Earnings Review / Isbank (ISCTR TI) - ROE pressured by high CoR: Maintain Hold
Isbank announced 3Q18 net income of TRY1,238m (-19% q-q, -18% y-y), in line with the RT consensus (TRY1,209m), yet slightly below our estimate (TRY1,316m). Core revenues grew 16% q-q on expanded core spread (+57bp) and surged CPI-linker revenues (46% q-q). Fees soared an eye-catching 37% y-y, above that of private banks in our coverage, while opex grew only 12% y-y, half that of inflation. Trading line remained in the red on mounted swap losses (+67% q-q). Mind that unlike private peers, Isbank does not hedge FX provisions. Asset quality deteriorated as net total CoR jumped to 390bp from 180bp in 2Q, while NPL coverage dropped to 58% (-8.3pp) and TRY150m of free provisions reversed. The CAR rose to 17.4% (+1.5 pp q-q), 14.4% sans forbearance. All in all, ROE fell to a peer-low 10.8% from 13.6% in 2Q. Earnings would be 84% q-q lower and ROE could have been 2% instead of 10.8%, if we adjust for provisions reversal and decreased coverage. We reduced our 18-20E EPS by 5%/4%/0%, on results. We cut our GGM-based TP by 13% and maintain HOLD.
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.