WOOD Flash – Turkish and Russian banks: making sense of early indicators
We debuted our inaugural virtual conference last week, and hosted Akbank (SELL, PT TRY 6.80), Garanti (BUY, PT TRY 11.3) and Sberbank (ordinary shares BUY, PT RUB 286; preference shares BUY, PT RUB 243). In this flash note, we discuss the main takeaways from the meetings, and our take on the initial feedback. This kind of crisis is a novelty and no one has a crystal ball. However, we can tell that the expectations in both Russia and Turkey remain sanguine. Turkish banks still foresee 1-2% GDP growth in 2020E, and we believe the risk to this estimate is likely to be to the downside. Turkish credit spreads also indicate that this is the line of thought in the banking sector. Sber still wants to distribute 50% of its 2019 net income, when most banks are being pushed to retain capital these days. In Sber’s stress-test scenarios, the bank could stay profitable in a fairly stressful scenario, which would suggest that the bank does not expect a sweeping shock in the economy.Akbank is a commercial bank. Co. operates in five segments: Retail banking offers a range of retail services, such as deposit accounts, loans, credit cards, insurance products and asset management services; Corporate and Small and Medium Size Enterprises banking provides financial solutions and banking services; Treasury Activities conducts regional and foreign currency spot and forward transactions, bonds and other domestic securities; Private banking offers banking and investment transactions for upper-income groups and the International banking provides services for foreign trade financing and Turkish Lira clearances, and money transfers through agent financial institutions.
Sberbank Russia is an open joint stock commercial bank. Co.'s principal business activity is corporate and retail banking. This includes, but is not limited to, deposit taking and commercial lending in freely convertible currencies, local currencies of countries where the subsidiary banks operate and in Russian Roubles, support of clients' export/import transactions, foreign exchange, securities trading, and trading in derivative financial instruments. Co.'s operations are conducted in both Russian and international markets. As of Dec 31 2014, Co. had total assets of RUB25.20 trillion.
Turkiye Garanti Bankasi is a private banking group based in Turkey. Co. operates as an integrated financial services group in every segment of the sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with subsidiaries in pension and life insurance, leasing, factoring, brokerage, and asset management. Co. provides a range of financial services to 13 million customers through a distribution network of 994 domestic branches; 6 foreign branches in Cyprus, Luxembourg and Malta; 3 international representative offices in London, Dusseldorf and Shanghai with more than 4,152 ATMs, a Call Center and internet.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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