1H05 BRSA Bank Only Financial Results

1
1H05 BRSA Bank Only Financial Results
29 July 2005
2
Highlights

• Total assets increased 28 y-t-d, reaching TRY
  44.7bn (USD 32.8bn)
• Continued growth in loan portfolio of 32 y-t-d
• 41 growth in TL loans -mostly made up of high
  yield SME and consumer loans
• Aggressive growth in customer deposits, up 32
  y-t-d, generated from 87 growth in TL customer
  deposits
• Net commission income growth 57 y-o-y, driven by
  the strong growth in credit card and consumer
  loan related revenues
• 40 growth in net profit, reaching TRY 778mn (USD
  571mn)

3
Highlights
Total Assets (TRY billion)
Loans (TRY billion)
18
23
8
7
Deposits (TRY billion)
Net Profit (TRY million)
40
23
10
At YE04 prices
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We are improving our rankings
1H05 1H04

• Total Loans 1 2
• Total Consumer Loans 1 2
• Car Loans 1 2
• Mortgages 1 1
• Deposits 1 2
• Asset size 2 2

Private Commercial Banks
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Profitability
Profitability performance (TRY mn.)
change
1H05
1H04
1,285 304 1,119 778 3.9 26.3
1,252 194 803 554 3.4 19.5
3 57 39 40
Net interest income Net fee income Income before
tax Net income ROAA () ROAE ()
At YE04 prices
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Ratios
Balance sheet performance
1H05
YE04
Interest Earning Assets / Total Assets Interest
Bearing Liabilities / Total Liabilities Gross
Loans / Total Assets Loans / Deposits Deposits /
Total Assets NPL Ratio Capital Adequacy Ratio
(Basel I)
95.4 83.4 39.0 64.4 60.4 1.7 23.5
95.9 78.0 37.6 66.0 57.1 1.6 36.2
Blocked demand deposits of POS merchants (TRY
528mn), which encompasses the character of a
demand deposit, is booked as Miscellaneous
Payables instead of deposits The sharp fall in
the Capital Adequacy Ratio is effected from the
share buy-back as well as increase in capital
requirement on credit card limits to 100 and
strong growth in loans
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Composition of securities
Composition of securities (TRY bn.)
9.1
9.2
52
38
62
48

• Securities to total assets shrunk to 41 from 44
  y-t-d
• Eurobonds amounting to USD 307mn (TRY 418mn) and
  USD 52mn (TRY 70mn) are registered under trading
  and available-for-sale securities portfolios,
  respectively
• 68 of TL securities are carried under
  available-for-sale securities, profits being
  booked under equity

8
Loans
Composition of Loans
up 32 y-t-d
TRY 17.1 bn.
TRY 13.9 bn.
TRY 12,9 bn.

• TL loans surged 41 y-t-d, compared to 23 growth
  in the sector
• Akbanks market share in loans reached 14 from
  12.7 y-t-d
• Despite the strong growth, NPL ratio has been low
  at 1.7 and fully provisioned

According to provisional market data
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Consumer and SME lending is now 62 of total
loans
Breakdown of Loans
Growth (y-t-d)
6
33
47
36
10
Segment based developments
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Akbank is today 1 in retail lending
Consumer Lending (1H05, TRY mn.)
5,275
4,743
4,488
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Retail Banking - credit cards
Credit Cards Issuing Volume1
Credit Card Loans1
Market shares are cumulative
1 Amex is included

• Strong product mix and solid retail partners has
  boosted the credit card business
• 15 growth in credit card loans y-t-d
• 3 million active credit cards by 1H05

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Retail Banking - consumer loans
Consumer Loans1 (TRY mn.)
55 y-t-d
3,125
2,416
2,010

• Akbanks consumer loans market share reached
  16.0
• Market share in car loans reached at 26.6
• Market share in morgage loans reached 16.7

1 Numbers represent direct lending to
individuals, excluding credit cards
14
Retail Banking - small business
Small Business Loans1 (TRY mn.)
Only 4 in FX

• Special credit packages for
• Certain sectors and regions (pharmaceuticals,
  agriculture, tourism etc.)
• Dealer networks of corporate clients (ie.
  Microsoft, IBM, Bosch, Arçelik)
• Cross sell ratio in small business loans is 3.1x

1 Small business loans given to companies with
sales turnover ltUSD 2 mn are granted by the
retail banking unit
15
Commercial Banking
Commercial Loans1
1Q05
2004
1H05
2004
1Q05
1H05
TL cash loans
FX cash loans
(USD mn.)
(TRY mn.)

• Commercial loans are also considered as a hook
  product, which paves the way for further
  marketing opportunities like cash management
  services and foreign trade products
• There is already 41 commercial banking centers in
  16 provinces and we are targeting to add approx.
  5 more in a year
• Cross sell ratio in commercial loans is 3.9x

1 Medium size companies with sales turnover btw.
USD 230 mn are serviced through our commercial
banking unit
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Corporate Banking

• Loans to blue-chip companies like Ford, Unilever,
  Carrefour reached USD 3.3 billion registering a
  33 increase y-t-d
• Project finance loans stand at USD 1.1 billion
• Special and structured financial solutions for
  corporate needs like cash management products
  regulating the collection and payment cycle of
  companies
• Blue-chip companies provide excellent cross-sell
  opportunities (3.8x)

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Asset management
Mutual Funds (TRY mn.)

• Currently 2 in mutual funds
• The underlying factors behind this
• Superior channel management
• Superior asset management performance
• Effective marketing and communication

Private Banking Assets (USD mn.)
Volume
Market share ()

• Wide range of domestic and international
  investment products
• Top quality investment advisory service
• Cross-sell ratio in private banking is 3.7x

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Breakdown of customer assets
TRY 46 bn
TRY 39 bn
87 y-t-d
Market share
10
15
19
14
36

• Total customer assets surged 19 year-to-date,
  compared to 5 for the sector
• Akbanks market share for total customer assets
  constitutes 15 of the market versus 13 in YE04

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Income statement - composition of interest income
Composition of interest income
TRY bn.
2.3
2.2
At YE04 prices

• Growth in TL loans has had a dramatic impact on
  interest income

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Net fees and commissions
Net Fees Commissions (BRSA, TRY mn.)
Fees and commissions revenue contribution
Corporate loan related
Asset management fees
Consumer loan related
Money transfer fees
57
Other
Merchant commissions
Credit cards commissions
At YE04 prices

• Net fee and commission income growth is mainly
  due to the rapid growth in credit card and
  consumer loan related revenues
• We continue to implement and increase fees in all
  the product base

21
Improving fee income ratios in line with targets
Net fees commissions/operating expense
Net fees commissions/operating income

• We are rapidly approaching our medium term fee to
  income target of 25

22
Efficiency ratios
Operating expense/average assets ()
Cost/income ()

• Restructuring of branches will largely be
  finalized at YE05
• Centralization together with the new technology
  infrastructure continue to allow us to keep
  operational costs subdued

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Net interest margin
NIM ()

• Net interest margin is only falling gradually due
  to the shift into TL assets

NIM (after FX loss, loan provision)
1H04 and YE04 figures are after monetary loss
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Income statement summary
Income statement summary (1H05, TRY million)
133
-167
93
-529
304
-341
1,285
778
Net fees income
Tax
Net income
NII
Net trading income
Other income
Operating expense
Provisions

• Asset switch to TL loans from TL securities
  continues to affect the interest spread
  positively
• A y-o-y increase of 57 in net commissions has
  had an important impact on profitability

25
Free capital comparison
Free Capital 1H05 (BRSA, TRY mn.)
Total Equity (BRSA, TRY mn.)
AKBANK

• Buy-back of founders shares has reduced equity
• Akbank will continue to optimize its capital
  structure through its dividend policy of 30 min.
  - 50 max. cash dividend payment
• Akbanks strong free capital is a major cushion
  against the effects of any market volatility

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Akbank is the 1st bank in Turkey to buy its
founders shares

• Akbank finalized the buy-back of its founders and
  usufruct shares from its extraordinary reserves,
  on 28 June 2005
• The target for the transaction was
• To create value for ordinary shareholders as they
  will be eligible to receive dividend payments
  from a larger pool of distributable profit
• To reduce excess capital by approx. USD 750mn
• To enhance ROE and therefore the overall
  valuation of the bank
• To improve corporate governance
• To clear the way for potential strategic
  partnerships and mergers in the future for Akbank

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Balance sheet highlights
Shares ()
BRSA (TRY mn.)
2004
1H05
2004
1H05
TOTAL ASSETS Cash and Due from
Banks Securities Loans TOTAL
LIABILITIES Deposits Funds Borrowed TOTAL
EQUITY
34,913 1,995 15,238 12,939 28,686 19,918
4,845 6,227
44,673 2,747 18,308 17,109 39,062 27,005
5,790 5,611
6 44 37 57 14 18
6 41 38 60 13 13
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Income statement highlights
BRSA (TRY mn.)
1H04
1H05
Interest Income Interest Expense Net Interest
Income FX Gain (Loss), Net Provision for Loan
Losses Net Interest Income after FX,
Income/Loss NPL Prov. Fees and Commissions
(Net) Profit on Trading Securities
(Net) Operating Profit Operating
Expenses Monetary Loss Income Before
Tax Tax Net Income
2,190 (938) 1,252 (105) (51) 1,096 194 225
1,654 (421) (360) 803 (249) 554
2,317 (1,032) 1,285 11 (143) 1,153 304 68
1,769 (490) - 1,119 (341) 778
Amounts are expressed in terms of the
purchasing power of TL at 31 December 2004
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Balance sheet highlights in USD
Shares ()
BRSA (USD mn.)
2004
1H05
2004
1H05
TOTAL ASSETS Cash and Due from
Banks Securities Loans TOTAL
LIABILITIES Deposits Funds Borrowed TOTAL
EQUITY
25,490 1,456 11,125 9,447 20,943 14,542
3,537 4,547
32,799 2,017 13,442 12,561 28,680 19,827
4,251 4,119
6 44 37 57 14 18
6 41 38 60 13 13
Figures are stated with exchange rates
effective at respective dates
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Income statement highlights in USD
BRSA (USD mn.)
1H04
1H05
Interest Income Interest Expense Net Interest
Income FX Gain (Loss), Net Provision for Loan
Losses Net Interest Income after FX,
Income/Loss NPL Prov. Fees and Commissions
(Net) Profit on Trading Securities
(Net) Operating Profit Operating
Expenses Monetary Loss Income Before Tax
Tax Net Income
1,701 (758) 943 8 (105) 846 223 50 1,299
(360) - 821 (251) 571
1,387 (595) 792 (66) (32) 694 123 143 1,0
46 (267) (228) 508 157 351
Figures are stated with exchange rates
effective at respective dates
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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 Companys 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
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exercise of judgement by any recipient. The
Company does not accept any liability whatsoever
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