Halkbank (HALKB TI) - Operationally in line: Maintain Hold
Halkbank announced 1Q18 net income of TRY790m (+10% q-q, -35% y-y), in line with both our estimate (TRY818m) and the RT consensus (TRY800m). Core revenues slid 5% q-q on contracted core spread due to high deposit costs and weaker fees, despite flat CPI-linker revenues. The bank set aside free provisions of TRY70m against potential changes in IFRS 9 parameters. Otherwise net earnings would be 9% higher. Trading line was supportive thanks to favourable FX transactions and relatively low swap costs. The net total CoR materialized at a low 39bps thanks to strong collections, while Halkbank guides for 80bps gross specific CoR for the full year (1Q: 53bps). Opex fell 5% q-q, but grew 17% y-y, higher than the full year guidance (14%). All-in-all, ROE went down by 69bps q-q to 12.2%, which is one of the lowest among peers.
We made slight revisions to our 2018-20E estimates and GGM-based TP (see page 5 for details) but remain HOLD. We think Halkbank’s valuation is full at 0.3x P/BV and 2.3x P/E on our 2018 estimates.
Turkiye Halk Bankasi (Halkbank) is a banking and financial services company based in Turkey. Co. offers corporate and commercial banking products and services to a range of customers, from individuals to large corporations. Co.'s operations include: consumer and retail banking, consumer loans, credit and debit cards, deposit and overdraft accounts, payroll services, corporate and commercial banking, budget loans, credit line facilities, cash management, investment banking, brokerage, factoring, leasing and insurance services, and tradesmen/SME banking. As of Dec 31 2011, Co. operates 771 branches and had total assets of TL92,160,657,000.
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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