EUR 103.24 For Business Accounts Only

BGC Partners: TURKISH BANKING SECTOR: Reckoning with all the changes over the past month - GARAN (Buy - top pick), VAKBN (Buy), YKBNK (Buy), AKBNK (Hold),

Decreasing 2019 and 2020 earnings estimates by 8% and 5%, respectively... A whole lot has happened in the Turkish banking space over the past one month or so, from the BRSA asking banks to recognize some TL46bn of NPLs to CBT being able to deliver higher rate cuts than even our most bullish 600bps expectation for 2019 at the beginning of the year, from the SDIF materially increasing deposit insurance coverage and premia to the CBT significantly changing its reserve requirement framework while sharply cutting the remuneration on those along with the monthly credit card interest rate caps. In this report, we have factored all those into our models and as such, we have decreased our 2019 and 2020 earnings estimates by 8% and 5%, respectively, on average.