Vakifbank (VAKBN TI) - Backed by solid fee growth: Maintain Buy
Vakifbank posted a 1Q19 net income of TRY651m (-38% q-q, -38% y-y), in line with the RT cons (TRY664m) and our estimate (TRY681m). Core revenues remained flat q-q thanks to a wider core spread (178bp vs BNPPe: 162bp) and an eye-catching fee growth (120% y-y), the highest growth among peers, despite lower CPI-linker revenues (down TRY1.1b q-q). Trading line was supportive on securities sales and favourable FX transactions, despite some swap costs. Opex was up 23% y-y, above the inflation, while net provisioning expenses rose on new NPL inflows and higher stage 2 loans. Net total CoR rose to 190bp from 6bp in 4Q18, while NPL coverage remained flat at 74%. ROE dropped to 9.1% in 1Q (peers 13.3%) from 15.2% in 4Q.
We revise our 2019-21E EPS by -5%/-2%/-1%. We slightly lower our GGM-based TP to TRY5.66. (from TRY5.80).
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.
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.
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