15 Şubat 2013 Cuma

VAKIFBANK - 4Q12 earnings review: BUY

Stronger-than-expected top-line performance (NII+NFI)
Vakifbank posted TRY451m bank-only net profit in 4Q12 (+48% q-q and +72% y-y), 10% above our estimate and beating even the highest market expectation. FY12 net profit was TRY1,460m (+19% y-y) and yielded 13.9% ROE (4Q12: 15.7%). 4Q12 top-line performance (NII+NFI) was stronger than expected, while trading income compensated for provisions.

Fee revenues have started catching up
After around 30% y-y contraction in net fee income in 9M12, it grew by 15% y-y in 4Q12. We expect a further pickup in FY13 and conservatively pencil in 40% y-y NFI growth. Strong lending expansion of 5.8% q-q (7.3% q-q on the TL side), from the retail segment and commercial and instalment loans, supported the bank’s fee-generation.

Transferring coverage and changing valuation basis
We transfer our coverage, and change our valuation method to Gordon Growth and Excess Equity Return, which produces a TP of TRY6.72. EPS growth of 16.4% y-y in FY13 (outpacing the sector average), improving ROE and attractive price multiples make us comfortable to maintain our BUY recommendation for the stock, with a TP of TRY6.72.

Strong operating performance might be carried into FY13
Core spread improved by 90bp q-q on the TRY side and 20bp q-q on the forex side. 8.5% q-q TL deposit growth, at a 120bp q-q lower cost, helped the 100bp q-q NIM expansion (which was still a 60bp q-q improvement ex-CPI linkers). Per-head HR costs fell 3.8% y-y in FY12. There was a TRY164m security portfolio trading gain, and more may come in FY13 due to TRY1,450m marked-to-market gains being booked under equity. Asset quality was strong, with just 5% q-q growth in restructured loans. Cost-of-risk grew 60bp q-q, to 174bp due to aging NPLs. A 240bp q-q surge in CAR to 16.1% enhanced financial strength. In short, 4Q12 operating performance was strong, and we expect this to be carried into 2013.
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