Turkiye Garanti Bankasi AS

IST:GARAN.E

Earnings Call Transcript 2021-Q3

[Operator]

Hello, everyone. Welcome to Garanti BBVA's Third Quarter 2021 Financial Results Webcast. As always, we will have a Q&A session at the end of the presentation. [Operator Instructions] Our presenters will be our CEO, Recep Bastug; our CFO, Mr. Aydin Guler, and a Director of Investor Relations, Ms. Handan Saygin. And now I leave the floor to our presenters.

[Handan Saygin, executive]

Welcome, everyone. Thank you all for being with us at our third quarter earnings conference call. We are once again very pleased and honored to be able to present another set of outstanding results.

But before presenting our results, let us start as usual with a brief on the backdrop. 2021 has so far been a strong growth year such as we'll likely end at double the pace we had anticipated in the beginning of the year. GDP growth realized in the first half alone was 14.3%, and we could not see meaningful signs of deceleration in the third quarter.

Our big data proxy suggests that domestic demand keeps growing on consumption, whereas investment stays relatively weaker. With this higher momentum, we would not be surprise this 2021 GDP growth ends up to be double digit. Higher domestic consumption-driven GDP growth though naturally accompanied with it higher inflationary pressures on top of the already pressuring cost push factors, where we now expect some downside risks to our earlier year-end CPI projection.

Continuing with further macro indicated on this page, we expect exports to remain supportive given the recovering export demand and tourism revenues. Imports, on the other hand, still surprised on the upside. And most recent reading and current account deficit in August was a manageable 3%.

Regarding the budget deficit to GDP, September realization was 1.5%, thanks to the strong tax revenues versus controlled expenditures. They remain very supportive and likely will continue to differentiate Turkey as one of the 2 countries meeting the Maastricht criteria.

Now let's move on to the announcement of our new record high profits in the quarter. Our quarterly earnings increase was 26% on top of the earlier records. We ended with TRY 3.6 billion in the third quarter after setting aside a further TRY 1 billion in pre-provisions. Our remarkable performance as of the first 9 months of 2021 points to an earnings increase of a remarkable 73% year-on-year to 9.1% -- TRY 9.1 billion, sorry.

So in net income is a net result of improving fundamental revenues, normalizing need for provisioning and contained operating expenses. The need for further loan loss provisions has come down due to the fact that we have already preemptively accumulated significant provisioning earlier. On top of this, what we are experiencing is a muted flow of new NPLs versus continuing strong collections. Nevertheless, we remain cautious and strengthened further our provisions on balance sheet with TRY 1 billion addition to free provisions. This carried our total pre-provisions on balance sheet to TRY 6.6 billion, which is a buffer set aside for any unforeseen developments.

The base of our remarkable performance is also well witnessed when isolating all the provisioning. The pre-provision income, with an annual growth of 8% in the first 9 months, reached very sizable TRY 17.2 billion. The underlying factor to this meaningful pre-provision income growth is purely due to our sustainable revenue generation capability.

In a year of higher funding costs and the significant margin's pressure, we could demonstrate, again, a well defense of our margins and remain to deliver the highest margin in the sector as well as remain to be the one with the highest net fees and commission revenues.

So our results in the first 9 months of 2021 is a return on equity of 19.2% and a return on assets of 2.2%. If we hadn't set aside the pre-provisions, ROAE would have been to 22% and ROAA would have been 2.5%.

Let's now move on to explaining the contributors to these results and start with the assets. Net assets grew by further TRY 23 billion in the quarter, reaching TRY 631 billion in total. Main contributor to asset growth was again the customer-driven and high-yielding portion. Notice the share of performing loans and assets at 63.2%, up from 62.2%, up another 5% total loan growth in the quarter.

TL lending growth was a significant 9%, and this growth the year-to-date Turkish lira loan growth at guarantee to 22%, which is a level that is above inflation and roughly twice as much as the sector and already meeting our guidance for the year.

On the foreign currency lending side, in line with our guidance, we had further shrinkage. Our foreign currency loan book is now almost $1 billion less in size compared to the beginning of the year.

On the securities front, we continue to strategically manage the portfolio to help write out the volatility. We opportunistically added some CPI and FRN securities to the portfolio. However, the share of securities in assets remain under 13%.

Continuing with loans, the growth we booked in Turkish lira year-to-date actually points to significant market share gains that has been across the board and more importantly, at rational pricing level. Notice our well-balanced Turkish lira loan book in business and consumer that is almost half and half. We now ranked #1 in Turkish lira lending among our private sector universe.

In consumer lending, namely general purpose loans, mortgages and auto, our year-to-date growth of 25% led to a market share increase of 150 basis points to 11.7% from 10.2% at the end of last year. In business banking, despite the significant reductions in the first half, we could grow by 17% year-to-date and bring the market share to 9% from 8.3% since the start of the year.

Now as to how we fund the assets, notice on this slide, the funding mix. Deposits, both time and demand deposits and deposits like Turkish lira bonds issued and merchant payables fund more than 70% of the assets. Also notice the increasing share of demand deposits year-to-date as well as the sustained solid level contributions of time deposits and the capital base.

Borrowing share, on the other hand, has come down to under 11%. Funding contributors suggest that liability side of the balance sheet is also actively managed at Garanti. 34.5%, in other words, more than 1/3 of the interest-earning assets are funded with what may be considered as free funds. This is major. This is major in our profitability outperformance in the sector as free funds to interest earning assets ratio at private peers stands at much lower 23%.

Brief reminder on the liquidity is that we sustain our high liquidity, even though our total external debt has further come down to $7.1 billion. Our foreign currency liquidity buffer remained high at $12 billion, pointing to a liquidity level that is more than fourfold the need to meet the short-term use of $2.7 billion.

Now a detailed look into the deposits. Year-to-date, Turkish lira deposit growth was 21%. More significant growth though was seen in demand deposits. Demand deposits share in total deposits climbed to 45%. In Turkish lira deposits, we sustained our significant outperformance in the share of demand. It is 27% at Garanti versus sector's average of 22%. And similarly, of our foreign currency deposits, 57% is demand versus sector's average of 41%.

The other quality that strikes in deposit performance is the share of retail and SME depositors in total customer deposits. We have also got significant improvement there for both Turkish lira and foreign currency deposits. All of these qualities point to the strength of our franchise, our effective customer penetration, and of course, they also point to the net preference of our customers picking us as their main bank.

Naturally, we do see significant impact of this differentiated deposit base on our superior margin performance that you will see on next page. Our third quarter margin expansion was a visible 55 basis points, taking the quarterly margin to 4.5%, a level that remains to be the best in class. Core NIM, in total, remains to be the biggest component. In just 1 quarter alone, net interest income growth was TRY 1 billion and roughly 60% of it was from the core business.

Our active spread management, long volumes booked at healthy price levels, deposit and other funding composition will continue to be supportive of our superior NIM performance. The cumulative margin as of the 9 months '21 was down by 119 basis points. Given the latest front-loaded ease in funding costs and the expected October inflation reading, which may be around the current high levels, the fourth quarter margin seems to be on track for even a higher sequential expansion. Accordingly, it seems quite visible that we will actually end up with a better margin at year-end than what we anticipated and guided.

Moving on to the topic of asset quality on Slide 12. You can see on the left-hand side that of the gross loans total of TRY 427 billion, 15% is in Stage 2, which is a slightly lower share than the prior period. Nominal reduction in Stage 2 of roughly TRY 2 billion was mostly owed to the relief in SICR and collections based on the high economic growth.

Within Stage 2, as SICR portion is now down to 33% that further restructuring from the watch list file. The share of the restructured portion is now up to 52% and the watchlist portion has eased down to 12%. Past due portion remains to be low at 2%.

Despite lower Stage 2 and some provision relief due to the partial collection of some loans, we stepped up the Stage 2 coverage to 16.9%. The 90 to 180 days filed balance classified on the Stage 2 has been TRY 1.7 billion as of September end and has been shrinking week-by-week based on aging impact.

Because of the abolishment of the NPL forbearance, they have been coming down and moving to NPLs or being collected. So assuming all of this portfolio ends up in Stage 3, it will add 40 basis points to our year-end NPL.

On next page, notice all the asset quality metrics that are faring much better than we initially anticipated. The quarterly net new NPL inflows remains limited and the strong collections performance was sustained. NPL ratio by quarter end is down to 3.8%, with a cash coverage increase to 69%. Our 9 months cumulative net cost of risk dropped notably to 0.6%, suggesting a positive bias to our below 150 bps net cost of risk guidance for 2021.

Moving on to the topic of net fees and commissions. We have a proven capability for an unrivaled level of fee generation. In the 9 months of the year alone, we could book TRY 6.5 billion of net fees and commission revenues, a level by far the highest in the cycle. The growth performance in fees was an exceptionally high 33%. This was growth as the result of our bank's organic penetration with support of increased digitalization and relationship banking.

Payment systems and lending-related fees contributed significantly to this performance with 50% and 52% annual growth, respectively. The higher interest rates and post-pandemic recovery in credit card volume supported payment systems fees.

Cash flow and fee growth performance was a natural some of our outperformance in lending that grows with its expanding customer base. Recall that Garanti now ranks #1 among private peers in Turkish lira lending. Similarly, money transfer is registered a striking growth of 49% on the back of digital empowerment and best-in-class customer experience. There was 28% year-on-year increase in number of digital transactions.

Moving on to the operating expenses. Despite the depreciating currency, operating expense growth was contained in line with full year guidance. We had a 19% increase in operating expenses year-on-year. Actually, if we exclude the 4% currency depreciation impact, which is 100% hedged, the real OpEx increase hitting the bottom line was only 15%, a level well below the average CPI.

Taking into account the currency-adjusted costs, we could book improvement in all the KPIs compared to the first half. As of the September end, cost-income ratio was 36%, operating expense in assets was 2.2% and fees coverage of operating expenses was 66.5%.

Let's also take a quick look at our capital. We continue to operate with strong capital buffers. Our capital adequacy ratio stands at a robust 15.7% and core equity Tier 1 is at 13.2% without the BRSA's currency forbearance. Taking into account the minimum level of 12.1% for capital adequacy ratio, we have TRY 21 billion in excess capital on a consolidated basis and we remain committed to growing in a capital-generative manner.

Now allow me to share with you some of our nonfinancial strengths as well. Our continuous investments in digital since the late '90s to enrich customer experience, meet the growing digital trends clearly carried us to the forefront. We continuously strive to empower and serve to improve the financial health of our customers.

Since the start of the pandemic, we had a net increase of more than 2 million customers for both digital and mobile. So now we exceed 10 million customers also in the mobile world. And what we experienced is that, they are 2.2x more penetrable than non-digital customers. Customer monthly logins have increased by 60% since the beginning of 2020. Accordingly, there was significant increase in the number of digital channel transactions. Also, digital sales domination in total sales exceeded 80%.

Our market share in mobile financial transactions is almost double the level of our fair market share at 19%. As I anticipated, the pandemic caused 31% reduction in branch transactions whereas the growth in digital was a significant 79%.

So a brief update on the sustainability side. Our parent group BBVA has committed to provide EUR 200 billion in financing to combat climate change and support sustainable development by 2025. And we, as Garanti BBVA, are also aiming to support the sustainable development and the fight against climate change in parallel to BBVA's pledge.

We were able to achieve our target of becoming carbon-neutral to 15 years earlier in 2020 while not only by reducing our net emissions already by 75%, but also setting more ambitious targets for years ahead. As Garanti BBVA, we're also the only Turkish signatory to the United Nations at Net-Zero Banking Alliance. With this alliance, we are committed to set sector-specific targets for carbon-intensive sectors and align our lending and investment portfolio to become net-zero by year 2050 or sooner.

In the period ahead, we aim to lead the way to a more sustainable future through the business decisions that we make at every level. We are supporting our shareholders, stakeholders in the transition to low-carbon economy and offering opportunities along the way. We're increasing our investments in order to combat global climate change while creating awareness.

Our energy financing has been 100% renewable since 2014, and our existing coal risk will be 0 by year 2040. In this context, we have been prioritizing renewable energy projects, establishing green office standards, creating awareness and brainstorming about the needs of the sector.

To be able to manage our risks on the environmental and social front, we have loan policies supported by impact assessment models that we use to set sector principles. We adopted our environmental and social loan policy in 2011 in line with the equator principles. We have a very clear exclusion list such as weapons of mass destruction and landmines, child labor or companies that violate women human rights and so on.

In 2020, Garanti BBVA offered 43 different types of loans and products to contribute to sustainable development, such as an Garanti BBVA's gender loan structure introduced in 2019 as the world's first; sustainability-linked loan in which Garanti BBVA participated as a sustainability agent to an energy company back in September 2020; as well as the Garanti BBVA sustainability-linked syndicated loan signed in May 2020 as the world's first such syndication.

All of these efforts granted us to be included in 11 different sustainability indices, including Dow Jones Sustainability Index, as the only company from Turkey for 6 consecutive years. We're also listed in the Bloomberg Gender Equality Index for the fifth time in a row again as the only company from Turkey. Another distinction is that the Garanti BBVA is part of CDP A List 2020 as the only bank from Turkey.

Now with this, we would like to leave the floor to you for questions you may have. Thank you all for listening.

[Operator]

[Operator Instructions] We have a question from Waleed Mohsin.

[Waleed Mohsin, analyst]

Congratulations on the third quarter results. 2 questions from my side. First of all, I wanted to check if you're making any changes to your FY '21 guidance, especially given that most KPIs are running ahead of your expectations. So that's the first question.

Secondly, if you could kindly talk about the drivers behind the success of your demand deposit collection strategy because it's clearly exceeding competition by a fair margin. So would be curious to hear what you're doing differently.

Thirdly, I mean, again, excellent growth on the digital side, which is obviously feeding into the results. I wanted to understand if this is going to change your branch strategy going forward.

And finally, ending on -- with macro. Given the sharp depreciation in the fourth quarter, how is management thinking about the macro backdrop, especially with the Turkey also being added to the FATF gray list. So these are my 4 questions.

[Recep Bastug, executive]

I think there are 5 questions in total. The first one, we changed our guidance and we announced it. So there may be some, positively, difference from the guidance. But in general, we don't want -- we don't think to change our guidance. Everything is in line with the guidance that we announced that we changed, I think last quarter.

[Handan Saygin, executive]

Yes.

[Recep Bastug, executive]

So the NIM guidance is, of course, it is upside. When we announced our NIM guidance last year, our guidance was deterioration, less than 100 bps. Regardless of the latest rate cuts, we were in line with our guidance. Still, it will be in the same direction, but after 200 basis points cuts, that will be positively contribution of this rate cut to the NIM as well. So NIM, will be much more positive than our guidance. But for the last 2 months, we don't need to change our guidance. So related with NIM.

The third one, I think the demand deposit share. Yes, I think historically, Garanti BBVA's demand deposits has a strong number. Although we don't have the highest number of branch, we have the highest mobile active customer and active customers. So our digital capabilities differs us from our competitors. Our continuous investment in IT enable to do us.

So secondly, our growth is very well balanced. There has been no business line in the front. So that is very balanced business lines distribution in our loan growth. That is the reason under this volatile environment, we are able to keep our NIM and our demand deposit level at a sustainable number.

There are other contributors to this number, for example, payment system, we are -- I think we have leading highest market share in payment system, including acquiring and issuing, so the contribution of these subsidiaries. All in all, this is very strong demand deposits. You will continue to see this amount of demand deposits. There may be some volatility according to the economic and macro conditions. But always, there will be very strong demand deposit share among our total TL deposits number.

So branch strategy, I think there is a saturation in Turkey when you compare the branch number with Europe, I think there are still room to stay at this number. That is the reason our strategy, in general, will not be changed within the quarter. So next year, you will be seeing a similar number of branch within -- with Garanti BBVA. There is some number of branches we may close, but it did not change the main picture.

The last one, maybe the gray list that Turkey was in that last week. It was -- it happened between 2011 and 2014. Its reflection to the financial sector was not so strong, and it will be happening like that as well. I hope the necessarily precautions will be taken from the state officers, and we will be out of that as well.

[Operator]

The next question is from Alan Webborn.

[Alan Webborn, analyst]

A couple of questions, if I may. Firstly, on volumes. I mean, clearly, you've done very well across the 9 months of 2021 against, I guess, a state bank system that's been growing much less fast, I guess, capital constraints and so on. Now we seem to have had a change in the rate trajectory. Do you think that sort of volume is going to the shift between state and private bank is going to change? Are you now a little bit more cautious in terms of how you want to grow going forward? Or do you still feel that the lower rates in this environment is an opportunity for you to keep growing strongly on volume?

So do you think that your volume rate will start to slow now? Or do you think it can be sustained even if there's perhaps a bit more competition coming in from the state banks? That was the first question.

The second question, you've had now sort of 300 bps of rate cuts. What are you actually doing? And what are you seeing on the ground in terms of deposit costs in terms of loan yields?

And I guess, linked to the first question, presumably, it's a little bit early yet to see how the competitive environment is going to develop as a result of rate cuts and what's your feeling on that? I mean, clearly, you're going to do better, as you said, on NIM for 2021, but looking a bit further out, what do you think the dynamics are going to look like in the first half of next year? So that was the second question.

The third question was what are we likely to see in Q4 in terms of the net cost of risk with the end of the NPL forbearance? Is that going to have a particular impact? I guess, you wouldn't be using any pre-provisions yet, but it will be interesting to know what your view of Q4 was on that as a result?

And the fourth question, a couple of ESG questions. I mean do you set your own target for a sustainable finance? I mean, obviously, you've got this very big $200 billion BBVA target, and I fully accept that you're within the BBVA Group. I mean how does Garanti manage that? And does Garanti have a target within there, that would be interesting. And what's the sort of time horizon for you in terms of seeing some form of sort of scope 3 sort of downstream view of the loan book. Is it a 1 year? What's your view on how you're doing there?

[Recep Bastug, executive]

Okay, Alan, thank you very much. I try to give an answer in order. Let me start from easiest part, cost of risk, forbearance impact for this year, it is 40 bps. I may give you a clear number. It is around TRY 1.5 billion. So to the year-end, it will be reaching to 0. So it has started to be transferred to NPI from stage 2. Those TRY 1.5 billion, a little more than that to the year-end, it will be 0. So the total cost is just 40 bps.

When we change our guidance less than our NPL, we announced that it would be less than 450 basis points. This effect was also included with that guidance. So this is a total cost of risk, impact cost -- to cost of risk due to forbearance. The second one, cost of deposits. It is -- we have very clear strategy. We don't pay over the CBRT's policy rate. This is our rule. So today, whoever you are, 16% is the highest rate that we are able to get from Garanti. So this 200 basis rate cuts also reflected to the credit side.

So I will skip the first question. And this will be the part of it as well. So the -- there were a huge market gaining period for state banks between 2018 to 2020. So it was mainly driven by price -- harsh price competition. So we didn't get part of it. It's -- after 2021, they changed their policy. They are reasonable, rational -- they are making rational pricing. That is the reason under this environment, as you pointed out, there has been a shift from state banks to private banks.

I think this will continue. But I have to give you some color about the market. With this interest rate, that -- there has not been a strong demand from wholesale part, from corporate, commercial and from big SMEs. Only their demand is for short-term purposes, short-term capital needs. The investment appetite is not so strong. That is the reason in the short run -- short term, we reflected our prices in line with the rate cut.

But in the long run, that has not been so strong demand. That is the reason only the retail demand, still that is a stable retail demand and its cost under this circumstances, about 20% to 23% levels, which is normal for retail part.

So this is the main picture. So in coming periods, our growth appetite is reasonable. We will not be -- this year, we have got 1% market share, through the year-end, we think to protect that 1%. We don't have any aggressive growth because as of now, our growth amount is very valuable and profitable one. From now on, we will protect that amount, and we will be getting reasonable market shares in a reasonable levels. We will not be aggressive for the other part of year.

So the -- I think the last question is ESG part. So of course, we are part of that commitment as well. But as you know, EUR 200 billion consists of all of the BBVA's footprint countries. In our country, we are the leading bank in sustainable finance. A small number Handan gave you, but I want to underline it, today, 25% of wind turbines in Turkey, power plants was finances -- has been financed by Garanti BBVA. So our strategy will be in that manner as well.

And also, we are the bank who announced to stop the coal-powered plants financing and also to reach 0 level in this area to do to 240 years. So we are very, very strong supporter of sustainable issues. As Handan mentioned, we are the first and only carbon-neutral bank of country. And also, we signed -- we became the part of Net-Zero Banking Association. We are developing retail products for sustainable issues. And also we will develop too many products. We -- electric bicycles, waters, bills, et cetera. So the customer will feel more product from Garanti BBVA in sustainable area.

[Alan Webborn, analyst]

So what stops you putting a target on that? Is it just too difficult? Or are you not sure what the demand is going to be? I mean I don't doubt your credentials at all. I just wonder in the context of $200 billion from BBVA, that Garanti can't say well, look a minimum of so much must be doable. I just wondered why you don't do that?

[Recep Bastug, executive]

I think no countries in BBVA were -- did it. So we have some numbers, but now I don't -- this is not the right place for me to announce that number, but that may be a good idea for our commitment to the society and we will be thinking on that. Because our number is the part of that $200 billion not so strong due to Turkey's sustainable environment. So I think this is a good idea. We take it as a note. Thank you.

[Alan Webborn, analyst]

Okay. And in terms of the Scope 3?

[Recep Bastug, executive]

Sorry, Stage 3?

[Handan Saygin, executive]

Scope 3.

[Alan Webborn, analyst]

The Scope 3.

[Recep Bastug, executive]

Could you please tell me again, Scope 3 emissions. What is the question, please?

[Alan Webborn, analyst]

I'm just wondering when we'll be able -- you'll be able to be in a position to tell us what's happening with your overall loan portfolio? Are you moving in that direction in terms of emissions on the loan portfolio? I just wondered where you were in terms of going along that road?

[Recep Bastug, executive]

There is very strong and details our [indiscernible] has been going. So I cannot tell you the right timing, but maybe after this work out will be delivered to my side. I may get date and the numbers and sharing with you in our next meeting, but not now. That is not ready to share with you.

[Alan Webborn, analyst]

Okay. That's fine. But excuse me for asking. That's very helpful.

[Operator]

And Simon Nellis has a question.

[Simon Nellis, analyst]

Yes, I was just hoping you could give us a little more color on the outlook for net interest income given the rate cuts going into the fourth quarter. I guess you'd assume that net interest income should expand quarter-on-quarter. And then anything you could say on next year's outlook, I know it's very uncertain. I'm sure you're planning your budget. But also in terms of fee growth, do you think you can continue having quarter-on-quarter growth?

And what's the outlook for next year given that with rates coming down? I think your payment systems fee income will be negatively impacted because of that. And then last is just your intention with dividends. I know it's too early again because I guess, up to the regulator ultimately. But what would be your intention for capital return?

[Recep Bastug, executive]

Simon, the margin expansion and NIM also, I think it is positive -- they're positively affected with this rate cut. So in fourth quarter, due to rate cuts, due to lower cost of deposits and higher CPI revenue, that will be -- we will be seeing much more positive margin spreads and the net interest margin. This is the first part.

The second part, the fee growth this year, as you have seen, 33% is our fee growth. This is an exceptional year. Next year, we will be providing -- we will be delivering very strong fee growth, but that will not close to those 33%. It will be I think positively over the inflation. But this 33% is an exceptional unit. It's not easy to repeat it every year, but next year, there will be very strong key growth over the inflation. I am sure that over the market average, but will be less than 30% levels next year. We have not finalized the budget yet, but the picture is very similar to what I have been explaining.

Dividend. Last year, as you know, BRSA approved to distribute 10%. As I have always repeated here, our policy is to distribute up to 30%. So this year, we are going to apply to BRSA for their approval, up to 30%. What is going to happen? We will see it together because they don't give any color about it during -- and this is not a right time to ask them about this approval.

I hope to distribute it -- this is my message last year under that circumstances, they allowed us to distribute 10%. I hope to get 10% or more this year. But this is hope, this is not any promise or strong commitment to the investors. But as a bank, you have seen the numbers. We are strong enough to distribute if we love to distribute. This is management's approach, so we will try our best to distribute the dividend.

[Simon Nellis, analyst]

Very clear. If I could ask just 2 more quick ones. I think I may have missed it. What was the CPI linker assumption that you're using for CPI linkers now? And the second question would be, you said you have 10 million digital customers. What is your overall retail customer number? Just trying to think about penetration digitally.

[Recep Bastug, executive]

Yes, calculated number in the first quarter is 18%. In total, our retail customer numbers is between 19 million to 20 million levels. The active one, I think, more than 10 million.

[Simon Nellis, analyst]

Yes. Okay. And then maybe just one last thing for me. The impact of a 10% lira depreciation on your capital level, what's the rough sensitivity?

[Recep Bastug, executive]

Handan?

[Handan Saygin, executive]

It's 39 basis points.

[Recep Bastug, executive]

Yes.

[Simon Nellis, analyst]

39 basis points, okay.

[Operator]

It looks like we don't have any questions left. So I'm leaving the floor for closing remarks. Thank you.

[Recep Bastug, executive]

So thank you all for attending today. I'm proud to announce that we could once again deliver a new record-high profit. Our performance in high-quality earnings generation capabilities stronger than ever. And on top of that, we continue to add value to the environment, social life and technology through many successful projects.

To me, doing all this together is the most valuable outcome. I would like to thank my colleagues for their great contribution. We are indeed an excellent team, and thanks to all our stakeholders for their continued support and trust. Stay safe. Thank you again, and have a great day.