We anticipate that the relaxation of the regulatory framework and a return to more conventional policies will positively impact the banking sector. TL commercial loan/deposit spreads (front book), which had plummeted to as low as -18% by the end of June, have reached 6.6%, thanks to the removal of a cap on lending rates and lower deposit rates. Taking these favourable developments and strong 2Q23 results into account, we are raising our aggregate FY23 NI estimate for the sector by 10%. We now fo...
While key central bank meetings passed this week without any major upset, the short-term outlook for EM is likely to be driven by global risk factors such as US banking system concerns and the debt ceiling. Spread widening could open up value given expectations for a more supportive medium-term backdrop.
With signs of some stabilisation in global markets, EM credit performed well this week. We see potential for the positive momentum to be sustained in the near term, with spreads still at elevated levels and EM nations largely insulated from recent banking stresses.
Buying opportunities in EM bonds? Yes, if you believe the key rates hiking cycle is soon at its end… Next week we hope the volatility amplitude will calm down following contained stress in financial markets caused by recent troubles in the US and EU banking systems, emergency actions and further tightening of monetary conditions. EM credit spreads technically widened recently, and cautious demand emerged. In this report we review our trade ideas we made before the storm started.
Halkbank’s 3Q22 results are higher than estimates: Halkbank reported bank-only net income of TL4.30bn in 3Q22 (+67% q/q) (RoE: 24.2%), higher than both our TL4.04bn forecast and the consensus estimate (TL4.06bn), thanks to higher-than-expected NIM. As such, net income in 9M22 reached TL8.9bn (20.0% RoE), vs. TL215m in 9M21. We revised our FY22 NI estimate to TL14.0bn from TL21.5bn, factoring in the high provision expenses, and our FY23 NI estimate to TL32.5bn from TL29.5bn, mainly due to greater...
3Q22 NI in line with our estimate: Vakifbank reported bank-only net income of TL5.59bn in 3Q22 (-20% q/q) (RoE: 26.1%), in line with our forecast of TL5.48bn and higher than the consensus estimate of TL4.90bn. Net income would exceed our forecast if the bank did not set aside TL5.5bn free provisions , rather thanTL5.0bn included in our numbers, thanks to lower than expected loan loss provisions. As such, net income in 9M22 reached TL15.6bn (29.2% RoE), vs. TL2.2bn in 9M21. The management retaine...
EME Equity Market – August 2022 Market performance – Turkey the biggest winner, in a predominantly bad month. The MSCI EM Europe Index declined 1.2% mom in EUR and 2.8% mom in USD terms. Turkey’s ISE index outperformed all other indices, adding 24.9% mom in EUR terms and 25.1% in local currency terms. Hungary’s benchmark, the BUX Index, added 1.1% mom and 0.2% mom in EUR and HUF terms, respectively. Greece’s ASE Index had a muted performance and added only 0.6% mom. All the other indices across ...
Halkbank’s 2Q22 results are higher than estimates: Halkbank reported bank-only net income of TL2.58bn in 2Q22 (+27% q/q) (RoE: 15.8%), higher than both our TL2.34bn forecast and the consensus estimate (TL2.42bn), thanks to higher-than-expected NIM. As such, net income in 1H22 reached TL4.6bn (16.6% RoE), vs. TL123m in 1H21. We revised our FY22 NI estimate to TL21.5bn from TL14.8bn following the results. Halkbank trades at 2022e P/B of 0.32x and we maintain our HOLD recommendation for the stock w...
Isbank (-/B3/B-) reported net income of TRY22,972m in 1H22, up 467.3% YoY, and TRY14,540m in 2Q22, up 72.4% QoQ. Vakif (-/B2/B-) reported net income of TRY10,019m in 1H22, up 610.3% YoY, and TRY7,016m in 2Q22, up 133.7% QoQ. Coca-Cola Icecek AS (BBB-/-/BBB-; Net Debt/ EBITDA ratio: 1.03x) reported 2Q/6M22 financial results on Tuesday, 9 August. Turk Telekomunikasyon AS (B+/-/B; Net Debt/ EBITDA ratio: 1.43x) published 2Q/6M22 financial results on Monday, 8 August.
2Q22 NI in line with our estimate: Vakifbank reported bank-only net income of TL7.02bn in 2Q22 (+134% q/q) (RoE: 36.0%), in line with our forecast of TL7.21bn and higher than the consensus estimate of TL6.66bn. While loan loss provisions were higher than our estimates, this was offset by lower-than-expected tax expense. As such, net income in 1H22 reached TL10.0bn (30.3% RoE), vs. TL1.4bn in 1H21. We revised our FY22 NI estimate to TL30.7bn from TL33.8bn as we incorporate high provision expe...
We anticipate net earnings growth of 304% for the banks in our coverage in 2022, driven by higher CPI linker income, which translates into an average ROE of 41%. While this level of ROE has not been seen in recent years, we believe it is more accurate to look at the ‘real’ return on equity, rather than the nominal level, considering the high inflation level. We expect CPI to end the year at 57%, and a return below inflation therefore means a contraction in banks’ equity in real terms. While ther...
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