Transcript Slide 1

IS INVESTMENT
2007 QI Results & Performance
2007 QI Results and Performance

Is Investment is the investment arm of Is Bank and the leading investment banking institution
in Turkey. The company covers a wide range of services including, brokerage and investment
advisory, asset management, corporate finance, private equity and research
 IS Investment is the outright leader in Turkish capital markets with 6.4% share in equities,
25% in derivatives, 13% the bond and bills, 21% in portfolio management
Market Share (Ranking) in Turkish Capital Markets % (*)
Year
Equity
Bonds & Bills
Derivatives
Mutual Funds
2006
6.4 (1)
13.1 (2)
25.3 (1)
21 (1)
2005
6.3 (1)
15.5 (1)
25.1 (1)
20 (1)
2004
6.4 (1)
11.1 (2)
-
21 (1)
2003
5.2 (1)
12.3 (2)
-
20 (1)
2002
4.9 (2)
9.4 (3)
-
-
*
Source: ISE, Derivatives Market, Rank of Is Investment among brokerage firms in terms of volume
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Equity Market
Solidify our leadership position in the ISE Equity Market
 We cemented our leadership position in the equity market by increasing our market share from 6.3% to 6.4%
 However, our trading volume declined to TRY 10,7 bn, down from TRY 11 bn due to contraction in the overall
market
 Recall that, 2006/QI was one of the strongest quarter in the ISE history in terms of trading volume
Equity market trading volume and market shares (Is Investment)
TRY 11 bn
TRY 10.7 bn
6.3%
6.4%
2006/QI
2007/QI
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Bills & Bonds Market
Recaptured leadership in the ISE Bills & Bonds Market
Bills&bonds trading volume and market share (Is Investment)
Bills&bonds trading volume and market share (Is
Investment)
13.1%
14.8%
TRY7.5 bn
TRY4.8bn
2006/QI
2007/QI
2007/QI
Market Share : 14.8%
2006/QI
4,8
7,5
Market Share : 13.1%
0
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2
3
4
5
6
7
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 Is Investment recaptured leadership in the ISE bills &bonds market, and increased its market share to 14.8% from
13.1% a year ago (among the brokerage houses)
 However, our trading volume declined to TRY 4.8 billion, down from TRY 7.5 billion due to contraction in the
overall market volume
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Derivatives
Our daily trading volume in the Derivatives Market more than quadrupled on YoY basis
Is Investment's Daily Trading Volume
TRY 39.4 mn
TRY 9.7mn
2006/QI
2007/QI
 Our daily trading volume quadrupled to TRY 40 mn in the derivative market, although our market share declined
to 17%
 Upbeat momentum in the derivative market is expected to continue in the coming quarters
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Mutual funds
Parallel to the sector, we have experienced major redemptions from our mutual fund
business
 Our revenue from portfolio management declined in Q1 due to a
Is Investment's Funds
contraction in assets under management parallel to the sector
 We expect sharp recovery in portfolio management revenues starting
US$ 170 mn
from the second quarter
US$ 83 mn
(i) Assets under management recovered to $105 million, up from
$83 million in the first quarter
(ii) Is Portfolio Management will be consolidated to Is Investment’s
results starting from QII/2007
2006/QI
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2007/QI
Corporate Finance
A major upswing in corporate finance income
Income from corporate finance (TRY 000)
 Corporate finance revenues recorded 103%
YoY growth in QI/07.
640
 Retainer and success fees from increasing
number of M&A deals boosted the fees on
corporate finance operations
316
 QI corporate finance revenues do not include
revenues from Halkbank and Is Investment
IPOs
2006/Q1
2007/Q1
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Breakdown of Revenues
Is Investment
2006/QI
2007/QI
YoY ▲ %
TRY 000
Operating Income:
Interest and trading income
Commission Reveneus
Income from corporate finance
Other income
17.691
9.960
316
3.948
20.369
8.333
640
1.439
15,1%
-16,3%
102,5%
-63,6%
Total Operating Revenues
31.916
30.782
-3,6%
8.978
10.982
22,3%
22.937
19.799
-13,7%
Other Expenses
1.997
1.362
-31,8%
Financial Expenses
2.179
2.863
31,4%
Minority Expense
6.962
9.917
42,4%
EBT
11.799
5.657
-52,1%
Tax
1.174
511
-56,5%
10.626
5.146
-51,6%
Operating Expense
Net Operating Profit
Net Profit
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Breakdown of Revenues
Breakdown of Operating Revenues
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(TRY mn)
0,3
0,6
30
7,5
25
20
10,8
10,0
8,3
15
10
14,1
11,1
5
0
2006/QI
Other Income
Commission Revenues
2007/QI
Interest and trading gains
Corporate Finance
 Is Investment’s total revenues amounted to TRY 30.7 mn in QI/2007, down by 3.6% on YoY basis
 Commission revenues remained below the target due to dismal fund commissions
 Interest and trading revenues grew sharply from TRY 7.5 mn to TRY 10.8 mn due to rise in margin
accounts
 Other revenues contracted from TRY 17.7 mn in QI/06 to TRY 16.5 mn due to decline in arbitrage
revenues
 QII sets to be a much better period in terms of operating revenues
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Breakdown of Commissions
Commission Revenue Breakdown
TRY 000
Borkerage Commissions (securities, net)
Corporate Finance
Asset Management
Other Commissions
Total
2006/QI
7.420
316
1.319
1.221
10.276
2007/QI
7.505
640
570
258
8.974
YoY ? %
1,1%
102,5%
-56,8%
-78,9%
-12,7%
 Equity trading commissions displayed a weak performance on annual basis as 2006 Q1 was a very strong
quarter. Growth performance will improve in the forthcoming quarters as we move from high base period to
low base period.
 Commissions on derivatives skyrocketed in 2007, reaching TRY 1.2 mn vs TRY 170K in QI/06
 Mutual funds and other commission revenues have been the laggards. Mutual fund commissions were lower
compared to last year, due to strong redemptions experienced in the second half of 2006.
 Commissions on corporate finance has been quite strong in Q1. In our view, this is only the tip of the iceberg
as Halkbank IPO, the largest privatization offering in Turkish capital market, is finalised in the second
quarter.
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Breakdown of Commissions
2006 QI Commission Revenue Breakdown
Other Commissions
1.221
Asset Management
1.319
2007 QI Commission Revenue Breakdown
Corporate Finance
316
Other Commissions
Borkerage Commissions (securities, net)
258
7.420
0
1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00
0
0
0
0
0
0
0
0
Asset Management
570
Corporate Finance
640
Borkerage Commissions (securities,
net)
7.505
0
11
1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
00 00 00 00 00 00 00 00
Loans to Clients
 Loans to clients almost tripled in a year period and reached TRY 57 mn as of the end of QI/07
 Interest income on margin accounts recorded TRY 129% YoY growth, reaching TRY 2.9 mn in the first quarter of the
year.
Outstanding Loans (TRY Million)
Interest on loans extended to clients (TRY 000)
60
YoY Growth:129%
50
40
2.905
30
20
1.266
10
2006/QI
0
2004
2005
2006
2007Q1
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2007/QI
Other expenses
Securities borrowing and other costs declined
substantially on YoY basis
Other Expenses (2007/QI, TRY 000)
Other Expenses (2006/QI, TRY 000)
Total: TRY 1,36 mn
Total: TRY 1,99 mn
587
922
775
1.075
Cost on Securities Borrowing
Cost on Securities Borrowing
Other
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Other
Operating Expenses
TRY (000)
Employee Costs
Severance
Depreciation
Goodwill
Consultancy
Operating Costs
Sundry taxes
Advertisement
2006/QI
5.136
38
315
-80
222
1.745
1.171
197
2007/QI
5.552
68
251
-89
470
2.302
1.361
94
Marketing and distr. Exp. 234
8.978
Total
974
10.982
YoY ▲ %
8,1%
76,8%
-20,4%
10,9%
111,8%
31,9%
16,2%
-52,6%
316,9%
22,3%
 Operating costs recorded 22% rise on YoY basis
 The first quarter cost structure includes several one-off expenses like communication
and membership costs
 Pre-paid one-off expenses, such as IPO costs, also elevated the operating costs in
QI/07
 We will see a pick up in employee expenses in QII due to salary rises, yet it will be
more than offset by the savings on other fronts.
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Interest Expense
 Short term interest expense was recorded TRY 2.86 mn in QI/07 vs. TRY 2.179 mn in QI/06
 We have excluded the ISE money market expense and FC losses from the short term interest expenses.
Interest Expense*
2.863.319
2.178.929
2006/QI
* Other than ISE money market costs and FC
losses
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2007/QI
IS INVESTMENT SECURITIES
HEAD
OFFICE
Is Kuleleri Kule-2 Kat 12
4. Levent 34330 Istanbul
Ph: (0212) 350 20 00
Fax: (0212) 325 12 26 – 325 12 48
ANKARA
BRANCH
IZMIR
BRANCH
Talatpasa Bulvari No:27
Alsancak 35220 Izmir
Ph: (0232) 488 90 00
Fax: (0232) 464 69 43 – 464 68 98
YENIKOY
BRANCH
KALAMIS
BRANCH
Fenerbahce, Fener Kalamis Cad.
Tibas-Belvu Sitesi A2 Blok Daire 3
Kadikoy 81030 Istanbul
Ph: (0216) 542 72 00
Fax: (0216) 542 72 01
LEVENT
LIAISON
OFFICE
ALMA ATA
LIAISON
OFFICE
181 Zheltoksan St. The Regent Almaty
Oda 108 Almaata 480013 Kazakhstan
Ph: (+73272) 505000
Fax: (+73272) 582805
SUBSIDIARY
Tahran Cad. No:3/8
06700 Kavaklidere - Ankara
Ph: (0312) 455 26 50
Fax: (0312) 466 26 62
Koybasi Caddesi Iskele Cikmazi No 277
34464 Yenikoy ISTANBUL
Ph: (0212) 363 01 00
Fax: (0212) 363 01 01
Yapi Kredi Plaza C Blok Kat 9 Bolum
25/B 34330 Besiktas, Istanbul
Ph: (0212) 282 00 18
Fax: (0212) 282 00 19
MAXIS SECURITIES LTD
8 Princes Street
London EC2R 8HL UK
Ph: (+44207) 397 1431
Fax: (+44207) 726 2566
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www.isyatirim.com.tr
www.isinvestment.com
The information in this report is prepared by “IS YATIRIM MENKUL DEGERLER A.S.” (İş Investment) and it is not to be
construed as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide
investment services. Information, opinions and comments contained in this material are not under the scope of investment
advisory services. Investment advisory services are given according to the investment advisory contract, signed between the
intermediary institutions, portfolio management companies, investment banks and the clients. Opinions and comments contained
in this report reflect the personal views of the analysts who supplied them. The investments discussed or recommended in this
report may involve significant risk, may be illiquid and may not be suitable for all investors. Therefore, making decisions with
respect to the information in this report cause inappropriate results.
All prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice.
Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this report is strictly
prohibited. The information presented in this report has been obtained from sources believed to be reliable. Is Investment cannot
be held responsible for any errors or omissions or for results obtained from the use of such information.
Abbreviations and formulas used in the report: CB: Central Bank; MCap = Market Capitalization; P/E: Price/Earnings Ratio
= Price/Earnings per share; P/BV: Price / Book Value = Price/Shareholders’ Equity per share
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