TSKB (TSKB TI) - Backed by lower net CoR: Maintain Buy
TSKB reported 1Q19 net income of TRY185m (+9% q-q, +17% y-y), in-line with our forecast (TRY186m) and the RT consensus (TRY181m). Lower net provisions (-16% q-q) on strong collections, solid fee growth (34% q-q) and declined trading losses on derivative valuation gains explain the quarterly good results. Core revenues contracted 13% q-q on 70% drop in CPI-linker revenues, despite widened loan-to-borrowing spread (+77bp q-q) thanks to higher FX loan yields. Opex increased 24% y-y driven mainly by non-HR expenses. Asset quality remained intact as NPL ratio levelled out at 2.6%. Net total CoR dropped to 160bp q-q from 168bp a quarter ago on high collections. NPL coverage stayed flat q-q at 22%. ROE declined to 14.8% in 1Q (4Q: 15.8%), the highest ROE among the banks in our coverage.
We revise our 19-21E EPS 0.4%/0.6%/3.1%, respectively, lifting our GGM-based TP to TRY1.07. 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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