The Turkish financial sector with the slowdown expectations on the global financial crisis
The impacts of the global financial crisis were deeply felt in the first quarter of 2009. However, in the second quarter the announced figures of corporate companies in the USA were better than expected, sales figures in developed countries increased and production data in some developing countries improved, and these developments have strengthen optimism for the future.

Parallel to these global conditions, the Turkish economy experienced 13.8% shrinkage in the first quarter of the year but production data started to display slower signs of shrinkage and the recession in the capacity usage ratio started to slowdown in the second quarter. In this period the Central Bank of Turkey continued cutting interest rates to accelerate economic activities and the financial sector reaped the benefits of restructuring itself according to international standards and maintaining its service approach depending on real intermediation activities based on its previous experience. Despite the crisis affecting many financial institutions deeply in the global economies, the Turkish financial sector performed successfully in the first half of the year. The sector retained its stable position regardless of the reflection of the challenges in the real sector onto the activities of the financial institutions.

Profitability and liquidity in the sector despite the economic recession
In the first half of the year the total balance sheet of the banking sector increased by 17% and total assets reached 738 billion TL as of June 2009. In the sector balance sheet, TL assets increased by 15%, and the TL equivalent of FC assets increased by 20%, TL liabilities increased by 18% and the TL equivalent of FC liabilities increased by 14% compared to June 2008. The rate of loans to total assets decreased 4 points compared to the same period of the previous year and reached 49%. The deposits’ conversion ratio to loans decreased by 5 points compared to June 2008 and fell to 78%. The deterioration of asset quality, which has negative impacts on profitability of the sector, continued in 2009, however, thanks to the restructuring activities, the increase in non-performing loans slowed down in the second half.

In the first half of the year, the sector’s equity increased by 27% compared to the same period of the previous year and reached 93,8 billion TL. The equity/total assets ratio increased by 1 point in the period and reached 13%. The growth in paid-in capital and extraordinary reserves affected the equity increase.

The profit volume of the sector increased by 33% compared to the same period of the previous year and reached 10,7 billion TL. The decline in interest rates affected the profit volume positively as the average term of total assets is longer than the average term of total liabilities. The rapid growth of equities reduced the average founding cost and had a positive impact on profit. In the first half, the ROA of the banking sector was 1,4% and the ROE reached 11,4%.

The capital adequacy ratio, which was 16,9% in June 2008, increased to 19,4% as of June 2009. The growth in equities and the change in risk structure had an impact on the increase of the ratio.

The total market value of financial institutions, which was 45 billion dollars in 2008, dropped to 41 billion dollars in March 2009; but rebounded in the second half and reached 62 billion dollars in June 2009.

Branch openings were delayed for a certain period of time because of the economic recession, however, the number of branches increased by 61 in the first half of 2009, reaching 8,851.

Koç Group Finance Group
Koç Financial Services, a 50/50 joint venture between Koç Holding and UniCredit Group, and Turkey's first consumer finance company Koç Finans, operate under the auspices of the Finance Group. Koç Financial Services is the parent company of Yapı Kredi Bank, which was established in 1944 as Turkey's first nationwide privately owned bank, its financial subsidiaries and UniCredit Menkul Değerler A.Ş. that joined the Group on August 15, 2008. Yapı Kredi, with consolidated assets of 70 billion TL as of June 30, 2009, ranks as Turkey's fourth largest private bank in terms of assets. Yapı Kredi, despite the challenging global economic conditions, bolstered its customer base in the first half of 2009 and continued focusing on customer-oriented banking operations.

As of June 30, 2009, Yapı Kredi has a %10 market share in total cash loans and a 9% market share in deposits. Yapı Kredi continues to lead the market with a 21% share in the number of credit cards issued and has a 21% share in factoring, 12% in leasing, 18% in mutual funds and 15% in pension funds. In the first half of 2009, Yapı Kredi, the bank with the 4th biggest branch network in Turkey with 844 branches and a 9,5% market share, maintained its firm capital, liquidity and finance position.

Widely acclaimed for its achievements in 2009, Yapı Kredi’s credit card “World” has become the 7th biggest credit card platform in Europe, according to the 2009 Nilson Report. In April, Worldcard was awarded the “Best Promising Product” and the “Best of the Best” in the 2009 Visa Europe Awards with its innovative product for young people, “Play Club”. Having focused on alternative distribution channels in the first half of 2009, Yapı Kredi’s achievements have been also crowned with three Global Finance awards in the “Best Internet Banks in The World” category, one of them being the “Best Corporate Internet Bank in Turkey”.

Yapı Kredi has domestic affiliates that complement its strong, segment-based, wide network. It also has affiliates in various countries, including the Netherlands, Russia and Azerbaijan.