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Bank (YKBNK, Buy, TP TL4.20, upside 35%) announced its 1Q12 results with a net
profit of TL507mn (+7% QoQ) in its bank-only financial statements. This is 8%
higher than our TL471mn call and 6% higher than TL478mn CNBCe average estimate.
3M profit at TL507mn was down by 5% YoY and corresponds to a ROAE of 16.9%,
good enough figure for future growth projections.
The main
difference between our estimates and the actual figures stems from a strong NII
and higher-than expected dividend income (TL150mn vs. our call: TL125mn). On
the other hand trading loss was higher than our call (TL32mn loss vs. our
TL12mn call).
Looking at
the details, operating income was flattish QoQ. Limited NII
contraction and a strong dividend gain were able to offset weak fee generation.
The most important item of the quarter was the worsening asset quality.
The headline NPL ratio increased by 20bps to 3.2% (our call: 3.1%) while the
weight of Group II loans reached 2.9% (2.2% in 4Q10). On the positive side and
contrary to sector trends, a TL340mn NPL collection (+13% QoQ) was still
supporting the earnings. OPEX was flattish QoQ and up 10%, indicating the
maintenance of cost efficiency strategy. Finally, lower-than-expected tax
provisions supported earnings for the quarter.
The bank is
trading on 2012E P/E of 7.1x (at a c.16% discount to its peers) and P/BV of
1.10x with a 2012 ROAE at 16%. The valuation multiples are
attractive for the bank. We do not expect a major impact on the stock price.
For the longer term, we maintain our buy recommendation. Our target price of
TL4.20 is offering 35% absolute upside.
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