Significant profitability acceleration supporting improving fundamentals
On 2 November 2016, Yapı Kredi announced its consolidated 9M16 results based on Turkish accounting standards (BRSA), reporting TL 2,363 million net income, representing 86% year-over-year growth and 14.0% return on average tangible equity.
Strong core revenue growth coupled with disciplined cost approach leading to strong profitability acceleration
In 9M16, Yapı Kredi increased its total revenues by 23% year-over-year supported by 28% core revenue growth thanks to significant net interest income growth, solid fee performance and contained swap costs. Continued discipline in cost management was evident with cost growth of 5% year-over-year excluding the one-off Customs and Trade Ministry fine (stated cost growth at 8%). Accordingly, cost/income ratio improved by 6 percentage points year-over-year to 44%.
Ongoing selective volume growth with profitability focus
Yapı Kredi’s market share among private banks in both loans and deposits remained stable compared to the end of 2015 and realised at 16.0% and 15.3%, respectively.
In terms of lending, Yapı Kredi’s quarter over quarter loan growth was relatively subdued due to seasonality and the Bank’s conservative approach. Nevertheless, the Bank recorded 6% year-to-date growth in loans, in line with private banks, up to TL 161.6 billion. In the same period, Yapı Kredi rebalanced its funding base towards more cost efficient TL deposits and repo funding. The Bank’s deposit growth was slightly higher than loan growth at 7% year-to-date, in line with private banks, up to TL 138.6 billion. Demand deposits, a strong focus area for the bank, increased by 12% year-to-date compared to 8% growth among private banks. The Bank was able to lower its loan-to-deposits plus TL bonds ratio by 1 percentage points year-to-date to 113%.
In terms of funding, the Bank successfully renewed its syndicated loan in October 2016 with the participation of 33 banks from 14 countries and a roll over ratio of 96%. The loan facility has US$233.5 million and €817.3 million tranches with a cost of Libor+1.10%/Euribor+1.00% per annum.
Asset quality resilient in the context of the macroeconomic environment
The Bank’s asset quality was impacted by the challenging operating environment, similar to the overall banking sector. In the third quarter of 2016, non-performing loans ratio was realized at 4.7%. Specific coverage rose slightly to 77% while cost of risk (net of collections) was 1.40% compared to 1.47% at year-end 2015.
Continued improvement in capital ratios
The capitalization of the Bank has been improving consistently compared to the end of 2015 thanks to strong profitability, focus on effective capital usage and issuance of US$500 mln sub-loan in March 2016. On a bank-only basis, capital Adequacy Ratio increased by 2.1 percentage points year-over-year to 15.0% and Common Equity Tier-1 ratio increased by 1.7 percentage points year-over-year to 11.5%.
Inquiries:Yapı Kredi Investor Relations
Tel: (90) (212) 339 6770