Turkish Banks - Private Banks Outperform Operationally in August

The Turkish banking sector's August earnings data came out yesterday. Banks posted TRY4,232 mln net income in August, up 12% m-o-m and 15% y-o-y, for a 15.0% ROE. Adjusted for the TRY500 mln dividend income of state banks, the sector's recurring earnings growth was 3% y-o-y. In 8m17, net income totaled TRY33,280 mln, up 25% y-o-y (or 35% on a recurring basis), yielding a 14.1% trailing ROE. Compared with the 2Q17 monthly average, the average of July and August was down 2%, though it was up 20% relative to the 3Q16 average. The August data is generally neutral to slightly positive for banking stocks. Earnings growth continued to slow, while private banks posted a better operating performance than state banks and should continue to do so in the near term. The data was especially positive for TSKB and Albaraka Turk, as the performance of investment and development banks as well as participation banks stood out. Foreign banks performed well too, which is positive for Garanti Bank, which makes up roughly half of the segment.