TURKISH BANKS - Weekly banking review
In the week to 23rd November, total loans decreased 0.6% w-w, while total deposits contracted 1.6% w-w. NPLs rose 0.4% q-q, while loans shrank. We expect the current NPL level of 3.6% to reach 4% at the year-end and then further elevate to 6% by end-2019. The LDR materialized at 114%.
Four banks plan to issue covered bonds on mortgage loans based on which the Turkey Development Bank will issue asset backed securities. Their sale proceeds will be given to the issuer banks. Hence, capital adequacies are set to improve as covered bonds are 1,250% risk weighted but ABS are zero risk weighted. ABS could be used to obtain funding from the CBRT as well, in our view. We think this is positive as it will support capital adequacy and liquidity for banks.
QTD, XBANK has outperformed EM/European banks by 20.6%/33.5%. In 4Q, banks have outperformed the manufacturers and the broad market. The Banks / Manufacturers ratio has rallied 46.7% in the bank’s favour since its all-time low on 12th September.
At a 2019E P/E of 3.4x and P/B of 0.4x, Turkish banks we cover are trading at a 60% discount to their 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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