Yapi Kredi Bank (YKBNK TI) - Spreads expand; NPL coverage high: Maintain Hold
Yapi Kredi posted a 1Q19 net income of TRY1,241m (+15% q-q, flat y-y), above the RT cons (TRY1,138m) yet in-line with our estimate (TRY1,205m). Core revenues showed a 7% q-q drop on lower CPI-linker revenues (down TRY1.7b), despite widened core spread (210bp vs BNPPe: 230bp) and strong fee growth (30% y-y). Despite weak top-line, retreated trading losses and lower net provisions on high collections were supportive of earnings. Net total CoR slid to 265bp from 428bp in 4Q, while NPL coverage stayed flat at 72%, the highest among peers. ROE rose to 12.7% in 1Q (Akbank 13.2%, Garanti 14.5%) from 10.9% in 4Q.
We revise our 19-21E earnings by 0.2%/3.1%/3.3% respectively, and increase our GGM-based TP c15% to TRY2.25. Maintain 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.
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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