Earnings Review / Halkbank (HALKB TI) - Backed by dividends: Maintain Hold
Halkbank announced a 2Q18 net income of TRY1,113m (+41% q-q, -7% q-q div. adj.,+10% y-y), in line with both our estimate (TRY1,080m) and the RT consensus (TRY1,082m). Halkbank collected TRY374m dividend income in 2Q and we expect an additional TRY100m for 3Q. Core revenues grew 12% q-q on widened core spread (31bp) and higher CPI-linker revenues (+14% q-q). Fees contracted 2% y-y (vs 35% growth for top-tier peers), while opex rose 21% mainly on HR-related expenses. Halkbank’s headcount went up 6% q-q in 2Q (1,119 new staff) to replace potential retirees. Asset quality remained intact, yet new loan inflows into Stage 2 pushed the net total CoR to 80bp from 40bp a quarter ago. All-in-all, ROE went up by 4.1pp q-q to 16.3% (10.8% div. adj.).
We fine-tune our 18-20E earnings and GGM-based TP but remain HOLD. We think Halkbank’s valuation is full at 0.3x P/BV and 2.0x P/E on our 2019 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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