Turkiye Vakiflar Bankasi TAO

IST:VAKBN.E

Earnings Call Transcript 2018-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to VakifBank Audio Webcast First Quarter 2018 Bank-Only Earnings Results on the 21st of May, 2018. The conference call will be hosted by Mr. Mustafa Turan and Mr. Ali Tahan. [Operator Instructions] I'd just remind you that this conference call has been recorded. I will now hand over the conference to our first speaker, Mr. Mustafa Turan. The floor is yours, Mr. Turan.

[Mustafa Turan, executive]

Thank you, operator. Ladies and gentlemen, welcome to VakifBank First Quarter 2018 Earnings Announcement Conference Call. Please accept our apologies for the inconvenience. The last time of submitting the financials and the public disclosure platform, sometimes, it may be tricky. I have Ali Tahan, Head of Investor Relations; and Investor Relations team with me today. We will start with the highlights of VakifBank in the first quarter of 2018. Ali will be giving details. And later on, we will host your question, as always.

First of all, I'm really glad to announce another successful quarter, with good volume growth and strong earnings. Quarterly bank-only net income came at TRY 1,051,400,000, which is up by 16.7% Q-on-Q. First quarter return on average equity came at 17.4% versus the sector averages of 15.1%. We continue to beat the market averages like the last 3 years. Despite VakifBank's accounting change concerning CPI linkers, we delivered this income and TRY 113 million last CPI close because of accounting change. If it was not the case, comparable net income would be TRY 1,146,300,000, which would be up by 27% Q-on-Q. And this adjusted ROAE would bring at 19%, presumably the best in the banking sector so far reported.

We had a nice quarter, especially about the margins despite lack of CPI linkers support. Net quarterly margins came at 3.94%. The adjusted would be 4.15%, indicating only 8 basis points quarterly contraction despite challenging environment. Our Turkish lira core spreads came flattish. Although Q4 '17, we had some nonrecurring interest accruals from NPL collections. So actually, first quarter Turkish lira core spreads were better than our initial expectations.

Concerning the CPI, we used 8.4% in the first quarter for the accruals. And as of today, for the second quarter, we are increasing the CPI expectations to 9.05%. It seems that a further increase for the second half of the year is highly possible, therefore, margin outlook is on the positive side because of the CPI linkers. And so far, the core spread evolution is in line with our expectations.

Then we look at the asset quality. I'm really glad to announce that in the first quarter, NPL ratio came down 10 basis points Q-on-Q to 3.91%. Obviously, this is -- this includes good growth rate of 6.8% loan growth in the quarter. But obviously, we are end of our budget in terms of NPL.

Then we look at the IFRS transition. We have another good news. Group II loans are down by 10.7% Q-on-Q, which is more or less same for the past due 30 days part of the Group II loans, which are down by 9% Q-on-Q. These numbers are really encouraging in this credit challenging environment, and I'm glad to announce better figures than our initial expectations. The share of Group II loans decreased to 3.2% on the contrary of the industrial averages from 3.8% end of 2017.

Another good news came from fee and commission income growth. We are happily announcing 52.6% year-on-year fee and commission income growth. Of course, we are still coming from a low base, but something above 50% is a remarkable number, and we believe it deserves lot of credibility.

Then we look at the underlying forces. Synergy improvement with our subsidiaries, it's clearly paying off in terms of better fee and commission income collections.

Then we look at the international borrowing side. First quarter was another good quarter for us. In January, we issued $650 million of a 5-year senior unsecured Eurobond. The $650 million size was the biggest ever dollar senior for Vakif. The coupon rate has been set at 5.75%, below what the market shows nowadays. On top of that, we had the third consecutive Turkish lira-denominated covered bond issuance in the first quarter in February, amounting TRY 1 billion with 5 years maturity, 3 Turkish lira private placements reached TRY 3.7 billion in just 6 months' time, especially with very reasonable cost of cross-currency swaps, so these are very good timing.

And then we look at the world borrowing. We reached $1.8 billion equivalent in the first quarter only through Eurobond, covered bond, post financing and bilateral transactions, very ahead of our budget, very good to have this preloaded international borrowing towards more challenging time nowadays.

Then we look at the capital ratios. Although we had 6.8% nice loan growth as well as with the new year, we readjusted our market risk and op risk calculations. We had 15.37% Tier 2, which is down by only 15 basis points. And we have exceed Q1 at 12.22%, which is down by only 11 basis points. These are showing very strong solvency ratios compared to the sector evolution.

I'd like to pause here and would like to hand over to Ali for the details of the numbers. Thank you.

[Ali Tahan, executive]

Thank you, Mustafa. Good afternoon, everybody. First of all is we are in the holy month of Ramadan. We wish you a blessed month of Ramadan, and given the fact that some participants may be fasting, we would like to keep the presentation part at least as short as possible in order not to torture them too much.

As always, I will start with Page 4 in the presentation related to earnings and profitability. Our quarterly reported net income came above the market consensus at TRY 1,051,400,000, which is up by almost 17% Q-on-Q. Our reported quarterly average ROAE came in at 17.4%, which is 2.3% higher than the sector average of 15.1%. And our adjusted quarterly net income would be TRY 1,146,300,000 assuming diluted change the accounting methodology of CPI linkers from actual to expected [ fund ]. And in this case, our quarterly average ROAE would be even higher at 19%.

Then we look to the revenues side. Revenues were also strong, were also strong. Our total revenues are up by 18% year-on-year and 19.7% Q-on-Q, reaching to TRY 3,857,000,000.

Next slide is related P&L details. You can see item-by-item growth numbers both annually as well as quarterly, which we will go through in detail on the following pages.

Next slide, Page 6, is related to net interest margin, spreads and costs. Our quarterly reported net interest margin came at 3.94%, which indicates to [ 9 bps ] contraction in Q-on-Q terms. Most of the net interest margin contraction is coming from securities side, specific from the CPI linkers. This quarter, CPI estimate used valuation was 8.4%. And excluding CPI accounting methodology change effect, our adjusted quarterly net interest margin level would be at 4.15%, which indicates only limited 8 bps Q-on-Q contraction. And this quarter, our care -- core spreads remained flattish at 4.6% despite the lack of nonrecurring interest accruals from NPL interest collections in the previous quarter, which suggest real spread expansion came from every incremental lending during the first quarter.

Next slide is related to fee income. Annual fee and commission income growth came strong at 52.6% year-on-year, which is the highest growth rate among peer group on top of a very strong 35% growth in the year of 2017. Our [indiscernible] fee growth is supported by [indiscernible] resources, especially we are glad to see that finance income of it, our subsidiaries, started to pay off, and hopefully, it will continue to contribute more in the upcoming quarters.

On the right-hand side of the page, you can also see the breakdown of the fee and commission income. And in terms of the breakdown, we can say that half of the growth is coming from landing-related fees, while the other half is coming from both payment systems as well as transactional fees in the first quarter of the year.

Page 8 is related to OpEx. Annual OpEx growth came about [indiscernible] 4.3% year-on-year and 5.1% Q-on-Q due to both loan base effect of first quarter '17 as well as high inflation rate. Yet, we also have one of the lowest cost-to-income ratio. It was 2.8%, which is only 2 percentage points higher than the lowest rate in the peer group space.

In terms of the branch numbers as of today, we have 957 branches, which is 2 branches higher compared to year ago '17. Year-to-date, we divided existing 35 branches into 2 as commercial-only branches and SME and retail branches in order to increase the quality of services provided to our customers. These are mainly global or triple small branches, and we decided to divide as 1 floor is dedicated only to commercial clients, while the other 1 or 2 floors continue to serve for SME and retail customers. All in all, these -- in these locations, total service area in terms of square meter didn't change despite of the additional 35 commercial-only branches. It can be interpreted as a new branch classification system for us. But in reality, net-net, we closed 5 branches as total branch number increased by 30 despite to the addition of 35 new commercial-only branches.

With Page 9, we can move to the balance sheet details and asset side. Total assets are up by 27.6% year-on-year and 4.2% Q-on-Q, reaching to TRY 282 billion. Interest-earning asset growth also came in line with the total asset growth, and the asset share continue to hover around 85% during the last 1 year period of time. And in the middle of the page, you can also see the asset breakdown. We also have stable share of lending, which grew to 70% area on annual basis. And lastly, our margin in total assets reached to 8.4% as of first quarter 2018.

Next page, Page 10, is related to lending. This quarter, we had [indiscernible] loan growth both in TL and [ FX ] side. TL lending is up by 5.10% Q-on-Q, and FX lending is up by 4.3% in dollar terms. Those numbers brought total lending growth to 6.8% Q-on-Q, reaching to TRY 195.4 billion. Our market share in total and TL lending, which are also known as key areas, further increased to 8.9% and 9.4%, respectively. And in terms of loan-to-deposit ratio, we landed loan-to-deposit ratio materialized at 121%, which is 3 percentage points lower compared to sector average of 124%. And our TL loan-to-deposit ratio, which we pay more attention, came at 128%, which is 21 percentage point lower than the sector average of 149% as of first quarter-end.

On the next page, you can see the portfolio breakdown of total loans. Well diversified and stable lending portfolio maintained, and the share of SME lendings increased to 26.1% in the first quarter from 24.5% in the previous year. The share of retail loans came at 27%, and the remaining 46.8% is in the form of corporate and commercial lending, including project finance.

Next page, Page 12, is related to retail lending. Profitability focused lending continued as the fastest quarterly growth came from the retail overdraft loans. Overdraft loans are up by 8.4% Q-on-Q, reaching to about TRY 2.8 billion. And on the GPL lending and the residential lending, we had 3% and 3.3% quarterly lending growth, respectively. Although retail lending growth came 17.9% year-on-year and 3.1% Q-on-Q, reaching to TRY 49.4 billion. And in terms of the market share, our market share in retail stands at 9.9%, while it is even higher in accretive GPL growth at 10.3%.

Page 13 is related to business lending. Similar to the previous quarters, selective corporate and commercial lending was the main driver of the quarterly lending growth. Total corporate and commercial loans are quite 28.5% year-on-year and 9.5% Q-on-Q, reaching to TRY 91.5 billion, including TRY 9.4 billion project finance lending. Total business lending, including SME, is up by 31.2% year-on-year and 8.1% Q-on-Q, reaching to TRY 146 billion. On the CGF side, numbers are shown at the right-hand side. Our limit further increased to TRY 24.8 billion from TRY 21.3 billion in the year-end. But outstanding amount came at TRY 19.7 billion as of March end, which is even lower than our limit in December.

If adjusted, we collected more [indiscernible] to our CGF facilities than we originated during the first quarter as CGF facilities are mainly in the form [indiscernible], which will require us almost to make monthly payment to both [ deductible ] and to the interest.

Page 14, 15 and 16 are related to asset quality and IFRS. On the asset quality side, reported NPL ratio further came down 10 bps to 3.91% Q-on-Q versus 4.01% in the previous quarter. More importantly, despite IFRS transition, still, our Stage II loans are down by 10.7% Q-on-Q. And therefore, the share of Stage II loans decreased to 2.3% (sic) [3.2%] from 3.8% in the previous quarter. All asset quality performance in the first quarter came better than our initial expectations if we are still stick to our guidance of slight deterioration in the TL ratio, which is to 10 bps increase year-on-year based from -- for 2018 year-end. Yet, such good start to the year gives us additional buffer from asset quality point of view for the rest of the year, and we already started to see some increase in close watch category in the second quarter so far.

On Page 15, you can see the loan portfolio breakdown through IFRS transition period as the coverage ratio shift. In line with the sector practice, our specific coverage ratio also came down to 87% from -- 78%, sorry, from 86% in the pre-IFRS period. But still, our specific coverage ratio is still 3% higher than the sector average of 75%. On the flip side, the coverage for close watch category increased from 2.6% to 7.5% level, which is also a similar trend compared to peer group and the sector practice.

The last point I want to emphasize is related to net cost of risk. The details can be found on the following slide. Our net cost of risk came further down to 50 BPS, which indicates 43 bps increment compared to the same time of 2 previous years.

Page 17 is related to liability breakdown. Customer deposits well-diversified funding structure maintained, and the share of deposits came at 57.5% as of first quarter. But on the funding side, we obtained $1.8 billion international borrowing during the first quarter via Eurobond, covered bond, private placement, post finance and bilateral borrowing. In January, we issued $650 million senior unsecured Eurobond, which is the highest Eurobond issuance so far, with 5-year maturity and 5.75% coupon rate. And in February, we had a new issuance under our current bond program in the amount of TRY 1 billion. The maturity of that issuance was, again, 5 years. And during April and May, we also had syndication and DPR concession transactions amounting to $1.3 billion and $380 million, respectively. We continue to diverse our funding structure via different tools and programs.

Page 18 is related to deposit growth. Total deposits are up by 24.7% year-on-year and 4.4% Q-on-Q, reaching to TRY 162.1 billion. And in terms of the currency mix, 2/3 of the total is coming from TL side, while the remaining 1/3 is coming from the currency. And the breakdown of deposit structure can be seen in the middle of the page, which is quite stable over -- compared to year-end of 2017. And finally, we continue to gain market share in deposits, especially in the TL side. Our market share in TL deposits further increased to 11%, while the total deposit mix market share stands at 9.1% as of March-end.

Page 9 (sic) [ Page 19 ] is related to capital. Conservative solvency ratios maintained despite challenging macro environment during the first quarter. Our core equity tier ratio and total tier 2 ratio materialized at 12.2% and 15.4%, respectively. That level [indiscernible] based on today's [indiscernible] in the year of 2019 that all buffers fully taken. Impact of IFRS transition on the equity can be found in the right-hand side of the page. IFRS transition resulted to more than TRY 550 million increase in our equity, which can be translated as 29 bps positive impact in our solvency ratios.

For the sake of the time, I will stop here and give the floor to our operator again to move to the Q&A session. Thank you.

[Operator]

[Operator Instructions] We have a question from Sahil Kumar from Moody's.

[Sahil Kumar, analyst]

This is Sahil from Moody's. I have one question on your cost of deposit. So how do you see your cost of funding going forward for this quarter and for the rest of the year, considering the bond yield are increased, and deposit rates tend to increase when there is increase in the bond yield? So how do you see your cost of funding for this year?

[Mustafa Turan, executive]

Thank you. Actually, as you may see on the presentation, Turkish lira cost of funding is going up only by 8 basis points in the first quarter. Average Turkish lira cost of funding was 9.46% versus 9.38% in Q4. Second quarter, so far, substantially higher than those numbers, given the fact that deposit market pricing increase is very limited compared to the selloff in the bond market Turkish lira government pay for market and the central bank's policy rates because since the middle of the year, 2017 June, KGF loan growth distorted deposit market substantially. And therefore, as of today, the highest cost of Turkish lira deposit is still slightly below where it was in June 2017. So deposit-wise, we are not witnessing significant increase in the numbers. For the hard currency part, dollar deposits are going up slightly, but there is a good news there. When we calculate the spread of our hard currency deposit cost, the spread is going down. So nominal numbers-wise, dollar deposit average cost growth is below the 1-month or 3-month LIBOR increase so far this year. So our spreads are going down in terms of our onshore funding market. When we look at the international borrowing part, the first quarter numbers, we are clearly below where our spreads were compared to 2017. I mean, just for your information, we closed the syndicated loan in April, and that was 15 basis points lower than April '17, and it was 5 basis points lower than September '17. We closed the DPR securitization in early May, which was similar priced with the 2016 DPR issuance, the last issuance before this one. And the January 2018 Eurobond, we paid 335 basis points over with subs, with the coupon rate of 5.75%. That was also in the middle of our spread evolution in the debt capital markets. Because of the massive selloff we are witnessing in last 1 month, today, when you look at the secondary pricing of the debt capital markets, you're clearly seeing substantial higher numbers, but this is not the number that VakifBank is funding itself. I'm very glad to say that we prefunded more than our target in the first 4 months of the year. And as of now, we are $1 billion above our budget -- international borrowing budget as of mid-May. So if the market conditions remain such challenging, we don't have to keep the screens with some new issuance. And until September, we don't have any meaningful repayment to international markets. So overall question -- overall answer to your question, we are not seeing significant pressure in our cost of funding either in the hard currency part and/or Turkish lira part.

[Sahil Kumar, analyst]

Okay. Understood. So if you see -- so how you see spread, a, would you be able to maintain your spread for the full year in terms of your net interest spread and net interest margin?

[Mustafa Turan, executive]

So Sahil, the first quarter numbers are in line with our expectations, and we are in the middle of May. When we look at second quarter, so far, the numbers are also in line with our expectations. We don't need to revise our flattish full year net interest margin. As Ali mentioned in the details, we're going to enjoy a very higher CPI linkers contribution to the net interest margin. Second quarter CPI linkers will accrue TRY 30 million more on top of TRY 360 million we booked in first quarter, and we're still using 9% -- 9.05% average inflation. Unfortunately, seems that inflation will continue to overshoot than those expected numbers. So probably, in the second [ quarter ] of the year, CPI rate linkers performance will further improve. And cost effects-wise, repricing of new loans is substantial in most of the segments. Therefore, we are at the stage 4.5 months of the new year, we don't need to amend our full year flat net interest margin guidance.

[Operator]

Our next question is from Ovunc Gursoy from BNP.

[Ovunc Gursoy, analyst]

This is Ovunc from BNP. I have a couple of questions. The first one is about your fee performance. I see very strong numbers. Do you think you can keep this growth going forward over the coming quarters? Do you want to change your maybe guidance in fee growth? And the second one is about this TRY 800 million reversal of specific provisions. Is it -- could you give some color on that? Is it IFRS 9-related? And if so, what is the real collection income for the quarter, please?

[Mustafa Turan, executive]

Thank you, Ovunc. Let me start with the first one. I mean, yes, 52% is such a remarkable number. I have to say, TRY 443 million is way above our expectations for the quarter. There are two things here. First, TRY 443 million, a remarkable number for our performance, is still less than half of our private peer's average for the quarter, so there is also a base effect. Secondly, I have to say, first quarter of '17 was such a low base, TRY 291 million quarterly income [ of months ] the first quarter. Unfortunately, was a laggard quarter, so this number is inflated by those 2 items. So going forward, run rate will not be 50%-plus, of course. But you're right, our guidance, plus 20%, seems to me, is done. Let's see the second quarter first before we upsize our guidance, but it's clear that we will need to upsize the fee growth guidance. For your second question, I mean, huge provision reversals and very high quarterly provisioning cost isn't a simple outcome of IFRS 9 transition. Obviously, this is the first quarter of full transition. Then you look at the collections, you're right, we have almost TRY 900 million [indiscernible]. And then you look at the expenses, we have TRY 1,037,000,000 of Stage III provisioning cost. Therefore, those 2 numbers are inflated because of IFRS 9 transition. When you look at the collections, you may find the collections at -- on Page 14, TRY 446 million, NPL collections are cash collections for the quarter, compared to TRY 753 million new NPL. We have the deposit at 60% collection of the new NPL. This ratio is better than Q4, although nominal collections in Q4 was higher, so the bank's collection performance in challenging environment is still intact. And the sizable growth numbers for both collections and other income, unfortunately, then outcome of IFRS 9 transition.

[Ovunc Gursoy, analyst]

Just last question is about the NIM. Shall we assume higher NIM in the second quarter? Apart from the CPI change, you expect spreads are going up, widen in the second quarter, please?

[Mustafa Turan, executive]

Sure, Ovunc. When we look at daily numbers so far, we're comfortably seeing core spread improvement, daily basis. But I have to say we are in the middle of the quarter, second quarter, and unfortunately, even if there is a low time in Turkey and ultra low duration of deposits may change this picture, but so far, we are seeing core spread improvement apart from CPIs. There is -- there will be some small improvement in CPI accruals around 65 basis points higher inflation expectation for the second quarter. So Q2 margin, so far, seems clearly better than the first quarter margin, but it's too early for us to give a specific number. Overall, margin of that is not negative, margins are not our major concern, especially with high inflation ratings and low competition on the asset side. Margins are not our major concern. So far, we stick with our flattish margin guidance easily.

[Operator]

We have another question from Mr. Mehmet Sevim from JPMorgan.

[Mehmet Sevim, analyst]

I have 2 questions, please. Firstly, on asset quality. How do you see asset quality trends going forward given the recent exchange rate developments and the fact that we are seeing more and more restructuring request by large companies? What's your view on that? And how comfortable are you? And I understand you haven't classified your yield exposure as Stage II loan so far. Will you see that happening in the coming quarters? And my second question is on your effective tax rate this quarter, because you were guiding for a much larger effective tax rate due to a deferred tax effect and IFRS 9 adjustments, if I'm not mistaken. However, this doesn't seem to have materialized this quarter. So can you tell us what happened there and clarify whether this was maybe deferred to coming quarters?

[Mustafa Turan, executive]

Thank you, Mehmet. Let me start with the latter. First of all, you -- our effective tax rate is slightly below the tax rate. IFRS 9 transition is, I have to say, pretty complicated one. And when you look at the numbers, you will see a tax impact in our equity because we end up with TRY 269 million tax asset both. And under IFRS 9, this created an [ accruity ] in our balance sheet. This was not our expectation during January when we guided the numbers. So that is the main reason of the slightly lower FX -- sorry, tax materialization. Concerning your first question, I mean, although today, it's 21st of May, we are talking about March numbers. Please accept my apologies to come so late. I mean, we are almost going to summer, but we are still talking about the end of March. And on top of March numbers, there is around 12%, 13% north depreciation happening, if not slightly more. Therefore, there is a clear pressure on the asset quality front, ultra bit currency, although there is not any magic number what is the problematic level. I want to take your attention to the big picture. When you look at the currency, in plus 3 years, '15, '16, '17 aggregate, I see 63% Turkish lira depreciation against dollars. And in that 3 years' time, inflation index was up by 32%, 33%. So Turkish lira had almost 30% differential in terms of depreciation against dollars in 3 years' time. This is not a small number. On top of that, since the beginning of the year, we have 17% nominal depreciation, presumably 5% inflation index in 4.5 months' time. We are talking about 12% more on top of that number. So there is a sizable accumulated depreciation, but it didn't happen in just 1 month time. We are talking about 3.5 years of real depreciation accumulation. So my point is Turkish lira is almost all-time low in terms of election year [indiscernible] rate. And hopefully, we'll have certain moves from the central bank and some other good news, especially in terms of coming from ultra early elections. This may reverse, but my point is weakness is eating up, but it's not new. And this March numbers, better than our expectation, already include another small number of real depreciation. So my point is certain sectors are more distressed, but so far, we are not having bad dreams. Our only clear message to the investor community is the first quarter asset quality numbers, which we are announcing now for both NPL and Group II, are way better than our budget. So it is only giving us further room if things get nasty more. So this is the good news. And the -- for the restructuring request, I have to say there is not any more big restructuring request with the banking sector, apart from the 2 very well-known names, happened almost 2 months ago. So I wouldn't say that further restructuring request from big corporates are ongoing. I'm not saying it will not happen, but my point is 2 big groups are over-leveraged because of the international M&A activity already approached the banks. And for both groups, as of now, VakifBank management is pretty comfortable with this current situation versus 6 months ago.

[Operator]

[Operator Instructions]

[Mustafa Turan, executive]

Operator, if we don't have any audio questions, we have a couple of webcast questions?

[Operator]

Okay, we have no further audio questions. Please go ahead.

[Ali Tahan, executive]

Actually, sorry, there is also no question from the website.

[Mustafa Turan, executive]

Yes, I suppose it is answered. So let's give another round of time for investors if they have any questions.

[Operator]

[Operator Instructions] We have another audio question from Klim Fedoff from Lord, Abett.

[Klim Fedoff, analyst]

Just further on the FX depreciation. Can you tell us the sensitivity to your capital ratios for Turkish lira depreciation?

[Mustafa Turan, executive]

Thank you, Klim. We calculate our sensitivity for CAR ratio every $0.10 against $1 for Turkish lira. CAR ratio goes down 9 basis points. For the sake of discussion, since the beginning of April, there is $0.60 depreciation of Turkish lira against dollars, so that itself decreases our Tier 2 around 54 basis points from 15.35% level towards the end of today, 11.6% level, including so far the growth as well as other factors. So as of today, we see our Tier 2 ratio at 14.6% and core Tier 1 ratio [ about ] 11.5%. Obviously, depreciation of the currency such quickly is eating up. But as you know, it's clear that thanks to accuracy capital issuances, our sensitivity compared to our peer average is lower. So despite such a messy [ start ], we keep our solvency ratios still very strong compared to the market numbers.

[Klim Fedoff, analyst]

And do you have any planned activity in the capital markets? I mean, obviously, it's a little tough right now and elections are happening, but in the future?

[Mustafa Turan, executive]

Thank you, Klim. I mean, in our budget, we budgeted a $1 same year issuance for this year. And we were looking for some capital issuance, especially in Tier 1 format if the market conditions are right. But of course, you cannot budget it. So as you know, January, we printed $650 million senior unsecured as the pre-funding of our April repayment of $600, which is done. So we don't have to issue a dollar senior for the remaining part of the year, although it's 6.5 months to go -- sorry, 7.5 months to go. But after the election time, if the market conditions improve substantially, we may look at the market opportunistically, either for a dollar senior and/or a capital trade -- a Tier 1 trade. But those -- both are not a necessity for us. As I mentioned, as of today, our international borrowing number is around $1 billion above our budget guidance, so we're happily above the funding. We did more than our full year funding target already. But as you know, VakifBank always likes to be prepared, and we like to prefund before we need that liquidity. So after elections, we may monitor. But again, we -- thanks to the timely issuance in January, we will have the luxury to wait until the market is available.

[Operator]

[Operator Instructions]

[Mustafa Turan, executive]

Operator, is there any question left? Or...

[Operator]

There is no further question. Back to you for conclusion.

[Mustafa Turan, executive]

Okay. As Ali mentioned, this is a holy month, and let's not put Muslim people on the line more. Thank you for your patience for us. And again, please accept our apologies to hit the screens with the financials slightly late and hope to speak to all of you in the next quarter earnings result and, absolutely, with another good set of results. Thank you.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.