Akbank unveils plans for rapid 2012 expansion

ISTANBUL- Hürriyet Daily News

Akbank General Manager Hakan Binbaşgil.

Recently appointed Akbank General Manager Hakan Binbaşgil gave strong signals of a new drive that would cement the lender’s position as one of Turkey’s top private companies, at a press conference in Istanbul on Feb. 7.

Binbaşgil laid out plans to open 70 new branches this year, in addition to the current 916 – a move that would see the creation of 1,000 new jobs. The lender also plans to invest $120 million in its technology infrastructure this year. As part of the ambitious plan, Akbank will also add 500 new ATMs to the existing 3,542. His first meeting with journalists after taking the helm at the lender came after Binbaşgil completed a “roadshow” that allowed him to meet and address 15,000 Akbank employees across Turkey. Binbaşgil was the deputy general manager until the abrupt resignation of Ziya Akkurt on Jan. 5.

A recent Brand Finance research study has put Akbank’s brand value at $1.582 billion, said Binbaşgil, pointing to the strong fundamentals of Akbank, whose asset size stands at 140 billion Turkish Liras as of the third quarter of 2011.

These include a 16.9 percent capital adequacy ratio, compared with a sector average of 15.4 percent. As of the third quarter of 2011, Akbank’s loans-to-deposits ratio also stands at 94.5 percent, again lower than the average.

More importantly, the financial leverage ratio stands at 7.8, compared to a sector average of 8.6. This figure, which shows the ratio of debt to asset size, indicates how much of assets are financed by foreign sources.

Due to this emphasis on risk management, Akbank’s non-performing loan ratio is at nearly half the sector average at 1.6 percent.

On whether the ambitious 2012 plans point toward a more aggressive policy, Binbaşgil told the Hürriyet Daily News he “wants to use Akbank’s power more.” Risk management is “in the DNA” of Akbank, he said, adding that he sees huge potential ahead.

Room to grow
What lies behind such optimism is the promising outlook of banking in Turkey, which has been attracting many foreign investors, including Citigroup, which has a 20 percent stake in Akbank.

Binbaşgil said 19 million individuals remain “bankless” in Turkey, while 25 million are seen as “half-banked.” This highly unsaturated nature of Turkish banking is also evident in the loans-to-gross domestic product ratio, which stands at 48 percent, compared to 145 percent in the European Union. The number of branches per million persons stands at 130 in Turkey, as opposed to 430 in the EU.

“Turkey is becoming richer. The middle-income segment is growing,” Binbaşgil said. “Akbank will continue investing, in parallel with Turkey’s growth.”

As the eurozone tries to solve a crippling liquidity squeeze, Binbaşgil emphasized the importance of savings - whose chronically low levels put Turkey at the mercy of foreign capital inflows.

“The expansion of the middle class and an increase in savings is crucial, regarding the mitigation of the savings deficit and the current account deficit, which remains to be the soft underbelly of Turkey,” the general manager said.

In such an environment, Akbank is among many banks which have increased borrowing from Turkey and abroad, despite an unfavorable global outlook. Last year, Akbank’s foreign borrowing totaled $10 billion, nearly double the 2009 amount of $5.4 billion.

“In the 2009-2011 period, our foreign borrowing increased at an annual pace of 35 percent,” Binbaşgil said. “Our roll-over ratio in syndicated loans stands at over 100 percent.”

Akbank is scheduled to release its 2011 earnings on Feb. 10, the same day as public lender Halkbank and Finansbank, the Turkish unit of the National Bank of Greece.