TSKB (TSKB TI) - Stable top-line; high tax expense: Maintain Buy
TSKB has announced 1Q18 net income of TRY159m (+11% q-q, +13% y-y), below both our forecast (TRY173m) and the RT consensus (TRY173m). Higher-than-expected effective tax rate on new free provisions (TRY52m) largely explains our deviation.
Core revenues remained flat q-q on expanded loan-to-borrowing spread, despite lower CPI-linker revenues and higher repo costs. Trading line was in the red due to swap related costs. Asset quality was intact, evident by almost nil NPL rate. Net total provisions retreated on reversals (TRY80m), while opex expanded 16% q-q on personnel dividends. Effective tax rate rose to 38% from 11% in 4Q17. ROE materialized at 17.6%, up 1pp q-q.
We revise our 18-19E EPS -0.6%/+0.2, leave our GGM-based TP unchanged at TRY1.74 (see page 4 for details) and remain BUY. TSKB trades at 2018E P/BV of 0.9x and P/E of 5.3x, while 2018E ROE is at 18%.
Turkiye Sinai Kalkinma Bankasi is a private development and investment bank. Co. provides its clients with an array of products and services in the corporate banking, investment banking and advisory business lines. Co. serves its corporate clients in investment banking through solution oriented treasury products in addition to corporate finance activities such as mergers, public offerings and bond issuances. Co. mainly operates in investment and corporate banking segments. As of Dec 31 2014, Co. had total assets of TL6.23 billion.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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