Garanti Bank (GARAN)
posted TRY1,004mn NI (up by 17% and 33%, YoY and QoQ, respectively) in the
first quarter of the year, beating both the consensus and our estimate of
TRY931mn and TRY879mn, respectively. Higher than expected NI mainly stemmed
from an almost 2x higher than expected trading gain, better than envisaged fee
generation (up by 29% and 32%, YoY and QoQ) and release of TRY55mn free
provisions.
Income Statement
highlights... Quarterly
NIM evolution was somewhat different than we had anticipated as we have been
expecting both higher interest & expenses for the quarter, while a 4.60%
quarterly NIM was slightly higher than our estimate of 4.50%. Therefore, the 3%
contraction in quarterly NII of TRY1,803mn was slightly better than our 6%
contraction expectation. We have been surprised to see an LC deposit cost
decline of 85bps even with QoQ customer deposit growth of 5% and almost a flat
demand deposit ratio at 20%. Contrary to its peers (both Halkbank – down by
6bps and Akbank – down by 1bps, the banks that announced its 1Q13 financial
results so far) the bank managed to increase its LC core spread by 15bps, while
the securities yield contracted by 165bps due to lower CPI readings (CPI
linkers return was down by more than 10% QoQ).
Balance Sheet highlights…
Owing to higher
deposits and fresh issued securities of TRY1.25bn (TRY750mn Eurolira + bank
bill rollovers with higher rollover ratios) the bank decreased its MM
dependency by more than 15%. Another differentiation from the sector concerned
the components of loan growth. Despite tough competition, Garanti chose to grow
in LC corporate loans. Apart from that, and in line with the sector trend,
mortgages and GPLs were also up by 7% and 8%, respectively, both helping to
deliver a sustainable spread. All in all, loan growth was in line with the
sector at 5%, mainly driven by LC loan growth of 6.5%, while FX loan growth was
relatively slow at 3%, yet somewhat better than the sector growth of 1.4%. Non
FI - LDR was up to 111%, vs. 109% of 2012YE.
