1 Şubat 2013 Cuma

Garanti Bankası Bilanço Analizi

Very slight downward revisions to medium-term EPS estimates
In light of 4Q12 financials, we slightly revise down our net profit forecasts for Garanti Bank for the medium term but reduce our long-term profitability assumptions to a larger extent due to a lower sustainable margin expectation. This results in an 11% cut to our DDM-based target price to TRY9.60 from the previous TRY10.81.

4Q12 results highlight in-line core trends, prudent provisioning
Garanti reported TRY757m net profit in 4Q12, 12% below our TRY857m estimate and 10% lower than CNBC-e consensus. Almost totally in-line core trends were offset by higher-than-forecast opex and provisions, as the former rose due to a rise in employee termination benefit reserves while the latter rose due to provisions for unused cheque pages.

HOLD maintained as we see limited upside to our TP
We maintain our HOLD rating for Garanti Bank as we see limited upside to our TP. The key downside risk to our estimates is a sudden slowdown in the economy with rising unemployment figures pushing SME and credit-card NPL ratios higher. The main upside risk to our call is better-than-expected NIM evolution.

Management provisioned prudently and maintained 2013 targets
The bank intentionally lost market share during 4Q12, growing its loans 2.8% q-q while deposits shrank 2.6%, which resulted in a very strong 93bp q-q rise in L-D spread. Coupled with the boost from CPI-linkers, this has led to a 192bp q-q expansion in NIM, exactly in line with our estimate. Extra funding came via TRY repos which almost doubled q-q. Gross CoR rose sharply to 190bp due to prudent recognition of some commercial files as NPLs, reclassification of discretionary provisions previously set aside for a potential NPL as specific, and extra general provisions due to regulatory change. 4Q12 fees grew 3% y-y (as expected) while opex ended 2012 up 10.4%, just above management guidance.


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