On 2 May 2016, Yapı Kredi announced its consolidated 1Q16 results based on Turkish accounting standards (BRSA), reporting TL 704 million net income, indicating 41% y/y growth. The Bank’s ROATE was recorded as 12.8%, indicating strong improvement of 244bps y/y.

Strong revenue growth and disciplined cost control leading to significant improvement in operational efficiency

In 1Q16, Yapı Kredi increased its core revenues by 26% y/y (vs 19% sector) supported by 29% and 19% y/y growth in net interest income and fees & commissions, respectively. In 1Q, swap adjusted NIM improved 10bps q/q to 3.2% driven by effective pricing. Cost growth was realised below inflation at 7% y/y (vs 9% sector) following finalization of bulk investments. Accordingly, cost/income ratio decreased 5pp y/y to 44%.

Maintained scale with significant improvement in LDR

In terms of lending, Yapı Kredi’s total cash and non-cash loans increased 14% y/y to 213 bln TL, further reinforcing the Bank’s third positioning among private banks. Cash loan growth was in line with sector at 1% ytd (14% y/y) and market share was maintained at 10.3%. Loan growth was driven by above sector growth in general purpose lending (+3% ytd) and TL mid-sized company loans (+3% ytd).

In terms of deposits, above sector performance continued and the Bank recorded 5% ytd growth (vs 3% sector). In the first quarter, Yapı Kredi gained 24 bps market share in deposits and reached 10.4% market share. During the same period, demand deposits recorded an impressive 12% ytd growth. Meanwhile, the Bank’s loans to deposits plus TL bonds ratio decreased by 4pp ytd to 110%.

Ongoing focus on digitalization

Yapı Kredi, having invested in strengthening its service network significantly over the last 2 years, maintained its headcount and branch number relatively stable in 1Q16. On the other hand, focus on digitalisation continued at full force. Over the last two years, the Bank has recorded 86% increase in number of digital customers and 53% increase in number of transactions executed through digital channels.

Strengthened capitalisation and controlled asset quality

Capitalisation was strengthened with full reflection of new Basel 3 related regulations and positive impact of USD 500 million Tier-2 issuance as well as ongoing focus on effective capital usage. Accordingly, CAR increased 70bps ytd to 14.5% and Common Equity Tier-1 ratio increased 40bps ytd to 11.1%.

In 1Q16, NPL ratio was realised at 4.1% impacted by pressure on collections while NPL inflows improved compared to 4Q due to focused approach and solid performance of the corporate/commercial lending book despite the challenging environment.