Earnings Review / TSKB (TSKB TI) - CPI linkers offset NPL surge: Maintain Buy
TSKB reported 3Q18 net income of TRY167m (+1% q-q, +3% y-y), in line with our forecast (TRY175m) and RT consensus (TRY167m). Core revenues grew 34% q-q on expanded loan-to-borrowing spread (+69bp) and doubled CPI-linker revenues. Note that TSKB revised its Oct-Oct CPI assumption used to calculate linker revenues to 19% from 9.5%. Assuming 25% CPI for October, we calculate an additional TRY45m linker revenue for 4Q18, which is 36bp NIM accretive. The trading line was in the red due to swap-related costs (+25% q-q). Opex went up 27% y-y driven mainly by personnel dividends. Asset quality deteriorated slightly as the NPL ratio ticked up to 2.1%. Net total CoR rose 1.3ppt q-q to 250bp largely on the currency impact. CAR went up to 17.9% (+2.7ppt q-q), 13.7% if we exclude the BRSA forbearance. ROE materialized at a high 17.5%, down 42bp q-q. TSKB revised its 2018E budget guidance. NPL rate assumption was lifted to below 2.5% (from <2.0%) and loan growth (FX-adjusted) was cut to 2% (from 10-12%). The bank now expects c.20bp y-y higher NIM (previously +10) and c.17% ROE (previously 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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