Turkiye Garanti Bankasi AS
IST:GARAN.E
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Turkiye Garanti Bankasi AS
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Welcome to Garanti Bank's First Quarter 2019 Financial Results Webcast and Conference Call. Our presenters today are Mr. Fuat Erbil, our President and CEO; Mr. Aydin Güler, our CFO; and Mrs. Handan Saygin, Head of Investor Relations. [Operator Instructions]
The presentation will now start. I leave the floor to our presenters.
Hello. Welcome, everyone. We're very happy to announce once again a strong start to the year. A net income performance of TRY 1.9 billion, excluding the pre-provision, represents only a single-digit drop in earnings year-on-year. Despite the significantly more challenging economic environment we're in versus the same quarter last year, the first quarter net income result of TRY 1.8 billion represents a strong 63% quarterly growth. This is backed by simply keeping the jaws open via improved loan-to-deposit spreads, increased fee income, lower net provisions, derivative and FX gains and higher contributions from subsidiaries.
In terms of pre-provision income, the growth registered was a hefty 33% year-on-year and slightly better on a quarterly basis to TRY 5.6 billion. Now even though the income from CPI-linkers were TRY 2.5 billion lower Q-on-Q, notice the income booked from CPI-linkers in the bottom left-hand corner, we continue to increase our pre-provision income for the third consecutive quarter.
During the quarter, given the continuing uncertainties in the macro environment, we had deliberated to set aside a further TRY 100 million of free provisions. And this brought our total free provision in the balance sheet to TRY 2.35 billion. We finished the quarter with a consolidated capital adequacy ratio a strong 15.5%, a return on average equity of 16% and a return on average assets of 1.8%. Now this strong start to the year, especially in terms of growth, asset quality, spread and fees, definitely create cushion to comfortably meet our full year guidance.
Now let's start with growth on Slide 4. In total loans, we booked a year-to-date growth of 6%. Thanks to the positive surprise of the reintroduced Credit Guarantee Fund lending, we could kick off the year with better-than-predicted lending growth in Turkish revenues loans. We could grow our Turkish lira business loans by 13% in 1 quarter, and almost half of the contribution to this growth was from short-term, meaning, 1 to 3 months maturity, Turkish lira corporate loans for their working capital needs and the other half from Credit Guarantee Fund lending.
On the consumer side, the expected shrinkage got realized at 4% as new originations, given the low demand, higher rates, were not sufficient to compensate the flow of maturing book.
In foreign currency loans, due to disbursement from existing commitment, we could maintain the book flat during the quarter despite redeeming foreign currency loan portfolio. We expect roughly a low double-digit shrinkage in foreign currency lending, as you know, by year end.
So now moving on to the funding side on Slide 5. Our assets continues to be predominantly funded with deposits. 65% of the assets are funded with customer and bank deposits as well as deposits, like merchants payables. You can see on the chart on the left -- top left-hand side -- sorry, right.
Top left, 2 bars. The bar on the right-hand side.
Okay. In Turkish lira deposits, due to dropping deposit rates and heavy dollarization, there was 1% shrinkage in the quarter, whereas in foreign currency deposits, we could grow 6%.
Even though the total loan-to-deposit ratio improved further down to 98%, there was temporary deterioration in Turkish lira loan to Turkish lira deposits. However, when you adjust it with Turkish lira bonds, where we could see 62% growth in the quarter, the ratio was quite a manageable 127%. And very much eye-catching in deposits has been the outstanding share of demand deposits in total. Demand deposits share reached 29% in the quarter as Garanti versus sector's average of 21%, bringing also our free funds to interest earning assets ratio to 19.5%, a level that is significantly, I mean, well above the sector's average and contributing clearly to Garanti's well differentiated and outstanding margin performance.
Now a very quick look at the other liquidity indicators, especially the most inquired external debt stock on Slide 6. As you can see here, we have a total external debt stock of $12.4 billion. About 16% of assets are funded with these foreign borrowings. This amount, $5.4 billion is due within the next 12 months. And against these dues, we have a quick liquidity buffer of $11.4 billion. Since we have been exhibiting continuing shrinkage in foreign currency lendings since year 2013, the dependency to external borrowings has lessened. And as guided in the beginning of the year, we expect further drop in these external borrowings.
Now moving on now to asset quality issues, let's start with the loan staging on Slide 7. The share of Stage 2 in total loans remains flattish Q-on-Q at 14.5%. Now despite the level being flat, we continue to prudently increase the coverage of Stage 2 from 10.4% to 11.2%.
On this slide, I would like to reiterate once again that the level of staging is not comparable among banks. At per IFRS 9, there can be differentiation and quantitative assessment criteria, meaning each bank's definition of SICR, meaning significant increase in credit risk, may differ.
And secondly, there can be an approach difference in individual loan assessments, namely in the qualitatively assessed portion, that has a net past due risk factors and watch list file.
On the next slide, Slide 8, you can see the breakdown of Stage 2. Our prudent approach in staging remains. About 35% of Stage 2 relates to SICR where 80% of the files are not delinquent at all and the rest being less than 30 days past due. Now our 5 quarters of our first 9 data suggest that so far there has been almost no rollover to NPL from this bucket of Stage 2.
The qualitatively assessed 65% hold in it all the restructured and refinanced loans that we keep and follow under Stage 2 for a minimum 2 years or for lifetime of proactively and prudently assessed watch list and the past due loans. The past due portion of Stage 2 is actually only 9% of Stage 2 currently. And typically, the NPL inflows come from this bucket.
And looking at our scores for the qualitatively assessed portion of Stage 2, you can see on the bottom left-hand corner at 15.5%, it is about quadruple that of the quantitatively assessed one, which is 3.9%. So 15.5% versus the 3.9%, blended at 11.5%.
Maybe to note that this slide is only for bank-only numbers. The previous one, TRY 40 billion, which was consolidated, this is the unconsolidated total of Stage 2.
Yes. Thank you for pointing that. Now moving on to NPLs and the cost of risk on Slide 9. Net NPL inflows, as you can see, were almost half of that of the prior quarters, TRY 1 billion versus TRY 2 billion in the prior quarters. This led to lower net provisions despite a prudent increase in the Stage 2 coverage.
Net cost of risk, including currency impact and the macro revisions recorded, was 245 basis points. 44 basis points of this relates to currency impact and has no bottom line effects due to the full hedging done for foreign currency book. The reported net cost of risk also includes a 25 basis points macro parameter impact. If current trends continue like this, it is actually possible that we can beat our full year cost of risk guidance of less than 300 basis points.
Let's now look at the spread evolution and the impact on NIM on Slide 10. At the bottom half of the slide, you can see the multi-spread evolution for both Turkish lira and foreign currency loans that have been expanding since we have seen the bottom in October 2018. Mainly due to the rapid drop in funding cost since then, spread expansion was more visible than our anticipation in the first quarter. Accordingly, we could record a V-shaped recovery in first quarter 2019 in quarterly core margins. On a cumulative basis, we could increase our core NIM by 38 basis points to 3.9%, which is lower level our flat core NIM guidance for the whole year.
On a reported basis, cumulative NIM dropped inevitably due to lower CPI rating using the portfolio cap valuation, which was 13.7% for the first quarter versus 25.2% in 2018. Now during the year, down the road, we may revise our CPI estimate for inflation trends. For instance, currently for April, we're using 13% inflation estimates in our CPI portfolio income calculation.
Now let's look at the performance in net fees and commissions and OpEx on Slide 11. We could comfortably grow the net fees and commissions by 21% in the first quarter, bringing the quarterly fee generation to a new record level of TRY 1.5 billion lira.
One big contributor to this was the growth of 39% in payment system fees. As you can see on the pie chart, payment systems make up more than 50% of the fees. Mainly the interchange fees, which is a function of the prevailing interest rates, currently they're about 50% higher versus the same period last year. And another big contributor to fee growth has been, as usual, the money transfer fees, which clearly reflects our strength in relationship banking and digitalization.
We have 7.5 million digital active customers and more importantly, about 70% are mobile only. Digital channel share in noncredit link fees reached 46% and digital sales share in total reached 64%. Our high base of fees now cover 62% of our operating expenses. In the first quarter, the operating expense growth recorded was limited to 18%. So we kept the jaws open, as you can see. Even though the wage increase was above CPI, all efficiency gains resulted in below CPI annual growth.
Now wrapping up our results with solvency on Slide 12. Our solvency remains solid with a capital adequacy ratio of 15.5% and a core Tier 1 ratio of 13.3%. These levels are well above the regulatory requirements. As of the first quarter end, on a consolidated basis, we have TRY 11 billion excess capital when taken into account minimum required level of 12.5%. Total provisions we have so far set aside from balance sheet an amount of TRY 2.35 billion, actually suppressed the capital adequacy ratio by about 70 basis points. Without them, our capital adequacy ratio would have been 16.2%.
If you look at the cap chart below, you can see the components leading to the current capital adequacy ratio. As always, we see meaningful contribution from net income. The eye-catching contributor this quarter has been the increasing operational risk and market and credit risk. Operational risk is a function of previous 3-years revenue, so the negative figure we have there is no surprise. Regarding market and credit risk, it's mainly due to increasing domestic money market placement that receive 100% risk weighting as well as high growth in short-term corporate loans that I have mentioned earlier.
Now this concludes our presentation. Thank you for listening. We shall now take your questions.
[Operator Instructions] We are taking the first question from Deniz Gasimli, Goldman Sachs.
I have 2 questions from my side. One, regarding the spread evolution. During the quarter, we saw positive spread improvement due to an increase in the -- an improvement in funding costs. But I just wanted to ask, given the ongoing dollarization in the sector that we've been seeing so far year-to-date and also, there were some news report about banks raising deposit costs, do you -- just wanted to get your comments on whether deposit costs are going to -- on a Turkish lira side are going to increase in future quarters. Which -- in which case, will there be further margin pressure, if there will be any kind of margin pressure because of higher deposit costs.
And my second question was on loan growth. I mean this quarter, Turkish lira loans are up 6% since the -- I mean, since start of the year. Your full year guidance is 5% Turkish lira growth for the year. I mean this quarter was supported by the Credit Guarantee Fund. But I wanted to get your outlook for the rest of the year in terms of loan growth and what will drive it given that first quarter was this strong.
And just last question, I'm not sure if you went -- if you've discussed this and I missed it. But in the -- in your, I mean, in this quarter's income, there's a reversal in provisions of around TRY 1.6 billion. So if you could give any color on that.
Thanks for your questions. Let me start with the Turkish lira spread. As you can remember from the slide, the cost of funding year-end was around 17.7% and it dropped to 15.8%, including the demand deposit costs. So what we're expecting, and as you can see from the landing, I think it stabilizes around -- between 22.5% to 23%.
So what we're expecting in the second quarter relatively -- but relatively speaking, I believe that the credit -- so we have a very strong spread evolution in the first quarter, much better than expected. So based on that high figure, we might have a relatively challenging quarter in the second quarter. Might be relatively difficult to maintain our Turkish lira spreads. But frankly speaking, how much we're going to lose on that 6.9%, I believe it's going to be limited. So I cannot give you an indication, but it will definitely much higher than the year-end, which was 5.1%. It won't be 7% or 6.9% for sure, but most likely, we will be fluctuating between those 2 numbers.
So roughly speaking, you can take the expectation, which is not a real calculator because we don't know how the rates evolution in the coming days. But we already finished the first month, that's why I'm relatively speaking comfortably. So let's suppose around 6% average spread for the second quarter. And I believe the year's most difficult quarter will be this quarter, which means second quarter in that regard, the reason being, yes, cost of funding will slightly increase.
And just to give you the exact numbers, the lowest that we have seen in the time deposits only cost of funding was 19.7%, excluding demand deposits. As of now end of the month, almost 29th, it is 20.26%. So yes, there is slight deterioration, but I believe it's manageable in 2 regards:
One, we believe we're going to manage the cost. On the other side, of course, there will be repricing going on in terms of loan book. But to make it short, I believe less spreads you will see for the second quarter, but much better than expected for the whole year. That will be my answer to your first question.
The second question, yes, the first quarter was a fast one in terms of Turkish lira loan growth. And yes, there is KGF contribution, which is one time. Currently, we don't have anything upcoming as far as that we know in the pipeline. There were 2 tranches, as you know. So that made the Turkish lira banking, business banking loan growth 13%. And that will result in 5% quarterly growth. So I don't think this can be generalized for the whole year. But I can assure you that the yearly guidance, that 5%, looks too conservative.
So that's I can share with you. It's too early to make any further comments. Again, in the coming days, if there is a need for the revision, we definitely come up with the revision. But it looks like there need to be a revision needed in the loan growth, especially Turkish lira side.
In the foreign currency, as you know, the -- we kept it flattish. But I believe it's seasonal, and there are going to be some redemptions in the coming quarters, including this quarter. So as Handan stated, we're expecting single digit, saying -- let's say, I mean, they're saying around 10%. But let's say high single-digit shrinkage in the foreign currency loans going forward for the year-end.
Regarding the latter portion -- part of your question, reversal of the provision. We have not -- including -- we set aside not -- we just reversed, we just set aside extra TRY 100 million free provisions this quarter, which may total TRY 2.350 billion accumulated free provisions. So there is no reversal. There is one reversal in the other income, but I believe it is fully matched with the -- which part of our P&L?
[indiscernible]
So say please, share it?
Deniz, this is Handan. Provision reversals and provisions are both inflated, actually due to accounting. So you should look at the net provision.
So in net terms, the one that you see as reversal is fully offsetted by setting aside exact same amount provisions. Clear, Deniz?
We are taking the next question from Alan Webborn Societe Generale.
How exceptional do you think the first quarter performance was, both on the TL deposits and on the FX side? Clearly, there was a big push into dollars before the election. Do you see that trend now reversing? And how sharp do you think that reversal is going to be? Can you sort of just give us an idea of what you felt the dynamics were across Q1? And how they'll now sort of play out? Because clearly, the negative view of Turkey now is ongoing dollarization. But was this more of a function of pre-election caution? And do you think that potentially is now changing? Are you seeing any of that in your flows? That would be interesting.
Other than that, clearly, another good performance in fees. Do you think that there are -- is there more potential there? How do you feel in terms of budget for fees for the full year? That would be a second view.
And thirdly, in terms of your sort of NPL targets. I mean how do you think that is performing? In line with expectations or better?
Thanks for your questions. Very straightforward. The dollarization turned to dedollarization in April, early days in April, started to happening. So we don't see any further dollarization after the quarter end. So the existing levels, the households started to sell, so sell dollars, buy Turkish lira. So I believe this will continue with an increasing speed in the coming weeks as well. So far in the last 3, 4 weeks, we did see dedollarization in the system other than dollarization. So -- but how fast it's going to be, we will see in the coming days. But we can comfortably say that the dedollarization started already after the election.
In terms of fees, there is -- we need to highlight one thing: There is no one-off. So it is very high-quality fee performance and generation. As always, very diversified coming from many sources. Of course, payment systems contribution has been the highest, has always been. But still, the rest of the contributor doing the same performance.
Again, as Handan stated in her presentation, although we guided to you in terms of the growth for the fees and commissions, low teens, and this will take us a need for the revision in the coming months and maybe quarters. But so far, the trend, including this month, including April, around this level. And considering the economic activity, relatively less in this phase of the year seasonality-wise and the rebalancing-wise. And hopefully, we will continue to deliver around this fee performance with the same quality and sustainability.
And finally, NPL, I mean, as we have been guiding you starting from this year, the NPL contributors mainly coming from the small tickets, retail portfolios and the external portfolios, much more fragmented loans: 65%, if not more, coming from these portfolios as expected. Remember, we've been telling you, sharing with you last year was a year of the more corporates restructuring and corporate asset quality issues. And thank God, so far this year, year-to-date, we don't have any instances that we can share with you other than the plan and the budget provisions coming from the big tickets. But in line with the unemployment, in line with the slowing down in economy, those small portfolios comes with a lag, so it's happening. But the figure in terms of inflows again, in line, if not better than expected to our guidance as well as to our budget. This is for not only NPL formation, but also collections and including provisions.
So as again, Handan, stated, we have a guidance of 300 bps. So did almost 200, if not slightly less. So this is consolidated figure even now, so it's less. No? Slightly higher -- but around 200 bps.
So overall, so far so good. And what we can guide you with limited days of the second quarter, same trends is in place in the April as well in terms of asset quality issues in general, including NPL, loans, collections and provision.
We are taking the next question from Mehmet Sevim, JPMorgan.
Congratulations on the strong results. My first question on -- is on the headlines from last week, that certain international institutions are looking to buy restructured loans from Turkish banks, especially those higher-quality ones. I appreciate you can't say much. But I'd be curious to hear your thoughts on the headlines. And would you like -- would you be willing to offload some of those higher-quality restructured loans, especially because these make up the smaller portion of your Stage 2 exposure?
And my second question is can you please clarify whether you have to take a mark-to-market adjustment to the value of your Otas exposure during the quarter just like your other private peer did?
Thanks, Mehmet, for your questions. Regarding the headline news, I mean, it has been not specifically from those mentioned institution. I mean there -- we've been receiving some inquiries, some information requests from different funds and banks and investors related with some specific assets. But from this point, I cannot share anything concrete. But very frankly speaking, as has been shared with you, especially the energy fund and the related structure under construction in progress. So I would say that it is more likely scenario for Turkish banks put aside, if any, energy-related stressed assets in that fund. And the structure will be backed by, if needed and if they have any interest, backed by some international investors joining that fund structure. So, so far, that's the only concrete thing I can share with you. Other than that, I believe nothing concrete yet. But there is an ongoing, again, activity related with some stressed assets, so-called stressed assets.
In terms of order book, as you know, the loan became a financial asset. It's called...
Measured at fair value.
It's called. I never can...
Investment assets measured at fair value.
Yes. I always forget. Financial asset, it's a unique financial asset measured at fair value type of asset, as you know. And this asset has been frequently valuated by an independent third party.
As of now, I can very clearly can state that whatever the required provision, if needed, it has been set aside already regarding the Otas loan. And one thing maybe, there is one other good bank, as you know, you can chase. So we set aside a little bit more extra provisions last year to be on the safe side or to be more conservative. So we set aside some extra needed to offset the required level of the valuation.
So -- but overall, as of today, as of the quarter end, we set aside all required provision, which has been related with the values stated by the third party as well as the accrued interest on the business loan-type asset. So valuation, whatever the valuation dictates, we have set aside the required provisions already fully. And also, the interest accrued has already occurred.
Accrued.
Has already fully provisioned. Hopefully, this explains your questions, Mehmet.
The P&L impact for the last quarter has been $20 million. And we set this aside under other provisions you may see, along with that extra TRY 100 million free provisions, but it's not -- it doesn't relate to this loan. So there's TRY 20 million -- $20 million, roughly TRY 107 million.
Just for this quarter.
Just speaking for this quarter. So the P&L impact of this specific loan this quarter has only been $20 million.
Excluding the interest.
Yes.
We are taking the next question from Gabor Kemeny, Autonomous.
I have a few quick questions. First one on capital. How do you think about capital build for the rest of the year? You flagged a few peculiar movements, I think, in the first quarter, which included this -- the one related to the money market placements. Are there any unusual capital movements we should be aware of, especially given the lira volatility we've seen lately?
And secondly, if we put together your guidance in terms of the lira funding and the lira loan movements, do you expect your loan-to-deposit ratio to start coming down from the current level, which is around 150%? And do you have any preference of where you would want to get in terms of lira funding balance from here?
Related with the capital, we are very confident with our capital buffers, first of all. I have to mention it. And there is a very good contribution coming up from the net income generation. We believe this will continue. Although the year-to-date depreciation in the currencies is, I believe, 11% or something like that. So that's also included in this figure, most of it in that figure. And as you know, Turkish banks, in general, every bank, has been carrying some mismatches in the balance sheet that has been -- that should have to be managed. And you'll find it peculiar, but I find it very natural, I should say. But things are fully in line with our expectations, and we're not expecting any surprises on the capital side going forward.
And regarding loan-to-deposit ratio, as of now -- as of today, total loan-to-deposit ratio is 98%. Even today, it's 98%. So that is the loan-to-deposit ratio as of now. I believe you mentioned the Turkish lira, but it is mainly because of the deposit trends in the system for the first quarter. We're expecting the reversal of that in the coming days and the weeks. It's already happening. So I can comfortably say that, that 149% improved already in the last 4 weeks. It jumped dramatically in a positive way in Turkish lira only. And we believe this will continue around this level. So overall, in terms of the guidance for the whole year, total loan-to-deposit ratio should fluctuate around 100%, and Turkish lira loan-to-deposit ratio will drop in line with the dedollarization in the system.
We are taking the next question from Mariya Gancheva, HSBC.
It's been long, long time, so I've been catching up. Can I just understand a little bit. You mentioned this quarter included the Credit Guarantee Fund, but then it's not. Can you just elaborate a little bit on this because I'm not sure I'm understanding it. And then I have a few more questions after.
Mariya, to make it clear, does this slide help you in terms of the contribution of KGF loans to the total loans in Turkish lira? As you can see here, 21% percent of Turkish business lending comes from this KGF fund, and the total origination in Q1 is TRY 7 billion. The current stock is close to TRY 20 billion. so net increase year-end versus the first quarter end should be around TRY 5 billion because there are some reduction from the previous tranches.
Previous tranches. Yes. So yes, I got it now. Could I just ask, going a little bit deeper on the capital -- on the total capital. Do you have any sensitivity to the Turkish lira depreciation? You used to publish this before. Just to have an idea of the current capital structure and how it affects now the capital adequacy ratio, please.
I mean still, yes, that's still the case. 10% depreciation, 55 bps negative impact.
Sorry. Could you repeat that? Could you repeat that because the lines...
10% depreciation or appreciation results in 55% -- probably 55 bps positive or negative on the capital ratios.
On the capital. And that's on total capital.
Yes. Sorry, that's on the CAR ratio. Yes. Yes.
On the CAR. Okay.
We are taking the next question from Ovunc Gursoy, TEB.
And congratulations for the results. I wonder about the loan demand currently, apart from the CGF thing. How do you evaluate the demand for business loans and consumer loans? And shall we assume more hike in loan rates going forward? I mean we see that the deposit costs are coming up. But as you know, there is pressure from governments that -- to keep loan growth high. How do you see it?
In terms of loan demand, yes, there was a boost from KGF, especially for the first quarter. But again, for the Turkish lira business loans, still, we are lacking some appetite for the new investments. So the demand is coming for just to finance the company's small or large companies working capital needs. So that's the sole demand as of now in the coming days. Hopefully, with the economic activity, that will increase in the coming months, and I believe it will be happening starting from the second half.
In terms of retail, I believe we are so far doing okay in line with our expectations in the cards. I believe we are doing good enough in the cards business, credit cards business.
There is some activity in unsecured retail lending, we call it GPL, that started to increase versus early days of the year or the last quarter of the year. That as well as for the housing and as well as cars. But the demand for the cars and the houses is still limited and very below our normal averages. So still, we are seeing -- and I think Garanti is one of the most negatively affected bank in that regard since we do have a large mortgage portfolio and the car loan portfolio, the newcomers, the new redemptions are not enough to offset the upcoming demand. So we're expecting overall the consumer book will continue for some time, will continue to shrink just because of these 2 products. And GPL are, I believe, will be maintaining and it will increase as well as credit cards. And overall loan demand, a related question is this.
And regarding the prices, of course, I mean, there will be some adjustment to the loan prices. It's already happening. And considering our Turkish lira balance sheet gap is around 3 months, 90 days. So it will come slightly with a lack. But for the new loans, we are going to reprice if the cost of funding increases accordingly. So this is it, Ovunc.
We are taking the next question from Yulia Di Mambro, Federated Investors.
I have a question regarding your exposure to the Central Bank of Turkey. If I look at your footnotes, you disclosed about $2.6 billion of exposure to the Central Bank, which is held as unrestricted demand deposits. Is that how you account for ROM reserves? Or is that something else? And how much are you getting paid on those deposits? And in addition to this voluntary exposure to the Central Bank and FX, do you have any right-way swaps with the Central Bank as well? And how has that changed in Q1 relative to the end of the year.
The figure that you have seen in the footnotes, Yulia, is not the ROM amounts, so -- which is the depo placement to the Central Bank. So that's one thing. And regarding for the swaps, I mean, we have always been in the swap, always, I mean, not specifically for this quarter. We are totally opportunistic where we find we have the availability and the cost of funding, with better costs, so we just place it accordingly.
So there is nothing I can share with you in terms of this much with this counterparty, this much for the -- this counterparty. I don't have specific information, and I cannot disclose. But I can state that the total swap will decrease so far, which I can state, number one. Number two, again, the counterparties need to -- we need to manage on terms of the availability as well as costs. That has been our approach for many years, and it will be like that going forward.
Just to clarify on the unrestricted deposits. So you said they're not ROM, so it's something else. Would you be able to share with us how much you're getting paid on these deposits? And given the trends towards dedollarization that you expect going forward, how would you think about those deposits? Would you unwind them more? Would you keep them there?
I mean these are pure bank deposits. That is the extra liquidity that we place with our counterparties. Always, one of our counterparties, largest counterparties always the Central Bank. But there are many other international banks, which are our correspondent banks that depo our extra liquidity. So that figure that you have seen has always been around those figures in the recent years. If not, there might be some fluctuations.
So this is not related at all any dollarization. So there's no correlation with the dollarization or dedollarization in the system. We are separately following our foreign currency liquidity, and we're also sharing with you in our meetings, our wholesale fund that is more related, our foreign currency liquidity that we keep or set aside. And whomever the counterparty is, we will placing those extra liquidity. So this is not correlated at all or related at all with the systems deposit trends.
There are no more questions, and this concludes the end of our Q&A session. I leave the floor to our presenters for closing remarks.
Thank you. Thank you, all, again, once again. I believe on behalf of all Garanti team, this is another very strong quarter. I believe most of the parties were not expecting that. But I believe the contribution coming from not only single one element, but it is very diversified, like growth, like asset quality, like spread and the fees. And I believe in a very difficult year and in a -- that difficult year, the most difficult quarter, Garanti managed to deliver, I think, very good and very straightforward and sustainable sets of results. And we are, as always, as a whole team, very confident and comfortable. And we are very grateful for your confidence and support to Garanti and to us.
So once again, we all wish you a pleasant evening. So the mission is rolling and will continue to roll. Thank you so much.
Thank you all for participating in Garanti Bank's First Quarter 2019 Financial Results Webcast and Conference Call. You may disconnect now.