EUR 102.91 For Business Accounts Only

BGC Partners: YKBNK 1Q19 Update - Relative improvement in all operational metrics continues

Yapi Kredi Bank reported TL1,241mn unconsolidated net income in 1Q19, slightly above the TL1,138mn consensus and TL1,130mn BGC estimates, mainly due to lower-than-forecast general provisions while all other lines were broadly in line with expectations. Overall, we assess that the relative improvement in YKB’s operational metrics continued in 1Q19, as the bank delivered a peer-best q/q expansion in core spreads, along with lower-than-peers net NPL formation, robust fee growth, and a contained rise in operating expenses. Meanwhile, following a deleveraging in 4Q18, YKB grew in TL SME loans under the Credit Guarantee Fund umbrella in 1Q19 as well as in GPLs, in line with its business mix shift strategy. As such, 1Q19 ROATE materialized as 13.3%, slightly above the management’s low-teens guidance for FY19 and ranking second best to Garanti among peers.