earnings presentation brsa bank-only ye 2011 february 14, 2012 · investor relations earnings...

Earnings Presentation

BRSA Bank-Only YE 2011

February 14, 2012

2

INVESTOR RELATIONS Earnings Presentation_Bank Only YE11

www.vakifbank.com.tr

4Q 2011 Macro HighlightsStill strong fiscal stance: 2011 budget deficit fell to 56.5%yoy and came in at 17.4 billion TL (below Medium TermProgram target of 22.2 billion TL). 2011 budgetdeficit/GDP is expected to be -1.4%.

CBRT became more concerned about inflationarypressures and shifted to contractionary policy stance.CBRT widened interest rate corridor and used alternativepolicy tools rather than policy rate hike. Globaluncertainties such as EU sovereign risks and the expectedslowdown in economic activity were behind CBRT’sunconventional policy.

Increasing global risk perceptions had considerablereflections on Turkish markets: USD/TL hit 1.9230 inDecember 2011. And TL depreciated 5.8% against USDrelative to Q3 2011 average. Benchmark Treasury bondyield increased to 11.5% by the end of Q4 2011 from8.4% in end Q3. CBRT sold over 2 billion dollars againstTRL through direct market intervention and sold over 8billion dollars through FX selling auctions in Q4 2011 tocool down market fever.

CBRT reduced average TL RRR from 13.1% to 10.5% andFX RRR from 11% to 10.2% in October 2011. Also, itpaved the way for Banks to hold up to 40% of their TLreserves in FX and up to 10% of both TL and FX reservesin gold.

Increased number of positive signals from the USeconomy supported confidence. However, lower growthexpectations from EU and developing countries continued.EM central banks were generally concerned with slowinggrowth, taken actions to provide liquidity.

Negotiations amongst EU countries made the headlinesbut no significant footstep in eliminating the EU sovereignrisks.

ECB adopted a more protective stance against sovereignrisks and passed on to a looser monetary policy.

Strong growth performance in Turkish economy; 8.2%GDP growth in Q3 2011 was realized and annual GDPgrowth is expected to be above 8%.

CPI yearly inflation came in at 10.45% by the end of2011. Depreciation in TL, volatile food and commodityprices and tax adjustments were behind the rise.

C/A deficit is easing in accordance with the rise inexports thanks to the depreciation in TL. The cooling incredit markets as a result of the lagging impacts of CBRTand BRSA regulations were also effective on C/A deficit.However as of year end 2011, USD 77.1 billion C/A deficiton a 12-months basis represents a still limitedimprovement.

3



YE 2011 VakifBank Highlights Selectively continued lending growth, especially in key segments; SME and higher yielding overdraft & credit cards:

Solid loan growth at 27.6% YoY (currency adjusted 21.2% YoY) and modest 4% QoQ loan growth due to the slowdown in the economy, driven by 7% QoQ TL loan growth by higher yielding segments.

Stellar penetration among SME segment, commercial installment loans are up by 26% QoQ, the share of com. installment loans in overall loan book increased to 18%, still below sector averages promise further growth.

Prudent general purpose & mortgage lending to defend the margins, GPC up by 2.4% & mortgages up by 3.1% QoQ.

Solid funding mix further strenghtened; outstanding deposit growth 9.7% QoQ & 27.8% YoY, dependency on short termCBRT funding decreased substaintally to less than 3 billion TL.

Loan/Deposit ratio decreased to one of the best in peer group with 94% blended, 90% for TL; increased competitiveadvantage for 2012 onwards.

NPL ratio is at 3.63%, down from 4.81% at YE 2010 without asset sale & write off; annual gross CoR is 80 bps, afterextremely strong collections net CoR retreated to negative 48 bps.

Bank-Only net profits are 1,227 mio TL, up by 6% YoY, despite sector overall profits are down by 10% YoY.

Net Interest Income is up by 6% YoY; 11.8% QoQ.

Strong Net Fee & Com. Income which is up by 26.2% YoY & 3.4% QoQ.

NIM widened another 29 bps QoQ to 4.16% thanks to; higher yielding TL loan portfolio, up by 53 bps QoQ to 12.7% & CPI-Linkers support.

Opex growth inside management guidance, up by 14.9% YoY & 6.7% QoQ.

4



409.2

239.9

316.1261.7

1Q11 2Q11 3Q11 4Q11

Quarterly Net Income (Mio TL)

YE 2011 Earnings and Ratios

ROAE (%)

Net Income (Mio TL)

1,157 1,227

YE10 YE11

14.52% 13.74%

YE 10 YE 11

6%

(17.2%)

Cost/Income:YE10 YE11

41% 44%

5



Breakdown of Assets (%)

66.376.7 78.8

YE10 3Q11 YE11

Total Assets

Total Assets (TL bio)

Interest Earning Assets (TL bio)60.6% 61.5% 64.1%

24.5% 21.2%21.6%

4.6%3.2%

2.6%

10.4% 14.0% 11.6%

YE10 3Q11 YE11

Loans Securities

Interbank Other

20.6%

18.9%

7489.3 89.2

YE10 3Q11 YE11

(0.1%)

2.7%

Asset Growth;YoY

20.6%Reshuffling fromsecurities to loans; securities’ share in assets decreasedYoY ;

2.9 pps to

21.6%Loans’ shareincreased YoY;

3.5 pps to

64.1%

Other

Interbank

Securities

Loans

85.5% 88.4%89.6% of total

6



1,087

1,327 1,393

4Q10 3Q11 4Q11

12,53% 12,13% 12,66%

4,29% 5,11% 4,37%

TL Yield

FC Yield

Interest Income on Loans (TL mio)

31.536.4 38.9

13.3

18.618.3

YE10 3Q11 YE11

FC TL

Selective loan growth in higher yielding segments supported loan yields

Total Loans (TL bio)

27.6%

44.8

54.957.2

4.2%

28.2%

Loan/Deposit (%)

89.5 91.5 90.1106.9 117.3

103.1

YE10 3Q11 YE11

TL

FC

93.9%98.9%94%

(1.5%)*

7%

*FC lending is down by 3.1% QoQ in USD terms.

7



Breakdown of Loans (%)

Significant shift towards higher yielding segments

53.2%47.3% 44.4%

15.1%16.5%

16.3%

13.4%15.6%

15.4%

12.9% 14.7% 17.9%

5.4% 5.8% 6%

YE10 3Q11 YE11

Com&Corp. GP Consumer Housing

SME Other*

*Other includes Credit Cards, overdraft and auto loans.

(27 bps)

(16 bps)

315 bps

Other

SME

Housing

Com&Corp.

GPC

53.2%

44.4%

15.1%

16.3%

13.4%15.4%

12.9%17.9%

5.4% 6%

YE10 YE11

Com&Corp. GP Consumer Housing

SME Other*

SME

Housing

GPC

Com&Corp.

4.95 pps

2.09 pps

1.17pps

(8,75 pps)

Portfolio Shift (%)

(287 bps)

Other

8



YoY market share gains;

Mortgage up by201 bps to

11.9%Total retail up by

79 bps to

9.4%Rankings*;

# 1 in GPC

# 2 in mortgage

# 1 in retail overdraft

588.7702.9 770.3

YE10 3Q11 YE11

General Purpose Consumer (TL bio)

6.8

9.1 9.3

YE10 3Q11 YE11

14.9

20.4 21.1

YE10 3Q11 YE11

Selective growth in retail lending, focused on higher yielding segments

Total Retail (TL bio)

Residential Mortgages1 (TL bio)

6

8.6 8.8

YE10 3Q11 YE11

1 Includes TOKI projects.* As of September, 2011 in the peer group.

41.5%

37.4% 47.6%

Retail Overdraft (TL mio)

30.9%

9.6%

2.4% 3.1%

3.7%

9



2.52 3.76 4.79

Business Card

1,963 2,0122,369 2,571 2,720

4Q10 1Q11 2Q11 3Q11 4Q11

Credit Card Loans (TL mio)

Consistent growth in credit cards strongly supported by business cards

*Calculations based on monthly BRSA reports.

Market share* (%)

3.18 3.32 3.45

YE10 3Q11 YE11

Average Quarterly Issuing Volume (TL thousand)

40.3% Credit Card Loans growth YoY;

40.3%Sector growth YoY;

29.3%

5.8%

YE10 3Q11 YE11

1,436.81,820.8 2,015.9

10.7%

10



Corporate & Commercial (TL bio)

23.9 26 25.4

YE10 3Q11 YE11

Total Commercial Loans* (TL bio)

SME (Commercial Installment Loans, TL bio)

5.88.1

10.2

YE10 3Q11 YE11

29.934.5 36.1

YE10 3Q11 YE11

* Includes Commercial & Corporate loans, Commercial (Installment, Overdraft & Credit Card) loans.

6.6% 76.5%

20.6%

Highlycollateralized&high yieldingcommercialinstallmentloansYoY growth;

76.5%

High yielding SME lending growth continued

(2.2%)26.4%

4.4%

11



Total Deposits (TL bio)

YE10 3Q11 YE11

35.339.7 43.2

YE10 3Q11 YE11

Total Retail Deposits (TL bio)

22.5%

27.8%

47.7 55.6 16.619.1 20.6

YE10 3Q11 YE11

24.6%

Stellar deposit growth in every segment further strenghten solid funding structure

TL Deposits (TL mio)

60.9

12.415.8

17.7

YE10 3Q11 YE11

42.5%

FC Deposits (TL mio)

8.7% 12.1%

9.7% 8.1%

Deposit growth;YoY

27.8%Outperformingsector averagegrowth YoY;

12.7%

12



64.5% 62.2%68.3%

11.6%10.2%

10.4%8.6%

9.5%9.2%

11% 12.2%6.7%

4.3% 6% 5.4%

YE10 3Q11 YE11

Deposits SHE

Funds Borrowed Repo

Other

Breakdown of Liabilities (%)

Solid funding mix-deposit heavy funding structure

9.2%

Conservative WholesaleBorrowing

Funds Borrowed / Liabilities

68.3%

Deposits Heavy Funding Structure

Total Deposits / Total Funding

Other

Repo

Funds Bor.

SHE

Deposits

47,7 60,9

8,5 9,26,3 8,28,1 5,93,3 5,0

YE10 YE11

Liabilities Shift (TL bio)

OtherRepo

Funds Bor.

SHE

Deposits

89.273.9

6.7%

Repo Reliance DecreasedSubstantially

Repo*/ Total Funding

* Includes CBRT and market TL & other FC repo transactions.

(26.9%)

27.8%

13



13,765 12,911 13,139

24110 174

4,307 5,919 5,972

YE10 3Q11 YE11

AFS Trading HTM

Securities portfolio mix

Total Securities (TL mio) Portfolio Structure

38%

62%

TL6.6%

3.7%

0.1%

Fixed Floating

FC

99.9%

62%of TL securitiesare floating.

CPI Linkers’ share in total;

9.1%

HTM

Trading

AFS

18,09618,940

Total TL14.8 bio TL

Total FC4.5 bio TL

19,285

14



8.99%7.61% 7.30%

6.62%7.86%

6.88%6.35%

5.69%

YE10 1H11 3Q11 YE11

3.01%2.32% 2.19% 2.16%

4.12%

3.26%3.08% 2.89%

5.91%

4.22%3.89%

3.02%

5.17%3.77%

3.50%

3.44%

YE10 1H11 3Q11 YE11

4.81%3.89%

3.63% 3.63%3.65%2.92%

2.66% 2.70%2.88%

2.34%2.31% 2.39%

Overall NPL Ratio* (%)

NPL Ratios

* Accumulated NPL, no write off & no asset sale for Vakifbank. **NPL Ratio, if legacy NPL before 2008 excluded.

SME NPL (%)

Sector

Sector

Total Retail NPL (%)

Credit Cards NPL (%)

Sector

Sector

W/O Legacy NPL**

1.10%

0.70% 0.63% 0.57%

1.45%1.00% 0.96%

0.88%

Mortgages NPL (%)

Sector

2.73%2.12% 2.05% 2.07%

3.66%

2.76%2.59% 2.58%

YE10 1H11 3Q11 YE11

General Purpose Consumer NPL (%)

Sector

15



NPL 3Q11 New NPL Collections NPL YE11

2,069.6

NPL (mio TL) *

Collections started normalising & positive signals from Group II loans

*Accumulated NPL, no write off & no asset sale. **Cash Coverage Ratio is 96.4%, if 31.8 mio TL free provision included.

215.8 128.5 2,156.9

514 544 664

1,644 1,440 1,194

YE10 3Q11 YE11

Other Group II Without Past Due

Past Due 30 Days

Group II Loans

(13.9)

2,158 1,858

1.80

0.590.97

0.06 -0.88 0.11

4Q10 3Q11 4Q11

CoR Net CoR

Cost of Risk (%) Cash Coverage Ratio of NPL (%)**

0.74% -0.69%

1,984

0.80 -0.481.68% 0.59%98.9% 98.9% 99.6% 97.2% 94.9%

YE10 1Q11 1H11 3Q11 YE11

(6.4%)

16



14.35 14.0013.41 13.38

YE10 1H11 3Q11 YE11

Capital Structure

Capital Adequacy Ratio (%)

Conservative leverage

= 8.6SHE

BRSA Recom.

12%

Min. Ratio8%

(Liabilities-SHE)

13.91*

*CAR, if the regulation effect on risk weighting of GPC loans excluded.

17



Earnings Summary

2,436 2,481

YE10 YE11

(TL-mio, %) YE2010 YE2011 Growth

Net Interest Income 2,730 2,893.7 6%

Net F&C Income 443.3 559.3 26.2%

Net Trading Income 316.3 39 (87.7%)

Dividend Income 35.2 44.8 27.4%

Other OperatingIncome

601.0 885.3 47.3%

Total Operating Income

4,125.8 4,422.2 7.2%

Total OperatingExpenses (-)

1,689.8 1,941.4 14.9%

Operating Profit 2,436 2,480.8 1.8%

Provisions (-) 973.2 905.6 (6.9%)

Tax Provisions (-) 305.6 348.4 14%

Income frominvestments

0 0 n.a.

Net MonetaryGain/Loss

0 0 n.a.

Net Income 1,157.1 1,226.8 6%

Operating Profit (TL mio)

F&C/Operating Income

4Q10 4Q11

11.2% 12.7%

1.8 %

18



Net Interest Income (TL mio)

P & L Participants

Net F & C Income (TL mio)

2.730 2,893.7

2010 2011

443.3559.3

2010 2011

6%

26.2%

432532.7

169175.2

2010 2011

Other

Income from provision reversals

Other Income (TL mio)

47.3%

601885.3

1,689.81,941.4

2010 2011

Operating Expenses (TL mio)

14.9%

19



6.42 6.95 6.83

4Q10 3Q11 4Q11

6.41 6.74 6.32

4Q10 3Q11 4Q11

12.5312.13

12.66

4Q10 3Q11 4Q11

Yields (%) Cost of Deposits (%)

Net Interest Margin (NIM_%)

TL Loans

8.38 8.48 10.14

4Q10 3Q11 4Q11

TL Securities

4.295.11

4.37

4Q10 3Q11 4Q11

FC Loans FC Securities

TL Deposits FC Deposits

NIM, Spreads and Costs

(74bps)

53 bps166 bps

(42 bps)

4.293.87 4.16

4Q10 3Q11 4Q11

* Accumulated margin as of YE11.

29 bps

(12 bps)

2.183.12 3.49

4Q10 3Q11 4Q11

37 bps

4.35%* 3.89%* 3.99%*

20



Distribution Channels & Customer Base (#)

YE2011

Branches 680

ATMs 2,533

Personnel 12,222

POS Terminals 84,984

Outstanding Credit Cards 2.6 mn

Total Customers 11.8 mn

Total Payroll Customers 2.2 mn

Internet Banking Customers 1.7 mn

Active Mutual Fund Customers 1.2 mn

Efficiency (‘000 TL) YE2011

Assets per Employee 7,297

Assets per Branch 131,154

Loans per Employee 4,680

Loans per Branch 84,119

Deposits per Employee 4,986

Deposits per Branch 89,616

Strong efficiencyratios continue

Vakifbank with numbers

21



(TL-mio, %) YE2010 3Q2011 YE2011YoY

GrowthQoQ

Growth

Cash & Balances with Central Bank 4647 8,935 7,137 53.6% (20.1)%

Interbank 3,373 2,863 2,320 (31.2%) (18.9%)

Securities 18,096 18,940 19,285 6.6% 1.8%

Loans 44,836 54,919 57,201 27.6% 4.2%

Subsidiaries & Investments 895 820 865 (3.4%) 5.5%

Property & Equipment 1,114 1,104 1,094 (1.8%) (0.9%)

Other 1,001 1,675 1,284 28.4% (23.3%)

Total Assets 73,962 89,255 89,184 20.6% (0.1%)

Deposits 47,701 55,560 60,939 27.8% 9.7%

Funds Borrowed 6,327 8,469 8,237 30.2% (2.7%)

Other 10,385 14,911 9,426 (9.2%) (36.8%)

Provisions 990 1,167 1,283 29.7% 10%

Shareholders Equity 8,559 9,148 9,298 8.7% 1.7%

Guarantees 11,345 14,433 15,664 38.1% 8.5%

Commitments 10,348 12,638 44,555 330.6% 252.6%

Derivatives 6,968 10,875 12,950 85.9% 19.1%

Ass

ets

Liab

ilities

& S

HE

Off

-B.S

Balance Sheet

*Reported Balance Sheet

22



(TL-Thousand, %) YE2010 3Q2011 YE2011∆{YE11YE10}

∆{4Q113Q11}

Net Interest Income 2,730,001 2,085,674 2,893,718 6% 11.8%

Net Fee & Com. Income 443,282 412,693 559,307 26.2% 3.4%

Dividend Income 35,189 44,495 44,817 27.4% 1866%

Net Trading Income 316,289 15,625 39,000 (87.7%) 189.2%

Other Income 601,030 707,904 885,315 47.3% (32.8%)

Total Revenues 4,125,791 3,266,391 4,422,157 7.2% 4.8%

Operating Expense (1,689,813) (1,422,536) (1,941,380) 14.9% 6.7%

Provisions (973,204) (608,832) (905,596) (6.9%) 45.1%

Tax Provisions (305,634) (269,888) (348,396) 14% (17.8%)

Net Income 1,157,140 965,135 1,226,785 6% (17.2%)

Income Statement

Investor Relations Çamlık Cad. Çayır Çimen Sok. No:2 Kat:634330 1. Levent-İstanbul / Turkey E-mail: [email protected] (90-212) 316 7120Fax (90-212) 316 7126www.vakifbank.com.tr

Disclaimer Notice: This report has been prepared by Vakifbank, Investor Relations Department and is providedfor information purposes only. Although the information on which the report is based has been obtained fromsources which we believe to be reliable, no representation or warranty is made by Vakifbank for the accuracyor completeness of the information contained herein. Information contained herein is subject to changewithout notice. Vakifbank accepts no liability whatsoever for any direct or consequential loss of any kindarising out of the use this document or any part of its content.

earnings presentation brsa bank-only ye 2011 february 14, 2012 · investor relations earnings...

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