15 Şubat 2013 Cuma

YAPI KREDI BANK - 4Q12 Earnings review: BUY

Core operating performance remains slightly below its main peers
Yapi Kredi Bank (YKB) posted TRY512m 4Q12 bank-only net profit (-5%
q-q, +8% y-y), broadly in line with our estimates. FY12 net profit came in at TRY1,913m showing a mere 3% y-y earnings growth and yielding 13.8% ROE. Relatively weaker operating performance compared to its main peers was offset by high trading income and other operating income.

Focus on asset quality after rise in restructured loans
35bp q-q improvement in TL L/D is fine but below its peers. Higher than sector average growth rates in TL loans and deposits (7.2% q-q, 4.7% q-q) might be the reason for that. TRY380m net NPL inflow in 4Q12 (TRY300m in 3Q12) resulted in 50bp q-q surge in cost-of-risk ratio. Recalling the 23% q-q rise in restructured loans, our focus will be on asset quality.

Less NIM pressure secures higher EPS growth in FY13
We transfer coverage for YKB, maintaining our BUY with a lower TP of TRY6.41. Valuation multiples largely justify our call (2013E P/E and P/BV of 9.1x and 1.2x) with an ROE of 14%. Our strong 25% 2013 EPS growth estimate is mostly backed by less NIM pressure due to the lower security portfolio exposure (17.5% of total assets) compared to the sector average.

Cautiously optimistic management guidance
YKB provided cautiously optimistic guidance; expects 18% y-y loan growth in line with 17% y-y fee growth guidance. YKB’s 17% y-y deposit growth forecast is above the average guidance of other banks. It is achievable in our opinion with less pressure on cost-of-funding given the moderate growth environment. A stable-to-slightly down NIM target is also reachable in our opinion. Low inflation environment may also enable the bank to achieve its 9% cost growth target. We only have doubts on the cost-of-risk side. Further bias towards credit card loans may be an obstacle in front of stable-to-slightly down CoR management expectations; we have pencilled in flattish CoR in our earnings estimates.

 
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