- What is a brief description of Yapı Kredi?
- Turkey's first privately-owned bank with a nationwide presence Yapı Kredi is the fourth largest private bank with total assets of TL 74.0 billion, as of 1Q10. Yapı Kredi, through its innovative products and services, is one of the Turkish banking sector's standard-setters. As of 1Q10, Yapı Kredi has a 10.3% market share in total cash loans and a 8.4% market share in total deposits. Through a customer-centric strategy and segment-based service model, Yapı Kredi has an extensive customer base to which it delivers a comprehensive array of retail, SME (Small and Medium Size Enterprises), corporate, commercial, and private banking products and services as well as asset management, leasing, private pension, insurance, and brokerage services.
- Yapı Kredi has financial subsidiaries in Turkey that complement the Bank's strong, segment-based business structure and also international banking operations located in the Nederland, Russia, and Azerbaijan. Yapı Kredi controls one of the most extensive branch and alternative delivery channel networks in the Turkish banking sector. In addition to a physical service network consisting of 838 branches and 2.351 ATMs, Yapı Kredi's internet and telephone banking applications are at the service of its customers.
- Yapı Kredi's principal shareholder, Koç Financial Services (KFS), the 50-50% joint venture between UniCredit and Koç Group, controls a 81,8% stake in the Bank while minorities' stake is 18.2%. The Bank's shares are traded on the Istanbul Stock Exchange and on the London Stock Exchange.
- What is the vision and strategy of the Bank?
Yapı Kredi’s vision is to become the undisputed leader of the finance sector through sustainable growth and value creation and be the first choice of customers and employees.
Yapı Kredi’s strategy is focused on:
- Healthy and consistent growth based on:
- Outstanding performance of core banking activities driven by leadership in the higher return on capital and growth segments
- Continuous focus on expanding market presence through network development and investment for growth, aimed at sustaining long-term performance
- Strong and sustainable profitability driven by:
- Continuous enhancement of productivity and commercial effectiveness
- Strong emphasis on efficiency and cost management
- Outstanding risk management
- What are YKB’s competitive advantages?
- Large network & leading brand
- Leadership in key segments/products
- Segment focused organization
- Solid risk profile
- Quality revenue generation…
- …With large customer base not yet fully explored
- Focus on customer service , efficiency and cost discipline
- Committed shareholders
- What is the strategic positioning of Yapı Kredi?
Focusing on a customer-oriented strategy and service model, the Bank offers its 6.0 million active customers through around 838 branches (as of 1Q10) across the country a broad range of financial products and services in retail, corporate, commercial and SME banking, asset management, leasing, insurance and brokerage.
Yapı Kredi has a unique strategic positioning:
| 4th largest position among privately-held banks by asset size (8.1%) |
| 4th position in terms of number of branches (9.3%) |
| No 1 in outstanding credit cards volume (20.5%) |
| No 2 in asset management (18.0%) |
| No 1 in non-cash loans (14.9%) |
| No 1 in factoring (29.9%) |
| No 1 in leasing (17.9%) |
| No 3 in pension funds (15.1%) |
| No 6 in non-life insurance (6.1%) |
| 4th position in cash loans (10.3%) |
| 7th position in total deposits (8.4%) |
- What is the Istanbul Stock Exchange stock symbol for Yapı Kredi Bank?
The bank’s shares trade under the ticker symbol YKBNK.IS on the Istanbul Stock Exchange.
- What is the paid-in capital of the Bank?
TL 4,347 million.
- Who are Yapı Kredi’s main shareholders?
As of March 2010, 81.8% of Yapı Kredi is owned by Koç Financial Services A.Ş. (“KFS”) -- the 50/50% joint venture between UniCredit and Koç Group - while minorities’ stake in the Bank is 18.2%.
Koç Group is Turkey’s largest industrial and services group, focusing on the main driving sectors of the Turkish economy with leading positions in almost every sector it operates, supported by the largest distribution network and richest customer database in Turkey. As of 2009, Koç Holding is the only Turkish company in the Fortune Global 500 list of companies, in the 172th place.
UniCredit (UCI) is one of the largest banking and financial services organizations in Europe with a network of over 9,500 branches, around 162,000 employees and strong local roots in 22 countries. Its international network is made of branches, representative offices in 27 other markets.
(Update based on 1Q10 results)
- 8. What is Koç Financial Services (KFS)?
KFS, Yapı Kredi’s major shareholder with 82% stake, is an integrated and well capitalized financial services provider. Its partners Koç Group and UniCredit share a common vision and goal based on significantly growing KFS’s financial operations, network and market share as a result of a focused commercial growth plan and a conservative risk profile approach, under the guidance of a strong local management team and with the dedicated strategic support of UniCredit. Value creation will be driven by revenue growth, cost and risk control.
- When did UniCredit (UCI) enter into Turkey?
UCI decision to enter the Turkish market was based on a strong vision in the significant growth potential of Turkey and its banking sector. UCIs presence in Turkey dates back to October 2002 when UCI finalized a 50%-50% partnership with the Koç Group in Koç Financial Services (KFS), a first in the Turkish financial sector. The aim of the strategic partnership has been to consolidate and significantly grow KFS’s position as one of the top leading financial groups in Turkey in order to realize a sizable value generation opportunity.
UCI and its local partner Koç Group further deepened their commitment for growth in Turkey by acquiring, through KFS, Yapı Kredi Bank (YKB), one of Turkey’s top four private banks at the time and a leading retail franchise.
- Exclusive negotiations with YKB’s previous shareholder the Çukurova Group that started in January 2005 led to a share purchase for the acquisition of 57.4% stake in YKB held by the Çukurova Group and SDIF (Saving Deposit Insurance Fund).
- The deal was finalized with the transfer of YKB shares to Koçbank in September 2005.
- In April 2006, KFS increased its shareholding in YKB to 67.3% through the acquisition of an additional 9.9% YKB shares by Koçbank.
- As a final step, the legal merger of the two banks under the “Yapı Kredi” name took place in October 2006. The new YKB is uniquely positioned as Turkey’s fourth largest private bank by assets with leading positions in key segments and products such as credit cards, non-cash loans, asset management, leasing, factoring, pension funds and non-life insurance.
YKB acquisition is the result of UCI and Koç Group’s shared vision in Turkey’s long-term growth prospects as well as their strategic focus on growth in the financial services sector. The combined KFS group’s financial services network (including its international and domestic financial subsidiaries) encompasses more than 890 branches, almost 17,000 employees and 6 million customers across the country and constitutes a premier franchise in retail, corporate and commercial banking offering a broad range of banking products.
Turkey represents one of the biggest investments UCI has made in the CEE region, contributing 26% to UCI’s CEE division operating profit in 1Q10. UCI aims to further grow in Turkey with an objective to become one of the top three leading players in the banking sector.
- Can you provide some key financial highlights for YKB?
As of 1Q10, based on BRSA consolidated financials in TL:
| Total Assets (bln) |
|
74.0 |
| Performing Loans ( bln) |
|
42.5 |
| Deposits (bln) |
|
44.9 |
| AUM (bln) |
|
8.1 |
| Number of Credit Cards (mln)(1) |
|
7.6 |
| Number of Active Customers (mln) |
|
5.8 |
| Number of Branches |
|
838 |
| Number of ATMs |
|
2,351 |
| Number of Employees |
|
16,849 |
(1) Including virtual cards. Total # of virtual cards: 1.5 mln
- What is the capital adequacy ratio (CAR) of the bank?
Yapı Kredi’s consolidated CAR is 15.7%, bank-only CAR is 16.9% as of 1Q10.
- Please comment on the future outlook and trends in the Turkish banking sector
The Turkish banking sector is among the least affected banking systems in the world by the global crisis. Turkish banks are not exposed to the derivative products based on mortgages that created the foundations of the global financial crisis. High liquidity, lower leverage, very limited currency risk, sound asset structure, solid capital adequacy and risk management as well as the importance given to internal control and corporate governance are the main factors increasing the resilience of the Turkish banking system to the global crisis.
Small and medium sized enterprises (SME) segment is and will continue be an important area of competition. Banks will compete to find creditworthy SME’s that were “under banked” in previous years. This will increase the importance of risk management and credit scoring systems. Efficiency increasing efforts (such as POS-sharing, ATM-sharing) are expected to continue.
- How significant is the future growth potential of the Turkish banking sector?
With its high-quality human capital, technological infrastructure comparable with that of the developed countries’ financial sectors and its dynamic structure, Turkish banking sector carries a strong potential.
The ratio of total loans and deposits to GDP as a measure of financial intermediation has been calculated as 288% for the Euro-area in 2008. The same ratio was 83% in Turkey in 2008 and reached 83% for 2008. This reveals that Turkish banking sector is far from being saturated and carries a significant growth potential. In line with continious stability and sustainable and balanced growth, low penetration levels are expected to increase and gradually approach to EU levels.
- What are some of the specific areas that high growth is expected?
Due to existing low penetration, high growth potential exists in specific consumer banking areas:
Mortgages: Significant room for growth remains comparing Turkey’s mortgage penetration (mortgages/GDP) with CEE benchmarks: 11% in Poland, 12% in Hungary, and 39% for MU-13 in 2006. This ratio rose from 1.9% in 2005 to 3.9% in 2008 in Turkey and is expected to grow steadily once the global financial crisis is overcome and consumer confidence returns. The New Mortgage Law, approved in the parliament in 2007, introduced variable rates, up to 2% pre-payment penalty, establishment of a secondary market for the securitization of mortgages, faster collection of collateral and shortened foreclosure process.
Pension Funds: Pension funds are another underpenetrated retail banking area offering strong growth prospects. The pension funds to GDP ratio was 0.05% in 2004, 0.17% in 2005, and reached 0.7% in 2008.
SMEs: SME segment is an important area of competition. Banks will compete to find creditworthy SMEs in this “under-banked” customer segment with a significant potential. This will increase the importance of credit scoring and risk management systems.
