Earnings Review / TSKB (TSKB TI) - CPI linkers offset NPL surge: Maintain Buy
TSKB reported 2Q18 net income of TRY166m (+4% q-q, +14% y-y), above our forecast (TRY155m) while in line with RT consensus (TRY160m). Core revenues grew 16% q-q on expanded loan-to-borrowing spread (+47bp), strong loan growth and elevated CPI-linker revenues (+7% q-q). TSKB revised its Oct-Oct CPI assumption used for calculating linker revenues to 14% from 9.5%. We expect 15bp positive NIM impact in 3Q from this change. The trading line was in the red due to swap-related costs. Opex went up 24% y-y due to personnel dividends, 12% y-y when adjusted. Asset quality deteriorated as an energy sector related big ticket corporate file went into NPL. Net total CoR rose 1ppt q-q to 122bp. The effective tax rate declined to 15% from 38% in 1Q18. CAR dropped to 15.2% (-92bp q-q) mainly on currency depreciation. ROE materialized at a high 17.9%, up 28bp q-q. TSKB revised its 18E budget guidance such that the NPL rate assumption was lifted to below 2% (from <0.5%) with 65bp net total CoR. The bank now expects c.10bp y-y higher NIM and c.18% ROE. We revise our 18-20E EPS -1.6%/+2.5%/-1.4%, respectively, raising our GGM-based TP to TRY1.07 and maintain BUY.
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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