Vakifbank (VAKBN TI) - Backed by improved CoR; high ROE: Maintain Buy
Vakifbank has announced a 4Q net income of TRY1,044m (+6% q-q, +16% y-y), in line with the RT consensus (TRY1,012m) and our estimate (TRY1,047m). Core revenues contracted 16% q-q on narrowed core spread (-2.1ppt q-q) due to high deposit costs, while CPI-linker revenues (+19% q-q) and solid fee growth (98% q-q), the highest growth among peers, were supportive of the top-line. Trading income was supportive in the absence of swaps. Opex rose 60% y-y due to the transfer of OTAS provisioning (TRY392m), if adjusted, up 37% y-y. Net provisions declined 92% q-q on macro parameter changes, while the bank set aside TRY530m of free provisions in 4Q. Net total CoR went down to 6bp from 357bp a quarter ago with 2.7ppt q-q drop in NPL coverage (74%). ROE rose to 15.2% (+25bp q-q) in 4Q; yet adjusted for free provisions and dropped coverage ROE would be 15.8%, one of the highest among top-tier peers.
Turkiye Vakiflar Bankasi (Vakifbank) is a banking and financial services company based in Turkey. Co. offers products and services that cover corporate, commercial, investment and small-scale enterprise banking as well as the retail and private banking sectors. Co. also provides financial leasing, portfolio management, real estate, insurance and factoring services through its financial participations. Co.'s deposit products include time and demand deposits, as well as loans comprise spot loans, foreign currency indexed loans, consumer loans, automobile and housing loans, working capital loans, gold loans, foreign currency loans, eximbank loans, and pre-export loans.
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