Yapi Kredi Focuses on Cards, Fees as Industry Profit Lags

Yapı & Kredi Bankası AS, the Turkish bank part-owned by UniCredit SpA (UCG), will focus on credit cards, income from fees and project financing as slower loan growth and stiffer competition pare profit.

Loans in the industry are expected to expand at a maximum of 15 percent in 2012 with overall profit declining 10 percent, Chief Executive Officer Faik Acikalin told reporters in Istanbul yesterday. Yapi Kredi forecasts that its loans will increase 17 percent, he said.

Turkish banks are seeking alternative means to boost profit after the central bank in Ankara took measures to pare a boom in lending that grew as fast as 40 percent last year. Deposit costs also increased as the central bank squeezed liquidity by providing less cash to banks at its lowest lending rate of 5.75 percent.

Yapi Kredi and other Turkish banks will need to raise fees and commissions by a “reasonable amount” to help reverse the narrowing in profit margins brought on by slower loan growth and more competition for deposits, Acikalin said.

”This is necessary for sustainable growth,” he said. ”Banking is a costly industry and this has to somehow reflect in fees and commissions.”

Yapi Kredi climbed 0.9 percent to 3.53 liras at 12:51 p.m. on the Istanbul Stock Exchange (XU100), rising for a second day and valuing the bank at 15.4 billion liras ($8.6 billion.) Yapi Kredi is Turkey’s fifth-largest bank by market value.

Acikalin said Yapi Kredi would focus on deposits as the primary means to raise more funding. The bank’s deposits will grow by 15 percent in 2012 compared with 12-13 percent growth in the industry, he said.

Bond Sales

Turkish banks are also expected to sell more eurobonds and sukuk this year to help finance growth even as costs of borrowing rise, Acikalin said. Yapi Kredi will refinance $2.7 billion of syndicated loans this year, he said.

”External debt instruments will become more attractive to Turkish banks even though costs slightly increase there,” Acikalin said.

Yapi Kredi will maintain its No. 1 ranking in credit cards and will lead the market in loans to small and medium-sized businesses within five years, Acikalin said.

The bank will have 700,000 small and medium-sized business clients at the end of this year compared with 600,000 now, Acikalin said.

Yapi Kredi will open 50 to 60 new branches in 2012 and aims to have 1,000 branches by the end of next year, Acikalin said.

UniCredit is ”extremely happy with Yapi Kredi’s performance” and has no plans to sell its stake in the bank, Acikalin said.

”Yapi Kredi is indispensable in terms of UniCredit’s game plan,” he said.

To contact the reporter on this story: Sibel Akbay in Istanbul at sakbay@bloomberg.net

To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net

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