core Tier-I Comfortable CAR band (12.5%-14.5%) 14.8% 11.3% 16.3% 16.3% 16.0% 10.8% 10.8% 10.5% 1 1 Excluding impact of dividend payment Shareholders Equity 12,300 16,862 17,184 1Q12 4Q12 1Q13 Basel I Basel II Capital adequacy ratio under Basel II at 16% in 1Q13 (14.7% Group). Bank core Tier-I at 10.5% (Group:10.5%) Significant strengthening of capital adequacy ratio in 2012 resulting in dividend distribution (300 mln TL, 16.5% payout ratio) Expected finalisation of insurance sale process in 2H13 to further strengthen CAR 2. Bank CAR to remain >15% and Core Tier-I >11% by YE13 (including impact of insurance sale and dividend payment) 14 (1) Excluding dividend payment impact of 25 bps (2) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13

15 2013 Forecasts 2013 Macro guidance confirmed, backed by positive macro evolution 2013 Outlook GDP Growth 4.8% CPI Inflation 6.4% Policy Rate 4.5% Current Account Deficit / GDP 6.6% Loans 17% 18% Deposits 13% 17% Fees 16% 17% NIM Sector Stable / Slightly Down Stable / Slightly Down Costs 10% 9% YKB ~20% TL loan growth via market share gains in value generating segments / products, ~13% FC loan driven by project finance Above sector growth driven by ~20% TL deposit growth Solid growth driven by acceleration in business volumes Pressure on loan yields in 1H13 and deposit cost evolution aligned with sector Emphasis on cost efficiency and strict management of ordinary costs while continuing investments for growth Cost of Risk (CoR) Stable / Slightly Down Stable / Slightly Down Total CoR to be driven by controlled evolution in specific CoR and general CoR dependent on volume growth / regulation (1) Current YK Economic Research estimates as of May 13 15

16 Key investment highlights Turkey Large, young and growing population. Solid and improving fundamentals providing high resilience to shocks Banking Sector Underpenetrated, profitable, well regulated and well capitalised Sizeable financial services group and reputable banking franchise Leading positions in value generating services and products leveraging on innovative banking technologies Well-positioned for low / stable interest rate environment driven by diversified business mix and dedication to customer satisfaction Yapı Kredi Solid governance structure with strong and committed shareholders, Koç Group and UniCredit Successful execution of strategy resulting in delivery of consistently solid results Profitability, customer business focus and value generating growth as key areas of strength Solid capital level for shock absorbtion and value generation Comfortable liquidity position and conservative risk profile 16

17 Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 17

18 Customer business focused asset composition with a well-diversified loan book Asset Composition Total Assets Loans by currency by sector (1Q13) TL 135 bln ytd Total Loans: TL 80.6 bln FC 30% 31% ytd +3% 3 Construction:6% Financial Inst:6% Wholesale: 5% Trans/Comm:5% Utilities:5% Textile: 4% Food: 4% Metals: 4% Loan composition: Healthy with high share of value generating TL loans Loans 60% +4% TL 70% 69% +2% Retail 4 : 38% Other: 22% Diversified with avoidance of concentration (top 20 loans/total loans 12%) Peers: 23% Securities 15% -7% Securities Q13 by currency (1Q13) Trading by type 4% 2% Securities composition: Balanced in terms of currency Other IEAs 1 21% +6% FC 45% TL 55% AFS 70% 70% Increase in AFS portfolio driven by focus on effective liquidity management Other Assets 2 4% 1Q13 0% HTM 26% 28% Q13 CPI-linkers TL 2.1 bln (10% of securities) 18 Note: Loan figures indicate performing loans. Loan by sector and concentration information based on risk management data. Sector data based on publicly available monthly BRSA financials HTM indicates held to maturity; AFS indicates available for sale (1) Other interest earning assets (IEAs) include cash and balances with the Central Bank of Turkey, banks and other financial institutions, money markets, factoring receivables, financial lease receivables (2) Other assets include investments in associates, subsidiaries, joint ventures, hedging derivative financial assets, property and equipment, intangible assets, tax assets, assets held for resale and related to discontinued operations (net) and other (3) FC loan growth in US$ terms (4) Excluding commercial installment loans

19 Solid deposit base backed by focused and innovative approach Deposits Total Liabilities and Shareholders Equity Deposits Currency Composition Demand Deposits/Total Deposits TL 135 bln ytd Total Deposits: TL 73.8 bln ytd YKB: +3% ytd Sector: +0% ytd FC 42% 39% -9% % 15.5% 16.0% 16.5% 16.4% Deposits 55% +4% TL 58% 61% +10% 1Q12 2Q12 3Q12 4Q12 1Q13 4Q12 1Q13 Borrowings Repos Shareholders Equity Other Liabilities 1 19% 4% 12% 10% 1Q13 +7% +12% +1% -8% 1-to-1 Deposit Pricing Approach Launched in Feb 12 to determine most cost-effective TL deposit rates to customers based on their price sensitivity Following successful results so far, also to be utilised for FC deposits in late-2013 YKB Market Share YKB Cost of TL Deposits Sector Cost of TL Deposits 1Q13 vs Feb 12 1Q13 vs YE bps +27 bps -271 bps -96 bps -266 bps -75 bps Solid deposit base: Significantly above sector growth in TL deposits Deliberate decrease in FC deposits due to comfortable FC liquidity position Continuing TL deposit market share gains with better than sector evolution in TL deposit costs supported by 1-to-1 deposit pricing approach Weekly deposit pricing committee meetings to ensure disciplined pricing 19 Note: TL time deposit market share and cost based on publicly available BRSA bank-only financials for Yapı Kredi and monthly BRSA financials for sector (1) Other liabilities include retirement benefit obligations, insurance technical reserves, other provisions, hedging derivatives, deferred and current tax liability and other (2) FC deposit growth in US$ terms

20 Continuation of funding diversification as a key long-term strategic priority Funding Diversification Total Liabilities and Shareholders Equity TL 135 bln ytd Borrowing Composition Supranational 5% 6% Securitisations 7% 6% Deposits 55% +4% Sub-debt 22% 21% Funding secured in 2013: ~US$ 585 mln sub-debt 3 (10yr) in Jan 13 Syndications 19% 18% US$ 500 mln Eurobond (7yr) in Jan 13 ~US$ 1.5 bln syndications (1yr) in Apr 13 Borrowings 19% +7% TLBonds+ Eurobonds (incl. LPN) 15% 19% TL 1.2 bln outstanding local currency bonds (6-12mth) Repos 4% +12% Subsidiaries 16% 15% Shareholders Equity 12% +1% Other 2 16% 15% Other Liabilities 1 10% -8% Q13 1Q13 20 Note: Please see annex for details on borrowings (1) Other liabilities include retirement benefit obligations, insurance technical reserves, other provisions, hedging derivatives, deferred and current tax liability and other (2) Other borrowings include foreign trade related borrowings (3) In Jan 13, sub-debt was repaid in full and replaced with a new sub-debt of US$ 585 mln at 5.5% coupon rate

21 Capital base supporting business growth Capital Total Liabilities and Shareholders Equity Deposits TL 135 bln 55% ytd +4% Q13 CAGR Tier 1 21% Tier 2 36% Tier 2 Tier Capital Evolution Q13 Capital Adequacy Ratio and Tier 1 Ratio (Bank) Basel I Basel II CAR 16.1% 16.0% Tier I Ratio 12.2% 10.5% Q13 Borrowings Repos 19% 4% +7% +12% Risk Weighted Assets Evolution (TL bln) Op Risk Market Basel II Bank capital adequacy ratio at 16.0% at Bank level (14.7% on a consolidated basis). Capital evolution supported by: - Focus on value generating segments - Strengthening actions in 2012 Shareholders Equity Other Liabilities 1 12% 10% +1% -8% Credit Q13 RWA Growth 31% 31% 25% 5% Loan Growth 40% 28% 12% 4% Agreement signed with Allianz for the sale of YK Sigorta. Expected positive CAR impact of ~80/90 bps following finalisation in 2H13 2 1Q13 21 (1) Other liabilities include trading derivative financial liabilities, miscellaneous payables, hedging derivative financial liabilities, provisions, tax liabilities and other liabilities (2) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13. CAR impact: ~80/90 bps. Tier I impact: ~100/110bps

22 High quality and sustainable revenues Revenues Revenue Composition (TL mln) Evolution of Net Interest Margin (NIM) (bank-only) Core 1,473 1,778 Revenues +21% 1,535 1, % 4.6% 3.5% Loan-Deposit Spread: Yapı Kredi: 2.9% Sector: 2.8% 4.1% 4.0% 2 Successful NIM performance: Effective mix management - Value generating lending growth - Focus on demand deposits Dynamic pricing approach Net Interest Income 70% 72% +22% Q13 Composition of Fees and Commissions Received (1Q13, bank-only) Net Fees & Comms. 26% 26% +19% Insurance 4% Other 3 (+39% y/y) 11% (-7% y/y) Asset Management 3% (+33% y/y) Lending Related 32% (+25% y/y) Credit Cards 49% (+6% y/y) Strong fee generation capability: Diversified composition (solid share of credit card and lending related fees) Focus on new products/ services Other 1 4% 2% 1Q12 1Q13-41% High fee coverage of costs (59% as of 1Q13) 22 Note: Sector Loan-Deposit data based on publicly available monthly BRSA financials NIM: Net Interest Income/Average Interest Earning Assets Loan-Deposit Spread: (Interest Income on loans Interest expense on deposits)/average(loans+deposits) Core revenues: Net Interest Income + Net Fees and Commissions (1) Other revenues include dividend, trading and other (2) Comparable basis: NIM at 4.1% when adjusted to exclude 57 mln TL sub-debt early repayment penalty impact in 1Q13 on net interest income (3) Other fees and commissions received include account maintenance, money transfers, equity trading, campaign fees, product bundle fees etc

23 Capability to manage asset quality in changing market conditions Asset Quality NPL Ratio Specific and Generic Coverage of NPLs GDP Growth Hard Landing -4.8% 6.3% Strong Growth Avg 8.9% Softlanding 2.2% Acceleration 2.8% 1 General provisions/npl Specific provisions/npl 117% 115% 100% 31% 40% 111% 111% 110% 46% 49% 46% 3.4% 3.0% 3.2% 3.4% 84% 77% 65% 62% 64% Q Q13 Conservative loan classification approach, including booking of cross-defaults as NPL Stable credit approval ratios Proactive and conservative coverage (>100%) Collections/NPL inflows up to 64% (vs 56% in 4Q12 and 44% peer avg) driven by deceleration of NPL inflows and sustained collections 1Q13 asset quality evolution indicating stabilisation in consumer loan and credit cards, ongoing SME NPL inflows and resilient corporate/commercial Net Inflows 2 (mln TL) Collections/ Inflows 2 NPL Inflows and Collections NPL Inflows Collections 1,823 2,589 1,346 1, Q12 1Q % Cumulative % % Quarterly % Peer Avg: 44% in 1Q13 23 Note: Specific coverage = specific provisions/npl; Generic coverage = (Standard + Watch Provisions)/NPL (1) Yapı Kredi Research Estimate for 1Q13 GDP growth GDP growth estimate 4.8% (2) Excluding impact of a few commercial positions being transferred from watch loans category to NPL impacting 3Q11 (121 mln TL), 4Q11 (178 mln TL), and 4Q12 (59 mln TL)

24 ADCs Efficiency Productivity Solid performance in commercial effectiveness Commercial Effectiveness Core Revenues/Employee (ths TL) % % 362 YKB 330 Sector 4,502 YKB 3,730 Sector Loans/Employee (ths TL) 5, % 4, % Deposits/Employee (ths TL) 4, % 4,108 YKB 3,718 Sector 3,909 +5% 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 Retail Cross-Sell % 3.69 Conversion of Card-only Customers 441, ,000 ~400,000 target 102,000 26% of 2013 achieved Significant outperformance vs sector in key productivity indicators Consistent improvement in retail crosssell Ongoing focus on converting card-only customers into bank customers Q Q13 Reaping benefits of multi-channel approach, with share of ADCs up to 81% Increasing contribution of alternative delivery channels in sales activity. In total sales, share of ADC increased to 22% (vs 15% at YE11) and share of teller increased to 17% (vs 16% at YE11) Significant increase in mobile banking penetration following launch of innovative application in Sept 11 - Mobile banking market share up to 13.2% (vs 0.6% at launch) - Mobile banking users up to 210K (vs 68K at YE11) Increasing effectiveness of call center center activites - 77% increase in number of calls to 2.3 mln (vs 2009) - 1 sale realised per 9 contacts (vs 18 in 2009) Note: ADCs indicate Alternative Delivery Channels 24

25 Strong risk management policies Risk Management Market Risk FX position squared at the end of each day Effective hedging of interest rate risk via swap funding Securities portfolio outlier vs. peers due to conservative FC lending approach Strict regulatory liquidity limits (aligned with Basel III liquidity funding ratio) Cross Currency IRS (bln) Foreign Currency HTM securities 1Q13 US$ 2.1 bln US$ 1.4 bln Credit Risk Limited intra-group exposure (6.6% of capital vs 20% regulatory limit) Strong collections capability (both in-house and outsourced) Dynamic NPL portfolio management Loan growth not driven by relaxation of credit policies (stable / conservative loan approval rates since 2008) Continuous enhancement of credit infrastructure Utilisation of internally developed scorecards in individual + SME lending Launch of new monitoring tool for commercial lending Further development of behavioural rating Operational Risk Fully compliant to Basel II standard approach; ready to implement Basel II Advanced Measurement Approach Leader in operational risk management (regular monitoring of risk maps and action plans) 25

26 Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 26

27 Summary Financials (BRSA Consolidated) TL mln 1Q12 1Q13 y/y TL bln Q13 YTD Total Revenues 1,535 1,815 18% Total Assets % Core Revenues 1,473 1,778 21% Loans % o/w Net Interest Income 1,079 1,311 22% TL % o/w Fees & Comms % FC (in US$) % Other Revenues % Securities % Operating Costs % Deposits % Operating Income 788 1,017 29% TL % Provisions % FC (in US$) % o/w Loan Loss Provisions % Shareholders' Equity % Pre-tax Income % Discontinued Operations % Net Income % 50% 2 Loans/Assets 59% 60% Return on Tangible Average Equity 14.2% 14.7% 17.3% 2 Securities/Assets 17% 15% Return on Average Equity 13.1% 13.8% Loans/Deposits 109% 109% Return on Assets 1.4% 1.6% Loans(excl. LT)/Deposits 85% 84% Cost/Income 49% 44% Loans/(Deposits + TL Bonds) 107% 107% 27 Note: Loans indicate total performing loans. LT indicates long-term loans (project finance and mortgage) (1) On 26 March 2013, YKB signed an agreement with Allianz for sale of its 94% stake in YK Sigorta (which owns 100% of YK Emeklilik). As part of the agreement, YKB will buy-back and retain a 20% stake in YK Emeklilik. Transaction expected to be finalised in 2H13. Accordingly insurance subsidiaries (YK Sigorta and YK Emeklilik) have been classified as "discontinued operations" as of 1Q13 in BRSA financials. 1Q12 results have been restated for comparability purposes (2) Comparable basis: 1Q13 results adjusted to exclude 57 mln TL sub-debt early repayment penalty impact on net interest income and impact of competition board fine on other provisions for comparability purposes

28 Key strategic guidelines in place to deliver sustainable long-term performance Strategic pillars Key Strategic Guidelines Healthy and consistent growth Strong and sustainable profitability Superior and long-lasting customer satisfaction Focus on core banking activities Strict cost-control, efficiency gains Key Guidelines Integrity, «easy to work with» approach and employee satisfaction Growth & commercial effectiveness Funding & capital Efficiency & cost optimisation Risk management Sustainability Selective and value generating loan growth in Retail (GPL, SME and mortgages), higher yielding mid-commercial and project finance in Corp/Commercial Continuation of organic growth (+30/40 branch openings/year) Process/systems investments to increase sales effectiveness Focus on fee & commission generation and customer penetration, acquisition, activation to offset margin compression Further emphasis on deposit base and funding diversification Effective loans/deposits ratio management Effective capital usage via optimum allocation/monitoring of EVA at customer/product and segment level Disciplined cost approach Development of lower cost to serve models to reduced time to serve leveraging on IT/operations transformation plan Ongoing investments for growth and optimisation of physical presence Multi-channel approach via improvement in ADC capabilities Dynamic and proactive portfolio management to decrease NPL entries and improve collections/collateralisation Continuous investments to maintain below through the cycle cost of risk Focus on early collections via capacity increase and strategy redesign Constant focus on customer/employee satisfaction and loyalty Continuous investments in technology and innovation to enhance easy to work with approach 28

29 Domestic International Borrowings (as of May 13) Syndications Securitisations Subordinated Loans Foreign Currency Bonds / Bills Covered Bond Multinational Loans Local Currency Bonds / Bills ~ US$ 2.7 bln outstanding Apr 13: US$ 437 mln and mln, Libor +1.00% p.a. all-in cost, 1 year, participation of 52 banks from 20 countries Sep 12: US$ 322 mln and 618 mln, Libor % p.a. all-in cost, 1 year, participation of 37 banks from 16 countries ~ US$ 1.3 bln outstanding Dec 06 and Mar 07: ~US$ 305 mln, 6 wrapped notes, 7-8 years, Libor bps Aug 10 - DPR Exchange: ~US$ 460 mln, 5 unwrapped notes, 5 years Aug 11: ~US$ 410 mln, 4 unwrapped notes, 5 years Sep 11: ~ 75 mln, 1 unwrapped note, 12 years ~ 2.3 bln outstanding Mar 06: 500 mln, 10NC5, Libor+2.00% p.a. Apr 06: 350 mln, 10NC5, Libor+2.25% p.a. Jun 07: 200 mln, 10NC5, Libor+1.85% p.a Dec 12: US$ 1.0 bln, 10 years, 5.5% (coupon rate) Jan 13: US$ 585 mln, 10NC5, 5.5% fixed rate US$ 750 mln Loan Participation Note (LPN) Oct 10: % (coupon rate), 5 years US$ 1 bln Eurobond outstanding Feb 12: US$ 500 mln, 6.75% (coupon rate), 5 years Jan 13: US$ 500 mln, 4.00% (coupon rate), 7 years TL 458 mln first tranche Nov 12: SME-backed with maturity between 3-5 years; highest Moody s rating (A3) for Turkish bonds EIB Loan - Jul 08 / Dec 10: 525 mln, 5-15 years EBRD Loan - Aug 11: 30 mln, 5 years TL 1.4 bln outstanding Apr 12: TL 200 mln, 10.33% compounded rate, 406 days maturity Nov 12: TL 507 mln, 6.45% compounded rate, 178 days maturity Feb 13: TL 241 mln, 6.09% compounded rate, 146 days maturity Feb 13: TL 59 mln, 6.51% compounded rate, 286 days maturity Apr 13: TL 328 mln, 6,49% compounded rate, 179 days maturity Apr 13: TL 22 mln, 6,66% compounded rate, 294 days maturity 29

30 Branch and alternative delivery channel network Branches ATMs 929 branches, fifth largest network Strong focus on retail and SME Network covering all regions of Turkey Emphasis on increased efficiency to further support sales activities 53% increase in branch network since % of Transactions 1 2,837 ATMs, sixth largest network 83% of ATMs with cash deposit features; 83% coin dispensing 435 ATMs designed for disabled customers (first in the sector) ~520K product sales/year 65% increase in ATM network since % of Transactions 1 Share of Non-Branch Channels in Total Banking Transactions* 1Q13 81% Internet / Mobile Banking Call Center Award-winning internet bank tailored for retail and corporate customers mln internet banking customers mln transactions/month - ~337K product sales/year Two award-winning call centers ~40 mln contacts/year 44% self-service usage 1 ~440K credit card retention/year % Leading mobile banking applications with 13.2% market share 22% of Transactions 1 ~2.4 mln product sales/year 1% of Transactions 1 30 Note: All data based on Yapı Kredi alternative delivery channel information. Branch and ATM rakings based on publicly available BRSA data Compounded annual growth rates used for revenues and costs. Increase in number of branches and ATMs calculated from beginning of 2007 Transactions indicate all comparable banking transactions. Of the 81% non-branch share, ~10% via other channels including post office and centralised automated transaction channels (1) Channel transaction ratio and non branch penetration ratio are as of Feb 13

31 Asset Quality NPL Ratio by Segment NPL by Sector (1Q13) 12.6% NPL Composition of Company Loans Ship Building NPL Ratio 57.7% Share in Performing Company Loans 1% 10.0% 7.7% SME 1 Credit Cards Consumer 2 Ship Building 15% Wholesale/ Retail 11% Construction 10% Textile 9% Wholesale/Retail Food Textile 4.6% 4.3% 3.6% 7% 8% 8% 5.5% Food 9% Construction 3.3% 8% 3.0% Corporate & Comm Q13 4.0% 3.0% 2.5% Other 2 35% Transport./ Comm. 6% Metals 4% Utilities 0.8% Financial Institutions 0.3% Transport/Comm. Metals Utilities Fin. Institutions 2.7% 2.3% 0.3% 0.1% 10% 6% 9% 9% Other 2 3.3% 35% NPL ratio at 3.4% (vs 3.2% at YE12) driven by - Stabilisation in consumer loan and credit cards. Credit card NPL ratio at 3.0% vs 5.3% at sector - Ongoing SME NPL inflows due to slowdown in economic activity in Resilient corporate/commercial Diversified loan book supporting asset quality evolution 31 (1) As per YKB s internal segment definition, SMEs: companies with annual turnover < US$ 5 mln. Corporate & Commercial: companies with annual turnover > US$ 5 mln (2) Other includes various industries, all with less than 4% share (automotive companies, agriculture, tourism, chemical products, machinery, health and education, furniture, glass, rubber, etc.)

32 Financial Highlights (in US$, 31 December 2012) Total Assets (bln) 57.1 Revenues (bln) 10.8 Net Income (mln) 300 Number of Employees 80,987 Market Capitalisation (bln) 15.5 Established in 1926, Turkey's largest industrial and services group in terms of turnover and exports with 82 thousand employees 222 nd largest company in the world 1 Leading positions with strong competitive advantages in energy, automotive, consumer durables and finance sectors Largest distribution and after-sales network Total Sales/GDP 7% Total Exports/Turkey s Exports 10% Total Share in Istanbul Stock Exchange 15% Revenue Composition (2012) Other 4% Finance 9% Durables 12% Automotive 12% Energy 63% Market Positions Sole petroleum refiner in Turkey #1 in LPG distribution (29% market share) #2 in petroleum products distribution (19% market share) #1 in total automotive (27% market share) #1 in passenger cars (17% market share) #1 in commercial vehicles (49% market share) #1 in consumer durables (50% market share) (refrigerators, washing machines, ovens, TVs, conditioners) #4 in total banking assets among private banks (9.4% market share) #1 in factoring and leasing; #2 in asset management 32 Note: Market shares of Koç Group companies as of 2012 based on publicly available Koç Group information. All data and information presented on this page publicly available on Koç Group investor relations website and presentations Market capitalisation as of 17 May Based on Istanbul Stock Exchange data. Calculated as share price * paid-in capital (1) According to Fortune Global 500

33 Financial Highlights (in US$, 31 December 2012) Total Assets (bln) 1,245 Loans (bln) 739 Deposits and Debt Securities Issued (bln) 761 Revenues (bln) 9.5 Net Income (bln) No. of Branches 9,466 No. of Employees 159,283 Roots dating back to Created through the merger of 9 of Italy's largest banks and the subsequent combination with the German HVB Group and the Italian Capitalia Group A major international financial institution based in Italy with operations in 22 countries and 50 financial markets - Leader in Austria with 15% market share - #2 in Italy with 13% market share - #3 in Germany with 3% market share - #1 in CEE region with 6% market share Largest international banking network in the CEE region with more than 4 thousand branches and outlets - Leader in Bosnia, Bulgaria and Croatia - In the Top 5 in Serbia, Slovakia, Turkey, Czech Rep., Poland and Kazakhstan - In the Top 10 in Romania, Baltics, Russia, Slovenia, Hungary and Ukraine Azerbaijan Bosnia-H. Bulgaria Croatia Czech Republic Estonia Hungary Kazakhstan Kyrgyzstan Latvia Lithuania Poland Romania Russia Serbia Slovakia Slovenia Turkey Ukraine Tier 1 Ratio 10.85% Revenue Composition Branch Composition Employee Composition Capital Adequacy Ratio 13.53% Market Capitalisation (bln) 31.7 Poland CEE 7% 8% Austria 18% Germany 23% Italy 46% Austria Germany 3% 9% Poland 11% CEE 30% Italy 47% Other 13% Austria 12% Turkey 11% Poland Germany 6% 25% Italy 32% 33 Note: Financial information based on publicly available UniCredit financials All data and information presented on this page publicly available on UniCredit investor relations website and presentations Market capitalisation as of 17 May Calculated as share price * paid-in capital

34 Executive Summary Recent Macro Developments Yapı Kredi Overview Yapı Kredi Financial Performance Annex - Yapı Kredi - Turkish Economy and Banking Sector 34

35 Macro Turkey Turkey: Overview Europe s 7 th largest economy 1 and a member of G20 Young, dynamic, large and growing population TR 2012 TR 2023 EU 2012 Population (mln) Median Age Single party government since 2002 Population Growth (CAGR ) 1.4% 1.0% 0.4% Sovereign ratings of Baa3 2 /BB+ 2 /BBB- by Moody s/ S&P/Fitch. First investment grade achieved in Nov 12 (Fitch). Second investment grade achieved in May 13 (Moody s) 2023 Ambition: To become the 10 th largest world economy GDP ( bln) 612 1,639 12,898 World Ranking Per Capita GDP ( ) 8,092 19,459 25,607 World Ranking Converging economy (from BRSA establishment in 2001) with positive growth environment except for crisis periods According to IMF, Turkey to be among top 3 fastest growing economies in OECD ( avg growth of 3.9%) Transition from double digit to single digit inflation Improvement in the still unbalanced structural current account deficit Avg Avg GDP Growth -0.8% 6.8% 8.8% 2.2% 4.8% Inflation (eop) 58.8% 13.3% 10.4% 6.2% 6.4% Benchmark Rate 69.1% 25.6% 11.0% 6.2% 6.5% Unemployment 8.1% 10.6% 9.8% 9.2% 9.0% CAD/GDP 0.7% 3.8% 10.0% 6.0% 6.6% o/w energy 3.2% 3.9% 6.2% 6.7% - Public Debt/GDP 51% 54% 40% 38% 35% Private Debt/GDP 35% 40% 80% 82% Notes: EU indicates EU27 countries (source: population and macro data based on Turkish Statistical Institute) (1) Based on Turkish Statistical Institute and IMF World Economic Outlook (2) Upgraded by one notch to Baa3 (investment grade) by Moody s in May Upgraded by one notch to BB+ (one notch below investment grade) by S&P in March 2013 (3) Based on YK Economic Research estimates (4) Total private debt/gdp of 82% includes domestic debt of 53% (o/w Households 18%, Companies 35%) and external debt of companies/financial institutions of 29%

36 Recent Developments Challenges Banking Sector Banking Sector: Overview Significant growth potential (mainly retail driven) Well regulated (BRSA est. in 2001) with solid capital/liquidity Best practices in technology: payment systems and qualified workforce High technology usage Healthy profitability and solid volume growth Tighter monetary policy / higher regulatory intervention Compressing margins Pricing competition on funding (and short maturities) Geopolitical uncertainties (conflict in neighbouring countries) F Banks # Branches # 7,618 9,834 10,234 10,539 Loans/GDP 32% 50% 53% 54% Deposits/GDP 42% 53% 54% 53% Loans/Assets 49% 56% 59% 58% Loans/Deposits 78% 94% 98% 102% NPL Ratio 3.5% 2.6% 2.8% 3.2% CAR 17.4% 15.4% 17.3% 15.3% Loan Growth 26% 30% 15% 17% Deposit Growth 14% 13% 11% 13% ROAE 25% 15% 16% 15% ROA 2.6% 1.6% 1.7% 1.7% NIM 5.0% 3.5% 4.2% 4.1% Increase in M&A activity Tax incentives on long-term deposits / new pension system Draft Basel III with min. leverage ratio (3%), Core Tier 1 (4.5%) Competition Board Case: 12 banks fined TL 1.1bln ( 474 mln) Consumer Protection Law with possible impact on fees Date Target Bank Majority Shareholder Acquirer Name Acquired Stake Deal Price ( mln) Apr-12 EFG Eurobank EFG Burgan 99% 277 Jun-12 Deniz Dexia Sberbank 100% 3004 Mar-13 ABank Anadolu Group CB of Qatar 71%

37 Banking Sector: Recent Developments Banking Sector Volumes and KPIs Nominal Quarterly Growth bln TL 1Q13 1Q12 4Q12 1Q13 Total Loans % 5% 5% TL 576 4% 5% 6% FC ($) 118 4% 4% 0% Total Deposits 788 0% 4% 3% TL 521 0% 5% 3% FC ($) 147 8% 4% -2% Total Securities 267 0% -3% -1% Drivers of Loan Growth (annualised) Banking Sector 9.8% 5.5% 3.8% NPL Ratio 2.7% 2.8% 2.9% CAR 15.5% 17.3% 16.7% Loans/Deposits Ratio 96% 98% 100% NIM (quarterly) 3.9% 4.6% 4.3% ROAE (cumulative) 17% 16% 15% 1Q12 2Q12 3Q12 4Q12 1Q13 Individual Company Commercial Installment Loans +5% ytd driven primarily by commercial installment loans as well as mortgages and GPLs Deposits +3% ytd supported by 3% ytd TL deposit growth. Contraction in FC deposits due to ongoing funding diversification NPL ratio at 2.9% with limited increase (+10bps) vs YE12 Loans / deposits ratio at 100% (vs 98% in 4Q12) NIM at 4.3% (-25bps vs 4Q12) with significant decline in deposit costs partially offsetting lower loan and security yields (1) Indicate performing loans 37

38 Contact Investor Relations Yapı Kredi Head Office Yapı Kredi Plaza D Blok Levent Istanbul - TURKEY Tel: +90(212) yapikredi_investorrelations@yapikredi.com.tr Web: #3 in Best IR Team Category #2 in Best IR Officer Category Strong Analyst Coverage 14 Fixed Income Analysts 33 Equity Analysts Quarterly Fixed Income Bulletins >400 fixed income meetings and participation in 10 fixed income conferences / roadshows in US, UK, Europe, Middle-East and Asia over the past 2 years 38