Prospectus - Notowania

Following progressive worsening of the global and domestic macroeconomic environment since Q308, the signs of
stabilisation which were first seen in Q209 continued in Q309 leading to further improvement in expectations in Turkey. The
magnitude of GDP contraction, which had peaked at -14.3% in Q109, eased slightly in Q209 to -7.0% and is expected to
ease further in Q3. The Central Bank of Turkey (CBRT) continued the easing cycle with 150bps further rate cuts in Q309
bringing the total to 950bps since November 2008. The policy rate as of the end of Q309 was 7.25% (currently at 6.75% as of
16 October 2009). In the banking sector, sound levels of profitability, liquidity and capitalisation were maintained in 9M09.
Despite a significant increase in the cost of risk, the banking sector’s strong profitability was driven by positive net interest
margin evolution on the back of continued the CBRT rate cuts despite relatively flat volumes as well as strict cost
management.
In light of this challenging operating environment, YKB continued to operate with a strict focus on profitability and risk
management together with an unremitting focus on supporting its customer base and growing its customer related core
banking business. The bank consistently intensified its focus on customer satisfaction in an effort to increase operational
efficiency and commercial productivity.
During the first 9 months of 2009, Yapı Kredi’s profitability remained strong on the back of positive net interest income
evolution, strong fees and commissions and strict cost control, despite low volumes and increasing cost of risk. Positive net
interest margin was supported by continuing aggressive rate cuts by the CBRT together with timely repricing and release of
costly Turkish Lira deposits by Yapı Kredi. Despite flat lending volumes, fees and commissions remained resilient with 10%
y/y growth driven by repricing. As a result, revenue growth of 27% y/y has been recorded in 9M09. Driven by the strong focus
on cost control to offset low visibility/ a high level of uncertainty in the macro/sector outlook, costs remained flat y/y (+4% if
normalised to exclude one-off pension fund expense in H108). Cost/Income was at 39% as of M909.
In M909, YKB maintained and further strengthened its strong position in terms of capitalisation, liquidity, and funding. In
September Yapı Kredi successfully secured a new syndication of ~USD 985m for an all-in cost of Libor + 2.25% per annum
with the participation of 44 banks from 21 countries. This club loan facility was a replacement of a USD 1 billion syndicated
loan which matured in September 2009. In October, Yapı Kredi also received a €200m 12 year loan from the European
Investment Bank (EIB) to support SME clients in Turkey. Driven by continued emphasis on liquidity and flat/slightly
contracting loan volumes, YKB’s loans to deposits ratio declined to a comfortable 88% (vs 91% at YE08) on a consolidated
basis in M909. YKB’s capital adequacy ratio increased to 16.5% at consolidated level and to 17.7% at bank-only level.
In lending, mainly driven by low demand by consumers and the increased focus on risk management leading to selective
lending so as to limit the increase in cost of risk, Yapı Kredi’s loan book recorded a decline of 4% ytd in M909 driven by slight
contraction in both Turkish Lira loans (-4% ytd) and stable FX loans (-2% ytd in Turkish Lira terms). In terms of deposits,
driven by lack of loan volumes and release of costly deposits, Yapı Kredi recorded a slight decline in M909 (-2% ytd). In
Q309, the slight pick-up in Turkish Lira lending, which had started with the first signs of stabilisation in macro conditions in
Q2, continued and Turkish Lira loans grew 0.2% q/q driven primarily by mortgages (2.3% ytd).
In line with sector trends, asset quality deterioration continued in Q309. The non-performing loan (NPL) ratio was 6.4% as of
M909 (vs 5.8% in 2Q09). This deterioration, which was driven by new inflows in credit cards, SME and consumer loans, was
partially offset by proactive credit risk management efforts leading to a significant increase in collections (restructuring
programs and credit infrastructure improvements). As a result of Yapı Kredi’s conservative stance, specific provisioning
coverage increased further to 71% (+1 pps vs 2Q09, +8 pps vs YE08).
CONSOLIDATED INTERIM REPORT
AS AT SEPTEMBER 30, 2009
68