Isbank (ISCTR TI) - Strong ROE; NPL coverage rises: Maintain Buy
Isbank posted a 4Q19 net income of TRY2,310m (+71% q-q, +5% y-y), in line with both our estimate (TRY2,251m) and RT consensus (TRY2,280m). Net earnings would have been 43% higher at TRY3,310m adjusted for free provisions (TRY300m) and assuming flat q-q NPL coverage in 4Q. Core revenue grew 14% q-q on widened core spread (1.3ppt vs BNPPe: +90bp) and higher fees. Fee income growth (22% y-y vs BNPPe: 18%) fell behind the opex growth (37% y-y) mainly due to additional provisions for pension deficit (TRY259m). Swap related trading losses continued to weigh on earnings, but at a lesser extent q-q. Net provisions surged on higher stage-2 and NPL coverage, while net CoR rose to 264bp from 132bp in 3Q. NPL coverage went up to 55% from 51% in 3Q. Reported ROE soared to a huge 16.3% (private peers: 7.3%) from 10.1% in 3Q. Coverage and fee provisions-adjusted ROE stood at 23.3%, which could be the highest ROE among the top-tier peers in 4Q.
We maintain BUY, on strong long term (2019-30E) ROE at 16.2%.
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.