Türkiye Vakiflar Bankasi Türk Anonim Ortakligi (VAKBN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to VakifBank Audio Webcast Second Quarter 2020 Bank-Only Earnings Results on the 10th of August 2020. Thank you for standing by. [Operator Instructions] I'll now hand you over to Mr. Ali Tahan, Head of International Banking and Investor Relations from VakifBank. Sir, the floor is yours.

Thank you. Thank you, Rob. Good afternoon, everybody, and welcome to VakifBank First Half 2020 Earnings Presentation Conference Call. I have all the colleagues with me from our Investor Relations department headed by Nihan. And as usual, we will touch the important highlights of the presentation. And after a brief update on the presentation, we will continue with the Q&A session. On the presentation, let me first start with Page 2 related to earnings and ratios. Second quarter P&L of Vakif chain, above the market consensus at TRY 1.525 billion. And this grew first half net income number to more than TRY 3.2 billion, which is up by almost 218% compared to the same term of the previous year. And such strong P&L numbers take us to ROE numbers of 15.8% only for second quarter only and 16.9% for the first half of the year. And those ROE numbers, especially the first half ROE number, is the highest among peer group in Turkey. And as you know very well, during the quarter, we had timely TRY 7 billion CET1 injection from sovereign wealth fund. And excluding this equity increase, our first half ROE would be even higher at 18.6% and our second quarter average ROE would be higher at 17.4%. And my point is, those already very strong ROE materialized even despite such a strong capital injection. And apart from this strong P&L, this P&L even came despite the fact that we provisioned a lot during the first half of the year. As you can see, right-hand side of the page, our pre-provisioning operating income numbers are way higher compared to net income numbers. And especially during second quarter, deliberately, we decided to increase coverage ratio for both Stage II and NPL ratio. As you can see, our Stage II coverage ratio increased by almost 5 percentage point from 7.3% to 12% area and total NPL coverage ratio also increased to 110% area, which was 93.3% a quarter ago. And upon those strong coverages, we still have TRY 852 million free provision in our P&L. So we didn't release any provision. On the contrary, we deliberately increased our coverage for Stage II and the NPL but still managed to deliver a very strong set of results in the first half of the year. Next page, you can see the key highlights of second quarter in terms of the best ROE performance among the peer group in terms of better-than-expected NIM evolution, in terms of proactive and prudent coverage for both Stage II, NPL and total coverage as well as increased market share across all asset classes and deposit classes as well as further strengthened CET1 and solvency ratios. We will discuss all those points in a very short period of time. Therefore, I also skip this page. The most important part of the quarter was the CET1 injection, TRY 7 billion, which was a rights issue used specifically by one institution which was sovereign wealth fund, TRY 7 billion injected through only sovereign wealth fund. And now they became one of the main shareholders of Vakif. And therefore, we depicted here clearly before and after ownership structure following the CET1 injection. Out of this TRY 7 billion, paid-in capital increased by almost TRY 1.4 billion and the remaining TRY 5.6 billion is booked as share premium. So total equity increase was TRY 7 billion but the breakdown was different. And thanks to such capital injection, our solvency ratios boosted by 182 basis points in second quarter. And that was the most important part of the story during the second quarter. The P&L details, I also skip this page very quickly. On Page 6, you can see the revenue generation capacity of the bank and revenue breakdown. Our total revenues are up by 74% year-on-year. And the breakdown of revenues are pretty unchanged. Still NII is the biggest revenue item, followed by net fee and commission income. So core banking revenues continue to be strong during the first half of the year. Of course, on the fee income side, similar to market practice and similar to peer group, we also had a slight decline on an annual basis due to mainly regulation impact. As you know, the new fee regulation became effective fully as of second quarter. And especially in the second quarter, the negative impact was very visible. And consequently, on a cumulative basis, our fee income is down by almost 4% Q-on-Q. At the same page, you can also see the breakdown of net fee and commission income between cash loans, noncash loans, payment system, insurance, inquiry and expertise and other fee items. On Page 7, you can see the details of net interest margin. As we guided and expected, our reported NIM came down slightly compared to first quarter. But compared to initial expectation, of course, we are happy to see that our net interest margin declined in a very limited way compared to our initial guidance. It was down only by 20 basis points from 5.17% to 4.96%. And first half net interest margin came at slightly more than 5%, which is above our initial guidance, even though we were still saying that each and every quarter net interest margin will be lower compared to previous quarters. Still 5% first half net interest margin is slightly above than our expectation, and it is mainly because of the very limited decline in second quarter net interest margin than our expectation because during the quarter, especially further decline in cost of deposit and cost of funding together with Central Bank funding help us to manage relatively better net interest margin. And also adjusted net interest margin also came at 4.35% in the first half of the year, which is also a similar trend compared to reported net interest margin. At the left-hand side, we can see the breakdown between the core spread in terms of both loan yields and deposit cost in both Turkish lira and hard currency as well as security yields. And at the right-hand side, you can see the evolution of Central Bank funding and the cost of it as well as swap cost, so especially for those of you interested in detail, you can see those numbers in our presentation. Next page, Page 8 is related to cost and OpEx. We continue to maintain one of the lowest cost-to-income ratio in the sector. In the first half of 2020, our cost-to-income ratio further came down to 27%, which was more than 35% during the end of 2019. So in this time, the efficiency increase of the bank is also very visible in terms of cost-to-income ratio, even though the OpEx increase is also more than our guidance, which is 23% almost year-on-year, adjusted with some one-off items. And during this period since the beginning of the year, deliberately, we decided to close 5 branches. And our branch numbers came down to 937, which was 943 in the beginning of the year. And at the right-hand side, you can also see the quarterly evolution of OpEx breakdown between HR cost and non-HR cost. This Page 9, which I move to balance sheet growth and lending growth. As you can see at the headline, quarterly TL loan growth, mainly driven by secured CGF loans. During the quarter, total lending growth came 18% in our case, which is mainly driven by TL lending. TL lending is up by 24% Q-on-Q and FX lending growth was up by only 1% in dollar terms. And most of the TL lending growth came through CGF. As you know, after the outbreak of pandemic, in line with the coordination of the economy administration, we were also part of new CGF package. And unlike the previous CGF packages, the new CGF loans extended to not only SME and commercial clients, but also for the first time, it was also offered to retail customers. And at the same page, on Page 9, on the right-hand side, we can see quarterly loan growth between retail and nonretail products. This quarter, of course, SME lending growth was very visible with 36% Q-on-Q growth, and all of them were under CGF umbrella. But on the retail side, retail lending growth was also very strong. We had 39% Q-on-Q growth on general purpose consumer lending, and we had 19% residential mortgage lending. So SME lending, GPL lending and mortgage lending, those 3 products are the main driver of strong TL lending growth during the second quarter. And most of them, apart from residential mortgages, were under CGF guarantee. On Page 9, you can see the breakdown of loan portfolio at the left-hand side. And at the right-hand side, you can see detailed information related to CGF loan usage. During the quarter with the new CGF package, we extended TRY 52 billion loan to our loan customers, out of which TRY 42.2 billion extended to nonretail customers, including SME, corporate and commercial customers and TRY 10.8 billion in the form of general purpose consumer loans extended to retail customers. So therefore, we also put separately the segment breakdown of CGF loans between the customer type. And with the extension of TRY 52 billion CGF usage, CGF loans in the quarter, total CGF amount increased to almost TRY 77 billion as we also have additional CGF exposure coming from previous packages. In terms of the CGF, the good thing is we didn't lose our lending criteria but as a state bank having responsibility to support Turkish economy, we did our best not to put our customers in a more financially difficult position. So therefore, without any developed lending criteria, we extended the new CGF loans to both SME, corporate and commercial as well as retail customers in the 2 quarters. On Page 11, you can see the normal bank ratios related to asset quality. Because of the denominator effect, we have a decline, both in terms of NPL ratio as well as the share of Stage II in total loan portfolio. NPL ratio further came down to 4.3% and our Stage II ratio came down to 8.72% as of June end, but this is mainly because of denominator effect. As we discussed, we increased deliberately our coverage for both Stage II, NPL and total NPL coverage ratio. And as a result of that, our quarterly net cost of risk came at very strong at 243 basis points, which brought first half net cost of risk number to 228 basis points area. So such incremental coverage ratio increased resulted in a higher net cost of risk number for the portfolio, which can be perceived as credit positive for the upcoming quarters. On Page 12 and 13, you can see more detailed information related to liability side. On Page 12, you can see more detailed information related to deposit as deposits are the main funding tool within our total liabilities with 62% share. And during the quarter, we are glad to have very strong deposit growth across all deposit products. And therefore, we gained additional market share in every subsegment deposit area. Total deposit growth just one quarter period of time came strong at 25%. And TL deposit growth also strong at 27%. But our net FX lending growth, which was almost flattish Q-on-Q, we also have additional 17% deposit growth in hard currency deposits in dollar terms, which was also very visible. So in TL deposits, in total deposits, in hard currency deposits, VakifBank continue to gain market share as well as we also gained market share within demand deposit. And as of today, the share of demand deposit within total deposit portfolio further increased to 21%. At the right-hand side, you can see the breakdown of total deposit portfolio between retail, state and other. And each and every quarter, we witness that while the share of state deposit is coming down, thanks to more visibility in the field, we are happy to gain more market share in both retail as well as SME and corporate deposit market. On Page 12 -- 13, sorry, you can also see the detailed information related to wholesale borrowing. The most eye-catching development of the quarter was syndication loans. Vakif obtained $950 million syndication loan in April. And compared to other big banks in Turkey, compared to other state and private banks, we are happy to have the highest rollover ratio in terms of comparing to the syndication loans obtained in 1 year ago. So therefore, that was the most eye-catching and most successful part of wholesale borrowing story within Vakif. And as of today, we are still carrying TRY 13 billion wholesale borrowings obtained by well-diversified funding sources, and share of total wholesale funding in total liabilities is holding around 19%. On Page 14, you can see the capital ratio, solvency ratios, our total Tier 2, thanks to TRY 7 billion CET1 injection, increased to 7.6%. Tier 1 ratio increased to 15.6%. And CET1 ratio increased to 12.6%, way higher compared to a quarter ago. And these are the reported solvency ratios at right-hand side. You can see our solvency ratios without forbearance measures introduced by BRSA. In this sense, we are still very transparent, and we are clearly showing what would be our solvency ratios without such forbearance measures and the impact of such BRSA forbearances is 170 basis points, 170. And on top of that, as we discussed, this TRY 7 billion CET1 injection is creating 182 basis points positive impact in our solvency ratios. So at this stage, I would like to stop and leave the floor to Rob again. On the next pages, you can see more different information related to sustainability, related to digital banking, related to asset/liability composition, security portfolio, retail lending quota, et cetera. So at this stage, I would like to hand over again to Rob. Thank you.

[Operator Instructions] I believe we have a question from Deniz Gasimli from Goldman Sachs.

Two questions from my side. One is on deposit. So as you showed, there's been very strong TL deposit growth during the quarter as well as foreign currency deposit growth. I think looking at expected data for after June, there's also been a decent increase in foreign currency deposits for the whole banking sector. Perhaps, I mean, you could say there's some dollarization happening in deposits of the local population. So would you say you're seeing that from your side? As in, did you see that some depositors are shifting their holdings from Turkish lira to foreign currency given maybe that, let's say, they don't think the rates on Turkish lira are as attractive as they were perhaps? Are you seeing that since the end of second quarter? And maybe perhaps given that there's been kind of a change in the funding from 8.25% to 9.75%, are you seeing any kind of changes in your deposit rate since that happened on Friday? And I guess, do you expect that to impact your deposit rate? So just like that's one question. The second question on your loan growth, as you mentioned, very strong loan growth driven by CGF as well as general purpose loans and mortgages have also found strong growth. So I just want to clarify, did you say that all of the general purpose loan growth was also driven by the Credit Guarantee Fund? As in, do you think there will be this much demand for general purpose loans? I believe there's a lot of like demand right now for those loans for consumption purposes in Turkey. Would there be this much demand without Credit Guarantee Fund packages or is this like the main reason why the funding is up?

Thank you, Deniz. Actually, on the deposit side, for the second quarter, we had 17% deposit growth in dollar terms. Actually, this is due to mainly 2 reasons. First, we were also very active in the field in terms of corporate and commercial banking because especially during the pandemic, most of the private banks were working half a day. But at Vakif and state banks, we were available whole day. And we were gaining more market share in corporate and commercial lending. And we were also pushing to do portfolio management in the field to collect more hard currency deposits because that was something we were behind the competition as of first quarter. So we don't want to be behind the market at any balance sheet item. And deliberately, that was a deliberate action as we were pushing for additional FX deposit growth and more interaction on corporate and commercial banking, more business, especially on trade finance automatically is bringing more FX deposits from customer point of view. Secondly and maybe more importantly, the introduction of new regulation called asset ratio. Yes, as of today, it is a little bit loose compared to initial wording, but that asset ratio regulation resulted more FX deposit shift from private banks to state banks mainly. And even though we are offering relatively low rates compared to what we were offering for term hard currency deposit funding a quarter ago, still, we were managing to collect more and more FX deposits. So therefore, we were clearly the winner of this asset ratio regulation introduction and without increasing the rates on the contrary, even though we are still cutting the rates, we were collecting more and more FX deposits. That was the story during the second quarter. As of today, I am checking my current balance sheet numbers, and we still have a good level of hard currency deposit growth, especially, you are right, especially in this month, we are having or we are seeing some additional volatility over dollar-Turkish lira parity. People may switch opportunistically to FX deposits. And sector-wise speaking, FX deposits are also going up quarter-to-date. But from our side, we are almost in the middle of third quarter. In the third quarter, so far, we are also seeing a good level of additional FX deposit growth on top of the strong FX deposit growth in the first half of the year. For the second question, I mean, yes, you are right, Deniz. I mean TRY 10 billion CGF usage was in the form of CGF guarantee. So up to certain threshold, up to certain content conditions, most of the loan, almost 90%, let's say, average, is guaranteed by Turkish data and Turkish Treasury. But the scope of CGF within retail portfolio, but only limited to general Turkish consumer lending. The residential mortgage growth, for example, was out of scope in terms of CGF umbrella but a strong quarterly GPL lending, general purpose consumer lending is mainly driven by CGF lending growth, which was the first time we witnessed because in the previous CGF packages, CGF loans were available only for SME, corporate and commercial clients, which is now retail. But for the first time, as you know, the scope of CGF totally expanded to retail within the pandemic. And most of GPL loan growth, in our case, was driven by CGF loan growth.

We now have a question from Mr. Ali Dhaloomal from the Bank of America.

I have 3 questions on my side. I mean the first one, in regards of your net short position that you mentioned in your financials, I was wondering if, as of today, you are still above the 20% requirement. And what's the plan there? I mean, do you expect a forbearance from the BRSA above the 6 weeks that usually you are allowed to or I mean, any color will be appreciated. Then the second question, can you give us the deferrals, how much principal exposure do you have to clients that have asked for deferrals? And my last question is in regards of your loan growth guidance for this year. I mean in light of the monetary tightening that we have seen starting from last week, I mean, how do you see loan growth in TL and FX by year-end and also how it will be driven? Will it be again by CGF or are you looking more at I mean GPL, mortgages to drive the loan growth for the rest of the year?

Thank you, Ali. Let me first start with the latest question related to lending growth guidance. I mean, in the first half of the year, our total loan growth came very strong at almost 48%. This is way stronger than our initial guidance. But of course, similar to other parts of the world, we were also passing through extraordinary conditions driven by pandemic. And therefore, we took extraordinary steps and measures. Therefore, lending growth in the first half of the year came way stronger and higher than our initial guidance. For the second half of the year, I mean, given the fact that we just increased our lending rate across all products because in line with the increase in cost of funding, we fully reflected all the cost of funding increase to lending rate at the moment. And with such a relatively higher interest rate environment, it may not be easy to find high-quality loan demand. So my point is, in the current macro backdrop, it is not easy to find high-quality demand. So because of the weakness from demand part of the part, we don't expect additional lending growth. Of course, there will be additional lending growth, but compared to first half, the growth will be very limited. Of course, we have a clear view to support Turkish economy in case we have high-quality demand. But my point is with the current backdrop, with the current interest rate environment, it may not be easy to find high-quality demand. And going forward for the rest of year, we don't expect any additional FX lending growth. We expect lending growth to continue to come from local currency side. But as I mentioned, the numbers will be very limited compared to what we delivered in the first half of the year because we already provided loans to all eligible loan portfolio, and it may not be easy to provide more loan to high-quality customers. So lending growth will be very limited in the second half compared to first half. And as of today in our agenda, we don't have any discussion related to new CGF package. And I personally believe there is no need for such new CGF program. So therefore, new CGF is not in our agenda or is not in our discussion. So lending growth will be very limited in the second half of the year compared to first half. For the first question, I mean, in terms of net short position, today, we will also be announcing our consolidated financials. Probably, it may be published. I couldn't check when we were coming to this call. But consolidated numbers and financials are also very strong. We had TRY 2.3 billion P&L on a bank-only basis, but our consolidated numbers are even stronger at TRY 4.2 billion. And on top of that, yes, on a bank-only basis as of June end, our net FX position is slightly more than 20% cap. But more importantly, given the fact that our asset growth -- asset side was very higher and bigger on a consolidated basis, our net FX position is still inside BRSA maximum cap of 20% as of June end. But as of today, we are more than this 20% cap, both at bank-only basis as well as consolidated basis. But the point is, we believe this situation, this reality is manageable and it is temporary. We don't expect any forbearance from BRSA. But hopefully, we will be coming in line with the BRSA regulation soon. There are some steps we are considering to take. And hopefully, in a very short period of time, we will again be in line with the BRSA regulation. We will see. And for the deferrals, I mean, as you know, once the pandemic has broken out, we provided a postponement opportunity to all existing local bank loan customers just to provide financial relief to those people and companies. We have deferrals both on the retail side as well as on the nonretail side. But it was a temporary relief. It was a temporary postponement, and this is no longer the case as of beginning of third quarter. We provided these deferrals until the end of second quarter. And therefore, as of today, every borrower is supposed to make their repayment in line with their repayment plan as scheduled. According to my notes, we have around TRY 19 billion deferral on the -- and this is principal -- TRY 19 billion deferral on the retail side and around TRY 25 billion deferral on the nonretail side, including SME, corporate and commercial. But as I mentioned, that was a temporary relief we provided until the end of second quarter. And as of today, this is no longer available.

We've got a question from [ Constantine ] from JPMorgan.

My first question is a brief addition to the question that has just been asked. So in terms of management of this short FX position in the near term, could you maybe give some guidance how exactly it's going to be managed? Would you buy FX on the market to balance or is there some kind of instrument that the government is considering to make a balance there? And next, in terms of the deferrals, so out of these loans, which benefited from payment deferrals during the second quarter, do you have some guidance what share of these loans could ultimately need some longer-term restructurings and an increase in provisioning? So these are the 2 questions for me.

Sorry, Constantine, the line was not good. I couldn't hear properly the second question. If you don't mind, could you repeat the second question, please?

Yes, of course. From those loans which benefited from payment deferrals since the middle of March, what's your best estimate, what proportion of those would require some longer-term restructuring decisions and additional provisioning?

Thank you, Constantine. Let me first start with the first question. I mean, we don't have a magic ball to deal with this short position issue in the short term. Of course, we will be using the traditional mechanisms that we can think of. Our treasury colleagues are working on it. Let me do not speculate about the mechanisms, how we can manage this issue, but you are closely following BRSA data, and we believe and we expect and hope in a short period of time with the use of traditional mechanisms, those numbers will be, again, in line with the BRSA regulation. And for the second question, I mean, this a very good stress test for our portfolio because just to provide more support financially to our customers in line with the practice across almost all Turkish banks because this postponement offer was not something you could see only from the Vakif side. It was a common practice, both within state banks and private banks, to some extent, most of the banks in Turkey. And this is also something common you saw in other EM and other parts of the developed markets. This is very understandable because this unprecedented COVID-19 created unprecedented challenges for all businessmen and retail people. Therefore, as a responsible institution operating in Turkish economy, we were supposed to be fast and we were supposed to take responsible precautions and that option was one of those. The good thing in terms of the provisioning is, you will see -- I mean, without any exclusion, we offered those deferral opportunity to all existing VakifBank loan customers. There was no precondition. There was no prerequisite. It's not available for everybody, but it was temporary. Now starting with the 1st of July, they are supposed to be in line with the new revised onetime conditions in terms of the repayment schedule. We will now follow the BRSA rules and regulations. And in case they are failing to comply with the new repayment schedule, we will follow the maybe common staging in terms of both Stage II and Stage III. But as you saw in the second quarter, deliberately, we put additional coverage for Stage II and Stage III. I mean, Stage II coverage already increased from 7% to 12%, and total NPL coverage ratio already increased to 110%. And for the rest of the year, I would like to produce net cost of risk guidance, just to remind you, in the beginning of the year, we were guiding a slight decline in our net cost of risk. Just to remind you the numbers, last year, average net cost of risk of Vakif was 190. This year, we were expecting initially a slight decline in our full year net cost of risk, sorry. But because of this pandemic and because of the change in our IFRS modeling because we decided to use more conservative indicator within our IFRS modeling, and this resulted in more provisioning requirement. And as a result of that, in the first half, our net cost of risk came almost 228 basis points. And going forward, we have a clear view to keep those high net cost of risk ratios unchanged even though the denominator effect in the first half of the year was very strong. Still, we managed to put additional net cost of risk increase. And going forward, especially in the second half of the year, we would like to keep this fully unchanged. And therefore, we will continue to have more and more provisioning. And we believe such strategy and such conservative stance is more sustainable in terms of both earnings management and P&L management going forward between the quarters and the year between 2020 and 2021. And on top of that, as you know, especially because of the NPL definition change, some loans are classified under Stage II, and those loans are the loans who have more than 90 days late repayment, but not more than 180 days. Under normal conditions, if there was no BRSA NPL definition change, those loans are supposed to be NPL. And according to our estimation, if there was no such NPL definition change rather than 4.3% as of June, our NPL ratio would be 4.68%, which means that the NPL definition change itself is resulting in 38 basis points impact in our asset quality. But my point is, even though we are reporting those loans as NPL, still, we are putting provisioning as if those loans are NPLs because this NPL definition is valid until the end of 2020. And with the new year, the beginning of 2021, under current regulations, if there is no additional change or additional announcement, we understand that NPL definition will come back to normal NPL definition. And starting with 2021, those loans are supposedly stay again as NPL. But my point is, as a conservative state lender, even as of second quarter, we already started to put more provisioning to those Stage II loans as if they are NPLs. And consequently, our net cost of risk came higher than our initial guidance. These are the points I would like to share with you, Constantine, if you don't have any additional questions. Thank you.

Ladies and gentlemen, I believe we have no other audio questions, so Mr. Tahan, we can now switch to the written Q&A, if that's okay.

Sure, Rob. Actually, we have 2 questions in written format. One of them is coming from our Turkish colleague from Oguzhan from Yapi Kredi Yatirim. Oguzhan is asking to share -- is asking our new 2020 budget. Let me give you some specific numbers in terms of our new budget. As we discussed on the lending side, in case of high-quality demand, which is very challenging, we still want to grow on the lending side. But with the current contraction, we believe it may not be easy. In terms of net fee and commission income growth, we had a low single-digit contraction in the first half. But for the full year, we expect fee and commission income growth will be high single-digit contraction, which is in line with the guidance of private banks. OpEx growth is supposed to be around 22% on a comparable basis, adjusted with some one-off items. We clearly showed in our presentation. For the net interest margin part, in the first half, we had 5% reported net interest margin. And this reported margin was 4.14% in the previous year. And in terms of the margin outlook, second half of the year will be relatively more challenging because of the duration gap and because of the upward revision of both deposits and loans. As of today, all the cost of funding increase fully reflect to lending rate. But given the fact that we are carrying around 2 quarters duration gap, it means, of course, that will suffer in the second half of the year. But on the other hand, we will enjoy relatively good return from our CPI portfolio. And during the second quarter, I think it was a good move and good strategy. As you can also see in our presentation on Page 19, deliberately, we changed the composition of security portfolio. While we are decreasing the share of fixed papers within our security portfolio, we increased the share of floating and CPI linker portfolio, and the upside can come from this CPI portfolio because in the first half of the year, we were using CPI estimate at 8.37%, which is relatively conservative, which was 8.11% in the previous quarter. But given the inflation outlook and given the ongoing dynamics on the macro front, we may have additional upside from CPI portfolio. But despite such additional, still, now we are revising to our -- revising down to our net interest margin -- full year net interest margin to flattish level, which is 4.15% area. Even though we had 5% in the first half, still given the core spread evolution, we believe flattish net interest margin for the full year of 2020 seems to be much more realistic. And such negative revision in our net interest margin will also have impact in our ROE and profitability. In the beginning of the year, we were guiding 14% average ROE. In the first half of this year, on a reported basis, our average ROE came almost 17%, but because of the both denominator effect, because of the CET1 injection of TRY 7 billion as well as because of the net interest margin guidance to downward, now realistic ROE for the full year is supposed to be around 12%. So compared to 14% of initial guidance, now we are also revising our full year average ROE to 12% area. And these are the main highlights of our budget for full year 2020. I think it is the question to or some question. I'm also checking the other questions. We also have additional question from Ali Kerim, another Turkish colleague from Gedik. How much loss did the bank restructure since the beginning of the year? That's the question of Ali Kerim. Actually, the numbers of the restructured loans within our portfolio seems to be increasing in a limited way. I am just checking my notes. As of 2019 year-end, it was TRY 16.6 billion. Now it is around TRY 16.9 billion. So total cumulative restructured loans increased very limitedly. It was only up by 2.4%. And I think this is something we can also see in our financial business. We have also additional question from our fixed income investor [ Colleen ] from New Jersey. Colleen is asking, what is your current hard currency liquidity with detail on each item quantified, please. As of today, we are having around -- as of today, I am just checking my notes, Colleen, we are having around $7 billion hard currency liquidity, short-term liquidity. And within a year period of time, total redemption, total repayments, including syndications, DPRs, eurobond, covered bonds, as you know, in April 2021, we will also have a reduction of EUR 500 million covered bond. We are having around $3.8 billion redemption. So out of total TRY 7 billion (sic) [ $7 billion ] hard currency liquidity, we have around $3.8 billion redemption in the upcoming next 12 months. And in terms of the syndications, they have to roll over a relatively small syndication loan in November. As you know, each year, we are having 2 syndication loans. April, in our case, is relatively a bigger one. November is relatively a small one. And within this $3.8 billion, we also have around $600 million repayment of November syndication. And hopefully, we will be starting to discuss with our correspondent banks for the renewal of this syndication shortly. And within this $7 billion hard currency liquidity, my colleagues are saying to me that around 70% of that is in the form of right way swaps with Central Bank of Turkey. And I think that's the question for your -- the best answer to your question, Colleen. We also have a similar question from -- not from a live person, but I think it is very similar to the question of Colleen. So at this stage, we also do not have any other written question. Rob, if you have no additional question on the audio, we can thank all participants for their interest and time. But in case of additional questions, we are happy to answer them as well.

Thank you, Mr. Tahan. No, indeed, we have no more audio questions. So ladies and gentlemen, this concludes today's webcast call. Thank you once again for your participation and you may now disconnect.