Halkbank (HALKB TI) - Unenthusiastic results; low ROE: Maintain Hold
Halkbank announced 4Q18 net income of TRY317m (+5% q-q, -56% y-y), in line with RT consensus (TRY317m), while slightly above our estimate (TRY298m). Core revenues went up a mere 1% q-q on contracted core spread (-1.5ppt), despite higher CPI-linker revenues (1.4x q-q) and expanded fees (peer-low 20% y-y). Trading line turned green on favourable FX transactions. Opex rose 27% mainly on HR-related expenses. Net provisions rose 16% q-q as the bank set aside the entire tax reversal (TRY225m) as free provisions (TRY264m). NPL coverage slid to 74% from 79% a quarter ago. The net total CoR fell to 80bp from 134bp a quarter ago. ROE went up by 14bp q-q to 4.4%, the lowest reported ROE among top-tier peers. Adjusted for free provisions and dropped coverage, ROE would be 2.2%.
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.
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