Report
Ovunc Gursoy
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Halkbank (HALKB TI) - Top-line grows; ROE recoups: Maintain Hold

Halkbank reported 4Q19 net income of TRY797m (up 158% q-q and 152% y-y), which was in line with our estimate (TRY777m) and RT consensus (TRY779m). Core revenues expanded by 28% q-q on a wider core spread (up by 1.8ppt vs BNPPe: 1.3ppt), lower repo costs and strong fee growth (29% y-y vs BNPPe: 28%). CPI-linker was the main headwind to the top-line as 19YE CPI came 4.4ppt lower than Halkbank’s in-house CPI estimate of 16.2%. Adjusting for this, linkers reduced core revenue by TRY1.2bn for 4Q. Trading losses, albeit lower on a q-q basis, and elevated effective tax rate (28%) put pressure on earnings. Opex (up 6% y-y vs peers 14%) was the second best performance among peers in 4Q. Net provisioning doubled q-q due to new NPL inflows, while net total CoR touched 144bp (3Q: 79bp). NPL coverage remained almost flat at 56% (down 73bp q-q vs peers 61%). Halkbank post the highest quarterly ROE of 10.2% in 4Q (peers: 10.9%) from 4.1% in 3Q.

We maintain HOLD; on long term (2019-30E) ROE of 11.2%.

Underlying
Turkiye Halk Bankasi Anonim Sirketi

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.

Provider
Teb Yatirim
Teb Yatirim

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.

Analysts
Ovunc Gursoy

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