First look at banking sector July figures

BRSA announced the Turkish banking sector’s aggregate net income in July 2012 as TRY1.8b, down 7% m-m but up 15% y-y. First the first seven months of 2012, banking sector’s aggregate earnings reached TRY13.4b, rising 12% y-y (down 2% for the private local deposit banks).

When adjusted for dividend income, the growth in the bottom-line reaches 16% m-m, which is mainly a result of lower provisions as Ziraat Bank had set aside sizeable extra provisions in June. July reported earnings compares 2% lower to the monthly average of 2Q12 while being 9% higher when dividend income is excluded.

For the private local deposit banks, the dividend adjusted bottom-line came off 20% m-m on the back of margin pressure due to lower contribution from CPI-linked bonds and lack of FX & trading gains while the negative net CoR was offset by sizeable higher other provisions. The reported earnings for private local deposit banks was 16% lower than the 2Q12 monthly average while being 4% lower on dividend adjusted terms.

We expect an improvement in future months as the decrease in funding costs that started in July will get reflected in the P&Ls throughout the rest of the quarter. We will issue a detailed note later.