Garanti Bank (GARAN, Buy, TP TL8.10/share, upside 20%) announced its 1Q12 results

Garanti Bank (GARAN, Buy, TP TL8.10/share, upside 20%) announced its 1Q12 results with a net profit of TL862mn (+9% QoQ) in its bank-only financial statements. This 7% higher than our TL803mn call and 4%higher than TL827mn CNBCe average estimate. The bank’s 3M profit at TL862mn was also up by 1% YoY and corresponds to a ROAE of 19 %, a strong figure. The main difference between our estimates and the actual figures stems from a higher than expected TL89mn trading gain (our call: TL39mn). Our expectations on the core revenues are broadly in line with the actual results. Yet, LLPs was much lower than our estimates due the lack of general provision expenses. These two factors supported earnings for the quarter.

We believe that a strong earnings expectations for 1Q12 has been mostly priced in for the stock. We do not expect a major impact on the stock. We maintain our buy recommendation. Our target price of TL8.10 is offering 20% absolute upside.