25 Şubat 2013 Pazartesi

BANK ASYA - 4Q12 earnings review

Below estimate due to higher-than-expected provisioning
Bank Asya posted TRY36m bank-only net profit in 4Q12 (-28% q-q and -31% y-y), bringing the FY12 net profit to TRY190m marking 12% y-y contraction and resulting in a poor ROE of 8.5%. Higher-than-expected provisioning expenses and the lower-than-expected other operating income pulled down the reported bottom line compared to our estimate.

Asset quality will be the main earnings driver going forward
Slightly encouraging points on asset quality were: 1) the TRY37m net NPL inflow, down by more than 50% compared to 3Q12, 2) the 3.1% q-q growth in restructured loans, which is lower than the average of the banks that have reported so far, and 3) 370bp q-q improvement in NPL provisioning ratio to 65.8% due to the effect of aging NPL.

Cut earnings by around 4% on average for 2013-15
Our earnings cuts result in around 100bp being shaved off of our long-term ROE estimate, lowering our TP to TRY2.18 (previously TRY2.55). We switched methodology from Dividend Discount to Gordon Growth/Excess Equity, with no noticeable impact on valuation. Downside risks: economic slowdown; Upside: Better NPL formation. Given limited upside, HOLD.
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