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2011 Q3Earnings Presentation
Contents
•Macroeconomic/BankingOutlook•2011Q3FinancialResults•MarketComparison•Appendix
AlbarakaTürk 2011Q3EarningsPresentation
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Macroeconomic / Banking Outlook
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Globaleconomies:Seekingfordebtstabilization
Advanced & developing economies: Are rescue plans a make-up or a comprehensive solution?
• UncertaintiesinglobaleconomiesraisingthepossibilityofasecondglobalrecessionstemmingfrommainlytheEuroareawhereacomprehensivesolutionhasnotbeenreacheddespitethedecisionof50percenthaircutforGreecedebtsandstrengtheningofEuropeanFinancialStabilityFund.
• Eurozonecountries,especiallyPIIGS,arestrugglingtocopewithhugesovereigndebtproblems,whichhavereachedhistoricallyrecordlevels.
Turkish economy is proceeding with its remarkable growth in the face of some constraints to be overcome• Turkisheconomyhasgrownby11.6%inQ1‘11and8.8%inQ2‘11andoverallgrowthisbeingexpectedtobe7.2%foryear-end2011whichwouldbehighercomparedwithgrowthofthedevelopedcountries.
• Unemploymentrate(9.1%byJuly2011)reachedtoitspre-crisislevelandshowsthecapabilityofjobcreationintheTurkisheconomy.
• Turkey’shealthyfiscalstructureisbeingexemplifiedtoothercountries.- Borrowingcostsaredecreasingandmaturityislengtheningthankstothestrongeconomywithfiscaldiscipline.- CentralgovernmentbudgetrecordedasTRL233millionsurplusinthefirstninemonths.- Centralgovernmentdebtstockas%ofGDPdeclinedto41.3%
• DeteriorationininflationduetonewtaxincreasesanddepreciationofTurkishLiraagainstUSD.- InSeptember2011annualcoreinflationsurpassedtheheadlineinflation(6.15%)andrecorded6.96%.- CBRTannouncedthatyear-endinflationwillbeconsiderablyhigherthanthetargetthatis6.9%.
Macroeconomic constraints • DepreciationinTurkishLira• Historicallyhighestcurrentaccountdeficit:AnnualizedcurrentaccountdeficithasreachedtoUSD75billionwhichisexpectedtodecreasebytheendof2011thankstodepreciationinTurkishLiraandslowdownineconomicactivity.
• Attheendof2011CA/GDPratiomightbe9.2%.
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CBRTproactivelyapproachestoglobalconditionswithoutleavingdisciplinarypolicies
Banking sector is keenly observant of CBRT’s regulations
• CBRThasreactedtothesecondpossiblerecessionproactivelybycuttingpolicyrate50bpsfrom6.25%to5.75%.ThisunexpectedmaneuvergaverisetoacceleratedTRLdepreciationagainstUSD.
• CBRTintroducedsomeprecautionarymeasurestocooldowntheFXmarketandtokeepTRLdepreciationundercontrol(i.e.directintervention,openingauctions,decreasingforeigncurrencydepositRRR,hikingshorttermlendingratesetc.)
• Bankingsectorismaintainingalternativefundingsources- Issuingdomesticbonds- Extendingtheamountofsyndicationandsecuritizationcredits
• Foreigninvestors’interestinestablishingabankinTurkey.
Participation banks diversifying and improving their funding base
• UsingshorttermborrowingfacilityprovidedbyCBRT• Accessingtowholesalefundingsources(i.e.sukuk,murabahasyndication,etc.)• Offeringdiversifiedproductstoexpandthedepositbase(i.e.golddepositaccount)• Concentratingoncreditswithhigheryields• ExpandingthesizeofP/Lsharingprojectsandretail-housingcredits• Continuingbranchnetworkexpansion• Seekingopportunitiesforbranchingandacquisitionsabroad
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2011 Q3 Financial Results
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Growth back on track: YtD 13% total asset growth L/Dratiorecordedat97%asendofQ3‘11whilstportionoffundedcreditsintotalassetscamebackto71%from75%inH1‘11.AdditionalUSD110millionfrommurabahasyndicationrolloverhadn’tbeenutilizedthroughcreditsasendofSeptember2011.
Total Assets (million)
TRL USD*
6,415
4,364
Dec ‘09 Sep ‘10 Dec ‘10 Sep ‘11
7,672
5,328
8,406
5,494
9,502
5,120
Composition of Total Assets (Q3 ’11) (%)
Funded Credits Liquid Assets Securities Portfolio Other Assets
71
5
3
21
31.0%
19.6%
13.0%
*USDequivalentoftotalassets
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10.78
Expanded funding base led to grow funded credits portfolio in Q3 ‘11
Credits Yields(1) (%)
LC Credits Yields FC Credits Yields Total Credits Yields
14.29
7.12
11.86
13.64
6.87
11.26
13.04
6.89
12.67
7.11
10.59
Dec ‘10 Mar ‘11 Jun ‘11 Sep ‘11
Total Securities Portfolio (TRL million)
Available for Sale Held to Maturity
500
400
300
200
100
0
Sep ‘10 Dec ‘10 Sep ‘11
82%86%86%
435428
515
18%14%14%
*USDequivalentoftotalfundedcredits
Total Funded Credits (million)
Securities Yield(2) (%)
Securities Yield
10.31
10.48
10.0610.00
TRL USD*
Dec ‘09 Sep ‘10
Dec ‘10
Dec ‘10
Mar ‘11 Jun ‘11
Sep ‘11
Sep ‘11
6,297 6,772
4,686
3,188
5,497
3,818 4,116 3,649
34.4%
17.3%
7.6%
(1)Profitshareincomereceivedfromcreditsforthelast12M/12Maveragecredits (2)Profitshareincomereceivedfromsecuritiesforthelast12M/12Maveragesecurities
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Composition of Total Funded Credits* (%)
Q4 '09 Q4 '10 Q3 '11
Corporate Credits 50.70 54.14 45.48
SME Credits 42.33 37.37 42.17
Retail Credits 6.97 8.49 12.35
Total 100.00 100.00 100.00
Restructuring funded credits portfolio: Emphasis on SMEs and retail credits
Total Retail Credits** (TRL million)
113140
194
114132
132
493594
902
Q3 ‘10 Q3 ‘11Q4 ‘10
Consumer Vehicle Housing
Currency Composition of Total Funded Credits (Q3 ‘11) (%)
TRL USD* EUR*
63
12
25
Retail credits (including installment based commercial credits but excluding credit cards) grew to TRL 1,228 million in Q3 2011 from TRL 866 million in Q4 2010.
*Excludinginstallmentbasedcommercialcredits *IncludingUSD&EURindexedcredits
**Includinginstallmentbasedcommercialcredits,excludingcreditcards
42%
71%
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Asset quality has always priority
Non-performing Loans (TRL million)
NPL Specific Provisions Collateral
Q4 ‘10
Sep ‘10 Dec ‘10
Q3 ‘11
Sep ‘11
181155 164
228202 193
Composition of NPL (Q3 ‘11) (%)
Depositors’ Share in Participation Pools
From Bank’s Own Share Bank’s Share in Participation Pools
64
7
29
Cost of Risk** (bps)
171
129
96
NPL Ratio* (%)
3.633.24
3.03 2.99
Dec ‘09 Sep ‘10 Dec ‘10 Sep ‘11
**Specificprovisionsforcreditsforlast12M/12Maveragecredits*Includingfinancialleasings&accrualsandrediscounts
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Further diversified funding sources boosted growth on the funding base
Composition of Total Liabilities (Q3 ’11) (%)
Funds Collected Shareholders’ Equity Wholesale Funding Other Liabilities
7310
13
4
Composition of Funding Base (TRL million)
5%15%
5% 16% 16%14%
81%79% 69%
Q3 ‘10 Q4 ‘10 Q3 ‘11
Wholesale Funding Current Accounts Participation Accounts
9,000
8,000
6,000
4,000
2,000
0
6,5777,256
8,182
Achieved to raise funding; • TRL 356 million from CBRT’s short term borrowing facility• TRL 230 million (equivalent of USD and EUR) from wakala funding • Rolling over of murabaha syndication credit with additional USD 110 million
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Collected funds slightly increased in Q3 ‘11ExpectedaccelerationincollectedfundsgrowthfromQ4‘11andonwardasprofitsharingratiomovesfurtherinadvantageofparticipationaccountholders.
Total Funds Collected (million)
TRL USD*
Dec ‘09 Sep ‘10 Dec ‘10 Sep ‘11
6,882 6,961
5,465
25.9%
13.9%
1.2%
3,717
6,222
4,321 4,4983,750
Currency Composition of Participation Accounts (Q3 ‘11) (%)
TRL USD EUR
66
22
12
Maturity Composition of Funds Collected (%)
1712 455310
3411
48
13824
18
52
17 18
Dec ‘09 Dec ‘10 Sep ‘11
>1 year Up to 1 year Up to 6 months Up to 3 months Up to 1 month Current Accounts
Cost of Funds Collected(1) (%)
LC FC Total
8.66
3.71
6.82
7.91
3.69
6.42
7.52
3.66
6.15
7.18
3.70
5.96
Dec ‘10 Mar ‘11 Jun ‘11 Sep ‘11
Average Maturity for Funds Collected (days)
TRL: 156 FX: 143 Total: 152
*USDequivalentoftotalfundedcredits (1)Profitshareexpensetodepositorsforthelast12M/12Maverageparticipationaccounts
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Off balance sheet has grown as projected
*Revocablecreditlimitsnotincluded
LGs-to-Total Assets (%)
Dec ‘09 Dec ‘10 Sep ‘11
5044
41
Off Balance Sheet Composition (%)
Others* Letters of Credit Letters of Guarantee
Dec ‘09 Dec ‘10 Sep ‘11
8 8 99 10 1083 82 81
Off Balance Sheet (TRL million)
Dec '09 Dec '10 Sep '11
Letters of Guarantee 3,214 3,687 3,918
Letters of Credit 348 471 485
Others* 309 335 427
Total 3,871 4,493 4,829
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(TRL thousand) Year on Year Change Quarterly Change Notes
Sep '10 Sep '11 % Change Q2 '11 Q3 '11 % Change
Net Profit Share Income 232,062 275,697 19% 90,817 97,813 8%Higher NPSI arises from higher credit yields and lower deposit costs. Average cost of funding in Q3 '11 is around 100 bps less than it was in Q3 '10.
Net Fee Income 60,493 65,292 8% 19,430 22,444 16%Net fees & commissions (F&C) income increased by 16% QoQ since less F&C paid in Q3 '11.
Net Trading Income 12,195 11,852 -3% 3,691 3,480 -6%FX trading income increased by 25% on QoQ basis. However, revaluation of some equities held offset increase in FX trading income.
Other Income 38,941 34,769 -11% 11,669 9,687 -17%Deceleration in recollections resulted as less other income in Q3 '11. Besides, there hasn't been any "one-off income" in 2011.
Staff Costs 87,710 104,366 19% 34,628 35,314 2% YoY 19% increase in staff cost is in line with our budget expectations.
Provisions 81,055 70,120 -13% 27,876 22,174 -20%Specific provisions reduced significantly on QoQ basis due to slight increase in NPL portfolio.
Other Costs 59,569 74,441 25% 25,269 26,140 3%YoY increase in other operational cost can be attributable to new branch openings.
Tax 23,883 28,722 20% 8,119 10,758 33% -
Net Profits 91,472 109,961 20% 29,715 39,037 31% -
Income-cost dynamics sustained, rewarding profitability achieved
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Income-cost dynamics sustained
Net Profit Staff Costs Provisions Other Costs Tax
Net PS Income Net Fee Income Net Trading Income Other Income
(TRL million)
68%
18%
3%
11%
71%
17%
3%
9%
27%
25%
17%
24%
7%
29%
27%
19%
18%
7%
Sep ‘10
Income
Sep ‘10Sep ‘11
Cost
Sep ‘11
450
400
350
300
250
200
150
100
50
0
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Breakdown of income for Q3 2011
Breakdown of Fee&Commission Income (TRL million)Breakdown of Profit Share Income (TRL million)
From Participation Pools Funded Credits Commission Income
From Bank’s Own Equity
From Non-funded Credits From Other Banking Services From Credit Card and POS Commissions
Reversal from Prior Year Provisions
Other Operating Income Net Trading Income
43384
22
112
1554
Breakdown of Other Income (TRL million)
28
12
7
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Expanding branch network
Total Number of Branches
Total Number of Personnel Albaraka Türk Branches
739909
1,1561,477
1,799 1,934 2,1752,468
100109
37 43
6380
101
120
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011-9M
2011-9M
İstanbul 48Ankara 12İzmir 4Konya 4Adana 3Bursa 3Kayseri 3Kocaeli 3Antalya 2
Diyarbakır 2Gaziantep 2Afyon 1Aksaray 1Aydın 1Balıkesir 1Batman 1Çanakkale 1Çorum 1
Denizli 1Düzce 1Elazığ 1Erzurum 1Eskişehir 1Hatay 1Isparta 1İçel 1Karabük 1
Kastamonu 1Malatya 1Manisa 1Maraş 1Ordu 1Osmaniye 1Rize 1Sakarya 1Samsun 1
Sivas 1Şanlıurfa 1Tekirdağ 1Tokat 1Trabzon 1Van 1Yalova 1Zonguldak 1Erbil* 1
İstanbul 4
Bolu 1
Current Branches
Branches that will be opened soon
*1branchinErbil,Iraq
Albaraka Türk branches
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Market Comparison
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Percent 2010 (12 Months) 2011 (9 Months) as of 30 September
Albaraka Türk Participation Banks
Banking Sector Albaraka Türk Participation Banks
Banking Sector
AssetSize 31.04 28.88 20.75 13.03 23.61 20.52
Total Credits* 35.96 28.94 33.43 4.36 17.53 25.63
Deposits* 26.07 23.88 19.90 1.13 11.60 10.80
Total growth
*Accrualsandrediscountsexcluded
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Percent 2010 (12 Months) 2011 (9 Months) as of 30 September
Albaraka Türk/Participation Banks
Albaraka Türk/Banking Sector
Participation Banks/Banking Sector
Albaraka Türk/Participation Banks
Albaraka Türk/Banking Sector
Participation Banks/Banking Sector
AssetSize 19.40 0.83 4.30 17.74 0.78 4.41
Total Credits* 19.34 1.15 5.93 17.17 0.95 5.55
Deposits* 20.72 1.11 5.36 18.77 1.01 5.40
Market share
*Accrualsandrediscountsexcluded
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Percent 2010 (12 Months) 2011 (9 Months) as of 30 September
Albaraka Türk Participation Banks
Banking Sector
Albaraka Türk Participation Banks
Banking Sector
CAR 14.05 15.07 18.96 13.56 14.38 16.42
NPL Ratio* 3.14 3.56 3.77 3.19 3.10 2.77
Provisioning Ratio 85.68 70.67 84.03 89.36 69.35 81.42
ROAA (IBT) 2.29 2.51 3.03 2.18 2.15 2.32
ROAE (NI) 17.40 15.46 18.08 17.29 14.15 14.60
Yield 10.34 10.68 9.46 9.01 9.14 8.52
Spread 4.68 5.21 4.17 4.12 4.47 3.44
Net Profit Share Margin 5.30 5.92 4.92 4.47 4.87 4.00
Net Fee Income / Avg. Assets 1.99 1.25 1.37 1.83 1.80 1.32
Op Costs / Avg. Assets 3.10 3.87 2.98 2.94 3.27 2.43
Cost/Income** 43.8 49.8 43.6 48.10 51.23 47.21
Credits / Branches (000 ‘TRL) 55,187 51,884 52,941 56,437 59,053 64,704
Staff / Branches 20 21 19 21 20 19
CA / Deposits* 17.01 19.31 15,92 18.42 23.65 16.78
Ratios
*Accrualsandrediscountsexcluded**Cost:OperatingCosts,Income:NII/NPSI,NetFeesandCommissionsIncome,OtherIncome
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Appendix
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(TRL thousand) Dec ’10 Sep ’11 Growth
Cash and Banks 1,431,948 1,946,435 35.9%Financial Assets 59,141 91,061 54.0%FundsUtilized 6,296,815 6,772,405 7.6%
Cash Credits 6,017,335 6,301,101 4.7%NPL 190,850 202,334 6.0%Provisions -163,520 -180,798 10.6%Net Financial Leasing Receivables 25,920 12,663 -51.1%
Investments Held To Maturity (Net) 376,204 424,033 12.7%Associates 2,000 3,000 50.0%Fixed Assets 194,497 214,820 10.4%Assets Held For Sale and Investment 18,070 17,721 -1.9%Other Assets (inc. Tax Assets) 27,626 32,463 17.5%Total Assets 8,406,301 9,501,938 13.0%Funds Collected 6,881,590 6,961,028 1.2%Syndicated & Other Loans 374,807 1,220,501 225.6%Debts (inc. Taxes) 195,511 240,082 22.8%Provisions 101,758 133,350 31.0%Shareholders' Equity 852,634 946,977 11.1%
Capital 539,000 539,000 -Capital Reserves (inc. Premium) 31,109 28,445 -
Profit Reserves 148,147 269,050 -Profits 134,378 110,481 -
Past Periods 335 520 -Current Year 134,044 109,961 -
Total Liabilities 8,406,301 9,501,938 13.0%
Summary balance sheet
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(TRL thousand) Sep ’10 Sep ’11 Growth
Profit Share Income 491,008 549,489 11.9%Profit Share Expense 258,946 273,792 5.7%Net Profit Share Income 232,062 275,697 18.8%Net Fees and Commissions Income 60,493 65,292 7.9%
Fees and Commissions Received 66,755 80,033 19.9%Fees and Commissions Paid 6,263 14,741 135.4%
Net Trading Income 12,195 11,852 -2.8%Other Operating Income 38,941 34,769 -10.7%Total Operating Profit 343,690 387,610 12.8%Provisions for Loan Losses 81,055 70,120 -13.5%Other Operating Expenses 147,279 178,807 21.4%Net Operating Profit 115,355 138,683 20.2%Tax Provision 23,883 28,722 20.3%Net Profits 91,472 109,961 20.2%
Summary income statement
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Notes
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Notes
DISCLAIMER
THISPRESENTATIONANDTHEINFORMATIONCONTAINEDHEREINISCONFIDENTIALANDMAYNOTBEREPRODUCED,CIRCULATED,DISTRIBUTEDORPUBLISHED(INWHOLEORINPART)ORDISCLOSEDBYRECIPIENTSTOANYOTHERPARTY.BYVIEWINGTHISPRESENTATION,YOUAGREETOBEBOUNDBYTHEFOREGOINGLIMITATIONS.
Thispresentationdoesnotconstituteorformpartofanyofferorinvitationtosellorissue,oranysolicitationofanyoffertopurchaseanysecuritiesofAlbarakaTürkKatılımBankasıA.Ş.,norshallanypartofitformpartoforbereliedoninconnectionwithanycontractorinvestmentdecisionrelatingthereto,nordoesitconstitutearecommendationregardingthesecuritiesoftheBank.Theinformationcontainedinthisdocumentispublishedfortheassistanceofrecipients,butisnottoberelieduponauthoritativeortakeninsubstitutionfortheexerciseofjudgmentbyanyrecipient.TheBankdoesnotacceptanyliabilitywhatsoeverforanydirectorconsequentiallossarisingfromanyuseofthisdocumentoritscontent.AnypurchaseofsharesoftheBankshouldbemadesolelyonthebasisofsoundfinancialanalysisonthepartoftheinvestor,withnoliabilitiesarisingagainsttheBank.
TheinformationusedinpreparingthesematerialswasobtainedfromorthroughtheBankortheBank’srepresentativesorfrompublicsources.Althoughpreparedingoodfaithandfromsourcesbelievedtobereliable,noreliancemaybeplacedforanypurposeswhatsoeverontheinformationcontainedinthispresentationoronitsaccuracy,completenessorfairness.Theinformationinthispresentationissubjecttoverification,completionandchange.
Theprojections,forecastsandestimatesoftheBankcontainedhereinareforillustrativepurposesonlyandarebasedonmanagement’scurrentviewsandassumptions.Suchprojections,forecastsandestimatesinvolveknownandunknownrisksanduncertaintiesthatmaycauseactualresults,performanceoreventstodiffermateriallyfromthoseanticipatedinthispresentation.TheBankexpresslydisclaimsanyobligationorundertakingtoupdateorreviseanyprojections,forecastsorestimatescontainedinthispresentationtoreflectanychangeinevents,conditions,assumptionsorcircumstancesonwhichanysuchstatementsarebasedunlesssorequiredbyapplicablelaw.Investorsshouldnotemanydifferentriskfactorscouldadverselyaffecttheoutcomeandfinancialeffectsoftheplansandprojectionsdescribedherein.Asaresult,youarecautionednottoplaceunduerelianceonanyforward-lookingstatements.TheBank,itsadvisersandeachoftheirrespectivemembers,directors,officersandemployeesdisclaimanyliabilityincaseprojectionsandplansgiveninthisdocumentarenotrealized.
Albaraka Türk Participation BankInvestor Relations
SarayMah.Dr.AdnanBüyükdenizCad.No:6Ümraniye/İstanbul
Tel: +90 (216) 666 03 03 Fax: +90 (216) 666 16 20 E-mail: [email protected] Web page: www.albarakaturk.com.tr