TURKISH BANKS - Weekly banking review
In the week to 12th September, total loans decreased 1.5% w-w, while total deposits dropped 0.4% w-w. This week we saw new inflows (USD2.7b) of FX deposits, which were distributed evenly among private and state banks. The annual run rate of TRY loan growth declined to 10.5% from 11.3% a week ago. State banks led the TRY loan growth with an annual rate of 18.7% (19.6% a week ago) vs. 6.2% (6.7% a week ago) for private banks. On top of that, the LDR went down by 1.2pp w-w to 114% (132% for TRY and 98% for FX), while the NPL ratio ticked up by 11bp to 3.2% with 69% coverage. The Turkish banking index (XBANK) has gained 14.7% this week and outperformed its EM and EM EMEA peers for the second week in a row. QTD (4Q18), XBANK has gained 9.1% vs EM banks, which are down 3%.
On a 2019E P/E of 3.1x and P/B of 0.44x, Turkish banks we cover are trading at 62% and 60% discounts to their EM peers, respectively. We have BUYs on Akbank, Garanti, Vakifbank and TSKB.
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