TURKISH BANKS - Banking monthly - June 2019
The banking sector posted TRY5.1b of net profit for June (+42% m-m, +19% m-m adj. for dividends, cumulative -14% y-y). Higher dividend income and decline in net provisions led to the strong m-m earnings performance in June. Core revenue (NII + fees) fell 5% m-m on weaker core spread due to higher deposit costs, lower CPI-linker revenues and almost flat fees. TRY spread (-22bp m-m) slipped following the 36bp rise in deposit costs, despite the limited 14bp rise in loan yields. Asset quality was not a concern this month as net CoR (cost of risk) slid to 101bp from 115 a month ago, thanks to strong collections (+38% m-m) and lower generic provisioning on an appreciated Lira. ROAE stood higher at 13.6% from 9.7% a month ago. CAR remained high at 17.7%.
Our view: We estimate 19% q-q drop in earnings for our coverage universe in 2Q (18% q-q drop for PBs and 27% q-q fall for the SBs). PBs’ quarterly performance is better than our estimates, while the SBs’ performance totally came as a surprise. We think SBs’ relatively strong quarterly performance was due to Ziraat Bank’s likely provisioning reversals in 2Q.
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