Fine-tuning EPS estimates
while TP remains unchanged
We fine-tune our net profit forecasts up 5% for 2012 and 1% for 2013, driven mainly by lower provisions. We also reflect the pension provision as higher operating expenses in 2012 and the change in the specific NPL coverage policy as lower specific provisions in both 2012 and 2013. Meanwhile, our DDM-based TP of TRY6.01/share remains unchanged.
3Q12 NP met our forecast with an unfavourable mix of deviations
Isbank reported TRY685m net profit in 3Q12, in-line with our TRY670m estimate but above the TRY576m CNBC-e consensus estimate. The details however, were not encouraging with a lower-than-forecast expansion in NIM, accompanied by lower-than-expected opex-related items, the sustainability of which is highly questionable.
HOLD rating maintained with limited upside to our target price
We maintain our HOLD rating with no change to our TP which offers a limited 4% upside. Key downside risks to our call are worse than expected asset quality deterioration and further provisioning needs for the pension deficit while the main upside risks are better than expected L-D spread evolution and a sizeable non-core asset disposal.
We fine-tune our net profit forecasts up 5% for 2012 and 1% for 2013, driven mainly by lower provisions. We also reflect the pension provision as higher operating expenses in 2012 and the change in the specific NPL coverage policy as lower specific provisions in both 2012 and 2013. Meanwhile, our DDM-based TP of TRY6.01/share remains unchanged.
3Q12 NP met our forecast with an unfavourable mix of deviations
Isbank reported TRY685m net profit in 3Q12, in-line with our TRY670m estimate but above the TRY576m CNBC-e consensus estimate. The details however, were not encouraging with a lower-than-forecast expansion in NIM, accompanied by lower-than-expected opex-related items, the sustainability of which is highly questionable.
HOLD rating maintained with limited upside to our target price
We maintain our HOLD rating with no change to our TP which offers a limited 4% upside. Key downside risks to our call are worse than expected asset quality deterioration and further provisioning needs for the pension deficit while the main upside risks are better than expected L-D spread evolution and a sizeable non-core asset disposal.
We see upside to consensus EPS est. but earnings visibility is poor
Loans and deposits grew 0.3% and 2.2% q-q, respectively in 3Q12 as expected. At 17bp q-q, expansion in NIM remained below our 33bp forecast, despite better-than-expected 17bp L-D spread expansion due to lower security yields and higher borrowing costs. Meanwhile, NIM adjusted for net FX & trading contracted 36bp q-q on derivative losses. NPL ratio deteriorated 18bp while coverage was reduced to 84% from 100% as expected. Adjusted net CoR rose 58bp q-q to 49bp, the first positive reading since 3Q09. Fees grew 13% y-y as expected while adjusted opex was up 4% y-y despite also relatively low other provisions which include the expected wage increases yet to be done for 2012.
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