Earnings Presentation1H19–BRSA Bank-only Results
2Q-19 at a Glance
ROE 16.0% ROA 1.9%
Contraction in
loan bookNPL 2.2%
NIM 4.4% CAR @ 16.4%
17.9% 16.0% 14.8% 16.0%
17.9% 18.1% 18.0% 18.1%
2Q-18 2018 1Q-19 2Q-19
Annualized ROE & ROTE
ROE ROTE
277
407 383341
-105
-237-198
-146
172 170185 195
2Q-18 4Q-18 1Q-19 2Q-19
Net Banking Income Provisions&Tax Net Profit
TL mn
Quarterly Net Profit
44
229
69 5330
-59
42
-18
203
237
272306
2Q-18 4Q-18 1Q-19 2Q-19
Quarterly Net Banking Income
Net Banking Income exc. CPI&Trading Trading Gain/Loss CPI Income
5%QoQ
2
277383
407
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
341
*Long term (LT) funding does not include securities issued (Eurobonds).**Swap adjusted.***Net Cost of Risk as of 1H19
Financial Guidance (%)1H19
Figures2019
Guidance
FX Adjusted Loan Growth -%2.2 ~5
Loans/Assets Ratio 73 ~75
Loans/Long Term Funding Ratio* 122 ~115
Fees & Commissions Growth 52 >35
OPEX Growth 23 <25
Net Interest Margin (adj.)** 4.4 3.5-3.8
Return On Equity 16.0 14-15
Return On Assets 1.9 1.5-1.7
Cost/Income Ratio 12.0 13-14
Capital Adequacy Ratio 16.4 >15
NPL Ratio 2.2 ~4
Net Cost of Risk 75 bps*** ~100 bps
1H19 Figures vs 2019YE Guidance
3
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
Quarterly and Yearly Net Income Surge
TL mn 1H-18 2H-19 YoY 1Q-19 2Q-19 QoQ
Net Interest Income 550.8 770.7 40% 372.0 398.8 7%
Trading Income 54.6 24.1 -56% 42.4 -18.3 -
(Derivative MtM Valuation 26.4 5.4 19.3 -13.8)
Net Commissions 8.5 13.0 52% 7.8 5.2 -32%
Dividend & Other 7.5 16.5 121% 11.1 5.4 -51%
Banking Income 627.7 824.3 31% 433.2 391.1 -10%
OPEX (-) 81.2 100.2 23% 49.7 50.5 2%
Net Banking Income 546.4 724.1 33% 383.4 340.7 -11%
Provisions (-) 148.2 236.5 60% 145.3 91.2 -37%
Tax Provisions (-) 67.5 107.5 59% 52.9 54.6 3%
Net Profit 324.5 380.1 17% 185.2 194.8 5%
Based on MIS data Swap costs are adjusted to net interest income. Interest Income from securities includes impairment expenses of marketable securities with provisions. 2Q19 Provisions include Other Income, Deferred Tax and Expected Credit Losses in the audited P&L excluding impairment expenses of marketable securities
Derivative valuation loss, FX positionincome held for general provisions
Stable and strong NIM
In line with inflation
4
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
Supportive FX Liquidity and Maturity Profile
52% 53% 52% 53%
11% 11% 11% 11%
20% 21% 21% 21%
4% 5% 5% 5%4% 4% 4% 4%6% 3% 5% 3%
2Q-18 4Q-18 1Q-19 2Q-19
Funding / Total Liabilities (exc. equity)
T. Guarenteed DFI Funding Unguarenteed DFI Funding
Securities Issued Subordinated Debt
Syndication & Other Repo &Money Market
USD mn
6,616 6,383
$695 mn Non-Withdrawn DFI Funding
• Inclusiveness 48%
• Climate + Environment 45%
• Sustainable Infrastructure 7%
6,878
5
6,542
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
-217 - - - - - -
-114 -142
-534 -507 -454 -389
-1,888
-
-350
-350 -300
-
-350
-- - - -
-300 *
-
-300
3Q-19 4Q-19 2020 2021 2022 2023 >=2024
Syndication DFI Funding Eurobond Tier 2
Maturity Profile of External Debt USD mn
* Tier 2 bond has issuer call in 2022
Resilient Balance Sheet Composition
2Q-18 2018 1Q-19 2Q-19
Loans Securities Cash & MM Non IEAs
38.3
35.0
TL bn
3.02.3
2.3 2.6
2Q-18 4Q-18 1Q-19 2Q-19
FX Loans ($) TRY Loans
TL bn
74%
3%
14%
9%
91%
CurrencyBreakdown
Asset Composition
28.227.2
74%
14%
9%
78%
7%
4%8%
41.6
14%
30.6
6
5.0$5.1$5.3$
Total Loans
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
41.6
72%
14%
9%
5%
1%29.8
4.8$
Loan Portfolio Details
10%
2%
4%
4%
4%
4%
4%
5%
8%
10%
12%
36%
Other
Textile
Health & Education
Tourism
Non-residential Real Estate
Chemistry and Plastics
Construction
Metal and Machinery
Electricity/Gas Distribution
Telecom/Logistics
Finance
Electricity Generation
Other: %4 Food&Beverage, %2 Automative,%1 Packaging, %3 Other
Average Maturity (Years)
6.7
3.7
1.6
Investment Loans
APEX Loans
Working Capital Loans
Loans by Type
Investment; 71%
Working Capital;
20%
APEX; 9%
Investment Working Capital APEX
Electricity Generation;
86% Renewable Energy; 90% in Feed in Tariff
Finance;
74% APEX Loans
Non Residential Real Estate;
50% Energy&Resource Efficiency
7
5.4
* «The loan under Financial Assets at Fair Value Through P/L» (former OTAŞ Loan) is included in Gross Loans.
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
Prudently Managed Asset Quality
* The loan under Financial Assets at Fair Value Through P/L (former OTAŞ loan) is included in Stage 2 Loans** Net Cost of Risk is calculated for the first half of the year.
June’19 Net CoR75 bps
Excluding currencyimpact
61 bps Net CoR **
8
87.0% 86.8%
78.0%
83.0%
88.0%
1Q-19 2Q-19
Stage 1 Loans
10.9% 11.0%
10.5%11.4%
0.0%
5.0%
10.0%
2.0%
7.0%
12.0%
17.0%
1Q-19 2Q-19
Stage 2 Loans
2.1% 2.2%
26.9%
26.1%
20.0%
25.0%
30.0%
35.0%
0.1%
5.1%
10.1%
1Q-19 2Q-19
Stage 3 Loans
Coverage Ratio
TL Mn.
31.03.2019
GrossAmount
Share in Total Coverage Ratio Provisions (-)
Stage 1 25,930 87.0% 0.5% 134
Stage 2 * 3,240 10.9% 10.5% 339
Stage 3 618 2.1% 26.9% 166
Gross Loans ** 29,789 100.0% 2.2% 639
Free Provisions 240
TL Mn.
30.06.2019
GrossAmount
Share in Total Coverage Ratio Provisions (-)
Stage 1 26.578 86.8% 0.63% 167
Stage 2 3.375 11.0% 11.4% 384
Stage 3 682 2.2% 26.1% 178
Gross Loans ** 30.635 100.0% 2.4% 729
Free Provisions 240
Stage 2 & NPL Portfolio under Focus
9
37%51%
63%49%
1Q-19 2Q-19
Stage 2 Loans
Restructured SICR
3.2 3.4TL bn
SICR Loans are in the restructuring
process
• Single file NPL (92% of the NPL portfolio) has beenrestructured.
NPL inflow is minor
8% 8%
92% 92%
1Q-19 2Q-19
NPLs
Single file Other
TL mn618 681
Electricity Generation
33%
Food&Beverage23%
Telecom/Logistics
22%
Electricity/Gas Distribution
13%
Other9%
Stage 2 Sectoral Breakdown
• Diversified sectoral breakdown in Stage 2- 64% of Electricity Generation Loans are RE, all
of which are under feed-in tariff- OTAŞ (LYY) loan is illustrated under
telecom/logistics risk.
Favorable Yields on Securities support Profitability
12.9%
37.1%
18.1% 19.0%
12%15% 16% 17%
2Q-18 4Q-18 1Q-19 2Q-19
TL Sec. Yield TL Sec. Yield exc. CPI
TL Security Yields
3,594 3,896 4,085 4,043
278 309
303 309
2Q-18 4Q-18 1Q-19 2Q-19
TL FX($)
% 64
TL mn
%62 Floating
TL Securities Portfolio Breakdown
Securities / Assets : 14%
Float%22
Float%21
Float%21
Float%19
CPI%40
CPI%46
CPI%44
CPI%43
Fixed%37
Fixed%33
Fixed%34
Fixed%38
2Q-18 4Q-18 1Q-19 2Q-19
Duration: 1.2 yrs in Fixed bonds, 1.9 yrs in Floating bonds,
3.3 yrs in CPIs in TL Sec. Portfolio.
69% is in AFS portfolio.
Private sector bonds: 3.4% of total portfolio
10
CPI Effect
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
Strong Profitability compansates Currency Impact
10.4% 11.1% 10.7% 11.1%
2Q-18 2018 1Q-19 2Q-19
Tier I (CET 1) CAR
15.2%
12.0%
8.5%
Solvency Limits (%) 2019
Capital Conservation Buffer 2.500
Counter Cyclical Buffer 0.011
CET 1 7.011
Tier 1 Ratio 8.511
CAR 10.511
35.5 37.4 40.4 41.2
3.7 4.2 3.3 4.6 5.4 6.0 6.4 6.8
2Q-18 2018 1Q-19 2Q-19
Evolution of RWA and Equity
RWA Core Equity Total Capital
TL bn16.2% 16.4%
11.1
-0.8
-0.2
11.1
1.1
4Q-18 Δ RWA Δ MtM 2Q- Net Income 2Q-19
Tier 1 (CET1) Evolution
11
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
16.0%
3.9%
4.9%
4.5%
4.4%
4.1%
2Q-18
4Q-18
1Q-19
2Q-19
Annualized NIM
CPI normalized NIM
3.9%4.6%
5.4%
4.5% 4.3%
3.3% 3.3% 3.3% 3.7% 3.9%
2Q-18 3Q-18 4Q-18 1Q-19 2Q-19
NIM NIM exc. CPI&Trading
12
Sustained Core NIM Generation
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
3.1 3.2 3.1 3.4 3.5
2.8
1.3
0.6
2.7 2.8
2Q-18 3Q-18 4Q-18 1Q-19 2Q-19FX Loans TRY Loans+ MM
426
-58.5 -92.9 -113.9 -97.9
2Q-18 4Q-18 1Q-19 2Q-19
Quarterly Swap Costs TL mn
Quarterly NIM
Quarterly Spread
Low Cost Base on the back of Efficient Business Model
13.1%10.8% 11.1% 12.0%
2Q-18 2018 1Q-19 2Q-19
Cost to Income
27 27 28 30
9 12 10 11
5 4 12 9
2Q-18 4Q-18 1Q-19 2Q-19
Quarterly OPEX
Personnel Expenses Adm. Expenses Other Op. Expenses
* Adjusted after free provisions
**ΔTotal operating income after free provisions - ΔOPEX
TL mn
34%
47%40%
31%
13%24%
16%8%
2Q-18 2018 1Q-19 2Q-19
Positive JAWS Ratio
Δ Banking Income Jaws Ratio
2Q-18 2018 1Q-19 2Q-19
Cumulative OPEX
Personnel Expenses Adm. Expenses Other Op. Expenses
TL mn
66%
13%22% 62%
11%
23%
163
81
13
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
100
58%
21%
21%
56%21%23%
50
Appendix
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
Appendix: Balance Sheet
(TRY mn)30/06/2018 31/12/2018 30/06/2019
TRY FX TOTAL TRY FX TOTAL TRY FX TOTAL
Cash and Banks 102 1,103 1,205 600 1,340 1,940 1,208 1,727 2,935
Securities 3,594 1,262 4,856 3,894 1,585 5,479 4,051 1,790 5,840
Loans (Gross) 2,898 24,231 27,129 2,233 25,994 28,227 2,655 27,948 30,603
Provisions -43 -256 -299 -94 -416 -511 -75 -622 -698
Subsidiaries 568 36 604 1,343 42 1,385 1,005 45 1,050
Other 747 767 1,515 904 873 1,777 1,013 887 1,900
Total 7,866 27,143 35,009 8,881 29,417 38,298 9,855 31,775 41,630
ST Funds 144 2,451 2,595 169 1,928 2,097 229 2,215 2,444
LT Funds - 19,768 19,768 - 21,521 21,521 - 23,309 23,309
Securities Issued - 7,496 7,496 - 8,499 8,499 - 9,687 9,687
Repo* 80 196 276 - 137 137 - 199 199
Other 678 471 1,148 905 420 1,325 798 397 1,195
Equity 3,792 -66 3,726 4,788 - 69 4,719 4,862 - 67 4,796
Total 4,694 30,316 35,009 5,862 32,436 38,298 5,889 35,741 41,630
* TL security funding only15
Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19
• TSKB Financial Institutions&Investor RelationsMeclisi Mebusan Cad. 81
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Investor Relations I BRSA Unconsolidated Earnings Presentation 2Q-19