TURKISH BANKS - Weekly banking review
In the week to 14th September, total loans decreased 2% w-w while total deposits contracted 1.4% w-w. The annual run rate of TRY loan growth declined to 12.9% from 13.8% a week ago. The LDR remained flat w-w at 115% while the NPL ratio is at 2.9% with 71% coverage.
The Turkish banking index (XBANK) has gained 3.1% this week and outperformed EM and EM EMEA peers for the second week in a row. The quarterly XBANK sell-off now stands at 42.9%. The XBANK has gained 4.4% in lira terms and continued to outperform the manufacturers for the second week in a row. Note that the critical BIST Banks / BIST Manufacturers ratio (XBANK / XUSIN) remains near all-time lows (close: 0.81x; all-time low close last month: 0.75x).
Turkey’s medium term economic program, announced this week, aims to preserve the banking sector’s strong structure. The government wants to stress test the banks to ascertain their financial strength and need for additional capital.
On a 2019E P/E of 2.8x and P/B of 0.4x, Turkish banks we cover are trading at 64% and 61% discounts to EM peers, respectively. We have BUYs on Akbank, Garanti, Vakifbank and TSKB.
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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