Profits surged 65% with consistent growth Earnings Review December 31, 2006 in market shares in all business lines
Performance Highlights Total asset growth was 38.8% Y-o-Y reaching 57.1 Billion YTL on a consolidated basis as of end of 2006 Net cash loans to customers increased by 60.9%, constituting 54% of total assets TL loans increased by 65.2% in 2006, reaching 16.4 Billion YTL while FC loans increased by 49.5% in US$ terms, reaching 10.3 Billion US$ as of YE 2006 NPL ratio improved to 2.1% as of 2006 as a result of recoveries and write-offs Y-o-Y deposits from customers were up by 31.7% Total operating income reduced by fx losses and monetary losses expanded by 7.4% on a consolidated basis over the same period in 2005, reaching 3,452 Million YTL Income from operations 1 on a consolidated basis reached 1,404 Million YTL, an increase of 17.7% over YE 2005 Net income increased by 64.7% in 2006 over 2005, reaching 1,149.5 Million YTL ROAA and ROAE strengthened to 2.34% and 25.6%, respectively, as of 2006 Cost / Income improved to 49.4% in 2006, compared to 56.3% in 2005 1 excluding impairment losses but including monetary gain/(losses) 2
Profitability Consistent Growth ROAA ROAE In 2006, profitability 1.91% 43 bps 2.34% 25.6% improved: ROAE by 710 bps 710 bps ROAA by 43 bps and 18.5% cost/income ratio by 690 bps Cost 2 / Income 1 56.3% (690 bps) 49.4% EPS YTL 65.0% 547 331 1 Adjusted to exclude Retail (Tansaş) in 2005 2 Excludes depreciation and amortization, provision for severance payment, impairment, fx loss 3
Balance Sheet - Summary (YTL Million) 2005 2006 % Change Cash & Banks 4,400 4,989 13.4% Securities 12,891 15,987 24.0% Loans to Customers 19,142 30,804 60.9% Tangible Assets 1,219 1,079 (11.5%) Liabilities and SHE Assets Other Total Assets Deposits from Customers Deposits from Banks Repo Obligations Funds Borrowed Other SHE Total Liabilities & SHE 3,482 41,134 24,525 1,060 2,340 6,674 2,503 4,032 41,134 4,234 57,093 32,295 1,574 5,296 9,650 3,338 4,940 57,093 21.6% 38.8% 31.7% 48.5% 126.3% 44.6% 33.4% 22.5% 38.8% 4
Balance Sheet Composition & IEA vs IBL Asset Composition Loans to Banks 5.3% Loans to Custome rs 46.5% Tangible Asse ts 3.0% Other 8.5% Securities 31.3% Cash Equivalents 5.4% Loans to Custom e rs 54.0% Loans to Banks 4.4% Tangible Assets 1.9% Other 7.4% Securities 28.0% IEA 85.9% IEA 88.8% Cash Equivalents 4.3% Total assets increased to 57.1 billion YTL as of end of 2006 (40.9 billion US$). Loans to customers (net cash loans) increased by 60.9%, bringing its share in total assets up to 54.0% at YE 2006 from 46.5% in 2005. Liability & SHE Composition Repo Obligations 5.7% Funds Borrowed 16.2% Deposits from Custome rs 59.6% Other 6.1% SHE 9.8% Deposits from Banks 2.6% Repo Obligations 9.3% Funds Borrowed 16.9% Deposits from Custome rs 56.6% IBL 67.3% IBL 71.0% Other 5.7% SHE 8.7% Deposits from Banks 2.8% Share of deposits from customers in total liabilities and shareholders equity was 56.6% at YE 2006. Share of repo obligations & funds borrowed increased from 21.9% in 2005 to 26.2% in 2006. 5
Loans - Growth & Currency Composition 10.0 19.1 11.5% TL Loan Growth YTL Billion 65.2% Loan Growth & Market Shares YTL Billion 30.8 13.0% Market Shares* 16.4 60.9% FC Loan Growth US$ Billion 6.9 49.5% 10.3 Total loan growth in 2006 was 60.9% to reach 30.8 billion YTL. TL loans increased by 65.2% to 16.4 billion YTL while FC loans increased by 49.5% in US$ terms, reaching 10.3 billion US$ in 2006. TL loans in total loans mix increased to 53.4% in 2006 from 52.0% in 2005. 21.4% 8.8% 9.9% 18.0% * Market share data as of BRSA bank only results 6
Improving Loan Quality & Well-Diversified Portfolio NPL Ratio & Coverage Sectoral Loan Allocation 71.0% NPL ratio improved to 67.4% 16.8% 20.9% 2.1% in 2006, mainly due to recoveries and write- 3.7% 1.2% 2.1% 0.6% 2.5% 1.5% Provisioned NPL Unprovisioned NPL NPL Coverage 2.1% 4.0% 4.4% 4.7% 4.5% 3.5% 5.3% 7.4% 7.3% 2.6% 3.7% 3.9% 4.4% 5.1% 5.1% 4.5% 5.6% 8.4% offs. The coverage ratio increased 360 bps this year mainly as a function of lower NPL. The share of unsecured loans in total loans decreased to 27.9% in 2006 from 35.7% at YE 40.0% 35.8% 2005. This was mainly due to declining share of credit Asset Quality 2005 2006 cards in consumer loans. Secured Loans 64.3% 72.1% Unsecured Loans 35.7% 27.9% Consumer Service Sector Financial Institutions Textile Energy Food Transportation and logistics Construction Metal and metal products Tourism Other* * Other includes loans extended to sectors such as transportation vehicles and sub-industry, data processing, agriculture, chemistry and chemical products, durable consumption, mining etc. 7
Deposits Growth & Mix Deposit Growth & TL/FC Mix 25.6 53.4% 46.6% YTL Billion 32.4% 33.9 57.7% 42.3% TL FC Demand Dep. Growth TL FC Deposit Growth YTL Billion US$ Billion 20.3% 11,913 14,327 TL 36.7% 10,249 14,008 FC Customer Deposits Demand/Time Mix Main source of funding: Solid deposit base (59.4% of liabilities and SHE). Total deposit growth in 2006 was 32.4%. Demand deposit growth: 20.9%. 20.9% 8.1 6.7 73.8% 75.9% 10.9% 12.0% 26.2% 24.1% Market Shares* Demand Time * Market share data as of BRSA bank only results 8
Increasing Free Funds Free Equity YTL Million 70.2% 3,502 Free equity increased by 70.2% and reached 3.5 2,058 billion YTL from 2.1 billion at YE 2005. Free Funds*/IEAs YTL Million 50,723 Growth of free funds was 32.5% in 2006. 24.7% 35,326 22.8% Free funds / IEAs stood at 22.8% level at YE 2006. 8,728 11,566 Free Funds IEAs Free Funds / IEAs *Free Funds: Free Equity + Demand Deposits 9
Summary Income Statement YTL Thousand Net Interest Inc.Adj.by FX & Monetary Gain/Loss Net Fees & Comm. Income Impairment Losses Taxation Charge Net Income 2005 1,862,853 804,425 (455,985) (249,662) 697,913 2006 1,998,520 1,111,285 (218,548) (283,945) 1,149,500 Change 7.3% 38.1% Other Non-Interest Income 547,441 342,266 (37.5%) Total Operating Income 1 3,214,719 3,452,071 7.4% Operating Expenses 2 (1,811,159) (1,800,078) (0.6%) Operating Income 3 1,403,560 1,651,993 17.7% (52.1%) (13.7%) 64.7% 1 Adjusted by fx and monetary gain/(losses) 2 2005 includes retail subsidiary, Tansaş, divested in 4Q 2005 3 Excluding impairment losses but including monetary gain/(losses) 10
Fee & Commission Income Growth (YTL Thousand) 2005 2006 Change Fees and Commissions, net 804,425 1,111,285 38.1% Trading Account Income, net 4,506 20,626 357.7% Retail 258,902 - n.m. Insurance 162,736 242,653 49.1% Other 121,297 78,987 (34.9%) Non-Interest Income (excl. FX Gain) 1,351,866 1,453,551 7.5% Non-Interest Income excl. Retail (Tansaş) 1,092,964 1,453,551 33.0% Fees and Commissions YTL Millions Net Fees & Comm. /Avg. Assets 1,123 31.1% 1,472 38.1% 1,111 2.21% 2.26% 13.2% 804 319 361 Fees & Commissions Fees & Commissions Paid Received Net 11
Effective Cost Management Non-Interest Expenses 1 YTL Million 1,574 13.8% 1,791 37.4% 38.2% Opex 1 /Avg. Assets 1 4.32% 3.65% Operating expense over average assets ratio improved by 67 bps from YE 2005 to reach 3.65% at YE 2006. 9.9% 9.4% 52.7% 52.4% Fees & Comm. /Opex 1 51.1% 62.0% Net fees and commissions coverage of operating expenses increased from 51.1% at YE 2005 to 62.0% in 2006. Other Admin. Depreciation Personnel 1 Adjusted to exclude Retail (Tansaş) in 2005 12
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