Garanti Bank (GARAN TI) - Operationally strong: Maintain Buy
Garanti has announced a 1Q18 net income of TRY1,996m (+17% q-q, +31% y-y), above both our estimate (TRY1,576m) and the RT consensus (TRY1,656m). Core revenues slid 4% q-q on lower CPI-linker revenues post 4Q’s CPI adjustment (TRY560m), despite expanded core spread and a whopping 20% q-q growth in fees.
Our deviation stems mainly from higher-than-expected fees and lower-than-expected trading losses. Trading losses continued on high swap costs, yet sweetened by FX gains from fully hedged provisions. Asset quality was intact as NPL ratio ticked up only 3bps, while the net total CoR materialized at 143bps (Garanti guides for 100bps for 2018). Opex remained muted q-q on lower HR costs. ROE climbed by 2.3pp q-q to 19.1% (vs. 16.8% for Akbank), which is likely to be the best among peers.
We made slight revisions in our 18-19E estimates and GGM-based TP on results, but remain BUY. Garanti trades at 2018E P/BV of 0.9x and P/E of 5.7x, while 2018E ROE is at 16.4%.
Turkiye Garanti Bankasi is a private banking group based in Turkey. Co. operates as an integrated financial services group in every segment of the sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with subsidiaries in pension and life insurance, leasing, factoring, brokerage, and asset management. Co. provides a range of financial services to 13 million customers through a distribution network of 994 domestic branches; 6 foreign branches in Cyprus, Luxembourg and Malta; 3 international representative offices in London, Dusseldorf and Shanghai with more than 4,152 ATMs, a Call Center and internet.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.