Yapi Kredi Bank - We Are Upbeat on 2Q17 Results
Yapi Kredi Bank (YKB) announced 2Q17 BRSA standalone financials yesterday. It reported TRY892 mln in net income (down 15% Q-o-Q and up 20% y-o-y on a recurring basis), yielding 12.7% quarterly ROE. Net income over 1H17 totaled TRY1,893 mln, which translates to 38% recurring earnings growth. The bottom line beat our TRY838 mln forecast (consensus: TRY843 mln) on the back of a series of minor beats on the operating front. The key positive for the quarter were sustained LDR of 106%, a circa 45 bp improvement in capital ratios Q-o-Q, 90 bp Q-o-Q rise in the share of demand deposits in total deposits to 17.7% and stable NPLs with the "closely-watched" loan ratio down by 50 bps YTD to 3.0%. On the other side, meanwhile, we note a stretched core spread and more than doubled swap cost, which resulted in a 30 bp Q-o-Q NIM contraction. Overall, we expect that the earnings beat may have a slightly positive impact on the share price.Yapi Ve Kredi Bankasi is a financial services group. Co. serves its customers through its retail banking segment comprising of individual banking, Small and Medium Size Enterprises banking and card payment systems, corporate and commercial banking as well as private banking and wealth management segments. Co.'s operations are supported by domestic subsidiaries in asset management, brokerage, leasing and factoring as well as international banking subsidiaries in the Netherlands, Russia and Azerbaijan. As of Dec 31 2014, Co. had total assets of TL194.96 billion and total deposits of TL107.63 billion.
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