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1Q13 Earnings Release

Yapı Kredi recorded TL 544 mln consolidated net income in the first quarter of 2013 driven by robust core revenue performance and disciplined cost control

Yapı Kredi recorded TL 544 mln consolidated net income in the first quarter of 2013 driven by robust core revenue performance and disciplined cost control. Tangible ROAE was 17%(1) while bank capital adequacy ratio was 16%

On 7 May 2013, Yapı Kredi announced its consolidated 1Q13 results based on Turkish accounting standards (BRSA), reporting TL 544 mln net income (+31% y/y) and 17.3%1 return on average tangible equity on a comparable basis. Capital adequacy ratio under Basel II was realised at 16.0% at Bank level (14.7% at Group level). At the Annual General Assembly in Mar’13, it was resolved that Yapı Kredi would distribute TL 300 mln dividends (16.5% pay-out ratio) following significant strengthening of the capital base in 2012.

In 1Q13, the Bank sustained its leading positions in commercial business. Accordingly, leadership position in credit cards in all parameters was reinforced with 1Q results (outstanding volume with 19.4% market share, acquiring volume with 19.5% market share(2), issuing volume with 17.3% market share, number of cardholders(3), with 13.4% market share and number of credit cards with 17.1% market share). The Bank also maintains leading positions in leasing (#1 with 17.6% market share), factoring (#1 with 15.0% market share), asset management (#2 with 16.9% market share), brokerage (#3 with 7.3% market share), private pension funds (#3 with 17.3% market share) and life and non-life insurance (#4 with 5.0% and #6 with 6.9% market shares, respectively).

Yapı Kredi recorded TL 1,815 mln revenues (+18% vs 1Q12) driven by robust core revenue performance (+21% vs 1Q12) on the back of strong net interest income and fee evolution. Net interest margin evolved positively on an annual basis and reached 4.0% (+40 bps y/y) with limited compression in the first quarter of 2013 thanks to significant decline in deposit costs despite pressure on yields. The Bank recorded strong fee performance with +19% y/y growth mainly driven by consumer lending activity and bancassurance. Yapı Kredi sustained its discipline in cost management with +7% growth. As a result, cost/income ratio declined to 44% (vs 49% in 1Q12).

Yapı Kredi recorded 4% total loan growth in the first quarter of 2013. Focus on value generating growth continued with driven by mortgages (8% ytd), general purpose loans (5% ytd), credit cards (5% ytd) and SMEs (3% ytd) in local currency lending. In terms of foreign currency loan growth (3% in US$ terms ytd), Yapı Kredi focused on higher yielding long-term investment loans.

In asset gathering, Yapı Kredi recorded 4% ytd total deposit growth driven by more than 3x sector growth in local currency deposits (10% ytd). The Bank continued to benefit from one-to-one customer based deposit pricing approach which supported better than sector evolution in TL deposit costs together with market share gains. In terms of demand deposits, Yapı Kredi achieved above sector growth (3% ytd vs stable sector) and recorded 16% demand/total deposit ratio. At the same time, the Bank continued funding diversification by issuing a $500 mln Eurobond in Jan’13 with 7 year maturity and 4.0% coupon rate.

In terms of asset quality, there was a slowdown in pace of NPL inflows and sustained trend in collections. NPL ratio was realised at 3.4% in the first quarter of 2013 (vs 3.2% in 2012) while collections/NPL inflows ratio reached 64% (vs 56% in 4Q12). Specific coverage increased to 64% (vs 62% at YE12). Cost of risk continued to normalise down to 1.06% driven by lower general provisions and relatively stable specific cost of risk.

On 26 Mar’13, Yapı Kredi signed an agreement with Allianz for sale of 94% stake in Yapı Kredi Sigorta (which owns 100% of Yapı Kredi Emeklilik) coupled with a 15-year bancassurance agreement. As part of the agreement, Yapı Kredi will buy-back and retain a 20% stake in Yapı Kredi Emeklilik. The transaction is expected to finalise in 2H13 with positive capital adequacy ratio impact of 80/90 bps.

As of Mar’13, Yapı Kredi has 929 branches with 8.9% market share covering all regions of Turkey. Yapı Kredi continuously invests in its alternative delivery channels (ADCs) to improve customer satisfaction and efficiency. As of 1Q13, the bank handles 81% of transactions through its ADCs. ADCs are also increasingly used as points of sale contributing 22% of total sales (vs 15% in 2011). In addition, having fully upgraded its mobile banking application in 2011, Yapı Kredi increased its market share in mobile banking to 13.2% (vs 0.6% in Sep’11). Yapı Kredi also has 2,837 advanced ATMs and two award winning call centers, realising 2.3 million inbound and outbound calls per year.

Istanbul, 7 May 2013

: Yapı Kredi Investor Relations
Email: yapikredi_investorrelations@yapikredi.com.tr

(1)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 vs 1Q12. Comparable ROAE calculation based on (average 2012 shareholders equity + 1Q13 shareholders equity) to exclude mtm impact of transfer to AFS (from HTM)
(2)Mar’13 market share
(3)Number of unique credit card customers

Yapı Kredi / 08 May 2013