Yapı Kredi’s first quarter profit exceeds expectations

BLOOMBERG HT / RESEARCH

Yapı Kredi Bank achieved a net profit of 12.64 billion TL in the first quarter of 2023, above the market expectation of 11.25 billion TL.

The net profit of the bank in the previous quarter was TL 17.4 billion, while it was TL 7.3 billion in the same quarter of the previous year. Thus, the net profit of the bank decreased by 27 percent on a quarterly basis and increased by 74 percent on an annual basis. The Bank had a net profit of 52.7 billion TL in the whole of 2022.

The tangible average return on equity of the bank was 37.9 percent in the first quarter of the year. Return on equity was 56.6 percent at the end of 2022. When inflation accounting was applied, average return on equity was calculated as mid-low single digits for this quarter. Average return on assets stood at 4.2 percent.

The bank’s capital adequacy ratio, on the other hand, decreased from 18.1 percent to 16.8 percent as of the end of this quarter.

In the last quarter, TL loan growth was 9 percent, TL deposit growth was 26 percent. Despite the increased funding cost, the positive TL loan-deposit spread continued. TL loan-deposit spread was realized as 1.8 percent.

The cumulative net interest margin of the bank decreased from 9.10 percent at the end of 2022 to 5.63 percent. The bank’s target for 2023 is over 5 percent.

Yapı Kredi Bank’s net interest income, including swap expenses, decreased by 51 percent on a quarterly basis and increased by 68 percent on an annual basis to 15.5 billion TL. Revenues from CPI-indexed bonds this quarter; decreased from 21.1 billion TL to 9.67 billion TL with the decline in the inflation rate. While the TÜFEX volume, which was 111 billion TL at the end of the year, rose to 121 billion TL at the end of March, the decrease in the rate used in asset valuation based on CPI from 85% to 45% was effective in the decrease in interest incomes.

On the net fee and commission front, 5.8 billion TL revenue was achieved with an increase of 13 percent on a quarterly basis. Payment systems took part in commission incomes with a share of 41 percent. Operating expenses decreased by 5 percent on a quarterly basis and increased by 168 percent on an annual basis. The non-performing loan ratio of the bank decreased from 3.4 percent to 3.2 percent.

The tangible average return on equity target set by the bank for 2023 is at high twenties, and the tangible average return on equity for 2023, calculated according to inflation accounting, is at mid-low tens.