Isbank (ISCTR TI) - 1Q18 backed by non-core revenues: Maintain Hold
Isbank announced 1Q18 net income of TRY1,807m (+50% q-q, +10% y-y), above both our estimate (TRY1,338m) and the RT consensus (TRY1,426m). Isbank adopted equity pick-up method (IAS 27) in accounting subsidiaries income for the first time. The bank booked TRY510m subsidiaries income in 1Q (vs. BNPPe: TRY275m) and guides for a similar amount of income for each quarter going forward. Besides, Isbank reversed a one-off TRY504m of general provisions on reclassifying loans in line with IFRS 9. Adjusted for these, net earnings would actually be 11% q-q lower. Core revenues grew 4% q-q on expanded core spread on upward loan repricing and flat CPI-linker revenues, despite weak fee growth. All-in-all, ROE grew 5pp q-q to 16.8%. We think the chances of ROE (BNPPe for 2018E: 13%) getting closer to the guided 18E ROTE level (16-17%) appears more likely after adopting IAS 27.
We revise our 18-20E EPS +8%/-0.5%/-6%, we reduce our GGM-based TP 5% to TRY6.74 and maintain HOLD following 1Q18 results (see page 5 for details). We think Isbank’s valuation is full at 0.7x P/BV and 4.3x P/E on our 2018 estimates.
Turkiye Is Bankasi is a commercial banking group based in Turkey Co. is engaged in the provision of private, retail, commercial and corporate banking, money market and securities market operations as well as international banking services. Co. provides services to corporations, SMEs and other trading companies (excluding real trading persons) within the course of its corporate and commercial operations. Co. is organized into two main business segments: Banking segment, which includes corporate, retail and private banking, as well as treasury; and non-banking operations, which are followed according to insurance, ‘investment and finance' and ‘manufacturing and trading' segments.
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.