Buy - Sell

·         HALKB (HOLD; TP: TL18.72 cut from TL21.3) 4Q12 beat on higher trading gains; caution on restructured loans > 4Q12 NI @ TL742m (+24% q-q and +47% y-y) > Quarterly ROE @ 25.4%. FY12 NI +27% y-y. Annual ROE @ 24.8%. Top-line performance in line. Positives: Stronger than sector avg loan growth (+4.6% q/q & +17.2% y-y), mostly from housing & corp loans. +30bp q-q core spread => due to falling deposits costs. NIM +115bp q-q => +ve CPI linker contribution (~TL275m higher than 3Q). Deposits +4.6% q/q (20.7% y-y), sustained L/D ratio c. 82%. Negatives: Significant opex jump of 34% y-y in 4Q12 (22% y-y in FY12) => launch of new credit card scheme. 4Q net NPL addition @ TL91m in 4Q12 => better than TL137m in 3Q12, BUT restructured loans signals NPL inflow in 1Q13. Share of closely monitored loans => up from 2.9% to 4.7% q-q. TL83m discretionary provisions might be related to potential NPL inflows ahead. NET/NET: Despite higher-than-exp NI, possible NPL inflow makes us cautious re earnings performance.

 

·         ISCTR (BUY; TP TL8.63) 4Q12 results today > TEB-BNPP NI @ TL836m (-3% y/y & +22% q/q) Cons @ TL857m. We exp Isbank to gain mkt share in loans and deposits in 4Q12. We f/cast a relatively limited 36bp q-q improvement in total L/D sprd and a 54bp q-q expansion in NIM. However, strong trading gains should allow for an 83bp q-q widening in the FX & trading-adj’d NIM. We exp a sharp incr in net CoR, from the low base of 3Q12 when the bank changed its 100% NPL coverage policy, to 44bp levels. Otherwise, we f/cast a stable NPL ratio when adj’d for portfolio sales, which should lead to TL50m of one-off gains. Meanwhile, headline NPL ratio should improve to 1.9%. We f/cast fees and opex (adj’d for pension deficit) to have risen by 13% and 8% y-y, respectively, in line with 9M12 trends. We est a 22% q-q incr in NI, leading to an improvement in ROE, to 15% from 13% in 3Q12. Isbank will hold conference call and webcast at 18:30 Istanbul time. Webcast link => http://www.media-server.com/m/p/2q7yu5q8 Dial-in => Turkey “+90 212 708 12 36” UK “+44 203 367 94 53” USA “+1 866 907 59 25”.

 

·         VAKBN (BUY; TP TL6.91) 4Q12 results today > TEB-BNPP NI @ TL410m (+57% y/y & +34% q/q) Cons @ TL416m. We exp Vakifbank to have lost mkt shr in loans and gained in deposits in 4Q12. We f/cast a better-than-sector 61bp q-q improvement in total L/D sprd. However, a milder contribution from CPI-linked bond should limit NIM expansion at a lower-than-sector 75bp q-q. We exp a further rise in net CoR, mainly on the back of incr’d NPL coverage ratio, as well as a couple of problematic files. General provisioning costs could also be higher on regulatory changes re pre-Oct’06 loans. We f/cast an 18% q-q improvement in fees and a 15% y-y rise opex. We est a 34% q-q incr in NI, the highest increase of the banks we cover, leading to an improvement in ROE, to 14% from 11% in 3Q12. Vakifbank will hold conf call and webcast at 17:00 Istanbul time. Webcast link => http://www.media-server.com/m/p/v2b2yk69 Dial-in => Turkey “+90 212 705 29 20” UK “+44 2030 432 440” and “0 808 238 1774” USA “+1 877 887 41 63”.

 

·         YKBNK (BUY; TP TL6.54) 4Q12 results today > TEB-BNPP NI @ TL501m (+6% y/y & -7% q/q) Cons @ TL529m. We exp Yapi Kredi to continue to have gained mkt shr in TL loans and deposits and lost in FX. We f/cast a limited 28bp q-q improvement in total L/D sprd. A limited contribution from CPI-linked bonds should limit NIM expansion at a lower-than-sector +31bp q-q. However, strong trading gains (the bank sold some of its Eurobonds after reclassifying those to AFS from HTM) should lead to a strong 89bp q-q rise in the FX & trading-adj’d NIM. We exp MTM gains on Eurobonds to also have led to a sharp 13% q-q incr in equity. We exp a sharp incr in CoR due to higher general provisioning and partial restoring of the NPL coverage ratio following sizeable portfolio sales, which should lead to a TL67m one-off gain. We f/cast a 14bp q-q rise in the adj’d NPL ratio and an improvement to 3.1% in the headline figure. We f/cast fees to have contracted 1% y-y in line with 9M12 trends. However, opex growth is exp’d to gain pace to 15% y-y. As a result, we est a 7% q-q decline in NI, leading to a drop in ROE to 14%, from 17% in 3Q12. YKB will hold a conference call at 17:30 Istanbul time. Dial-in => Turkey “+90 216 217 12 02” UK “+44 203 367 94 55” USA “+1 866 907 5928”.

 

·         TTRAK (HOLD, TP TL46.60) > 4Q12 results today. TEB-BNPP NI & EBITDA (TL50m & TL60m) Cons (TL47m & TL58m).) Despite sharp decline in local unit sales in 4Q12 (down 32% y/y) co raised unit prices by 15% y/y, which resulted in a significant increase in operating profit. We do not expect a major increase in marketing and admin expenses in 4Q12. We expect revs to decline 13% y/y and EBITDA to jump 39% y/y despite increase in share of low-margin export sales to total revs. We project EBITDA mrgn will expand 5.2ppt y/y to 14.1%.

 

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