The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Edmond Christou - Bloomberg Intelligence - Analyst
: This is Edmond Christou from Bloomberg Intelligence. First question is on the staging downgrade into Stage 2. Can you just give some light on
the -- which account, which region that moved the Stage 2 from 6% to 6.6%? And how do you expect this to evolve into next year? I believe you
have been doing a lot of proactive downgrades and provisioning against it. Just some clarity on the guidance for next year on this.
And the other one on the margin. Very strong margin for Q4. I sense from your conversation that you expect some normalization of margin into
the first half of next year before we get the rate hike to filter into the margins in the second half of next year. So what's your expectation on the
cost of funding? Will it still be supportive in Turkey? And what's your expectation on the cost of funding in Qatar, given the tapering that's happening
and the expectation for rate hike by the second half of next year?
The last one, if possible, on the CET1. Very strong capital generation, your CET1 moved from 13.5% in Q3 and to 14.2% in Q4. I'm not be able to
reconcile this in terms off -- I did adjustment for dividends, and I added the profit as a cash generation, but I'm still not able to bring the number
close to each other. If you can walk me through what is the impact on the lira there and also your capital generation, if there is any one-off.
Question: Edmond Christou - Bloomberg Intelligence - Analyst
: Okay. This is very helpful. On the margin for 1H, do you see a lower margin on Turkey or you still expect low cost of funding to be supported?
Question: Edmond Christou - Bloomberg Intelligence - Analyst
: In Turkey -- and the low cost of funding in Turkey, do you expect it to be supported for 1H margin the first half of this year?
Question: Aybek Islamov - HSBC, Research Division - Analyst
: Yes, three questions, if I may. So the first one is I was curious: in a scenario that 10-year U.S. yields rise materially and they started to rise from end
of last year, how do you think that will -- may impact your cost of funding, your wholesale funding costs? So if U.S. yield curve also steepens, how
will that impact your sort of NIM position? That's my first question.
And the second question is...
Question: Aybek Islamov - HSBC, Research Division - Analyst
: No. So Fed rate is a short-term rate, right, so we're thinking about Fed rates as short-term 3-month rates. But these are long-term interest rates, like
Question: Aybek Islamov - HSBC, Research Division - Analyst
: But on the funding side, is there any sort of type of funding, maybe CDs or long-term wholesale notes, which are sensitive to 5 years, 7 years
(inaudible).
Question: Aybek Islamov - HSBC, Research Division - Analyst
: Okay, okay. Yes, yes, that's very clear. I'll move to the second question. So I mean you mentioned several times that revenue growth will continue
to be strong in 2022, which is great. In terms of -- you said that you will set aside some of your revenues for provision reserves, loan loss provision
expenses. What about operating costs, do you see any areas where you feel like you need to increase your OpEx? Any sort of CapEx plans on the
operating cost side?
Question: Aybek Islamov - HSBC, Research Division - Analyst
: And the last question, I just want to know your view on the return on equity outlook. Do you feel that in a scenario of rising interest rates and very
good provision coverage, can you improve your return on equity 100 basis points, 200 basis points? We can take a 2-, 3-year view here.
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