1 Mart 2013 Cuma

AL BARAKA TURK - 4Q12 Earnings review: BUY

Higher provisioning expenses due to a single large commercial file
Al Baraka posted TRY42.7m bank-only net profit in 4Q12 (-32% q-q, -15% y-y), bringing FY12 net profit to TRY192m marking 20% y-y growth and resulting in a 17.3% ROE. The bank’s top-line performance (NII + NFI) is in line with our estimate. What pulled down the reported bottom-line is high provisioning expenses due to a large commercial file.

Lower liquid assets/total assets to help defend NIM in FY13
TRY deposit growth rate was huge at 10% q-q in 4Q12, as participation banks’ deposit returns remained above conventional banks, which resulted in a liquidity ratio rise. Therefore, we expect NIM to be more resilient in FY13 as its liquidity ratio normalizes. Also, the bottoming out interest rate environment will be supportive for NIM, especially in 2H13.

BUY reiterated with slight upward revision in TP to TRY2.50
We transfer coverage and maintain our BUY rating with TRY2.50 TP (up from TRY2.43). The key downside risks to our GGM & EERM-based target price are: 1) worse than expected NPL’s, 2) higher than projected growth in opex, 3) higher than anticipated growth in non-cash loans compelling the CAR and, 4) excess liquidity which may pressurize the NIM.
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