Earnings Review / Yapi Kredi Bank (YKBNK TI) - Operationally in-line: Maintain Hold
Yapi Kredi reported 2Q18 net income of TRY1,227m (-1% q-q, +38% y-y), above our estimate (TRY1,116m) and the RT consensus (TRY1,107m). Our deviation stems from lower-than-expected opex on branch level expenses. Core revenues grew 9% q-q on expanded core spread (+42bps q-q) and higher CPI-linker revenues (+6% q-q). Fee income expanded by a solid but expected 27% y-y in 2Q18, while opex increased by an unexpectedly low 9%. Asset quality deteriorated as two big ticket loans (TRY402m) went into NPL. Net total CoR soared 161bp in 2Q from 96bp in 1Q. The CAR rose to 15% (+1.1pp q-q) on capital injection of USD1bn in June. ROE went down to 14.1% from 16.1% a quarter ago mainly on capital increase, 15% if adjusted for that.
We revise our 18-20E EPS by +0.6/+1.2/+3%, respectively, raise our GGM-based TP slightly to TRY2.33 and remain HOLD
Yapi Ve Kredi Bankasi is a financial services group. Co. serves its customers through its retail banking segment comprising of individual banking, Small and Medium Size Enterprises banking and card payment systems, corporate and commercial banking as well as private banking and wealth management segments. Co.'s operations are supported by domestic subsidiaries in asset management, brokerage, leasing and factoring as well as international banking subsidiaries in the Netherlands, Russia and Azerbaijan. As of Dec 31 2014, Co. had total assets of TL194.96 billion and total deposits of TL107.63 billion.
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