Buy - Sell

·         TK BANKS ‘NEUTRAL’ > Upg ISCTR (stronger ROEs in med-term, on further improvements in opex & fee-gen fronts & incr’d focus on depo cost controls) to BUY; D/G GARAN & HALKB to HOLD (mainly on val): We sl. raise our earnings est (1% for 12 & 13) for 10 banks we cover & raise our TPs 16% on avg due to: 1) lower CoE, as we lower our Rf assumption to 7.5% from 8.0%, 2) Stronger-than-forecast equity build-up during 4Q12 & 3) TVM. Peak L/D spreads to have supported 4Q12 => exp NI +17% q-q & 23% y-y in 4Q12, due to NII growth, led by c.50bp q-q expansion in L/D spreads & higher returns from CPI-linked bonds. Gains in NIM => offset by higher provisions in both specific & general, former due to a c.15bp q-q rise in NPL adj for portfolio sales & latter to higher q-q loan growth vs 3Q12. Spreads to stabilize in 1Q13 & steady decline thereafter due to d/w re-pricing on assets with limited room for funding costs to come down. We exp 11% y-y EPS growth in 2013 on avg => main downside risk  => macro-prudential measures, should there be acceleration in capital inflows & loan growth to undesirable levels.

 

·         CABINET RESHUFFLE > PM Erdogan reshuffled his Cabinet yday. Replaced Idris Naim Sahin with Muammer Guler at Interior Ministry, Omer Dincer with Nabi Avci at Education, Recep Akdag with Mehmet Muezzinoglu at Health, and Ertugrul Gunay with Omer Celik and Culture and Tourism.  Neutral.

 

·         TOASO (HOLD, TP10.90) > PSA-Opel announced further details on their planned strategic partnership. Plan does not include joint production in LCVs, according to the media reports. Even though the probability of commercial vehicle production was low, we take the news to be +VE for TOASO. Note that TOASO produces Nemo/Bipper models of PSA and Combo model of Doblo.