Transcript Review Meeting FITCH
Performance & Financial Results 2007 March 2008
ABOUT US OVERVIEW OF CAPITAL MARKETS OUR PERFORMANCE FINANCIAL RESULTS HINTS FOR 2008
ABOUT US
Is Investment - the investment arm of Is Bank and the leading investment banking institution in Turkey - stands out as the only listed brokerage house in the country offering variety of services, such as;
Brokerage (Trading securities including domestic and international equities, fixed income and derivatives)
Investment Advisory Asset Management Corporate Finance (Public offerings, M&A’s and strategic consultancy) Research Is Investment was established by Is Bank in 1996, with a paid in capital of YTL 500.000. The company has started with 42 staff and reached 289 employees as of 2007 and shareholders’ equity increased to YTL 246.2 mn. at the same time (Please note that it was YTL 235.9 mn. as of 2007/Q3).
3
CREDIT RATING ‘AAA(tur)’
‘AAA(tur)’
Fitch Ratings has assigned Is Investment’s national long-term rating of 'AAA(tur)' with stable outlook and the national rating of Is Investment reflects the support and close integration with our parent, Is Bank 4
ABOUT US OVERVIEW OF CAPITAL MARKETS OUR PERFORMANCE FINANCIAL RESULTS HINTS FOR 2008
5
TRADING VOLUME
Equity Market (YTL Billion) 775.4
574.5
513.9
19,3% 649.9
2006
Source: ISE - www.imkb.gov.tr
2007 Bills & Bonds Market (YTL Billion) 579.3
748.5
3,5% 575.5
722.9
2006
Source: ISE - www.imkb.gov.tr
2007 Equity market displayed a better perfomance with respect to the year 2006, whereby the higher amount of public offerings Decrease in the public borrowing requirement and CBRT’s interest rate policy, caused a weaker concern for the Bills & Bonds market 6
TRADING VOLUME
Derivative Market (YTL Billion) 551% 144.1
233.5
21.4
35.7
2006
Source: TurkDEX - www.vob.org.tr
2007 Eurobonds (YTL Billion) 29.268
25.010
64.2
20.271
913 2.048
2007
Source: ISE - www.imkb.gov.tr
3.677
Derivative market’s remarkable performance went beyond even our year-end estimates and the total trading volume reached more than six-folds of 2006 ISE has announced the trading volume of Turkish Eurobonds in 2007 for the first time as YTL 64.2 bn 7
ISE - EQUITY MARKET FIGURES
Number of Public Companies* Traded on the ISE 322 327 Average Free Float Rate (%) 31,6 31,6 306 2005 2006 *
Listed companies and ETFs
2007 30,9 Market Capitalisation ($ Billion) 288.7
2005 2006 2007
Is Investment’s expectation was YTL 285 bn.
162.8
2005 163.7
2006 2007
Source: www.tspakb.org.tr
8
FOREIGN INVESTORS
Share in Total Equity Portfolio (%) 72 68 67 59 51 2003 2004 2005 2006
Source: www.tspakb.org.tr – www.imkb.gov.tr
2007 Trading Volume / Total Equity Trading Volume (%) 29 19 18 12 9 2003 2004 2005 2006 2007 Foreign investors trade 29% of the ISE trading volume, while they hold the 72% of the free float market capitalisation with a stable approach 9
ASSET MANAGEMENT
Funds* (USD Million) 144.1
3.813
29.574
25.010
2.048
20.271
21.4
913 2006
Source: www.tspakb.org.tr
2007
29.268
20.271
2.048
Pension Funds Total 3.677
Portfolio size of pension funds confirms our claims to be the locomotive of fund business in near future, increasing 86% while total mutual funds performing 46% with respect to 2006
•
Including Exchange Traded Funds, Investment Trusts, Real Estate Investment Trusts and Venture Capital Companies
.
10
ABOUT US OVERVIEW OF CAPITAL MARKETS OUR PERFORMANCE FINANCIAL RESULTS HINTS FOR 2008
11
EQUITY MARKETS
Our performance is increasing in parallel with the equity market.
Equity Markets - Is Investment (YTL Billion) 6,32% 6,43% 49.1
41.8
2006
Source:www.imkb.gov.tr
2007 Despite the ascending total trading volume and the new comers to the market we maintain our leadership position 12
BILLS & BONDS MARKETS
Bills & Bonds Markets - Is Investment (YTL Billion) 13,1% 16.9
19.8
11,8% 11.3
14.2
2006
Source: www.imkb.gov.tr
2007 We hold the third place among the brokerage houses with 11,8% market share and YTL 14.2 bn trading volume and it is expected to see a recovery in the market with the issuance of private sector bonds in 2008 13
DERIVATIVE MARKETS
Derivative Markets – Is Investment (YTL Billion) 17,18 !
Almost three-folds of our year-end trading volume target figure
25,29% 2006
Source: www.vob.org.tr
2007 Our derivative market trading volume is almost three-folds of our year-end target figure (YTL 14 bn) we had set for the full year, reaching YTL 39.9 bn We maintain our uncontested leadership as of 2007 with 17,18% market share despite the rise in the market players Our client base in derivative products continue to get wider in each quarter as stated before (foreign & domestic) 14
INTERNATIONAL CAPITAL MARKETS
International Capital Markets – Is Investment (USD Billion) 38.1
3.4
2006
Source: Is Investment
2007 Our trading volume reached USD 38.1 bn from USD 3.4 bn surging by more than ten-folds with respect to 2006 and our trading volume will likely increase with the anticipated new instruments in international capital markets 15
ISE EUROBOND MARKET
Eurobond Market - Is Investment (YTL Million) 13.4
We hold the first rank among the banks & brokerage houses
1.2
2006
Source: www.imkb.gov.tr - Is Investment
2007 Our trading volume displayed a fundamental performance and reached YTL 13.4 bn. surging by eleven folds with respect to 2006 year end volume 16
ASSET UNDER MANAGEMENT
AuM & Pension Funds Portfolio Size – Is Asset Management (Million NTL) 173 173 173 7.043
410 516 6.003
682 516 6.484
5.247
777 682 6.620
6.484
860 777 6.620
6.820
5.247
AuM & Pension Funds portfolio size represent 20% and 19% of the funds market respectively 2005 2006
Source: Is Investment
2007/H1 2007/Q3 2007 The size of AuM, which is about to catch 2005 ’s mutual funds values after major redemptions in 2006, reached to YTL 6.8 bn due to the rise in portfolios and growing pension fund business 17
CORPORATE FINANCE (Public Offering - M&A)
Public Offering Size (USD Million) - Is Investment M&As Size (USD Million) - Is Investment 341 500 708 707.9
2006
Source: www.imkb.gov.tr
2007 34.9
38.9
38.9
2006
Source: Is Investment
2007 was a golden year for Corporate Finance business 2007 After the largest privatization offering -Halkbank- and Is Investment which was 15,4 times over subscribed, Tekfen Holding IPO generated the highest domestic demand among the private sector IPOs in Turkish capital markets We experienced the highest performance for M&As business in 2007, implementing USD 500 mn.
amounted M&As projects while it was USD 38,9 mn. in 2006 18
ABOUT US OVERVIEW OF CAPITAL MARKETS OUR PERFORMANCE FINANCIAL RESULTS HINTS FOR 2008
19
BALANCE SHEET
Is Investment YTL (000) Total Assets Shareholders’ Equity 2006
542.143
152.622
2007
1.237.785
246.179
YoY ▲%
128 61
Our shareholders’s equity reached to YTL 246.1 mn surging by 61% with respect to 2006 and while having more than 30% of the total assets of the brokerage houses in the sector 20
INCOME STATEMENT
Is Investment YTL (000) 2006
Interest and Trading Income Commission Revenues Income from Corporate Finance Other Income
Total Operating Revenues
Operating Expense
Net Operating Profit
Other Expenses Financial Expenses Minority Expense EBT Tax
Net Profit
28.948
34.475
7.492
8.931
79.846
-42.347
37.499
-7.094
-4.059
-8.384
17.962
-2.228
15.734
21 2007
84.269
51.814
17.079
5.151
158.313
-63.357
94.956
-7.921
-13.780
-31.224
42.031
-8.305
33.726
YoY ▲% 153
11 239 n.m.
233 272
114
191 50 127 -42
98
49
OPERATING REVENUES
84.269
(YTL 000) 2006 2007 51.814
34.475
28.948
7.492
17.079
Interest and Trading Commissions Corporate Finance 8.931
5.151
Other
Is I nvestment’s total revenues amounted to YTL 158.3 mn as of 2007, up by 98% on YoY basis.
Interest and trading revenues performed a fundamental growth, increasing to YTL 84.2 mn. from YTL 28.9 mn.
Commission revenues reached YTL 51.8 mn, surging by 50% while the commissions had totaled YTL 34.4 mn. as of 2006.
Other revenues amounted to YTL 5.1 mn down from YTL 8.9 mn due to the mainly decline in marked to market value of Is Private Equity.
22
BROKERAGE & TRADING FEES
40.060
(YTL 000) 27.405
2006 2007 5.053
10.419
Brokerage Asset Management 2.017
1.335
Other
Brokerage commissions reached YTL 40.1 mn. recording 46,1% rise over its 2006 year-end performance.
Commissions on derivatives rocketed by almost five-folds on YoY basis as of 2007, reaching YTL 8.5 mn. vs YTL 1.9 mn in 2006 year end.
Fees on asset management rose to YTL 10.4 mn. due to the effect of 70% consolidation of Is Asset Management started in 2007/Q3.
23
49.3
MARGIN TRADING
Outstanding Loans (YTL Million) 69.8
67.1
54.7
44.8
Interest Income on Loans Extended to Clients (YTL Million) 12.9
6.2
2006 2006 07/Q1 07/Q2 2007 2007 Interest income on margin accounts recorded 108% YoY growth with respect to end of 2006, reaching YTL 12.9 mn while loans to clients declined to YTL.44.8 mn 24
OPERATING EXPENSES
YTL (000) 2006 2007 YoY ▲ Employee Costs* Depreciation Goodwill Consultancy Operating Costs Sundry Taxes Advertisement 20.566
1.148
-344 1.852
8.322
5.999 1.638 Marketing and Dist.
3.166
Total 42.347
31.013
50% 1.230 7% -470 36% 2.806 51% 12.860 54% 6.754 13% 1.643 n.m.
7.521 137%
63.357 49% Operating costs recorded 49% rise on YoY basis while the total revenues displayed a 98% rise with respect to 2006
* The number of our employees has reached to 289, surging by 17,4% with respect to the end of 2006.
25
RETURN on AVERAGE EQUITY
R 31 December 2007
16,9 %
31 December 2006
10,8 %
31 December 2005
21,6 %
31 December 2004
5,1 %
We are targeting Is Investment’s ROAE as 20% in five years’ time 26
DIVIDEND DISTRIBUTION POLICY
Is Investment’s principles of dividend distribution policy are set by article 16 of the Articles of Association.
The net profit of the company is the amount found after the deduction of every kind of expenses to be paid by the company and miscellenaous depreciations and reserves from the total revenues obtained by the Company within a balance sheet period and the profit after deduction of any previous year loss, if any...
Dividend distribution decision will be taken by the General Shareholders Meeting which is expected to be performed towards the end of April We have shared our success by going to public in May 2007 and now we want to share our profit considering the expectations of our shareholders 27
ABOUT US OVERVIEW OF CAPITAL MARKETS OUR PERFORMANCE FINANCIAL RESULTS HINTS FOR 2008
28
HIGHLIGHTS - From 2007 to 2008
Geographic Expansion : Akaretler and Yesilkoy branches were opened.
ETFs : iBoxx Fixed Income ETF will come to market as the second ETF after ISDJE.
Hedge Fund : We are about to bring the first hedge fund to the market.
Prime Brokerage : We have developed a special software and started to test with clients.
Corporate Bonds : Closed two corporate bond deal. Creditwest Factoring is the first publicly traded corporate FRN.
Derivatives : Single stock futures and options will be initiated in the coming months
Euromoney Award : Is Investment rewarded as the “Best Equity House in Turkey” by Euromoney.
We Are in ISE-100: Is Investment was selected for the ISE National-100 Index in a four-month period after going public.
New Trading Platforms : TradeMaster and TradeMaster International.
29
TRADEMASTER: Electronic Trading Platform
5% of our total client equity transactions are performed by TM user investors and this percent is expected to getting higher day by day for not only the equity market but also the derivative market 30
TRADEMASTER INTERNATIONAL: Direct Access to Int. Markets
The continous demand for this platform and the constant additional boost to the income statement in 2008 increase in the daily transaction volume will give 31
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.
IS INVESTMENT
HEAD OFFICE AKARETLER BRANCH
İş Kuleleri Kule-2 Kat:12 4. Levent 34330 İstanbul Turkey Tel: (+90212) 350 20 00 Fax: (+90212) 325 12 26 – 325 12 48 Süleyman Seba Cd. No:44 B1 Blok D:10 34357 Akaretler İstanbul Turkey Tel: (+90212) 326 87 00 Fax: (+90212) 326 87 01
ANKARA BRANCH
Tahran Cd. No:3/8 06700 Kavaklıdere Ankara Turkey Tel: (+90312) 455 26 50 Fax: (+90312) 466 26 62
KALAMIŞ BRANCH
Fenerbahçe, Fener Kalamış Cd. Tibaş-Belvü Sitesi A2 Blok D:3 Kadıköy 34726 İstanbul Turkey Tel: (+90216) 542 72 00 Fax: (+90216) 542 72 01
YENİKÖY BRANCH
Köybaşı Caddesi İskele Çıkmazı No:277 34464 Yeniköy İstanbul Turkey Tel: (+90212) 363 01 00 Fax: (+90212) 363 01 01
YEŞİLKÖY BRANCH
Havalimanı Kavşağı EGS Business Park B3 Blok No:470 34149 Yeşilköy İstanbul Turkey Tel: (+90212) 463 20 00 Fax: (+90212) 463 20 01
LEVENT REP. OFFICE
Yapı Kredi Plaza C Blok K: 9 Bölüm 25/B 4. Levent 34330 İstanbul Turkey Tel: (+90212) 282 00 18 Fax: (+90212) 282 00 19
İZMİR BRANCH
Akdeniz Cd. No:14 Birsel İş Merkezi D:501 Alsancak 35210 İzmir Turkey Tel: (+90232) 488 90 00 Fax: (+90232) 488 90 01
ALMA ATA REP. OFFICE
Jeltozbekova Street 97 Block A2 Floor:2 Almaata 050051 Kazakhstan Tel: (+77012) 234803 Fax: (+77273) 340509
SUBSIDIARY MAXIS SECURITIES LTD
8 Princes Street London EC2R 8HL UK Tel: (+44207) 397 1431 Fax: (+44207) 726 2566
isyatirim.com.tr
isinvestment.com
33