Akbank - NI Beat on Strong Asset Quality
Akbank posted BRSA standalone financials for 1H17 yesterday. It reported TRY1,501 mln in net income in 2Q17, up 13% y-o-y and 7% Q-o-Q, for a 17.2% ROE. In 1H17, net income totaled TRY2,906 mln, up 24% y-o-y. The 2Q bottom line beat our forecast of TRY1,422 mln and the consensus estimate of TRY1,440 mln on stronger than expected NPL recovery and lower than expected provisioning. The main positives of the quarter were very strong asset quality (only a 40 bp net NPL formation rate and 38 bp net total COR), good deposit growth of 4.6% Q-o-Q (resulting in a stable LDR), an 85 bp improvement in capital ratios and 13% y-o-y net fee income growth (up from 6% y-o-y in 1Q17). On the flipside, the bank posted a circa 15 bp Q-o-Q NIM contraction, 10% y-o-y opex growth and moderate loan growth of 0.7% Q-o-Q. Overall Akbank's results were pretty strong and should have a positive effect on the share price.Akbank is a commercial bank. Co. operates in five segments: Retail banking offers a range of retail services, such as deposit accounts, loans, credit cards, insurance products and asset management services; Corporate and Small and Medium Size Enterprises banking provides financial solutions and banking services; Treasury Activities conducts regional and foreign currency spot and forward transactions, bonds and other domestic securities; Private banking offers banking and investment transactions for upper-income groups and the International banking provides services for foreign trade financing and Turkish Lira clearances, and money transfers through agent financial institutions.
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