Report
Ovunc Gursoy
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TURKISH BANKS - Banking monthly - January 2020

The BRSA announced banking sector KPIs for January, which is indicative of 1Q20. Banking sector net profit tripled m-m on normalized specific provisioning after a high base in 4Q. State banks’ (SBs) m-m net profit growth was better than that of private banks thanks to their improved net CoR. The TRY L/D spread and NIM performance were better at PBs. The TRY L/D spread of PBs rose 60bps m-m to 7.1%, while that of SBs contracted 12bps to 5.1%. We expect a continuation of spread accretion over the following months.

Our view: We believe that profitability will be strong in 1Q20 such that we see a 62% q-q net earnings expansion for banks we cover. In particular, the expansion in TRY L/D spread, the decline in provisioning and a benign opex should support profitability. We believe that private banks will see the best performance in core banking revenue (Net interest income + fees). Based on our models, ahead of the first quarter, we recommend our investors to add further exposure to Yapi Kredi, Garanti and Akbank.

Underlyings
Akbank TAS

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.

Turkiye Garanti Bankasi Anonim Sirketi

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.

Turkiye Is Bankasi Anonim Sirketi Class C

Turkiye Is Bankasi is a commercial banking group based in Turkey Co. is engaged in the provision of private, retail, commercial and corporate banking, money market and securities market operations as well as international banking services. Co. provides services to corporations, SMEs and other trading companies (excluding real trading persons) within the course of its corporate and commercial operations. Co. is organized into two main business segments: Banking segment, which includes corporate, retail and private banking, as well as treasury; and non-banking operations, which are followed according to insurance, ‘investment and finance' and ‘manufacturing and trading' segments.

Yapi ve Kredi Bankasi A.S.

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.

Provider
Teb Yatirim
Teb Yatirim

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.

Analysts
Ovunc Gursoy

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