akbank investor presentation 2q20 august · 6 policy response to address challenges of covid-19...
TRANSCRIPT
World’s Best Bank in the Emerging Markets
EUROMONEY (2020)
November 2020
Investor Presentation
2
01
02
03
Annex
04
05
06
Operating Environment
Akbank Overview
How Akbank is building its future
Financials
Looking Forward
Content
Turkey’s Growth Story
(1) GDP data as of 2Q20 (2) As of June 2020
More resilient economy after a successful deleveraging period
Long-term Growth Potential Remains Intact
The need for fiscal support is set to decrease as the economy recovers
Monetary policy will focus to secure long term disinflationary trend
Credit activity is to be more balanced
Economic activity proved resilient with supports and pent-up demand
Outstanding demographics
$743 BnGDP (1)
83.2mn population
Young population
Untapped potential (2)
46% Under the age 29
16% Btw age of 15-24
76%
5.2% 3.3%
Loan/GDP68% Deposit/GDP
16%Household debt/GDP
Mortgage debt/GDP
Pension funds/GDP
3
40
60
80
100
120
Service Confidence Index (s.a.) Retail Trade Confidence Index (s.a.)Construction Confidence Index (s.a.)
9M202014 2015 2016 2017 2018 2019 2020
85
80
75
70
65
6030.0
35.0
40.0
45.0
50.0
55.0
60.0
4 Sources: CBRT, Treasury, TURKSTAT, Akbank
Manufacturing PMI Real Sector Confidence & Capacity Utilization
Sectoral Confidence Indices Foreign Trade Statistics (yoy)
Economic activity bottomed out; but fragile
50
60
70
80
90
100
110
120
130
Real Sector Confidence Index (s.a.) Capacity Utilization Rate (%, s.a., rhs)
32.6
56.9
33.4
109.7
74.9
95.083.8
79.7
Export Import
23.3%
4.8%
-27.8%
-41.5%
60%
40%
20%
0%
-20%
40%
52.8
2007 9M202008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2007 9M202008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2014 2015 2016 2017 2018 2019 2020
Sep’20
Oct’20
Oct’20Sep’20
9M20
5 Sources: CBRT, Treasury, TURKSTAT, Akbank
Q1’20 Q2’20 July’20 August’20 September’20 October’20Growth (yoy, %) 4.4 -9.9
Industrial Production (yoy, %) 5.7 -16.7 -0.8 15.9Manufacturing PMI 50.6 42.7 56.9 54.3 52.8Electricty Consumption (yoy, %) 2.7 -12.5 -0.5 3.5 8.4White Goods Sale (yoy, %) 11.2 -1.2 58.4 20.9Automotive Sales (yoy, %) 44.8 18.7 350.9 106.0 101.9Home Sales (yoy, %) 33.0 13.8 124.3 54.2 -6.9Real Sector Confidence Index (s.a.) 103.9 75.2 99.4 105.2 105.7 109.7Capacity Utilization Rate (s.a.) 76.2 63.5 70.7 73.0 74.3 74.9Consumer Confidence Index (s.a.) 80.7 81.2 82.3 79.4 82.0 81.9Services Sector Confidence Index (s.a.) 95.4 50.9 66.7 70.5 74.9 79.7Retail Sector Confidence Index (s.a.) 103.2 80.2 94.6 94.9 93.5 95.0Construction Sector Confidence Index (s.a.) 76.9 60.4 87.0 85.0 83.3 83.8Unemployment Rate (s.a.) 13.1 14.1 13.6Budget Balance (bn TRY) -29.6 -79.9 -29.7 28.2 -29.7Current Account Balance (bn $) -7.9 -12.0 -1.9 -4.6Export (yoy, %) -4.3 -26.1 -6.6 -5.8 4.8Import (yoy, %) 10.3 -16.3 -7.9 20.4 23.3
Foreign Tourist Arrivals (yoy, %) -22.1 -97.9 -85.9 -71.2
Economic activity heat map
Best WorstAverage
Normalization initiatives during 3Q…
August
September
‣Capital Markets Board lifted ban on short selling in BIST-30 Index
‣ FX reserve requirement ratios were increased by 300 bps in all liability types and maturity brackets
‣ Targeted additional liquidity facilities started to be gradually phased down ‣ Liquidity limits offered to Primary Dealers in Open Market Operations was first reduced to half of
their limits and then lifted ‣CBRT started conducting repo auctions via traditional monthly auction method ‣ Banks’ borrowing limits at the CBRT for O/N borrowing transactions reduced to half ‣ TL and FX reserve requirement ratios raised for banks fulfilling real credit growth conditions ‣Asset Ratio was reduced from 100% to 95% for deposit banks
‣Maximum term of consumer loans decreased from 60 to 36 months ‣CBRT increased the policy rate by 200 bps to 10.25% ‣Off-shore right way & wrong way swap limits were increased ‣Asset Ratio was reduced from 95% to 90% for deposit banks ‣ Banking & insurance transaction tax on FX purchases was reduced to 0.2% from 1% ‣Withholding tax on bank deposits was lowered
6
July
7Source: BRSA & CBRT weekly data dated October 16,2020 & WACF as of Oct 26th, 2020
(1) Excluding participation banks
… increased market rates & slowed loan growthCBRT WACF vs Marginal TL Deposit Rates (%) Marginal TL Loan Rates (%)
5
6
8
9
10
11
13
14
CBRT WACF TL Deposit Rate
578
1011131416171920
Commercial Retail
Jul’20 Aug’20 Sep’20Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20 Oct’20 Jul’20 Aug’20 Sep’20Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20 Oct’20
-20
-16
-12
-8
-4
0
4
8
12
0
10
20
30
40
50
60
7063,4
21.5
Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20 Jul’20 Aug’20 Sep’20 Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20 Jul’20 Aug’20 Sep’20 Oct’20
9.0
-7.0
FX Loans (1) - 13 week averages (%)TL Loans (1) - 13 week averages (%)
Oct’20
7.2
11.0
12.9
7.413.5
18.426-Oct
16-Oct
16-Oct16-Oct
16-Oct
16-Oct
8
01
02
03
Annex
04
05
06
Operating Environment
Akbank Overview
How Akbank is building its future
Financials
Looking Forward
Our Core Values
9
03
01
04
02
05We give back.
We are built upon your trust.
We exist because of our clients.
We do what’s right.
We stand out through innovation.
Strong Major Shareholder with Long-term Vision
51.2%
48.8%
Sabancı Holding, affiliated institutions and individuals (1)
Free Float
29% of all shares are held by foreign investors
(1) Shareholder composition calculation is based on the “Ordinary General Assembly Meeting Shareholder List” dated 23.03.2020
‣ One of the two largest multi-business enterprises in Turkey with total assets of US$ 65 bn
‣ 7% of BIST capitalization with 11 public companies and the Holding itself
‣ Controlled by Sabancı Family, who is the majority shareholder
‣ Mainly operates in financial services, energy, building materials, retail and industrial businesses
‣ Market leader in building materials & energy distribution
‣ Joint-ventures with some of the most well-established companies in the world
๏ Including; Ageas, Aviva, Bridgestone, Carrefour, E.ON, Heidelberg Cement, Marubeni and Philip Morris
‣ Akbank is the flagship of the Sabancı Group with the highest share in revenues and profitability in the Group
SABANCI HOLDING
10
11
STRONG LOCAL SHAREHOLDER WITH LONG-TERM VISION
Our DNA: Prudent, Consistent, Transparent
Visionary management
Seamless execution
INVESTING IN OUR FUTURE
Robust infrastructure, Excellent distribution
Revolutionary branch design
Akbank Lab: Collaborating with over 100 international FinTechs
Akbank Innovation Campus
Young & dynamic team Avg. age 37
OUTSTANDING TALENT
Share of female employees: 53%
PhD & Masters Degree: 11% (Highest ranking among peers)
Drivers of Sustainable Value Creation
Strong Financials
(1) Excluding issuances of banks and affiliated companies .All data are based on TSPB and BIST (2) Among private institutions
15%
85%
12%
88%
Bank-only Net Income Subsidiaries' Contribution
9M19
9M20
/ Banking
/ Leasing
/ Brokerage
/ Asset Management
• Flagship of Akbank Group in Europe • Total assets at US$ 4,448 mn and equity of US$ 984 mn • Contribution to net income stands at 6.5% in 9M20
• Net lease receivables market share of 9.2%
• Top 4 in equity market transactions as of September 2020 (Top 3 in 2Q20) • Leader in equity public offerings with TL 7.8 bn transaction size since 2010 • Leader in corporate bond issuances (1) with 28% market share in 3Q20
• Total AuM with TL 58.1 bn • Leader in pension fund management with TL 29.7 bn AuM, c. 19% market share (2) • TL 18.6 bn AuM in mutual fund management with c. 13% market share • Leader in DPM with TL 8.7 bn AUM (2)
100%
100%
100%
100%
12
Strong Presence in Financial Industry
• Tosla, first mobile application of AkÖde was launched at Sep’19 • Tosla targets young users, provides core financial services in a way that is fun, simple,
fast & social
100% / E-Money
13
Board of Directors
Member CAN PAKER
Member YAMAN TÖRÜNER
Chairman SUZAN SABANCI DİNÇER
Vice Chairman and Executive Board Member EYÜP ENGİN
Executive Board Member AHMET FUAT AYLA
Member EMRE DERMAN
Member ÖZGÜR DEMİRTAŞ
Member AYDIN GÜNTER
36
AVERAGE EXPERIENCE
EDUCATION
40%
40%
20%
Years
PhD
Undergraduate
Graduate
Erol Sabancı is a Consultant to the Board
CEO HAKAN BİNBAŞGİL
Member TUĞRUL BELLİ
14
Executive Team
EVP, Corporate and Investment Banking LEVENT ÇELEBİOĞLU
EVP, Commercial Banking MEHMET TUGAL
EVP, Retail Banking BÜLENT OĞUZ
EVP, Private Banking and Wealth Management ALP KELER
EVP, Treasury ŞEBNEM MURATOĞLU
EVP, Credit Underwriting EMRE ÖZBEN
EVP, Credit Monitoring and Collections EGE GÜLTEKİN
EVP, Special Credits ZEYNEP ÖZTÜRK
CFO TÜRKER TUNALI
EVP, Strategy, Digital Banking and Payment Systems BURCU CİVELEK YÜCE
EVP, People and Culture PINAR ANAPA
EVP, Technology and Operations İLKER ALTINTAŞ
CEO HAKAN BİNBAŞGİL
24
AVERAGE EXPERIENCE
EDUCATION
15%
70%
15%
Years
PhD
Undergraduate
Graduate
15
International Advisory Board
Chairman SUZAN SABANCI DİNÇER
Member DR. HAMID BIGLARI
Member LUBNA OLAYAN
Member SIR WINFRIED BISCHOFF
Member PROF. DANTE ROSCINI
Member LORD STEPHEN GREEN
Member TOM DE SWAAN
Member MICHAEL KLEIN
Member LORENZO BINI SMAGHI
Member EYÜP ENGİN
Member AHMET FUAT AYLA
Member HAKAN BİNBAŞGİL
The Most Valuable
Banking Brand of Turkey
BRAND FINANCE (2011-2017)
World's Best Digital Bank EUROMONEY
(2019)
Bank of the Year in Turkey
THE BANKER (2018)
Best Bank of Turkey
EUROMONEY (2013-2020)
Best Bank of Turkey
GLOBAL FINANCE (2014-2020)
Best Bank of Turkey
WORLD FINANCE (2014-2020)
Best Bank of Turkey
EMEA FINANCE (2014-2019)
Best Private Banking Services Overall
in Turkey EUROMONEY (2010-2017)
Best Financial Institution Borrower
EMEA FINANCE (2018)
Awards over the recent years
16
Best Bank for Trade Finance
in Turkey EUROMONEY
(2020)
Best Private Bank in Turkey
GLOBAL FINANCE (2020)
World’s Best Bank in the
Emerging Markets EUROMONEY
(2020)
Best Corporate IR
in Turkey EXTEL (2018)
Best IR Program
in Turkey for Large Cap
INSTITUTIONAL INVESTOR
(2020)
Best Payment Services in
CEE EMEA FINANCE
(2020)
17
01
02
03
Annex
04
05
06
Operating Environment
Akbank Overview
How Akbank is building its future
Financials
Looking Forward
18
Run the Bank
Risk & return focused growth
Robust capital
Crafting the future
Invest in our people and infrastructure
Leverage digitization & advanced analytics
Best-in-class efficiency
Create superior customer experience
Akbank’s bifocal strategy: Twenty-Twenty Vision
Design & Innovation Culture
19
Akbanker
Customer
INTEG
RATED TO
UC
H PO
INTS
SMA
RT S
YSTEMS
PROCESSES
SIMPLE + DIG ITAL
ART
IFIC
IAL INTELLIGENC
E
Our forward looking operating model
People & Infrastructure
20
‣Young & dynamic team: Avg. age 37
‣Share of female employees: 53%
‣Share of female executives: 38%
‣PhD & Masters Degree: 11% (Highest ranking among peers)
Outstanding Talent
People & Culture: Drivers of sustainable value creation
Centers of Excellence
‣Future Trends
‣Design
‣Advanced Analytics
‣Robotics
21
A few of new prominent digital features launched during 2020
User-centered Smart Daily Banking
‣ New brand attitude and look & feel
‣ Lean experience, simplified language & new tone of voice
‣ Personalized communication area
‣ Native promo and sales areas
‣ Mobile youth proposition: Akbank FAV
‣ Turkey’s first digital-first credit card
‣ Add & rename “contacts” infrastructure
‣ Lean money transfer experience
‣ Akbank Mobile recognized with 3 key design awards: ๏ iF Design Best Mobile App Design ๏A’Design Award & Competition ๏Red Dot Award in Brand &
Communication Design
‣ AI-based personalized financial insights
‣ AI and need-based smart offers
‣ Campaigns and offers from favorite brands powered w/ AI
‣ Akbank Assistant chatbot: First point of help integrated into mobile
‣ Explore tab with search & help capabilities
‣ Proactive money transfer & payment suggestions
‣ Personalized small talk & info sharings
‣ Ready for upcoming regulations: Digital Onboarding, Single Factor login
One-Stop Shop for Wealth Management
‣ New investment dashboard
‣ Aggregated view of all assets
‣ Total portfolio and asset performance tracking
‣ New and enriched investment product rail
‣ FX platform with customized currency prices
‣ Crypto-currency menu integrated with prominent crypto-platforms
Socialized Banking Experience in Money Transfers & Payments
‣ Mobile payments with QR, NFC, OCR and barcode reading
‣ Nearby money transfers
‣ Money transfers and payments with QR
‣ Money transfers to contacts and groups
‣ Istanbulcard registration and top-up payments
‣New mobile platform targeting young users, providing core financial services ๏7/24, free P2P transfers interactive with feeds
๏Digital payments and contactless prepaid card
๏Free and easy top-up & withdraw
‣Quick and easy digital onboarding
‣ Social like its target audience – find and follow friends, like, comment, engage
22
Tosla A brand new ‘‘fun & playful, simple & fast, and social’’ mobile platform
23(1) Based on bank-only MIS data. Increase figures from Dec’19 to Sep’20 (2) Including non-branch channels, year-to-date sales
Enhancing bottom-line impact through digital transformation
Digital banking in numbers (1) with 5.3 mio customers
Interaction Financial Engagement Performance
‣ +21% monthly app login
‣ +15% # of mobile customers conducting financial transactions
‣ +8 pp mobile NPS
‣+62% # of financial transactions through mobile:
๏ +20% payments ๏ +28% money transfers ๏ +96% investment transactions
‣+13 pp share of mobile in financial transactions
๏ +11 pp share in payments ๏ +5 pp share in money transfers ๏ +10 pp share in investment
transactions
‣ ~ 2x digital customer x-sell compared to non-digitals
‣ 60+% credit cards sold through digital channels
‣ 70+% GPLs sold through digital channels
Active mobile customers visiting Akbank Mobile almost everyday
Conversation BarHidden Teller Counter
E-teller
Mobile RMs
24
Phygital Branch: Zero-based design creates competitive advantage
25 Includes Malta branch
2014 2015 2016 2017 2018 2019 9M20
719
771781800
841
902
991
Branch Number Evolution Total Customer Evolution (mn)
-272
2014 2015 2016 2017 2018 2019 9M20
+5.0 mn
13.4
14.4
15.4
16.5
17.4
17.9
Customer Driven Optimization
18.4
26
Commission / Employee (TL.000)
2014 2015 2016 2017 2018 2019 9M20
163
96114
369
220
288
(Loan + Deposit) / Branch (TL mn) Revenue / Branch (TL mn)
(Loan + Deposit) / Employee (TL mn)
2014 2015 2016 2017 2018 2019 9M20
261
188243
770670620
2014 2015 2016 2017 2018 2019 9M20
9.7
6.98.9
32.8
29.0
22.1
Revenue / Employee (TL.000)
2014 2015 2016 2017 2018 2019 9M20
17.3
10.613.4
44.1
34.234.5
2014 2015 2016 2017 2018 2019 9M20
Akbank Peers Average Sector
640
386494
1,878
1,481
1,230
Strong Momentum in all Efficiency Metrics
27
01
02
03
Annex
04
05
06
Operating Environment
Akbank Overview
How Akbank is building its future
Financials
Looking Forward
28
Akbank: Fully equipped to navigate through challenging times
Robust capital Solid liquidity Low leverage Best-in-class CIR
Low operating cost base
Outstanding talent
Cutting-edge technology
Excess Tier 1 Tier 1 (%)Excess Capital CAR (%)
29
Strong capital and robust liquidity underline resilience
(1) Acc. to Basel III requirements (2) 2020 figures are w/o forbearances that will end by YE2020 (Fixing MtM losses of securities & FX rate for RWA calculation to YE2019) (3) With forbearances (MtM loses on securities & fixing FX rate for RWA calculation to 2019 YE) (4) Bank-only. TL LDR includes domestic TL bond issuances and merchant payables
Total Capital
(TL bn, %)
2018 9M201H18
12.516.0
22.8
2019
19.7%16.8%
15.5%
Tier 1
(TL bn, %)
2018 9M201H18
11.914.6
20.3
2019
16.9%
13.3%
23.7
19.1%
20.1
16.1%
(1) (1) (2) (2)
21.8% (3)
18.6% (3)
14.3%
1H18 2018 2019 9M20
TL LDR LDR FX LDR
LDR (4) (%)
51
91
137 143
93
50
130
95
64
147
100
73
Well positioned asset composition & low leverage for unprecedented challenges
30
TL Loans (1)
(Net, TL bn)
2018 9M201H18
TL Loans
130 117 133
2019
(1) TL Loans adjusted for leasing receivables (2) Market share data based on bank only BRSA weekly data as of September 25, 2020 (3) FX Loans adjusted for leasing receivables and LYY
1H18 2018 2019 9M20
20.721.616.015.5
Securities/Total Assets (%)
1H18 2018 2019 9M20
8.27.1
8.18.8
Leverage (x)
Market Share among Private Banks
15.1%14.4% 14.6%
FX Loans (3)
(Net, USD bn)
2018 9M201H18
FX Loans
18 16 14
2019
Market Share among Private Banks
13.9% 13.5% 12.9%
(2) (2)
16113
14.7%12.9%
31(1) Including provision for loan losses net of collections, additional free provisions and MtM adjustment for LYY (2) CIR calculation excludes FX gain from long FX position related with stage 1&2 provisions and LYY hedge as well as insurance penalty of TL 71 mn & BRSA penalty of TL 117 mn
Pre Provision Income Total Provision Expenses
2018 2019
13,042
9M20
14,092
7,0155,865
Provision Build vs PPI (TL mn)
13,749
9M19 (1)
4,3559,849
1H18 2018 2019 9M20
32.332.9
32.332.5
Cost to Income (%)
(2)
Sound operating performance & low cost base driven solid PPI enables reserve build
7,641
32
Despite
‣ Increased funding costs due to CBRT tightening
‣ Still elevated CoC level
3Q20 in a nutshell: Well positioned to remain healthy & profitableAchievements
‣ Maintained solid core operating performance in a challenging environment
‣ Improved fee income almost to pre- Covid levels
‣ Sustained best-in-class CIR
‣ Almost fully hedged LYY(1) in 3Q
‣ Set aside TL 250 mn free provision, reaching TL 1,150 mn in total
‣ Continued prudent ALM with a focus on maturity mismatch
‣ Preserved significant capital buffers
(1) LYY is the Special Purpose Company which owns 55% of Türk Telekom shares
33
Revenue (TL bn)
9M19 9M20
Fee income Swap adj. Net Interest Income
10.1
3.6
13.718.8% YoY
3.5
Net Income (TL mn)
Pre-provision Income (TL mn)
9M19 9M20
9.4% YoY
4,028
OPEX (TL mn)
16.7% YoY
5,0925,940
Cost to Income (%)
9M19 2019 1Q20 1H20 9M20
32.331.6
33.832.9
34.0
(1) Adjusted for 1Q20 free provisions of TL 250 mn & 3Q20 free provisions of TL 250 mn (2) Including insurance penalty of TL 71 mn & BRSA penalty of TL 117 mn (3) 9M19 net income adjusted for TL 100 mn & 9M20 net income adjusted for TL 500 mn free provisions (4) CIR calculation excludes FX gain from long FX position related with stage 1&2 provisions and LYY hedge as well as insurance penalty of TL 71 mn & BRSA penalty of TL 117 mn
Sound core operating performance continues
9M19 9M20
9,849
39.6% YoY
(4)
13,749
(4)
9M20 RoE
11.6% (1)
12.8
16.3
4,409
(4)
9M19 9M20
HR Other Opex One-off
3,028
2,064
3,476
2,276
188
+10.3%
+14.8%
YoY Change
+13.0% OPEX
One - off adj.
Other Opex
HR
(2)
-5% QoQ
-4% QoQ
+15% QoQ
+11% QoQ
Free Provision Adj(3)
4,9094,128 18.9%
YoY
+12% QoQ
+4% QoQ
One-off Adj.
34
Quarterly NIM Breakdown (bps)
442
2Q20 NIM
Securities Other Deposit Cost
Swap Borrowing Cost
3Q20 NIM
Loan Yield
-3
FY NIM to remain within guidance
+5 +10 367
-22-32
-34
In 3Q20:
‣ Funding cost increased due to CBRT tightening
‣ CPI estimation remained unchanged at 9%
Looking forward, upward asset repricing & CPI adjustment expected to support NIM
3Q19 4Q19 1Q20 2Q20 3Q20
-765 -746 -590-738 -976
3Q19 4Q19 1Q20 2Q20 3Q20
CPI Linker Interest Income (TL mn)
(a) from 12% to 10% is -TL 295 mn (b) from 10% to 8.58% is -TL 303 mn
Impact of change in CPI estimation:
442 (a)
403 (b)
647741 784
+1% CPI has +5bps NIM & TL 212 mn NI impact
9M20 NIM 4.28%
Quarterly Total Swap Cost (1) (TL mn)
(1) Includes short and long-term swaps
2020B NIM
4.2-4.5%
35
Payment Systems (-35% YoY)
+21% QoQSupported by both acquiring & issuing volume growth
Pick up in consumer spending+13% QoQConsumer Loans (+115% YoY)
YoY impacted by regulatory changes & Covid related waivers in 2Q
+10% QoQMoney Transfers (-40% YoY)
Supported by both lending & non-lending Digital premiums/total premiums (1) +8 pp YoY
+22% QoQBancassurance (+21% YoY)
(1) Based on MIS data
Net Fees & Comm. (TL mn)
9M19 9M20
3,631
4.3% YoY
45
67
14
27
37
Fees & Commissions by product (%)
Payment Systems
Business Loans Money Transfers
BancassuranceWealth Management
Consumer Loans
Other
Fee income performance improved back to pre-pandemic levels
Product innovation & value added services Accelerated WM client acquisition driven by digital channels
+10% QoQWealth Management (+118% YoY)
3,475
1Q20 2Q20 3Q20
1,264 998 1,213
21.5%-21.0%
36
2019 1H20 9M20
Loans (net) Securities OtherReserve Requirement Liquid assets
Assets (TL bn)
Loan Breakdown (net, TL bn)
2019 1H20 9M20
TL Business Banking Consumer incl. Credit CardsFX Loans
Strong capital
19.1%
Unique growth opportunity
with risk & return in focus
Prudent Asset- Liability Management
Well-structured maturity mismatch
(1) Cash and cash equivalents (2) Without forbearances that will end by YE2020 (Fixing MtM losses of securities & FX rate for RWA calculation to YE2019)
(1)
11.2%
Strategic asset allocation drives sustainable long-term shareholder value
387.2
55.4%
21.6%
10.6%6.9%5.5%
37.8%
41.1%
21.1%
214.5
(2)
53.8%
22.6%
10.7%
8.8%4.1%443.7
14.6%
26% YtD
238.5 8.5%
21% YtD
43.3%
21.0%
35.7%
486.0
53.2%
20.7%
11.6%
7.9%6.6%
9.5%
258.7
40.8%
21.5%
37.7%
37
Maintained prudent & sound lending strategy
‣3Q TL loan growth dominated by consumer loans supported by recovery in consumer spending (+8.1% in General Purpose Loans & + 17.5% in Credit Cards, QoQ) ๏ 59% of 3Q20 GPL originations were pre-approved, separately 39% were to salary customers
‣TL loan market share maintained QoQ, in business banking and consumer credit cards
‣ CGF (opex & cheque) utilization in 9M20 at TL 3.7 bn. Total CGF exposure at TL 8.9 bn
(1) Market share data based on bank only BRSA weekly data as of September 25, 2020
TL Loans (net, TL bn)
2019 1H20 9M20TL Business Banking Consumer Consumer Credit Card
7.1%
6.1%
12.4%
Sector Market Share (1)
7.2%
+2.2%
+8.0%
+17.5%
QoQ Change
+4.9%
2019 1H20 9M20Project Finance & Export Other
FX Loans (net,USD bn)
Sector Market Share (1)
QoQ Change
+1.3% 6.9%
Multinationals & corporates with FX cash
flow generation
133.313.6
88.2
31.5
13.7
26%
74%
153.5
103.3
36.2
14.0
+19.7%
+24.1%
+20.4%
YtD Change
+20.8%
YtD Change
-8.1%
105.5
39.1
16.4161.1
12.4
74%
26%
72%
28%
12.6
38
Balanced loan portfolio
(% of Total Gross Loans (1)) Retail Loans 22.3
Food 3.5
Transport Vehicles & Sub-industry 4.6
Other (2) 16.2
Construction 3.9 ‣ 63% in FX ‣ 74% of FX loans are government guaranteed
(debt assumption)
Metal & Fabricated Metal Products 3.1
Real Estate 8.5 ‣ LTV c. 80%, with recent valuations &
assuming Decree 32 to be implemented perpetually (despite 2 yr limitation) ‣ c. 20% of total has FX cash collateralization
Energy Generation 6.9 ‣ 100% of PF loans since 2016 are renewable ‣ 75% of total energy generation are renewable ‣ 50% are government guaranteed (feed-in tariff)
(1) Consists of consolidated performing and non-performing loans & excludes leasing receivables and adjusted for financial assets measured at fair value through P&L (2) Loan concentration below 2%
Finance 2.9
Textile & Ready-made 3.8
Tourism 3.0 ‣ High room occupancy rate (c.%80) ‣ Well-known brands
Conglomerate 5.2
Transportation & Logistics 3.9 ‣ Increasing business volume in logistics with changing
shopping habits ‣ High capacity docks in different locations ‣ Financially strong companies with high and stable
cash flows
Services 2.1
Energy Distribution 2.1
Retailer 4.4 ‣ Financially strong sponsors ‣ Nation-wide supermarket chains with high
business volume
Petrochemicals Production 3.6
39
Proactive securities positioning
(1) MIS data
Total Securities (TL bn)
+20% YtD
2019 1H20 9M20
FX TL
84
42%
58%62%
38%
100
19.7% 0.4%
66%
34%
100
Security Yields (1)
(%)
4Q19 1Q20 1H20 9M20
CPI (real rate) TL Securities (excl. CPI) FX
4.9
17.1
2.3
4.8
16.2
2.5
4.9
13.8
2.4
4.7
12.1
2.4
TL Securities Portfolio Composition (%)
2019 1Q20 1H20 9M20
FV through OCI Amortised Cost
75
25
67
45
56
32
54
43
‣ More balanced TL securities portfolio classification
to limit MtM fluctuations in equity
‣ Redemption of fixed rate bonds during 3Q
40
Proactive securities positioning
+30% YtD
FX Securities (USD bn)
-18% YtD
2019 1H20 9M20
CPI Floating Fixed
48
8%
47%
44%
2019 1H20 9M20
Floating Fixed
99%
1%
99%
1%
6.0
TL Securities (TL bn)
6738.0%
99%
1%
4.918.0%
0.3%
6%
43%
51%
47%
63
6%
47%
6.0%4.9
‣Proactive positioning in TL fixed rate bonds by reducing avg. maturity to c. 1 year & share in portfolio
‣ Increasing CPI linker securities’ share to be NIM accretive
๏ Oct-Oct CPI estimation remained unchanged at 9% in 3Q
๏ Every +1% CPI has +5bps NIM & TL 212 mn NI impact
41
Maintained disciplined funding mix
(1) MIS data (2) Bank-only. TL LDR includes domestic TL bond issuances and merchant payables (3) Based on BRSA weekly data dated September 25, 2020
2019 1H20 9M20
Deposit Equity Funds Borrowed & Bonds Issued Other Repo
Composition of Liabilities (%) Deposit Currency Split (TL bn)
2019 1H20 9M20TL FX Demand Deposit/ Tot. Dep.
22%
Sticky & low cost RETAIL &
SME DEPOSITS’ Share in TL
Deposit 75% (1)
2019 1H20 9M20
TL LDR LDR FX LDR
LDR (2) (%)
31%
51
91
13763.2
14.0
13.9
6.32.6
61%
39%
245
Demand Deposits
+18% QoQ +76% YtD
Sector’s Total LDR at
103% (3)
58.4
13.0
14.1
6.8
7.7
64%
36%
294
138
98
54
60.6
12.1
15.1
7.1
5.1
60%
40%
259
32%
143
93
50
TL Demand Deposit/ TL Dep.
21%28% 28%
42
‣ Wholesale funding reduced down to c. USD 8 bn (c. USD 10 bn in 2018), led by c. USD 2 bn decrease in short-term portion
‣ In July, successfully issued USD 500 mn, long 5 year senior unsecured Eurobond with c. 3x oversubscription
‣ In August, issued milestone Green Bond transaction of USD 50 mn with c. 4 yrs maturity reflecting sustainability goals
‣ In October, successfully rolled-over syndicated loan with c. USD 800 mn from 36 banks (9 new) & 19 countries
Balances based on principal outstanding and bank-only MIS data (1) ≤ 1 year tenor
(2) Consolidated FX liquidity buffer includes FX reserves under ROM, swaps, money market placements and CBRT eligible unencumbered securities
(3) USD equivalent of TL 1.4 bn Covered Bond issuances (4) Call exercise in year 5 is subject to BRSA approval
Wholesale Funding Maturity Profile (USD mn)
(3)
Total: USD 7.7 bn Avg. maturity: ~ 3yrs
Wholesale Funding vs FX Liquidity Buffer
(USD bn)
9M20
FX Liquidity BufferST portion of Wholesale Funding
13.4
2.8
(1)
(2)
3Q Avg. FX LCR 246%
4Q20 1Q21 2Q21 3Q21 4Q21 2022 2023 2024 2025 2026 2027 2028 2029 ≥2030
Covered Bond Eurobond GMTN Multilateral Securitisation Syndicated LoanTier 2 Trade Finance Green Bond
1,055
251
1,025
489
129
1,009
646 555
952
557 538422
29 19
Well established wholesale funding profile
c. USD 840 mn eq.
Syndicated loan repaid
in Oct’20
10NC5 Tier 2 notes have issuer call date scheduled in 2022 & 2023
respectively (4)
43
Successful Wholesale Borrowings
Eurobond
Syndicated Loans
Green Bond
3Q20
3Q20
‣ USD 500 million, long 5 year, 144A/RegS senior unsecured
‣ First Turkish bank to issue Eurobond during Covid-19 pandemic
‣ Strong institutional demand with c. 3x oversubscription at peak
‣ Granular spread of institutional investors primarily from Continental Europe (39%), UK (31%), US (19%)
‣ USD 50 million, c. 4 year, RegS senior unsecured
‣ Milestone green bond transaction reflecting Akbank’s sustainability goals
‣ April 2020 Syndicated Loan ~ USD 605 million
๏ USD 256 million, 367 days tranche @ Libor+2.25%
๏ EUR 316 million, 367 days tranche @ Euribor+2.00%
๏ 29 banks from 15 countries participated in the deal despite an unprecedented global market volatility due to the pandemic
‣ October 2020 Syndicated Loan ~ USD 800 million
๏ USD 388 million, 367 days tranche @ Libor+2.50%
๏ EUR 348.5 million, 367 days tranche @ Euribor+2.25%
๏ Deal attracted 36 banks (9 new) from 19 countries across Europe, America, Asia & Middle East
Syndicated Loans
Proactive IFRS 9 implementation regardless of staging forbearanceStage 2 loans share
Real Estate
Retailer
Energy Generation
Tourism
Construction
Transportation & Logistics
% of Total Stage 2
15.3
10.8
8.5
4.4
4.0
0.7
Coverage (%)
12
29
28
8
32
10
All restructured loans (TL 21.6 bn) are followed under Stage 2
(1) Real estate’s share in Stage 2 is at 6.8% with 16% coverage, excluding one excessively collateralized real estate loan 44
13.2% (TL 30.1 bn)
(1)
2019 1H20 9M20
FX TL
40%
60%
46%
54%
52%
48%
11.9% (TL 30.1 bn)
Stage 1 Coverage
Stage 2 Coverage
Stage 3 Coverage
Free Provisions
2019
0.3%
11.1%
56.2%
TL 650 mn
9M20
0.6%
16.8%
62.9%
TL 1,150 mn
Coverage pp (Ytd)
7
21
(2)
Flattish
6
2
1H20
0.4%
15.1%
61.5%
TL 900 mn
‣ BRSA forbearances:
๏ 30-90 days files: c. 90% in Stage 2
๏ 90-180 days files: TL 1.9 bn
… with strong coverages
11.6% (TL 31.9 bn)
Restructured loans flattish
QoQ
FX provisions
hedged
45
Staging Breakdown & Coverages (TL bn,%)
Balances on deferred loans are well covered
2Q- Initial Granted 3Q- New Inflows 3Q-Payment 3Q- ending balance
Consumer incl. Credit Cards
Segmental Breakdown of Deferred Loans
(Principal amounts, TL bn)
Commercial Loans
17.22.6
2.2
17.6
Total
6.9 0.5
1.1
6.4
24.13.1
3.3
24.0
Stage 1 Stage 2
10.2%
1.5%Coverage
13.1 10.9
c.9% of Total Gross Loans with
c. 5% Coverage
‣ Deferred installments are at TL 8.5 bn with principal amount of c. TL 24 bn
‣ New loan deferral applications have gone down by 90% QoQ
‣ Payment holiday risk well captured as 45% of outstanding risk in Stage 2 and provisioned accordingly
‣ c. 55% of the deferred loans have matured installments; with very strong repayment performance so far
Based on MIS data
Prudent sector-wide coverage increase
NPL Ratios by Segment (%)
Business Consumer Credit Cards Total
Real Estate
Construction
Energy Generation
Retailer
Tourism
Transportation & Logistics
% of Total Stage 3
23.4
7.5
5.6
3.4
2.7
0.7
Coverage (%)
57
69
45
53
48
68
In 3Q20:
‣ Broad-based collection performance almost reached pre-Covid levels
‣ Due to sector-wide payment holidays & staging forbearances,(2)
Covid-19 impact on NPL expected to be seen towards end of 2020
๏ If all 90+ forbearance loans were booked as NPL, impact would be +60 bps
… FY20 NPL expected to be <6%
46
2019 7.1 4.8 6.0 6.6
(1)
9M20 6.2 4.1 5.4 5.8
Coverage pp (Ytd)
5
13
2
3
12
9
1H20 6.6 4.3 6.0 6.2
New NPL Collections Net NPL
4Q19
Quarterly New NPL Additions and Recoveries (3)
(TL mn)
4,2883,722
567
1,280729551
1Q20
471124347
2Q20
763498265
3Q20
(1) Adjusted for one excessively collateralized file (2) Stage 2 and Stage 3 recognitions extended to 90 and 180 days, respectively (3) Bank-only, does not include write-off and NPL sale
9M20 Stage 3
Coverage 62.9%
(58) (29) (40) (43) (42)17
209
34
206
117
22
161
99
74
Stage 1+2 (net) Stage 3 Currency Impact
CoC started to improve despite weaker TL
‣ Prudent reserve build >> Total provisions reached TL 17 bn with ytd provision charges of TL 4.8 bn
‣ 9M20 CoC excludes LYY MtM adjustment ๏ LYY almost fully hedged in 3Q20 ๏ TL 1,057 mn MtM adjustment during 3Q has been offset with TL 1,013 mn currency gain
… confident with our FY’20 CoC guidance of 250-300 bps47
Net Cumulative CoC Breakdown (bps)
Business as Usual Flow
Reassessment of
IA Loans (1)
& forbearances
Revised Model
Assumptions
+15
+178
+44-42
Currency Impact
9M20 Net CoC
Collections
76
(1) Individually Assessed Loans
1Q20 2Q20 3Q20
Net CoC Breakdown (bps)
201
317 294
Stage 3 Recoveries
113
161
28
130
138
44
9M20 Net CoC
excl. Currency Impact
227
271 259 271
Fully hedged
1H20 9M20
167 295 220 231 227
Net CoC excl. Currency Impact (bps)
48
Capital remains a source of strength
(1) Including buffers (Capital Conservation Buffer: 2.50%, D-SIB Buffer: 2.00%, Countercyclical Capital Buffer: 0.06%)
(2) Fixing MtM losses of securities & FX rate for RWA calculation to YE2019
(3) Basel III min. requirements: CAR: 12.56%, Tier-1: 10.56%, CET-1 9.06%
With forbearances (2)
Without forbearances that will end by YE2020 (2)
(%, TL bn)
CAR Evolution (QoQ, bps) Without forbearances that will end by YE2020
Securities MtM
Impact
Impact of Currency on RWA
Profit 9M20Derivatives Increase in RWA
of Loans
Market Risk
-21-61
+42
1H20
Min Basel III required (1)12.56%
19.1%-18
-55
Change in Volume of Securities
20.4%
-21-4
CAR
19.1%
21.8%
Excess Capital (3)
23.7
29.7
Tier 1
16.1%
18.6%
Excess Tier 1 (3)
20.1
25.7
CET-1
16.1%
18.6%
Excess CET-1(3)
25.5
30.5
‣ 10% TL depreciation: c. 60 bps
‣ 100 bps interest rate increase : c. 20 bps
‣ 1% NPL increase : c. 20 bps
Sensitivity of Solvency Ratios:
49
01
02
03
Annex
04
05
06
Operating Environment
Akbank Overview
How Akbank is building its future
Financials
Looking Forward
50
TL Loan Growth
FX Loan Growth (in USD)
Leverage
ROE
NIM (swap adj.)
Net fees&com. growth
Opex growth
Cost/ income (1)
NPL
Net total CoC
2020 Outlook: Financial strength & operational resilience remains intact
9M20
+20.8%
-8.1%
8.2x
10.5%
4.3%
-4.3%
16.7%
32.3%
5.8%
271 bps
(1) CIR calculation excludes FX gain from long FX position related with stage 1&2 provisions and LYY hedge as well as insurance penalty of TL 71 mn & BRSA penalty of TL 117 mn (2) Adjusted for 1Q20 free provisions of TL 250 mn & 3Q20 free provisions of TL 250 mn
Low-twenties
Negative c. 10%
~ 8x
Low-teens
4.2%- 4.5%
Neg. high-single digit
Mid-teens
≤34%
<6%
250-300 bps
2020B
9M20 RoE 11.6%
when adj. for TL 500 mn (2)
free provisions
+13.0% YoY One - off adj.
Maintaining best-in-class CIR
Achieving mid-to high-teens
ROE
Committed to sustainable dividend
distribution
Medium-term Targets
51
01
02
03
Looking Forward05
Operating Environment
Akbank Overview
How Akbank is building its future
04 Financials
06 Annex
11.2 10.8
1.4 1.4
3.95 4.13 34.0 34.3
10.9 10.0
1.4 1.4
4.14 4.71 32.9 29.7
10.5 10.5
1.4 1.3
4.28 3.67 32.3 33.7
52
(1) CIR calculation excludes FX gain from long FX position related with stage 1&2 provisions and LYY hedge as well as insurance penalty of TL 71 mn & BRSA penalty of TL 117 mn (2) Bank-only (3) TL LDR includes domestic TL bond issuances and merchant payables (4) 2020 figures are w/o forbearances that will end by YE2020 (Fixing MtM losses of securities & FX rate for RWA calculation to YE2019)
(%) Total LDR (2)
TL (3) FX
Leverage (x)
2019 9M209M19Profitability (%) ROE
ROE, Quarterly ROA
ROA, Quarterly Swap Adj. NIM
Swap Adj. NIM, Quarterly CIR (1)
CIR, Quarterly
Asset Quality (%) NPL Ratio Stage 3 Coverage Stage 2/ Total Gross Loans Stage 2 Coverage
Solvency (4) (%) CAR CET-1 Tier-1
90 138
51 7.4
91 137 51 7.1
93 143 50 8.2
6.0 58.1 13.5 11.9
6.6 56.2 13.3 11.1
5.8 62.9 11.6 16.8
19.1 16.1 16.1
19.7 16.9 16.9
19.5 16.7 16.7
Snapshot of Results
11.4 10.4
1.4 1.3
3.86 3.91 33.8 34.2
1H19
95 139 59 7.6
4.5 59.2 14.2 11.5
17.7 15.0 15.0
10.4 11.4 1.4 1.5
4.63 4.42 31.6 29.6
1H20
98 138 54 7.7
6.2 61.5 11.9 15.1
20.4 17.4 17.4
47,901
83,635
48,213
5,983
214,471
133,307
13,710
41,165
387,172
244,712
95,854
25,145
53,755
10,107
24,236
54,362
387,172
70,314
100,483
62,566
4,891
258,717
161,085
12,594
56,473
485,986
294,332
106,601
24,217
73,522
24,968
34,189
58,975
485,986
Consolidated (TL mn)
Cash and due from Banks
Securities
TL
FX (USD)
Loans (net)
TL
FX (USD)
Other
Total Assets
Deposits
TL
FX (USD)
Funds Borrowed and Bonds Issued
Repo
Other
Equity
Total Liabilities and S/H Equity
2019
53
QoQ (%) 9M20 YtD (%)
23
-
(6)
-
8
5
1
18
10
14
2
7
17
(27)
14
3
10
47
20
30
(18)
21
21
(8)
37
26
20
11
(4)
37
147
41
8
26
Balance Sheet Highlights
57,107
100,108
66,532
4,907
238,540
153,489
12,429
47,929
443,684
259,245
104,488
22,615
62,734
34,326
29,861
57,518
443,684
1H20
3,924 4,900 (976)
1,213
2,057 1,484
(1) 575
40
(2,042)
5,192
(1,864) (1,021)
(628) 256
(470)
(1,283)
(1,057) (250)
25
2,046 (523)
1,524
10,090 12,041 (1,951)
3,631
1,064 (59) 175 947
157
(5,092)
9,849
(3,565) (690)
(3,368) 435
59
(1,074)
(690) (100) (284)
5,210 (1,182)
4,028
12,830 15,134
(2,304)
3,475
3,201 1,798
291 1,112
183
(5,940)
13,749
(4,800) (2,307) (2,450)
742 (785)
(3,044)
(2,341) (500) (203)
5,907 (1,498)
4,409
(11) (2) 65
22
130 1,041
- 28
(40)
11
15
1 (15) (8) 52
262
116
156 - -
(2) 4
(4)
27 26 18
(4)
201 -
66 17
17
17
40
35 234 (27)
71 -
183
239 400 (29)
13 27
9
54
Consolidated (TL mn)
Net Interest Income incl. swap cost NII Swap Cost
Fees and Commissions (Net)
Trading Gain (Loss) FX Gain (Loss) from Long Position (1) Securities Other
Other Income
Operating Expense
Pre- Provision Income
Provision for Loan Losses, net of collections Stage 1+2 (net) Stage 3 Stage 3 Recoveries Currency Impact (fully hedged)
Other Provisions LYY MtM Loss Free Provisions Other
Income Before Tax Tax
Net Income
3Q20 QoQ(%) 9M19 9M20 YoY(%)
Income Statement Highlights
(1) Including TL 1,013 mn FX gain from LYY hedging for 3Q20 and 9M20
4,403 4,993 (590)
998
893 130 314 449
67
(1,843)
4,518
(1,837) (1,195) (680)
169 (130)
(594)
(412) -
(181)
2,087 (504)
1,583
2Q20
56
Ebru Güvenir Senior Vice President [email protected]
Institutional Investor Awards
İlknur Kocaer, CFA Vice President [email protected]
Bilgi Aslankurt Manager [email protected]
Nazlı Çelem Manager [email protected]
Burak Songül Manager [email protected]
AddressEmail IR Website
: Akbank Genel Müdürlüğü Sabancı Center 4. Levent 34330, İstanbul: [email protected] : https://www.akbank.com/en-us/investor-relations/Pages/default.aspx
Investor Relations Team
Best IR Program in Turkey
for Large Cap 2020
Best CEO for IR in Turkey for Large Cap
2020
Best IR Professional
in Turkey for Large Cap
2020
Best CFO for IR in Turkey for Large Cap
2020
Gülçe Deniz Manager [email protected]
Disclaimer Statement
57
The information and opinions contained in this document have been compiled or arrived at by Akbank from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document constitute the Company’s judgement as of the date of this document and are subject to change without notice. The information contained in this document is published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document may not be reproduced, distributed or published for any purpose.