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Q1-2019Investor Presentation
Albaraka Türk Participation Bank15 May 2019
Agenda
1 Financial Highlights
2 Market Comparison
3Appendix
Albaraka Turk – Q1’19 At a Glance
3
(Million TRL) Q4’18 Q1’19 Q-Q (%) % Q4’18 Q1’19 Q-Q (bps)
Balance Sheet Total Assets 42.223 44.594 5,62CAR 14,66 13,57 -109
Total Funded Credits (Net) 26.185 26.498 1,20
Total NPLs 1.889 2.045 8,26Tier 1 9,98 9,45 -53
Deposits (incl. Interbank) 28.623 30.628 7,00
Shareholder’s Equity 3.261 3.257 -0,12NPL 6,88 7,36 48
ProvisioningStage III
47,31 52,26 495
(Million TRL) Q1’18 Q1’19 Y-Y (%)
IncomeStatement
Net Profit Share Income 250 196 -21,5%Net Profit
Share Margin2,80 2,55 -25
Net Fees & Commissions 40 70 75,0%
Provisions for Loan Loss 257 325 26.4ROAE 4,27 1,93 -234
Operating Expenses* 103 105 1,94%
Net Profit 98 27 -72,4%Cost/Income 59,93 42,88 -1705
* Includes personnel expenses
Key Ratios
6Q1’19 Main Highlights (Million TRL)
3,19 3,143,37
2,94
2,62
3,71
3,353,48
2,8 2,55
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
NPSM (Exc. JV Projects)* Net Profit Share Margin*
* Trailing for last 4 quarters
4
37.08440.456
44.71242.224
44.594
25.93827.689
29.79726.185 26.49826.099
27.71129.330
28.623 30.628
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Total Assets Total Funded Credits Total Collected Funds
36
98
27
Q1'17 Q1'18 Q1'19
Net Profit
7,56 % 7,16
2,42 % 2,29
4,68 %4,12
Q4'18 Q1'19
Common Equity Tier I Additional Tier I Additional Tier II
13.57 %14.66 %
1090 1.1441.492
1.230
1.789
629 564
515619
549995 941
927 1.117
1.195
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Available for sale Held to Maturity Other Marketable Securities
2.875
2.648
2.934
7Asset Composition
Composition of Total Assets (Q1’19) Liquid Assets (Million TRL)
5
Total Securities Portfolio (Million TRL) Securities Yield (%)
12,9212,84
11,11
10,029,78
Q1'19Q4'18Q3'18Q2'18Q1'18
(*) Profit share income received from securities for the last 4Q/5Q average securities
2.714
9.395 10.920 12.580 13.465 15.485
25,30%27,00%
28,10%31,90%
34,70%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Liquid Assets % of Total Assets
Funded Credits; 59,4%
Securities Portfolio;
7,9%
Other Liquid
Assets*; 28,0%
Other Assets; 4,7%
*Liquid Assets includes Cash and Cash Equivalents, Financial Assets Measured at Fair Value
through Profit/Loss, Financial Assets Measured at Fair Value through Other Comprehensive
Income.
* Other Liquid Assets includes Cash and Cash Equivalents and Derivative Financial Assets
2.965
181 36 33 22
Q1'18 Profit ShareIncome
Fees &Comm
TradingIncome
Others Q1'19
1,029
6Operating Performance Breakdown
Income (Million TRL)
663 751 844
-413 -593 -648
Profit Share Income Profit Share Expense
250
Q4’18
Net Profit Share Income (Million TRL)
Key Movements in Income (Million TRL)
Cost & Yield Movement (%)
Q1’18
158 196
6
10,18% 10,04%10,47% 10,09% 10,58%
3,71%3,35%
3,48%2,80%
2,55%
5,83% 6,08% 6,41% 6,78% 7,17%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Credit Yield Net Profit Share margin
Cost of Collected Funds
64.4%87.2%
64.8%
5.7%
11.3%
7.3%
3.3%
1.5%
5.2%26.6%
4.0%
22.7%
Q1'18 Q4'18 Q1'19
Others Trading Income Fees & Comm Profit Share Income
1.302
835
1.0291,302
Q1’19
*USD equivalent
Total Funded Credits (including financial leasing, million) Yield on Performing Credits (%)
Profit share income received from credits for the last 4Q/4Q average credits
Funded Credits Portfolio
Q1’18 Q2’18 Q3’18 Q4’18 Q1’19
Corporate Credits 40.2 39.6 41.4 41.7 41.9
SME Credits 46.9 49.2 48.9 48.1 48.6
Retail Credits 12.8 11.2 9.7 10.2 9.6
46%
36%
18%
TRL
USD*
EUR*
Composition of Total Funded Credits* (%) Currency Composition of Total Funded Credits* (Q1’19)
*Including USD & EUR indexed credits*According to BRSA definition
7
Q1’18 Q4’18 Q1’19 QoQ YoY
TL Credits, TL 13.243 12.092 12.175 -0,69% -8,06%
FC Credits, $* 1.549 1.933 1.972 2,02% 27,31%
FC Indexed, $* 1.669 735 581 -20,95% -65,19%
Total Credits, TL 25.938 26.185 26.498 1,20% 2,16%
13,4%
16,6%
9,8%10,9%
6,4% 6,4%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Yield on TL Loans, adjusted, trailing
Blended Yield, adjusted
Yield on FX Denominated Loans, trailing
5,34 5,576,22
6,887,36
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Gross Funded Credits by Groups (including financial leasing, million)
243227 232
216 218
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Cost of Risk** (bps)
NPL Ratio (%) *
** Specific provisions for credits for last 4Q/ 5Q average credits
*Including financial leasing & accruals and rediscounts
Provisioning (Stage III)
Asset Quality
8
31.272
27.44227.04828.887
848929
1.168
8931.069
58,7%57,7%
60,1%
47,3%52,3%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Lifetime ECL Impaired Credits (Stage 3) (Million TRL) Provisioning Ratio (%)
27.778
84,0% 80,3% 76,2%73,7% 77,6%
10,7% 14,2%17,6%
19,4% 15,1%5,3%
5,6%6,2%
6,9% 7,3%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Group I Group II Group III
NPL Formation Trend
Asset Quality
92
87
20
9
45
4
43
9
31
5
56
44 1
17
25
3
78
23
1
16
5
33
6
18
6
23
7
372
250
475
272
363
1Q'18 2Q'18 3Q'18 4Q'18 Q1'19
Additions (million TRL) Recoveries (million TRL)
Net NPL Formation (million TRL) Net NPL Formation Rate (bps)
NPL Inflow Sector Distribution
Source: Albaraka Turk
12,0%10,9%
30,2%
7,7%
25,7%
5,19%
Communication Construction&Real EstateManufacturing OthersTrading Transportation
35,60%
14,20%
20,50% 7,90%4,00%
17,80%
Manufacturing Others
Construction&Real Estate Trading
Transportation Energy
Stage II Credits Sector Distribution
4.209
2.045 2.861
1.337
96
1.069
Stage 2 Stage 2 Stage 3 Stage 3
Risk amount Collateral Provision
Stage II-III Coverage (Million TRL)
*Includes construction of power plant projects
21% 24% 27% 24% 25%
19%21% 21% 23% 23%
60% 56% 52% 53% 52,0%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19Fund Borrowed* Current Accounts Participation accounts
Composition of Total Liabilities (Q1’19,%) Composition of Funding Base (Million TRL)
69%
21%
7%3%
Funds Collected
Wholesale Funding
Shareholders'
EquityOthers
32,885
21.6%
36,295
Funding Profile
10
*Fund Borrowed includes Funds Borrowed , Borrowings from Money Market and Subordinated Loans
39,978
(Million TRL) Q4’18 Q1’19 YoY Growth Comp.
Funds Collected (incl. Bank deposits)
28,623 30,628 7.0% 69%
Wholesale Funding 8,828 9,350 5.9% 21%
Funds Borrowed 6,852 7,499 9.4% 17%
Syndicated Loans 1,665 1,764 5.9% 4%
Wakala 1,211 1,199 -1.0% 3%
Issued Lease Certificates & Sukuk
3,463 4,187 -20% 9%
Other 514 349 -32% 1%
Sub-Ordinated Debt (Tier 2) 1,204 1,313 9.1% 3%
Interbank 772 537 -30% 1%
Shareholders’ Equity 3,261 3,257 -0.1% 7%
Paid in Capital 900 900 - 2%
Tier 1 Sukuk 776 - 2%
Others 1,510 1,359 -10.0% 3%
40,155
350
205 250
0 100 200 300 400 500
>2020
2019
Senior Sukuk Tier 1 Sukuk Tier 2 Sukuk
Maturity Profile of Liabilities (Million USD)
37,452
37
38
20
6
TRL
USD
EUR
Others
7,17%6,78%
6,41%6,13%5,88%
12,63%11,31%10,34%
9,58%9,10%
2,56%
2,47%2,33%2,13%1,94%
0,94%1,21%1,41%1,36%1,25%
Q1'19Q4'18Q3'18Q2'18Q1'18
Blended TL FC Precious Metal
Total Funds Collected (Million TRL)
Cost of Funds Collected*
*USD equivalent of FC accounts
*Profit share expense to depositors for the last 4Q/4Q average participation accounts
Currency Composition of Funds Collected (Q1’19,%)
Maturity Composition of Funds Collected (Q1’19, %)
32
19
42
3 4
Current Acc.
Up to 1 month
Up to 3 months
Up to 1 year
>1year
Funding Profile (Collected Funds)
11
Q4’18 Q1’19 YoY
Funds Collected 28,623 30,628 7,0%
Current acc./ Total Funds Col. 30.49% 32.14%
Current Accounts 8,729 9,842 12,8%
Current Accounts TL 2,810 2,886 2,7%
Current Accounts, FC, $ 1,121 1,240 10,6%
Participation Accounts 19,895 20,785 4,5%
Participation accounts TL 8,970 8,447 -5,8%
Participation Accounts FC, $ 2,069 2,199 6,3%
Q1’18 Q2’18 Q3’18 Q4’18 Q1’19Growth (%)
YoY
Letter of Guarantee 7,387 8,004 8,910 8,575 8,304 12%
Letter of Credit 1,020 1,178 1,266 1,230 1,423 39%
Others* 122 137 205 242 424 248%
Total: 8,530 9,319 10,382 10,046 10,151 19%
Off Balance Sheet Composition (%) LGs*-to-Total Assets
20,4%19,8% 19,9%
20,3%
18,6%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
Guarantees & Sureties(TRL million)
*Revocable credit limits not included.
Off Balance Sheet Growth
12
*Below 20% of LGs to Total Assets is targeted
62 59 5869
40
8 9 8
10
7
30 32 3421
53
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
LG LC Others
13.544 15.413 20.64812.003 12.444
14Income- Cost Dynamics
13
(Million TRL)
YoY Notes
Q1’18 Q1’19 %
Net Profit Share Income 250 196 -21,5%Profit Share income increased by 21% While Profit share Expenses incresed by 57% YoY. Upward pricing of Funded Credits in 2H19 is expected to lead stronger Net Profit Share Income.
Net Fee Income 40 70 75,0%Circa 75,0% Y-o-Y expansion in this line item is mostly driven by higher POS commissions and custody services, despite the deceleration in economic activity leading to slower growth in Funded Credits.
Net Trading Income 34 67 97,1%$205 mln Tier-1 capital sukuk shaped stronger FX gains in the 2019 1Q. This USD-denominated capital has acted as an organic hedge to TL depreciation.
Other Income 273 296 8,4%Provision reversals from stage 2 credits led to 2019 1Q total operating income being above the same period of last year.
Provisioning 257 325 26,4%Provisioning expenses related to Stage 3 credits put pressure on the provisioning expenses. Nevertheless, our total coverage ratio dropped to 62.6%, while Stage-3 coverage ratio increases to 52.3%.
Personnel Expenses 122 165 35,2% HR costs grew by 35,2 which is higher than CPI.
Other Costs 103 105 1,9%Despite the continued branch expansion (+11 branches YoY) to 231headline cost growth remained below 19,3% inflation. The growth in
Net Profits 98 27 -72,4%Worsening asset quality related higher provisioning expenses, rising cost aof funding depressed net profit in 2019 1Q
Agenda
1 Financial Highlights
2 Market Comparison
3Appendix
Percent % Q4’18 Q1’19
Albaraka TürkParticipation
BanksBanking Sector Albaraka Türk
ParticipationBanks
BankingSector
CAR 14.66 15.76 17.27 13.57 15.48 16.35
NPL Ratio 6.88 3.74 3.81 7.36 4.06 3.94
Provisioning Ratio (Stage 3) 47.31 63.30 68.32 54.26 66.53 68.83
Loan/Deposits 91.48 96.62 117.25 86.52 89.59 113.86
ROAA 0.33 1.48 1.78 0.15 1.38 1.64
ROAE 4.27 13.93 13.55 1.93 13.11 12.71
Asset Yield 8.29 9.64 10.49 8.46 10.01 10.98
Asset Spread 2.81 3.23 3.37 2.60 3.05 3.36
Net Profit Share Margin 2.80 4.21 4.26 2.55 4.06 4.23
Op Costs / Avg. Assets 2.89 2.10 1.84 2.88 2.09 1.85
Cost/Income* 59.93 35.70 34.39 42.88 34.48 33.04
Credits / Branches (000‘TRL) 113.848 121.472 219.358 114.709 126.508 232.359
Staff / Branches 17.34 14.08 17.96 17.01 14.88 17.88
CA / Deposits 30.49 32.75 21.32 32.14 33.19 22.80
*Cost: Operating Costs, Income: NPSI, Net Fees and Commissions Income, Other Income Net Trading Income
Financial Ratios - Sector Comparison
15
Agenda
1 Financial Highlights
2 Market Comparison
3Appendix
(Million TRL) Q4’18 Q1’19 Growth (%)Cash and Balances with Central Bank 5,918 5,306 -10%Banks 5,217 7,223 38%Financial Assets 2,949 3,530 20%Funded Credits 26,185 26,498 1%
Cash Credits 25,174 25,399 1%NPL 1,889 2,045 8%Provisions 893 1,069 -100%Net Financial Leasing Receivables 380 334 -12%
Associates 40 46 15%Fixed Assets 687 1,006 -100%Assets Held For Sale and Investment 650 656 1%Other Assets (inc. Tax Assets) 578 330 -43%
Total Assets 42,224 44,594 6%Funds Collected 28,623 30,628 7%Funds Borrowed 6,852 7,499 9%De bts 2,192 1,794 -18%Provisions (inc. Taxes) 90 102 13%Tier II Sukuk 1,204 1,313 9%Shareholders’ Equity 3,261 3,257 0%
Capital 900 900 0%Capital Reserves (inc. Premium) 846 863 2%Profit Reserves 1,301 1,431 10%
Total Liabilities 42,224 44,594 6%
Summary Balance Sheet
17
(Million TRL) Q1’18 Q1’19 Growth (%)
Profit Share Income 662 800 21%
Profit Share Expense 413 648 57%
Net Profit Share Income 250 152 -39%
Net Fees and Commissions Income 40 70 75%
Fees and Commissions Received 59 95 61%
Fees and Commissions Paid 19 25 32%
Net Trading Income 34 67 97%
Other Operating Income 273 296 8%
Total Operating Profit 475 420 -12%
Provisions for Loan Losses and Other Receivables 257 281 9%
Other Operating Expenses* 225 270 20%
Operating Profit Before Tax 115 34 -70%
Tax Provision 17 7 -59%
Net Profit 98 27 -72%
Summary Income Statement
18
* including personnel expenses
THANK YOU
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Address : Saray Mahallesi Dr.Adnan Büyükdeniz Caddesi No:6 34768 Ümraniye/ İSTANBULE-mail : [email protected] : +90 216 666 03 03Fax : +90 216 666 16 20 Internet : www.albaraka.com.tr