TURKISH BANKS - Weekly banking review
In the week of 11th January, the annual run rate of TRY loan growth declined to 3.3% from 3.5% a week ago. The NPL ratio remained flat at 3.8%. The LDR materialized at 111%.
The Turkish banking index (XBANK) has gained 16.9% for the best weekly performance since ‘Bernanke day’ (May 2013). YTD, XBANK has gained 10.9%, outperforming EM and European banks by 6.4% and 5.4%, respectively.
In lira terms, XBANK has gained 15.4% outperforming the broad market and the manufacturers by 9.3% and 13.4%, respectively. YTD banks outperformance vs the broad market and the manufacturers stands at 5.4% and 7.1%, respectively.
Note that the critical Banks / Manufacturers ratio (XBANK / XUSIN) has rallied 60% in the bank’s favour since its all-time low close on 12th September (0.75x = all-time low close; 1.20x = last night’s close).
At 4.2x 2019E P/E and 0.5x 2019E P/B, Turkish banks in our coverage are currently trading at a 41% discount to their EM peers on P/E and 49% on P/B. We recommend investors to further increase exposure to Isbank and Vakifbank ahead of 4Q18 results.
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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