Good afternoon, good morning, depending on your time zone. Welcome to 2024 Banking Day. Today we have Orhun Köstem, our Group CFO, and also Hakan Binbaşgil, Banking SBU President, with us today. Before we begin, please refer to our disclaimer. Now I will hand over to Orhun Bey for opening remarks.
Thank you, Kerem. Good morning, good afternoon, everyone. We're very happy to be together with you today in the Banking Day. As you know, within Sabancı Group, we have four main pillars on which we execute towards our purpose of uniting Turkey and the world for a sustainable life with leading enterprises. In addition to energy and climate technologies, materials technologies, and digital technologies, of course, banking and financial services makes a very important part of our portfolio. This is evident in the next page, where you look at the net asset value contribution of each business unit. Whereas you see, the banking financial services makes about 33% of Sabancı's net asset value, which stands at about $9.3 billion.
Well, through time, of course, our challenge, this is banking business, especially, within that, is a thriving business, where we're going to make you see, hopefully, display today as well. And in time, it has moved from, you know, being 43% of our NAV, being 33% NAV, still represents a very, very large and important part of our portfolio. Not only in NAV, but if you look at your next page, based on the latest, you know, financial performance, the bank contributes about 42% of our combined revenues, 67% of our combined EBITDA, and some 62% of our consolidated net income. Obviously, a very, very important part of our business.
And then, the dividend streams that Sabancı Holding receives, obviously, you know, banking plays a major contributor to that part. So with that, I'm happy to say today, we're together with Hakan Binbaşgil. Welcome. Welcome, Hakan. The last time we did this event, the banking event, of course, Hakan Binbaşgil participated as the CEO of Akbank and then an Executive Director of Akbank as well. But today, as he sits next to me, he's the Vice Chairman of the bank, Akbank, and at the same time, a member of the Executive Committee of Sabancı Group for the banking unit. So maybe you can tell a little bit about this change and how you feel about the role and the management changes, of course, in Akbank as well.
Yes. Thank you very much. Thank you very much for this very kind introduction, and I'm very happy to be here in this meeting, and I'm also very happy to be part of the group. It's a very vibrant environment, the executive team, full of energy, synergies. So I started witnessing that, and I'm really very happy for that. So, as you said, yes, I've been with the bank for about 22 years and 12 years as a CEO. It's a long time, actually, but this was a planned, actually, transition, so I'm also very happy in this role.
So I always had the privilege of having very strong boards, but now I can also say, as of today, we have a very strong board, who knows the business very well. So, I'm sure that there will be some contribution from the board as well. Of course, the management team executes the whole, you know, banking activities, but, as a support, what I can say, the board is also very strong now. And, I'm also very happy to leave a very strong management, first of all. So what I did over the last couple of years, there were two areas which we focused extremely well. One was the talent side, the management quality and so on, and the second one was the infrastructure.
So, when you look at Akbank today, I'm really very proud with the bank. The executive team, I think this—it's an exceptional team. When you look at the executive team, each individual person, I think, one of the best in the country. So it also speaks, you know, when we cover the numbers together, I mean, I think that, that is, that's a fact. And secondly, the culture, the cultural change in the bank. Innovative culture, digital culture and so on, young people with a lot of, you know, motivation and so on. And now we have a very positive trend. So when you look at the numbers, I think the numbers are exceptionally well. And also the infrastructure part, so the digital capabilities, AI capabilities, and so on.
So, I'm very happy, you know, as the bank stands today. And also the new CEO, so he's an old friend of mine, a team player, actually. So we worked for about almost seven years. So I'm also happy to have come back. So he was in our team, and for a period of time, he was the CEO of another bank, so he knows the bank very well. So this transformation turned out to be very smooth, as expected. So it's the same trend, the same dynamism, the same teamwork, and also with the board, a very good, you know, synchronization. So I'm really happy, both on the group side as well as the bank side.
This is excellent to hear. Maybe, from this point, obviously, what I've noticed was, the bank had a very good performance in 2023, and I'm sure, the audience today have witnessed it in, in the bank's statements earlier. But I also see some hints of, the advancement through its future objectives. You know, the digital transition back to a point about infrastructure and the achievements that, provide certain hints for the long term as well. Maybe as you, you know, take us through, some of your notes, if you would be kind enough to touch base on those hints as well going forward.
Yes, sure. First of all, let me start with the 2023 figures. First of all, when you look at the ROE, which is the most—one of the most, critical, of course, items that we look at, it was like, you know, roughly 38% ROE in a difficult year. And when you look at the ROA, it was like 4.4%. But, what is striking, despite the growth, market share gains, and so on, still the bank has a relatively low leverage, which is 9 times. So look, you know, looking at the future, that means there's a lot of potential for the bank. And, capital adequacy ratio of the bank was 18.5%.
It's actually the strongest among the peers, and 15.6% Tier 1, which is also exceptional. And I have to say that on top of that, recently the management team issued AT1 roughly $600 million, where the demand was almost like $3.7 billion. So initially they were targeting something like, you know, $500 million, but because of that excessive demand, they increased that to $600 million. So therefore, even with the Tier 1 capital that we have today, with the AT1 additional capital that we have, these numbers are even stronger. So that is something very very good, you know, for the future growth.
The management team is actually exceptionally well in terms of balance sheet management. As you know, Turkey is a very, you know, dynamic place. Regulation changes every time, so you have to, you know, manage your balance sheet very actively. And I think the team does it extremely well. Mismatch management, risk management, I mean, how we can, you know, optimize the profitability and so on. So I think that's another major strength of the bank. Which I'm most proud of, to be frank with you, is the customer acquisition, the digital capabilities, you know, which is also a reflection of the team quality over here, you know, digital capabilities, AI capabilities, and so on. So the bank is now 76 years old. Last year, it was like 75.
So when you look at the last two years versus 73 years, the bank was able to increase its number of customers by 55%. So that really shows the strength of, you know, digital capabilities and the talent and the team. I mean, the bank made something like, you know, let's say, a hundred customers. So when you look at the two years, such a short period of time, given the previous 73 years, still, you know, I think that that's a major, major achievement. In 2022, 2.3 million customers, and last year, again, 2.3 million customers. And I'm proud to say that the team still continues with the same trend in 2024.
So, it's not only, of course, the number of customers, but of course, the market share reflections. So I think these are like, you know, exceptional figures that our friends, you know, achieved, like 300 basis market share in market share gain in consumer loans, 150 basis in Turkish lira deposits. Maybe what is even more important, fee generation is extremely, of course, important, like in every business. 230 basis increase in our market share in fees and commission generations among the, you know, private banks and reaching around 16.2%. So I think these are, you know, fabulous growth achievements, to be frank with you.
As you mentioned at the beginning, so, we always have long-term vision. So there's always this, you know, daily work, which we have to manage, but we, we actually never lost our focus despite the volatility, despite the challenges, and so on. So when you look at our 2025 targets, and we, we had already disclosed that to our investor community, like a year ago. So we were targeting like 5 million customers in the next 3 years until 2025. So I, I'm, I'm proud to say that, you know, almost half of it has been already achieved.
And we are going with the same trend, which is even a better, actually, situation for the digital customer growth, something like 68%, actually. So while we were growing our customer base, like, you know, 55%, the digital part was growing like 68%. So that is something very good, especially for our numbers, efficiency, and so on. For consumer loans, we set like 300 basis points increase in our market share over the last three years, and our friends have achieved that in a single year. So I don't know where this is really, you know, heading. SME parts, we also have a very strong SME banking digital capabilities, and so on.
But as you know, there were caps on loan pricing, especially at the beginning of last year. So therefore, because of this, we did not really have, you know, that much of appetite. Unless something is profitable and sustainable, you know, we don't do that. So, so therefore, now, SME is actually growing very well, back to our track, because now, because the, there is some, you know, reasonable profit margin in that. So when you look at the TL time deposits, again, our target was like 300 basis. We have achieved like, you know, almost half of it in a single year. Demand deposit is the most difficult product, actually, in a banking environment.
Again, we had like 300 basis target there, and our friends had already achieved like almost all of it in a single year. So I'm really very proud, you know, with those numbers. Fee to OpEx, as you know, because of the high inflationary environment in Turkey, OpEx base grows exponentially in every company, and this is also the case with the banks. So in such a year, we were able to actually improve our fee to OpEx ratio 72%, which was like roughly 50s, like 58% like a year ago. So I think these are like, you know, major achievements. So when we are talking about Akbank, actually, so we also have to keep in mind that we have a very strong subsidiary, you know, subsidiaries.
Akbank AG, which is actually a full-fledged bank in Germany. So when you look at the asset size, it's like, you know, EUR 4 billion, but when you look at the capital, the capital base is over EUR 1 billion. So where half of it is actually excess capital. So we have ambitions there to grow the bank. And like we did here over the last, you know, so many years, we are also transforming our bank in Germany, so it's becoming a very full-fledged digital institution. So we are exporting our digital capabilities to our subsidiary there, and I'm very positive about that bank in the coming years. Aklease, it is a very, you know, significant leasing company in the market with almost 12% market share.
This is also the case with our brokerage company. Especially, there are certain areas where they are exceptionally good, actually. So when you look at, like, the bond issuance, so they had, like, 45% of the market, so that really shows that their strength. When you look at the IPO market over the last couple of years, actually, so the total volume is roughly $2 billion. So these are significant figures. Asset management company, I'm very proud of that team. So they are doing a great job, actually. They are actually, in terms of asset under management, they are the largest or in the top two, let's say, which has been like this for many, many years.
So over EUR 400 billion asset under management. Pension side, they are also very strong. So I think the bank is very well positioned, not only traditional businesses, but we also have, like, e-money, a company targeting the youth market, and now they are very active in B2B. We have a venture capital company, which we established in Netherlands about a year ago, with $100 million actually capital, which is very aligned with our actually vision in Turkey, because we are a very digital bank.
Yes, if we continue, I mean, I don't want to go through every single slide, but I think this is maybe the best part of our, you know, management, because we run the bank, and also we are also focusing on our future. So I think this is the, you know, strength of the team. So we have been doing this for many years. We have been transforming the bank for many years, and that is why actually we were able to come up with you know such strong results. So when you look at our focus, of course, people, the talent will continue to be our top priority. Infrastructure, digital, AI, and so on, top priority.
Open Banking, which is, our-- which has been our vision for the last several years, we will continue to, invest in that. We are, investing in new businesses, so it's a very, you know, dynamic, actually, environment in our bank. And of course, last but not the least, this, you know, ESG part, which is a, a great, focus, for the bank. I, I don't want to go into too much detail, but there are certain things that I would like to highlight, on the slide. This, first of all, bank agnostic approach that we have. So I think this is the vision that we have adopted in our institution, I think for the first time in the banking industry in Turkey.
So we are trying to make Akbank as the best, you know, banking, let me say, kitchen with, you know, best products, best services, and so on. Digital capabilities, AI capabilities, and so on. But what we are trying to do, actually, also we are trying to create platforms where Akbank is one of those players. So the other banks, the other financial institutions, are more than welcome to, you know, have their transactions on those platforms. So Juzdan is a very typical example of this. So when you look at Juzdan, it's an e-wallet, actually. You don't only see Akbank products, cards, and so on.
So you can see other banks' products and so on, and I think this is something very futuristic, and I think this is something visionary, and Akbank has done a major, major, you know, homework on that part. So that will be part of our strategy. Similarly, Banking as a Service and Banking as a Platform, I think these are very two critical, you know, these are very short maybe words, but in terms of, you know, the level of importance in our future strategies, I think these are extremely important. So API, I mean, we are trying to connect our bank to our ecosystem, so.
We are the first bank, I'm also proud to say that, to come up with the first API in Turkey, which was almost like 10 years ago. So I think these are very critical looking forward. I think this is a slide that we all should be very proud of as Akbank people. So this is our digital business growth. The growth is phenomenal. Number of customers, as I said, 4 million, is 4.6 million customers in net after attrition. I think that's a fabulous number. So when you look at the digital, the mobile actually growth, it's even higher than that. So what is striking? So this mobile banking is actually extremely interactive.
So when you look at a mobile customer, they visit this 35 times a month. So this is a very, very big number, actually. And there's a lot of AI behind this. So I mean, maybe we did our best to have a very frictionless, you know, processing and so on. But I think what is striking in this, in our mobile banking is the AI, the brain, that we have been actually, you know, establishing behind this. So the numbers are very striking.
So when you look at the sales today, almost 90% of our consumer loans are sold through this channel, almost like, you know, 70% of credit cards, you know, Deposits, for example, I mean, in the past, it was almost impossible to actually sell deposit products through this. Now, 83% of our deposits are initiated here. So I think this is something very also encouraging, and 96% of the transactions in the bank are taking place in a non-branch digital environment. I think these are exceptionally good numbers. And I'm also proud to say that digital onboarding, which is very critical for our future, the bank has invested so much time, effort, and so on.
So there are times where Akbank acquires one third of the digital new customers in the country, in Turkey, in Türkiye. So imagine, you know, this trend continuing, you know, one third of every new customer coming to Akbank, I mean, imagine where this bank can go in the next, you know, several years. ESG is, of course, Ebru Güvenir is sitting next to me. I think Ebru Güvenir and the team is also doing a fabulous job in this area. There's a lot of awareness actually. This is part of our KPI, by the way, the KPI of the CEO, the management, and so on. Very critical. And today is also a very important day for us because we have been working on this, this actually Net Zero commitments. So-...
I think our commitments became transparent today, so this interim targets for 2030. So, we will be very transparent on that area. When you look at our rating over the last two to three years and so on, MSCI, for example, rating, we were able to improve our rating by about three notches, right? Over the last two years or so. I think that's also a great achievement. There are also some changes at the board level. I also have to, you know, mention this, the board diversity policy. So we will be having our General Assembly tomorrow, actually, so we will be together in that. So now we have a board diversity policy as well, for the first time.
So that is something that I'm also very happy about. So in that, when you look at the diversity policy, there are some certain numerical targets, like achieving, like, 30%, you know, female, actually, board members by the end of 2027. And I'm also, maybe I should have mentioned that. So when you look at that, the management team, the direct reports to the CEO, so it was 57%, women. So that was something that I was proud of when I left, and this is still the case, and I, I'm sure that this will continue in Akbank in that manner. So there are basically four areas where we concentrate: sustainable finance, people and community, ecosystem, system management, climate change, and so on.
I mean, I don't want to bore you, you, with all those, you know, details and so on, but, what I can assure you that we have numerical targets, for, for each one of them, and, we transparently, share this, with our, investment community. That's basically it. What-- That's what I would like to mention. I mean, if I have missed anything, you know, major, maybe? Yeah. But I'm sure that there, there will be some, some, some questions.
Thank you, Hakan Bey. And now we can proceed with the, Q&A session. Please type your question to the Q&A section of the Zoom. So, we'll try to answer your, questions. Thank you.
Thank you, everyone, for joining us today. We're very happy to be with you once again, and thank you, Hakan Bey, for your time. So I'd like to ask, obviously, the first question regarding today's rate hike comes through. How would you evaluate today's rate hike? What would be the impact on the bank's profitability, ALM management going forward, and the banking sector?
First of all, I think that was an important move of the central bank today. So they have actually a very strong management, theoretically, very sound management. And I think it was a good decision, this actually 5% increase in the policy rate. When you look at the impacts of this on the banks in the short term, actually, it is negative, because that means, you know, NIM compression, which was already under a lot of pressure with all these, you know, tightening and so on. So in the short term there will be some negative impact, but I think that will be good for the country. So if the country is better, of course, everybody is better, the banks are better.
So I think we shouldn't look at it in the short term. I think we should look at it in a more actually long term. So I think that was a positive move. So that means maybe in the short term, that might have some negative impact on the growth of the economy and so on. Maybe we can see Turkey now growing down to something like maybe 3% or something, you know, plus and minus, with the new interest rate environment. But I think the biggest problem that we have as a country is the level of inflation that we are really experiencing. So that's not good for actually anybody. So I think this will have some positive impact in terms of lowering the level of inflation.
So our latest forecasts for inflation was around 45%. But with this, you know, new initiative of the central bank, I think we may see now move towards like low 40s%, maybe. Of course, still, there's quite a lot of time in front of us. And also we have started seeing the impact of this on the currency already. Long term, actually, interest rates, some positive impacts. So overall, I think it was a good decision. And that also shows the, in a way, the independence and the independent decision-making, so just prior to the, you know, local elections. So I think it was a bold movement.
Thank you. The next question is regarding the rationale behind our recent AT1 issuance. As Akbank, we already have a very strong capital, actually, the one of the strongest capitals. So what was the rationale behind the AT1 issuance?
First of all, Akbank has a lot of credibility, actually, in the international market. So if we remember what we did last year, we had some Tier 2 loans, if we remember, and we paid all these Tier 2 loans, you know, in due time and so on. And there's a lot of actually, as I said, credibility. So we decided to take the advantage of having this relatively, I mean, still, maybe we are still experiencing something like, you know, 300 basis CDS, but compared to, like, you know, 700, 600, and so on, it is much better than what we had. And there was this declining interest rate environment. And the gap between AT1 and Tier 2 bonds were narrowing. So...
There was a lot of, you know, feedback from our fixed income investor base, that if Akbank issues such a, you know, product, there will be a lot of demand, and which was the case. So we tried to take advantage of that. So we already have the, you know, highest level of capital, actually, among the peers, and that puts some additional strength because the bank wants to grow. That protects us also against any FX volatility in the market. And on top of that, that also increases our lending capability. So because, as you know, in banking, there are limitations, percentage of your total equity, which is the largest, one of the largest in the country.
But that is also giving some additional advantages for us, especially for blue chip company type of, you know, lending.
Okay. Thank you. And what excites you most in terms of our 2025 targets? And where would you like to position the bank in terms of market share, asset size, in the future?
That makes me so happy, to be frank with you, seeing the bank having the same trend, positive trend, day after day, month after month. You know, when you look at my original background, I did a lot of retail banking in the past. So that even today, the trend that we are having today, it is far beyond my expectations. So I'm really so happy seeing our friends acquiring almost 500,000 customers in every quarter and without any slowing down. I mean, the slope is exactly the same. So that makes me very happy. And also, not only the number of customers, the revenue generation, fee generation.
What is also very important, when you grow very fast in terms of, you know, number of customers, usually, theoretically, your cross-sell ratio should decrease. I mean, that is very typical in every institution. So what is also very good at, when you look at the, you know, that last two years, at the same time, the bank was able to improve its cross-sell ratio. So that means every new customer that our friends are acquiring, they are entering the bank with a, with, you know, multiple product and service relationship. So that is something very difficult to manage actually, especially if you are acquiring something like 60% of your customers through digital. That requires a lot of AI capability. So that makes me very, very happy.
When you look at the financial strength, the capital adequacy, et cetera, et cetera, and the trend, we have, it's not only consumer banking, SME, we already have a very, you know, strong corporate banking. You know, when you look at our subsidiaries, they are extremely well and so on. So all together, as you know, Akbank, all these, you know, different business lines and so on, I think the trend is very good. But having said this, you know, as the management team, I'm sure that, you know, this, this is part of our, you know, story in the past. We are not only focusing on our, you know, daily business, there's always something new that we are building on. So I'm sure that the new management will continue to do that.
As the board members and we will also be, of course, very happy to see this, you know, happening in the coming days.
One last question I'd like, that there is, regarding risk this time. It says: How do you actually manage growth and risk? How do you balance growth and risk in this high interest rate environment when you're trying to gain market share?
Akbank has been actually exceptionally well in risk management, so still, this is the same case. So when you say risk, there, there are many, many risks, you know, in a bank. Credit quality, it has always been, you know, exceptionally well. So the, the typical question in a rising interest rate environment, what, what will happen to your, you know, cost of credit? So, especially if you are increasing your market share. So I, I think that might be a, you know, valid question. So I'm, I'm very confident in that area, to be frank with you. Of course, rising interest rate environment, of course, you know, in general, cost of credit should rise a little bit, but I, I think it, it should be something, you know, controllable, especially in our institution.
Again, I rely a lot on our risk management skills, lending skills, digital AI, because when you look at especially like consumer loans and so on, we have invested so much in our AI, machine learning, you know, technologies and so on. So I'm very happy to see those, you know, trends, cost of credit and so on, still under control. So I'm not really expecting, you know, anything, you know, very different than what we have today. And also, the banks have lots of, you know, buffers, lots of provisioning and so on.
And also, when you look at the low interest rate environment in the past, that was something very positive, especially for corporate and commercial customers, so they have, you know, much better equity than what they had, you know, back a couple of years ago. So I think this is something very positive. And when you look at the corporates and so on, FX exposures and so on, there is a dramatic decrease. So that is also something, you know, very positive. So if I recall correctly, like several years ago, the FX exposure was, you know, more than, like, $200 billion. So it is, like, almost one fourth of what they had before.
Even you, if you look at the, you know, next year, the short term, they have surplus. So, the business community also in Turkey, because of all the volatility, what we had experienced in the past, you know, many, many crises, like many, many years ago, I mean, it's a very skillful, you know, management teams that we have in the corporate life, in banks. So in general, I'm positive. But of course, cost of credit is only one type of a risk. So in a volatile interest rate environment, of course, how you manage your maturity mismatch, asset liability management, and so on, I think that is absolutely very critical.
But you know, I think the bank has an excellent track record, so we know, you know, when to hedge ourselves and what product to buy, et cetera, et cetera. So I'm very confident that we have one of the best ALCO teams in the country and they are very agile also in managing their balance sheet.
Thank you, Hakan Bey. Kerem, I guess there are no further questions. I'll leave the floor to you for closing remarks, and in the meantime, if there are any further questions, you can always reach out to Akbank Investor Relations. And again, thank you, everyone.
Hakan Bey, Ebru, Orhun Bey, thanks so much for the participation. We'll have following few days in the remainder of the year, so please keep on following us. If you have any further questions, please email to either Akbank or us on the IR email. Thank you.