Yapi Kredi Bank (YKBNK TI) - Spreads widen; NPL coverage drops: Maintain Hold
Yapi Kredi posted 2Q19 net income of TRY1,120m (-10% q-q, -9% y-y), above RT consensus (TRY1,003m) and our estimate (TRY1,057m). Higher trading losses on elevated swap costs (70% q-q) dragged earnings in 2Q. Core revenues, on the other hand, expanded 9% q-q on a wider core spread (30bp q-q vs BNPPe: -8bp) and a higher securities yield despite a reduction in the in-house CPI assumption (-1ppt). Fee growth (21% y-y) remained below the peer average (31%), yet stayed above opex growth (15% y-y). Although net provisions declined 7% q-q on lower generic provisions, the net CoR ticked up to 271bp (+7bp q-q) as two big-ticket loans went into NPL. NPL coverage dropped to 66% from 72% in 1Q19 as the bank sold TRY1.7b of NPLs in 2Q19. If we adjust the NPL coverage for the NPL sale, the coverage would be 70%. Lower effective tax rate due to front-loaded tax payment in FY18 supported the 2Q earnings, as well. ROE dropped to 11.3% in 2Q (Akbank 10.5%, Garanti 15.5%) from 12.7% in 1Q. ROE should be 5.1% adjusted for coverage and one-off tax relief, as per our calculations.
We lower our 19-21E earnings by 6.2%/2.9%/4.9%, respectively, raise our GGM-based TP c12% to TRY2.51 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.
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.