Garanti Bank - Forecasts Beat Despite Free Provisioning
Garanti Bank announced 2Q17 financials yesterday, reporting TRY1,554 mln in standalone net income, about flat Q-o-Q and y-o-y (on a recurring basis, net income was flattish Q-o-Q and up 40% y-o-y), yielding a 16.7% ROE. In 1H17, net income amounted to TRY3,080 mln, marking 19% y-o-y reported earnings growth (or around 50% y-o-y on a recurring basis). The reported bottom line beat the market consensus estimate of TRY1,482 mln and our estimate of TRY1,448 mln, even though the bank set aside TRY220 mln in free provisions (we had been expecting TRY100 mln). The main positive of the quarter was the strong asset quality, as reflected in the only 30 bp net NPL formation rate. Garanti also sustained fee growth of 14% y-o-y, slowed opex growth to 8% y-o-y and substantially improved its capital ratios. The only real negative was an around 35 bp contraction in swap-adjusted NIM. We expect a positive market reaction to the financials.Turkiye Garanti Bankasi is a private banking group based in Turkey. Co. operates as an integrated financial services group in every segment of the sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with subsidiaries in pension and life insurance, leasing, factoring, brokerage, and asset management. Co. provides a range of financial services to 13 million customers through a distribution network of 994 domestic branches; 6 foreign branches in Cyprus, Luxembourg and Malta; 3 international representative offices in London, Dusseldorf and Shanghai with more than 4,152 ATMs, a Call Center and internet.
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