Akbank TAS
IST:AKBNK.E
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Akbank TAS
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Ladies and gentlemen, welcome to Akbank Second Quarter 2018 Consolidated Financial Results Conference Call and webcast. I will now hand you over to your host, Mr. Hakan Binbasgil, CEO.
Sir, please go ahead.
Good evening, dear friends. Welcome to our conference call. Today, I have with me Türker, our CFO; Ebru and Ilknur from our IR and Sustainability Team.
As you all know, second quarter was quite an eventful quarter, some being challenging actually. And with our cautious approach and in the best interest of our shareholders, we preserved our capital and liquidity while performing at the upper end of our ROE guidance. Despite our cautious balance sheet management, our core operating performance continued to be robust.
Now a few highlights, key highlights that I'd like to share with you. Our 15.9% ROE, which is at the upper end of our guidance, was due to strong core operating income. Our net income of TRY 3.28 billion was up by 9% year-on-year. Both our net interest income and fee income grew very strongly. We achieved this strong performance despite high provision charges in the second quarter.
We sustained healthy solvency ratios with capital adequacy ratio at 15.5% and Tier 1 at 13.3%, thanks to solid internal capital generation.
While maintaining our disciplined approach in LDR management, our swap adjusted NIM advanced from 3.54% in first quarter to 3.8% for the first half, well above our guidance. And this was achieved in a rising interest rate environment.
I would like to underline that, excluding the 2 percentage CPI adjustment, our NIM improvement was still sound at 3.7%. This is a result of our proactive asset and liability management where we have further decreased our maturity mismatch 3 months on the TL side.
As you all know, we have no metrics and especially on the FX side. Our conservative 11% CPI estimates provides a buffer for the second half of this year as every 1% inflation equates to an additional 5 basis NIM and 30 basis ROE. With a 32.5% cost-to-income ratio, we continue to set an example for the big banking industry, not only in Turkey but globally.
Our new branch model, our branch restructuring, along with our investments in digital has started to pay off both on the cost and revenue side. All these are a result of our solid banking model. And now Ebru will share our performance in detail. Then of course, we will be more than happy to answer your questions.
Thank you, Hakan Bey.
In the first half, our net income reached TRY 3.28 billion thanks to our 25% year-on-year growth in core operating income. Our swap-adjusted NII reached TRY 6.3 billion, up by 25%. Even excluding the increase in CPI assumption from 9 to 11, our NII growth was still very strong at 22%. Despite our cautious balance sheet approach, our fee income growth continue to be robust, reaching TRY 1.7 billion, up 22%, which is significantly above our 15% full year guidance.
Despite low loan growth, we were still able to increase our fees by 22%, thanks to our digitalization and diversification efforts. Direct banking fees are 41% of non-lending fees. Once again, wealth management fees, up 53%; and payment systems, up 28%, were eye-catching.
On the wealth management side, increasing mutual fund sales, thanks to innovative fund products, supported our fee growth. Also, there was a dramatic increase in acquisition of new equity customers with participation to major IPOs. We have further improved cross-sell and marketing of wealth management products with our new consolidated organization.
As for payment system, we continue to have a strong performance in both acquiring and issuing. On the issuing side, due to increase in interchange fee and volume; and on the acquiring side, mostly from price
[Technical Difficulty]
Sorry, we got cut off. Starting from Slide 5 on the digitalization efforts. Basically, we have transformed 99 branches to our branch model so far -- to our new branch model so far. We aim to reach 250 by year-end. It's early days. However, for branches that have been operational in the new model over 3 months, migration of cash transactions to E-tellers is at 40%, while product sales are up 30% and income generation is up 25%. We can say that initial results are quite promising.
We have increased our digital customer base by 22% to 4.4 million, while our mobile customers have reached 4.2 million. 67% of GPLs and 54% of credit cards are sold through direct channels.
We continue with our selective lending strategy. Our loan book is up 6% year-to-date. So on to the FX line, our loan book was down by 7% year-to-date in U.S. dollar terms, and our market share in FX loans was only 8%. We had the lowest FX loan book amongst peers by the end of first quarter, which was well collateralized and diversified. Our FX exposures to SMEs is almost 0.
Disciplined ALM is in our DNA. As we have shared with you several times, to adjust to higher interest rate environment, we continue to lower our maturity mismatch for TL, which now stands at 3 months down from 4 months at the end of the first quarter. This will help mitigate some of the NIM compression set in the third quarter of this year. On the FX side, we continue to have 0 maturity mismatch.
Our total LDR improved to 100% on bank-only basis, significantly below our -- the sector's 119%. We continue to manage our securities portfolio within the limits of our high-quality liquid assets requirement stemming from our balance sheet structure. And as you all know, we do not rely on short-term swap funding. Our swap book was limited to TRY 3.5 billion in the second quarter.
We continue to fund our lending activities with our sound deposit base. Our total deposits are up 8% year-to-date, which was slightly above our loan growth. Other than reducing our maturity mismatch over the past 2 years, another focus area has been to increase our demand deposit base. Over the last 3 years, we have steadily increased the share of TL demand deposits by 4 percentage points to almost 22%. Also, the share of retail and SME in our TL deposits is at 77%. These are smaller tickets which are more sticky and have lower cost. And now onto the next slide.
As a result of our successful corporate management, our second quarter swap-adjusted NIM reached 4.06, advancing further from 3.54 in the first quarter. With the strong second quarter performance, our first half swap-adjusted NIM was at 3.8%, well ahead of our 3.5% guidance. It is critical to highlight that even excluding the 2 percentage points CPI impact, our first half swap-adjusted NIM was still well ahead of guidance at 3.7%. As a reminder, we are using 11% inflation in our TRY 15.5 billion CPI linker portfolio calculation, and every 1 percentage point inflation affects NIM by 5 bps and TRY 120 million of net income post-tax.
Below you are able to see the four quarters successful core spread evolution. We were able to improve TL spread by 150 basis points in the last 2 quarters while maintaining 300 bps spread on the FX side. In the third quarter, there may be some NIM pressure. However, taking into consideration our first half performance and our conservative 11% inflation estimation, we still see upside to our 3.5% full year NIM guidance.
Akbank's long-term resilient risk indicators come from the quality of its loan book. As our overall loan growth was muted in second quarter, NPL and cost of risk ratios have been inflated to some extent due to the denominator effect. Our total cost of risk was 183 bps at the end of first half.
To go into detail, 35% of the cost of risk increase stems from additional coverage for OTAS exposure as well as currency depreciation and has almost no impact on net income.
Breakdown is as follows: Increase of OTAS coverage from 25% to around 30% has 34 bps impact, which is mostly offset by our TRY 250 million free provision reversal, resulting in an immaterial TRY 40 million net income impact.
Currency impact of OTAS coverage was 29 bps. This was 100% offset by our U.S. dollar long position, therefore, no impact on net income. As for 74 bps Stage 3 provisioning, [indiscernible] file with strong collateralization has created the main portion of the increase.
To share some detail, we have classified a syndicated commercial loan into NPL at the end of second quarter. The NPL classification was due to a delay in the restructuring process. There's a possibility for the restructuring process to be completed successfully.
IFRS 9 has created additional volatility in provisioning expenses. However, we are expecting our total cost of this to ease from current levels.
Our Stage 2 loans of TRY 24.9 billion make up 10.7% of our performing loans. In the first quarter, as you all can recall, Stage 2 loans were at 9.9%. To break this down, our OTAS exposure is at 33% of our Stage 2 loans. Additional 30% is coming from quantitative staging rules of IFRS 9, so these are not delinquent.
Excluding OTAS, only 11% of Stage 2 is delinquent, meaning past due 30 days -- above 30 days. We have increased our coverage for Stage 2 loans from 12.6% to 14.7%.
For Stage 3, we have set aside 67.7% provisions. Our total provision to NPL ratio stands at a solid 142%. And aside from all of this, we still have TRY 450 million free provisions.
Our conservative IFRS 9 modeling approach results in a high provisioning for our loan portfolio, which will provide additional buffer and tame earnings volatility in the mid- to long term.
Despite higher provisioning, we were able to still perform at the upper band of our ROE guidance and preserve solid solvency ratios of 15.5% CAR and 13.3% Tier 1. Healthy income and capital generation supported our solvency ratios despite the TL depreciation impact and also the month-to-month losses in securities. The sensitivity of our CAR to 10% depreciation is 57 basis points, while 1% TL FX interest rate move affects CAR by 32 basis points.
Our OpEx growth has declined by 1 percentage point from first quarter to 17.7% in first half. Please note that first half of 2017, there was a low base effect. The Q-on-Q growth was flattish. We expect further normalization on a year-on-year basis for upcoming quarters, but we may end the year 1 to 2 percentage points above our full year guidance of 13% due to FX and inflation. Note that our nominal OpEx base is significantly lower versus our peers. We had around TRY 4.9 billion OpEx in 2017 versus peers average of TRY 7.2 billion. Therefore, a 2 percentage point increase in our OpEx base translates to only TRY 100 million which can easily be absorbed by revenue generation.
A high-inflation environment is a great advantage to have a low-cost base, and this gives the bank flexibility. On the other hand, once again, we delivered a superior cost-to-income ratio at 32.5%, significantly below our full year 35% guidance.
Even excluding the CPI estimation change, our cost-to-income ratio would still be at a respectable 33.1%.
In the medium term, we continue to target between 33% to 35% cost-to-income ratio. 1/3 will come in from operational efficiency, and 2/3 will be coming from increase [ of gearing ] thanks to our efforts in digitalization and our new branch model. We continue to take a leading role in the sector with our operational efficiency.
And this concludes our presentation. Operator, you may now open the line for Q&A.
[Operator Instructions] Our first question is from Gabor Kemeny, Autonomous Research.
First question is on asset quality. I think you mentioned that you expect cost of risk to ease from here. Can you speak a bit about what makes you confident that cost of risk will improve given that, as you noted, the environment is clearly a bit challenging? And secondly, on the previous call, you mentioned that you tend to stress test your loan book with different exchange rate scenarios. Can you give us a flavor on how asset quality -- how do you think asset quality would perform if the lira were to devalue from here? Some sensitivities would be helpful.
Gabor, regarding our asset quality. As you know, we are quite prudent on our lending principles. So if you look at our total -- if you look at our lending mix today, we are very comfortable with the mix. The amount of FX, the amount of SME and, let me say, low-end consumer lending. And also, when you look at the -- actually, the mix, the segments and so on, it's a very well-diversified portfolio. So we are relatively comfortable despite some of the challenges in the market. So the current cost of risk, total cost of risk at the end of the second quarter is around 180. 183, actually. So what we are expecting towards the year-end, this number to reduce down to roughly 140 levels, 140 basis. but please also keep in mind that there is this FX impact in this number. So when -- because this FX part is actually fully hedged on the other side of the financial statement. So therefore, I think just to be fair, we should deduct roughly 20 basis out of that 140. So I think in a normalized way, I think our funds will end up somewhere around 120 basis towards the year-end. One reason why we had this significant increase this quarter, Ebru I think mentioned very clearly that there were just 1 or 2 -- actually some big tickets items, which we either put it in the NPL for Stage 2 and make sure that we clear the way looking forward. I'm sure that there will be, again, some additional loans into Stage 2, but I think in a declining manner. So I think we are comfortable with that guidance.
We constantly do stress-testing. We constantly [ clear arms ] with the interest rates, the FX rate and so on. We try to figure out its impact on our capital adequacy ratio, liquidity, asset quality and so on. There are different levels, of course, stress level 1, stress level 2 and so on. But even in the severe case, still looking at existing numbers that we have, and we feel very confident regarding capital adequacy ratio, liquidity, even the asset quality itself. So this 120 basis total cost of risk, I think this is something [ each year will -- ] for the bank.
Okay. And you mentioned this couple of big-ticket corporate items. Can you give us a sense of which segments they were related to? And more broadly, which industries do you see most at risk from the lira devaluation?
Actually, you know the names, probably. You read these names here and there. So I don't want to mention a client name. But these are like from the corporate sector, actually. So these are the ones that we heavily provision. And one of the files was from the energy sector. But as you know, in our case, our energy exposure is somewhat limited. So our total energy loans is something like 5.5% of the total lending that we have. And when you further decompose our energy loans, 2/3 government guarantee, 75% renewables. So I think it is a very rare situation in our portfolio. But having said this, even this file actually, we had a chance to recover this. So we were actually negotiating a restructuring, but it took longer than we have expected. Just to be following a prudent approach, we classify that under NPL. But still, I have confidence there because it is -- we have collateral for that. So in the medium term, even in the short term, you may hear some good news about this.
Our next question is from Alan Webborn, Societe Generale.
Firstly, I think, clearly, you made a decision in the second quarter to stop growing your loan book. And could you put a little bit of sort of flesh around why you decided to do that, where your concerns were and when sort of during the period did you start to do that? Just to give us an idea, because clearly you're growing -- you grew in the second quarter below, I think, what the private banks were growing at. So could you give us an idea of your sort of strategic -- your strategic approach? And clearly, the macro background today is now worse than it was, I guess, in the middle of the second quarter when you were making those decisions. So how do you feel about the second half of the year in terms of the opportunity? And then I guess sort of secondly, as you've gone through the presentation, you've clearly indicated that there are changes to your guidance but you actually haven't really made any changes to that guidance officially from the presentation. I mean, clearly, NIM is going to be higher. Is loan growth going to be lower? The cost of risk is going to be higher, fee income is clearly doing much better than expected. Could you just sort of perhaps update us across the board where you think the full year is going to look like now, given the fact that we're halfway through a year, which is really now quite different to how it was at the beginning? That would be very helpful.
Thank you for the question. First of all, our lending strategies, there are different areas where we are more careful. One was the FX lending side because as you know, there's a lot of volatility on the FX side. So because of -- also, the demand on the FX side is not as great as before. So even if you get the system, the FX lending in the system decreased by roughly 1 percentage point. So it's not only specific to Akbank but for the system as well. There is less demand. When you look at our portfolio, yes, FX lending decreased. Again, this was because of the FX volatility in the marketplace. So we just wanted to make sure that whenever there is a demand, the demand was good enough in terms of lending principles. And secondly, this is not something new, but for the last 2, 3 years, this is not only specific to Turkey, but something also we were expecting on the global scene. So we were actually expecting interest rates to increase globally. And because of this, over the last 2, 3 years actually, we have been trying to decrease our maturity mismatch. So we try to actually refrain from long-term lending as much as we can because of the rising interest rate environment globally and locally. But on the other side, there are other areas where we find lucrative and we are actually competing. And one area is general purpose loans where Akbank is more or less in line with the marketplace. So the other area is TL commercial loans. But the growth in those 2 areas was not big enough for us to gain market share in the total lending because our relative performance in FX and in those long-term lending was relatively less, but that was done actually deliberately. So -- and when you look at our market shares today, Akbank's market share is somewhere like 8%, 9% on the lending side, depending on types of products, even down to 6%. So looking forward, we feel comfortable. Still, I think there is a room for growth for Akbank without taking excessive risk. So I'm not talking about like market shares like double-digit numbers as of today, so still we can find good clients, good businesses where we can lend, but the growth in lending will not be as huge as before.
Regarding our guidance for the full year, we thought about this with our friends, but since there's so much volatility in the marketplace, we kind of decide to postpone our official revision of our guidance. But I can give you an idea. When you look at the ROA, we will stick to our official guidance. We are operating around 1.9% nowadays, a little bit higher than our guidance, so I think we will keep the bank there. Leverage, we said 9x. So we are operating around 8.8x. I think this is where we will continue with. ROE, we said 15.5% to 16%. We are comfortable with this upper end of ROE. I think we will continue to deliver. But having said this, there is this CPI linker portfolio that we have. So this, around 16%; with CPI linker, around 11%. But there is this possibility of inflation being higher than this 11%. So there's this upside actually on the ROE side. NIM, we said 3.5%. Nowadays, we are operating around 3.8%. In the third quarter, there will be a reduction in our NIM because of the cost of funding increase in the bank. But as Ebru mentioned before, we have one of the minimum actually maturity mismatches in the system, which is down to 3 months now. So I think we will be able to adjust to that more quickly than probably anybody else in the system. So if cost of funding stays where it is for the time being, starting from the fourth quarter, we -- I think we can recover again starting, I mean, a little bit lower in the third quarter and the fourth quarter, again, we can pick up again. But for the full year, our guidance was 3.5%. I think still, there's an upside for this, especially taking into consideration the CPI linkers. Even without the CPI linkers, I think we will be able to have -- for the full year, we'll have a better NIM, swap-adjusted NIM even without -- even if we assume that inflation is around 11%. As you said, we are doing very well actually on the fee side, commission side. As Ebru mentioned, we are diversifying our fee base. So even in those areas where we don't take risk actually, still, we have the capability of generating fees. So I'm very comfortable that our guidance was 15%. So until now, we are around 22%. So our goal is to keep the bank around this range. OpEx, this is the only area we are deviating. At the beginning of the year, we said 13%. Nowadays, it is around 17.7%. But as, again, my colleagues mentioned, this 17.7%, there are 2 factors. One factor is the low base coming from the previous year and also the amount of inflation and also the currency. So that also has some impact on the OpEx growth. So I think we will have a difficulty in reaching this 13%, so we will be slightly higher than that, maybe 14%, 15%. So it will be less than what we have today, but it will be higher than our guidance. Cost-to-income ratio, 35%. That was the guidance. So yes, around 32.5%. So the idea is to keep the bank around this range. So we will beat our -- actually, guidance. Cost asset, more or less the same. Capital adequacy ratio, it will be in line with the guidance. And they are, as you know, this is a very strong side of Akbank. And I think this is one of the reasons where we were able to actually improve our NIM in an increasing interest rate environment because we did not have to compete as vigorously probably like the rest of the system. Maturity mismatch management as well as LDR management is giving us a competitive advantage, actually. So we will keep the bank around -- below 105%. NPL. NPL, we said 2.1%. It is now 2.6%, so I think we will continue to operate around the existing levels. So we will be slightly higher than our NPL guidance. Cost of risk -- net specific cost of risk, we said 50 basis as the guidance. The bank is around 74 basis. So I think we will end up the year around 70 basis. But I think it is, nowadays, especially after IFRS 9, I think it is more important to talk about total cost of risk. We are around -- as you said, around TRY 180 million nowadays, and this figure will probably drop down to around TRY 140 million. But as I said before, some portion of that is related to FX volatility. But on that front, the bank is hedging itself. So I think we should deduct roughly 20 basis, while we are actually transferring this ratio into P&L calculations.
So EPS growth, we said 12%. Until now, it is 9%. But I think we will do better in the second half of this year, and there is a risk, it's the base effect, because 2017 first quarter, second quarter, Akbank did very well. Third quarter, fourth quarter, we did relatively okay. But the first 2 quarters were very strong for Akbank. So when you look at the full year, I think still, we will be able to come up with a double-digit EPS growth.
Lending, we said 13% to 15% growth. We may end up with low teens, maybe 1 or 2 percentage, maybe lower than our initial estimate. But as you are probably -- actually, you are following us very closely, we are trying to manage the bank as prudent as possible, maybe in terms of asset side and so on and maybe smaller than what we had initially planned but in a more profitable, margin-wise, higher-margin way. So therefore, we more than compensate actually what we are losing on the growth side. So this is, I think, something very positive, a very prudent management. A lot of provisioning, but still coming up with some very good results. That is the strategy behind our management.
[Operator Instructions] Our next question is from Yulia di Mambro, Federated Investors.
I have a couple of questions, please. Just to follow up on your asset quality. To clarify on this new loan that was classified as Stage 3, did you classify it as Stage 2 before or was it Stage 1? What sort of level of provision coverage does that loan now have? And on the conglomerate exposure that you classified as Stage 2 at the last reporting period, have you made any changes to that classification? Have you made any additional provisions for that? That's on asset quality. And then just on capital, if I look at Slide 12, you show that impact of low RWAs was a 64 basis point benefit for your capital ratio in Q2. Could you please explain where that came from?
This is Türker. Actually, with regard to that specific loan in Stage 3, actually, we cannot exactly give the coverage of that loan. But please keep in mind, it has a very strong [ collateralization ] as according to that, we have provided adequate provisioning for that loan. And secondly, with regards to RWAs, in the second quarter of the year, we did -- our loan book didn't grow, especially on FX side. So because of that composition change, we had that positive effect under RWA.
And you had another question about the specific loan. That was under Stage 2, actually. So it's not -- which happened all of a sudden so...
Yes.
We were -- that was already classified under Stage 2. Now it is in Stage 3.
And the other loan that you classified as Stage 2 in Q1, is that still Stage 2 or has that been reclassified as well?
Which other loan? The one specific one that we put into Stage 2 in the first quarter? Are you talking about the specific group. The...
Yes. So aside from the energy exposure, the other exposure.
OTAS? Are you talking about -- OTAS is still in Stage 2. And then the other one that we classified, are you talking about the yielded one?
Yes.
That's still OTAS and the telecom. And the other loans are still under Stage 2.
Our next question is from Hadrien De Belle, KBW.
I just have a quick question. Could you give us a number for -- [ to goes to ] increase in funding cost at Akbank? So how much you would have paid for deposit at the beginning of the year, where is it now, and where do you think it's going to end in the next couple of months? That would be my question.
Actually, at the end of the first quarter, the average deposit cost was at around 13%. Towards the end of the second [ quarter, actually ] on the portfolio, deposit costs here -- time deposit cost has reached 15% levels. Nowadays, we still see some increase there, so it's around 15.7% levels on portfolio level. On FX side, it was a bit more muted. So at the end of the second quarter, it was at 2.9% levels. And nowadays, again, our FX deposit cost stands at 2.9% levels.
Okay, so flattish forward. Good, perfect.
Yes, that's right.
[ Wait, no, hang on. ] Would you expect that from the given 15.7% that it goes up more given where the market price or bond and so on are?
I think it will stabilize more or less where we are. Maybe -- another maybe slight increase, but nothing significant, I would imagine, because the lending growth is also -- is not as huge as before. So therefore, hopefully there will be hopefully less competition for deposit taking. And also, what is good news, I think this is something that you should know. Since the beginning of the year, because of the high interest rate environment in the local currency, local currency deposits grew almost like 10%, where FX deposits, actually, there was a decrease around 3%. 3% decrease in the FX deposits, 10% increase in the TL deposit. So I think a good indication of recovery in terms of local currency, confidence for the local currency, because the real interest rates are actually very high. So therefore, I think we will probably stabilize where we are, maybe slightly higher than what we have today, but not a huge increase. At least unless there's any other change in the global markets and so on.
Our next question is from [indiscernible], JPMorgan.
Just going back to Slide 12 on capital. If you could revisit the logic for the impact on lower RWA, please. Because if I look at your consolidated accounts, something that [indiscernible] terms has gone up from TRY 298 billion to TRY 305 billion. So I'm just wondering where the positive impact of 64 basis points come from?
Since our FX book has not grown actually, the average RWA weighting of our loan book itself has gone down. That's actually the reason of that positive RWA effect.
[Operator Instructions]
All right. Are there any more questions from the line or we can take the web questions now because there are many web questions?
We have no audio questions at this moment. We can switch to written Q&A.
Okay. So the first question comes in and asking us, have you considered buying back any of your Tier 2 eurobonds given the currency prices?
I mean, this is a possibility. But honestly, we haven't really considered that, so it's not the case for the time being. But off case, of course, this is an option looking forward.
Okay. Can you provide an overview of how much of your wholesale funding is maturing this year and your wholesale funding needs given that you are pulling growth? What is the average cost of wholesale funding?
I think on the wholesale funding side, I think we did a very good job over the last couple of years. Not something recent, but which we have been working on for the last 2, 3 years, so we extended the maturities significantly. So I don't think there is something significant coming in the near term. We have the syndication actually in September, which is around...
900 million.
900 million.
940 million.
USD 940 million, so we started working on this. So everything really goes as planned on that respect. But other than this, when you look at the maturities, I think it's a very long-term portfolio. What else?
Can you clarify more on what happens to NPL [ formalization ] and how much was OTAS? OTAS was not in the NPL.
OTAS. OTAS is under Stage 2. OTAS is not an NPL. And we increased our provisioning in OTAS this quarter from 25% to 30%, but it is under Stage 2. So we are working on a solution actually. We have been working on a solution with the government just prior to the elections. So after the elections, I think we will continue with the possible solution along with the other banks.
Another question, still with NPL. Could you communicate on the amount sold in the first half, at which discount?
Okay. Actually, our NPL sale was in the first quarter of this year. The sales price was TRY 36 million for a nominal amount of TRY 770 million. So purchase price was at around 4.7%.
Are you going to make any adjustments to -- in third quarter regarding your CPI linker income? In third quarter?
I mean, that is not the intention for the time being, but we are following the, of course, inflation numbers very closely. At the end of October actually, for the full year, we will come up with the final number anyhow. So probably, we will do that in the fourth quarter, I would imagine.
I guess that's -- those are all the questions.
That's it?
Yes.
Is there a chance that OTAS will be classified as an NPL, given you are still closing the assets pool? I mean...
We are working on a solution, as I said before, with the other banks and with the government. So if we take over this company for a while, for a temporary period of time, of course, the intention is still to have this ownership change, and then sell the company. If that is the case, theoretically, yes. And we have to renew that loan from Stage 2 to NPL. But what I would like to -- of course, we will do a valuation, but our expectation is that moving from Stage 2 to Stage 3, P&L impact would be either 0 or minimal, I would imagine. At least, this is the plan as of today.
There's a question regarding the effective pricing of the syndicated loan in September, but I guess it's too early to indicate on that. Yes, it's too early to...
We are working on it. But I think we will come up with favorable, I think, rates. And I think there's no issue at all regarding the -- regarding syndication. So the demand is there, that I can tell for the time being. And what else?
That's, I guess, it for the time being.
Okay, then can we close the meeting now?
Yes, I guess so.
Maybe a few closing remarks then. Akbank's stable and sustainable performance will continue, that I can assure. Our people actually play an instrumental role in this important achievement. I am always, as you know, very proud of my people and remain our key most important asset. And I also would like to thank and take this opportunity to extend my deep gratitude to our customers and shareholders, our investor base for the trust you place in us. And thank you all for joining us today, and have a good evening. So hopefully, see you next time.
Bye-bye.
Ladies and gentlemen, this concludes our conference call. Thank you for your participating. You may now disconnect.