AKLease Investor Presentation, March 2015

Transcription

1 AKLease Investor Presentation, March 205

2 Agenda AKLease At a Glance AKLease Business Overview Turkish Leasing Sector Overview AKLease Financial Highlights 2

3 AKLease at a Glance #3 Market player in Turkey by net lease receivables (2) # Market leader in Turkey of financial leases for corporate jets, approximately 42% market share BBB- Investment grade in line with Akbank Profile () Established in 988 AKLease provides financial leases to a diverse range of sectors: transportation, production, textile, steel and mining, energy and natural resources Diversified assets: aircraft / rotorcraft, manufacturing machinery and equipment, commercial real estate, wind turbines, construction machinery Nearly tripled market share in the Turkish leasing sector since 2005 from 4.4% to 2.4% in 205 Q 99.9% owned by Akbank Key Financials (3) Income Statement (TLm) Q (5) Impairment loss on finance lease receivables (9) (24) (20) (2) Operating Expenses (3) (8) (7) (20) Net Income Balance Sheet (TLm) Q Net Finance Lease Receivables 2,077 3,35 3,800 3,97 Provision for Impaired Lease Receivables (27) (49) (64) (68) Total Assets 2,266 3,537 3,956 4,74 Borrowings (4),806 2,843 3,267 3,443 Total Equity Key Performance Indicators (%) Q Cost to Income NPL Cost to Assets Cost of Credit Equity to Gross Debt Equity to Net Debt RoAA RoAE () Source: Association of Financial Institutions (2) As of 3 March 205. (3) In accordance with IFRS (4) Includes Debt Securities Issued (5) 205 Q Income Statement annualized. 3

4 Shareholder Structure History and Shareholding Structure () Sabanci Group () One of the two largest multi-business enterprises in Turkey Free Float; 5.% Sabanci Holding & affiliates; 48.9% Akbank, % Sabanci Holding & affiliates, 0.05% Composed of 7 companies, with total assets of US$ 99.5 bn 2% of ISE capitalization with 2 public companies and the Holding itself Controlled by Sabancı family who owns the 57.7% shares Mainly operates in financial services, energy, retail, cement, industrial businesses. AKLease was established as BNP-AK-Dresdner Leasing in November 988, a joint venture between Akbank, Dresdner and BNP Akbank acquired the entirety of AKLease in 2005 and subsequently renamed it AKLease AKLease is % owned by Akbank, with the remainder (0.05%) owned by Sabanci Group affiliates Joint-ventures with most established companies in the world including; Ageas, Aviva, Bridgestone, Carrefour, E.ON, Heidelberg Cement, Marubeni and Philip Morris Akbank is the flagship of the Sabancı Group with the highest share in the revenues and profitability of the Group Akbank elects all of AKLease s directors () As of March 205 4

5 Organisational and Management Structure AKLease Board of Directors S. Hakan Binbaşgil C. Kaan Gür Şenol Altundaş Ahmet Fuat Ayla Eyüp Engin Hülya Kefeli K. Atıl Özus Chairman, AKLease Deputy Chairman Board Member and CEO, AKLease Board Member Board Member Board Member Board Member Mr. Binbasgil was appointed Chairman of AKLease s Board of Directors on 5 th January 202. Mr.Gur was appointed to AKLease s Board of Directors on 27 th January, 20 Şenol Altundaş was appointed as the Chief Executive Officer of AKLease on June 205 Mr. Ayla was appointed to AKLease s Board of Directors on 2 nd July Mr. Engin was appointed to AKLease s Board of Directors on 25 th March, 200. Ms. Kefeli was appointed to AKLease s Board of Directors on 7 th June 200. Mr. Ozus was appointed to AKLease s Board of Directors on 6 th June He joined Akbank in October 2002 as an Executive VP in charge of Change Management He was appointed Executive VP in charge of Retail Banking in November 2003 and Deputy CEO in May 2008 He became the CEO and a Board Member in January 202. He is also the Chairman of the Board of Directors of all Akbank s subsidiaries He joined Akbank as Executive VP of SME Banking on 4 th January, 20 and was reappointed as Executive VP of Commercial Banking in 203 Previously, he worked in various roles at Garanti Bank He started his banking career in 996 at Pamukbank and prior to joining AKLease, Şenol Altundaş held senior positions at Akbank Corporate and Commercial Banking for 2 years. He has a degree in International Relations from Marmara University, and an Executive MBA degree from Sabanci University. He joined Akbank as Corporate Branch Manager in 2002, becoming Senior VP in charge of the Corporate and Commercial Credits Approval Unit in 2005 In 2007, he was appointed as Executive VP in charge of Corporate and Commercial Credits Approval He joined Akbank in 978 as an Assistant Internal Auditor and was appointed Head of Internal Audit in July 2007 He also worked as the Head of the Treasury Dept. and Executive VP for International Banking at Akbank She has been with Akbank since 983 and has held various positions in the Foreign Relations and International Banking Divisions at Akbank In 2007, she was appointed as Executive VP in charge of International Banking He joined Akbank in November 2000 as VP for Financial Control and Risk Management, and was later promoted to Senior VP. In December 2007, He was then appointed as Executive VP (CFO) in charge of Financial Coordination Strong Management Team Board of Directors Internal Control Risk Management CEO EVP, Sales and Marketing EVP, Operation & Financial Affairs EVP, Credits SVP, Head of Finance SVP, Head of Financial Coordination & Support Services HR & Administrative Affairs Credit Risk Monitoring Legal Counsel 5

6 Agenda AKLease At a Glance AKLease Business Overview Turkish Leasing Sector Overview AKLease Financial Highlights 6

7 Key Strengths Strong Position in Growing Market with Low Penetration Fully owned by Akbank Most Valuable Turkish Banking Brand () Investment Grade Rating by Fitch Resilient Business Model with Diversified Asset Portfolio and Highest Efficiency Among Peers Superior Profitability Strong Asset Quality and Prudent Risk Management Diversified Funding Portfolio () Brand Finance Banking 500,205 7

8 7,90% 8,60% 7,40% 6,80% 6,80% 8,80% 9,50% 9,50% 2,20% 3,60% 3,40% 2,70% 2,80% 2,50% 2,40% 4,90% 8,0% 7,30% 7,60% 7,90% Well Positioned in a Growing Market Market Share (%) Third Largest Player with c.2% Market Share Net Lease Receivables (TLbn) Highest Growth Recorded in L4Y 8,0 3,4 33,0 7,0 29,4 28,0 6,0 24,6 5,2 5,6 23,0 5,0 4,0 3,0 2,0 7,0 3, 2,5 2,,3,5 4,3 3,3 3,3 2,2,8 3,9 3,73,8 3,9 3,0 2,8 2,0 2, 8,0 3,0 8,0,0 3, Q 0, Q -2,0 Peer Peer 2 Aklease Peer 3 Peer 4 Peer Peer 2 Aklease Peer 3 Peer 4 Sector (RHS) Total NLRs have increased 8%, 56%, 86%, 3% and 40% for Peer, Peer 2,Aklease, Peer 3 and Peer 4 respectively since 202. Total sector NLRs have increased 85% since

9 Synergies From Relationship with Akbank Established in 948 Most valuable Turkish banking brand 0.0% 3.5 million 4,200+ () Rated Baa3 (Moody s), BBB- (Fitch) Market share by loans Customers ATMs Consumer Banking Corporate, Commercial and SME Banking Treasury 7% 974 Asset growth in 205Q yoy Branches POS Private Banking International Banking 360,000+ () Brand Finance- Banking 500, 205 report Extensive Branch Network Commitment to AKLease Kartal Kartal Başkent, Bursa Başkent, Bursa Ankara 2 2 Ankara İzmir İzmir Antalya 20 9 Antalya Antalya 6 2 Gaziante p Gaziante p AKLease benefits from Akbank s 974 domestic branches and 23 regional offices across Turkey as representation channels Most of AKLease's customers are customers from referrals through Akbank Approx. 95% of AKLease s annual net financial lease receivables are from Akbank customers AKLease is the only leasing company whose shareholder has injected additional cash into its paid-in capital since 200: TL 50 million in cash capital injection on 7 December 203 TL 50 million in cash capital injection on 2 March 204 TL 60 million in cash capital injection on 0 April 205 9

10 AKLease Strategy Strategic Priorities Continue Exploiting Synergies with Akbank and the Sabancı Group Increase market share through customer referrals by Akbank Continued support from Akbank, especially Risk Management and IT functions Develop specific synergies with AK Sigorta, insurance subsidiary of the Sabanci Group 2 Take Advantage of Growing Lease Market Focus on growth sectors in the economy such as: Renewable energy Healthcare Transportation & Commercial real estate Logistics Construction 3 4 Further Diversify Funding Base Maintain High Asset Quality & Grow Receivables Maintain mix of short and long-term funding Seek financing from diverse sources: Local banks Foreign banks ECAs Multilaterals Domestic & international capital markets Healthy growth in lease receivables via: Continued conservative approach to asset quality and profitability Strong focus on risk management procedures Maintain Sustainable Market Leadership 5 New Products & Clients Develop sale-leaseback products Offer clients operating leases through strategic alliances with reputable partners 0

11 Source: AKLease Diversified Lease Portfolio And Strong Asset Quality Asset Composition Geographical Distribution Driven by Client Size Lease Portfolio by Assets (205Q) Metal Processing Machinery; 3% Medical Equipment; 4% Other; 7% Textile Machinery; 4% Aircraft; 3% Customer Geographic Distribution (205Q) 57% Electronic and Optical Equipment; 2% Manufacturing Machinery and Equipment; 24% Construction Machinery; 4% Commercial Real Estate; 39% Industry Breakdown 2% % 6% 5% Istanbul Ankara Gaziantep Kocaeli Other* *Other includes 70 other provinces of Turkey. None of them exceeds 4% NPL Ratio Consistently Below Sector Average Lease Portfolio by Industries (205Q) Food and Tourism; 7% beverage; 6% Textile; % Energy and Natural Sources; 5% Construction; 5% 8,0% 6,5% 6,7% 6,4% Production; 8% Steel processing and mining; 7% Other; 2% Healthcare; 6%,8%,7% 2,%,9% Transportation; 4% Q AKLease () Turkish Leasing Sector () Other includes: financial institutions, agriculture, wholesale & retail, chemistry, telecommunication, printing, and education. None of them exceeds 4% () AKLease s IFRS results equivalent are the same

12 Prudent Risk Management AKLease co-ordinates its risk management policies and processes with Akbank Risk parameters are reported to Akbank s Risk Management Division on a monthly basis Principal Leasing Risks Concentration Risk Credit Risk Mitigants Diversified portfolio by sector and lease asset type Selected counterparties Focus on assets with relatively high second hand value Additional collateral Detailed and thorough credit analysis, assesment,approval process Adequate level of additional collateral such as pledges on cash, shares, vehicles and other equipment; assignments of receivables, mortgages on real estate etc. Monitoring regularly the counterparties ability to pay, analyzing the financial position of the lessees and condition of the leased assets Market Risk Appropriate combination of fixed and floating rate borrowings and lease receivables Funding mainly on a matched basis (borrowings vs. lease receivables) and following a stringent currency risk parameter of FX position of max. 5 mio USD Use of interest rate swaps and currency swaps (for hedging purposes) Stress tests and gap analysis Operational Risk Effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment procedures as well assessment processes 2

13 Akbank Akbank EIB Domestic Banks ECA Covered Foreign Banks Multilateral DCM Akbank Akbank EIB ECA Covered Multilateral Domestic Banks Foreign Banks Stable and Well Diversified Funding Base Pioneer in Wholesale Funding Ongoing Funding Diversification The first financial leasing company in Turkey to issue long-term TL bonds in the capital markets (TL50 million two-year bond in February 202) Funding by Source (%) Q The first financial leasing company in Turkey to issue international bonds in the capital markets (U.S.$250 million five-year bond in April 203) 32% 3% 40% The first bank subsidiary in Turkey to establish a GMTN programme (December 203, Eurobonds in an aggregate amount of U.S. $72 million or equivalent in different currencies as at 3 March 205) % 5% 9% 2% 6% 3% 5% 7% 8% % Only 6% of AKLease's funding comes from Akbank Akbank EIB refers to loans that Akbank obtained from EIB and on-lent to AKLease ECA Covered refers to loans obtained under coverage of Ex-Im Bank, Euler-Hermes, EDC etc. Multilateral refers to loans provided by the multilateral organisations such as Proparco and the ECO Trade and Development Bank DCM refers to Debt Capital Markets and includes Eurobond, Notes issued under GMTN programme, and TL bonds.. 3

14 Leverage and Asset and Liability Management Equity to Gross Debt Ratio Portfolio Maturity (FY205Q) 8% 7% 7% % 205 9% 5% 209 0% 208 4% % Q Equity to Gross Debt Source: IFRS results Equity to Net Debt Ratio Source: IFRS results (FY205Q) 207 8% Portfolio Currency Composition 20% 6% 7% 8% Avg. Maturity: 2.6 yrs USD 38% EUR 36% Avg. Maturity: 2.9 yrs Source: IFRS results Q Equity to Net Debt Source: IFRS results Avg. Maturity: 2.3 yrs TL 26% Note: : Avg. Maturity means the remaining average maturity 4

15 Efficiency and Profitability Highest Among Peers 32,% 8,2% Cost to Income Ratio 34,8% 24,7% 36,3% 5,8% Cost of Credit 25,8% 3,% Q AKLease Turkish Leasing Sector According to BRSA results. AKLease s IFRS results equivalent are 8.2%, 24.7%, 4.9%, and 4.% for 202, 203, 204 and 205Q respectively 3,50% 3,00% 2,50% 2,00%,50%,00% 0,50% 0,00% 2,20% 2,30% Return on Assets,40% 2,00%,80%,70% Aklease Sector According to BRSA results. AKLease s IFRS results equivalent are 2.%,.5%, 2.%, 2,4% for 202, 203, 204 and 205Q respectively Return on Equity 2,60% 3,00% Q 0,8% 25,0% 0,3% 0,4% 0,4% 20,0% 5,0% 0,0% 4,% 0,0%,7% 5,9% 8,8% 9,4% 9,3% 6,0% 5,0% Source: IFRS results *Annualized Q* Cost of Credit 0,0% Q AKLease Turkish Leasing Sector According to BRSA results. AKLease s IFRS results equivalent are 3.5%,.7%, 6.7%, and 7,4% for 202, 203, 204 and 205Q respectively 5

16 Agenda AKLease At a Glance AKLease Business Overview Turkish Leasing Sector Overview AKLease Financial Highlights 6

17 Apr'5 Turkey: Underlying Macro Fundamentals Remain Intact 8 th largest economy in the world and 8th largest in Europe (incl. Russia) US$800bn GDP, with strong prospects Robust long term growth potential fuelled by favourable demographics Positive impact of falling oil prices on Turkey s current account deficit due to lower energy import costs Real GDP Growth (3) Italy Brazil Russia Spain South Africa Czech Republic Mexico Poland Turkey One of Fastest Growing EM Countries (0.4%) 0,% 0,6%,4%,5% 2,0% 2,% 3,3% 2,9% With Strong Growth Projections Advantageous geography; neighbouring countries with significant scale Turkey Real GDP Growth 9,2% 8,8% Political stability throughout the last decade coupled with sound economic policies 4,6% 2,% 4,2% 2,9% 4,0% 5,0% Avg. () () E 206E Low Inflation, FX Stabilised (2) Current Account Deficit ,0 2,5 2,0,5,0 0,5 0,0 Current Account Deficit (US$bn) 80 75, 60 45,4 9,7% ,2% 48,5 6,% 65, 7,9% 45,9 45,5 5,7% 2% 8% 4% CPI - (% change pa) USDTRY year-end rate - RHS March'5 Current Acct. Def. as a % of GDP 0% Source: IMF, TurkStat, Bloomberg, CBRT.. Medium term economic programme targets from State Planning Organization (DPT). 2. USD / TRY for 204 as of 3 Dec 204 and for April as of 30 April Data for

18 Turkish Financial Leasing Sector: Regulatory Framework and Key Features Typical Key Financial Leasing Transaction in Turkey AKLease retains legal title of the asset until lease expiry in case of default entitled to re-possess asset Supplier of Asset Sale of Interest Lessee : End User of Asset Physical (but not legal) transfer of asset on leasing AKLease Purchases Asset Transfer of ownership of leased asset on expiration of finance lease term Lease payments are made mostly on a monthly basis, allowing for regular credit performance monitoring Key Features of Financial Leasing in Turkey Interest on lease payments is typically tax-deductible, helping reduce lessee s taxable income base Certain equipment and machinery leases are subject to low VAT rates of c.% vs. general VAT rates of 8% and 8% Lessee able to acquire the asset upon lease expiry Financial leases available in both TL and foreign currencies New Financial Leasing Law () will allow AKLease to expand product offering: Offer leasing of complimentary parts, such as aircraft engines Offer sale leaseback services Provide operating leases () Financial Leasing, Factoring and Financial Companies Law Number 636 Regulatory Framework Leasing activities in Turkey are regulated by the Financial Leasing, Factoring and Financing Companies Law No. 636 (the Law No. 636 ), since 202 The new law introduces important changes to financial leasing agreements: Execution of the Agreement & Property Rights Development banks, investment banks, participation banks as well as financial leasing companies may act as lessors in a financial leasing agreement Anything that constitutes an asset may be leased under this agreement No minimum period during which a leasing agreement may not be terminated Agreements are no longer required to be executed by a public notary Rights & Obligations of the Parties The lessor and lessee undertake reciprocal obligation by entering into a financial leasing agreement Rights & Obligations of the Lessee The new law facilitates the transfer of possession of a leased good and also permits a change of lessee Rights & Obligations of the Lessor The new law removes a provision stating that the lessor shall be the insurer of the leased good. Pursuant to the new provisions, the agreement shall specify the party whose responsibility it is to insure the leased good Termination of the Agreement The event of unsuccessful execution proceedings against the lessee is no longer preserved as grounds for termination. However, the lessee may terminate the agreement prior to its term in the event that the lessee or its enterprise to which the leased good is allocated is in the process of liquidation, unless the relevant financial lease agreement provides otherwise Further, provisions exist for termination on the grounds of non payment 8

19 F 206F 207F World Turkey Turkish Financial Leasing Sector: Attractive Growth Prospects Driven by Low Penetration and Strong Fundamentals Turkish Financial Leasing Sector Overview Underpenetrated Market With Further Growth Potential 3 financial leasing companies with total asset size of TL35.2 billion Top eight financial leasing companies are bank subsidiaries, and represent approx. 77% of market share in Turkey 2008 global financial crisis along with VAT increases in 2007 had negative impact on the sector Strong rebound seen in lease transaction volumes commencing from 200, expected to accelerate following New Financial Leasing Law (). Establishment of Financial Leasing, Factoring and Financing Companies Association; all leasing, factoring and finance companies required to be the members Currently 2 members AKLease represented at the board level Strong Growth in the L5Y 8,00% 7,50% 6,90% 5,90% 4,70% 3,90% E 205E Source: Association of Financial Institutions Penetration New Business Generation 2 +47%* -26%* +93%* Leasing Volumes (billion USD) Source : BRSA Net Lease Receivables in Turkey (TLm) () Financial Leasing, Factoring and Financial Companies Law of 3 December 202 (2) Percentage of investments in Turkey financed through leasing * Percentage growth over period (ending value starting value) / starting value World (LHS) Turkey (RHS) Source: White Clarke, Global Leasing Report, Association of Financial Institutions 9

20 Agenda AKLease At a Glance AKLease Business Overview Turkish Leasing Sector Overview AKLease Financials Highlights 20

21 Income Statement TLm Q* Interest income from direct financial leases Interest income on placements and transactions with banks Total Interest Income Interest expense on borrowings (74.) (94.5) (9.7) (09.6) Interest expense on debt securities issued (2.7) (27.3) (4.8) (52.8) Net Interest Income Foreign exchange gains, including net gains or losses from dealing in foreign currency (8.0) 24.0 Net Interest Income after foreign exchange gains and losses Net trading, hedging and fair value income/(loss) 4. (5.3) 49.9 (8.4) Fee and commission income, net Impairment loss on financial lease receivables (8.9) (24.3) (9.9) (2.2) Recoveries from impaired lease receivables Other income/(expenses), net Operating expenses (2.7) (7.6) (7.5) (20.0) Operating Profit Income before tax Taxation on income (5.6) (0.8) (20.) (24.0) Net income for the year Other comprehensive income (cash flow hedge reserve) (0.) Total comprehensive income Based on IFRS financials. *Annualized. 2

22 Balance Sheet TLm Q Cash and cash equivalents Financial lease receivables 2, ,34.9 3, ,97.8 Other assets and prepaid expenses Assets held for sale Property and equipment, net Intangible assets, net Derivative financial instruments Deferred tax asset, net Total assets 2, , , ,73.6 Borrowings, ,58.4 2,26.4 2,07.8 Debt securities issued ,05.,335.3 Accounts payable Advances from customers Derivative financial instruments Other liabilities Deferred tax liability, net Total liabilities, ,2.3 3, ,3 Total paid-in share capital Legal reserves ,5 Retained earnings Total equity Total equity and liabilities 2, , , ,73.6 Based on IFRS financials. 22

23 Disclaimer Statement The information and opinions contained in this document have been compiled or arrived at by Aklease 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 Company s 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 authoritative or taken in substitution for the exercise of judgement by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document is strictly confidential and may not be reproduced, distributed or published for any purpose. 23