Upward revisions in EPS
estimates and target price
We increase our net profit forecasts by 3% in 2012 and 6% in 2013, driven mainly by better fees-to-opex evolution. We assume 18% loan growth for 2013 accompanied by flat NIM and 20bp higher CoR on a y-y comparison. Due to 50bp higher ROE assumption across our estimation horizon, we also increase our DDM-based TP by 13% to TRY5.46 from TRY4.85.
Beat 3Q12 estimates easily at the net operating income level
Yapi Kredi Bank reported TRY542m net profit in 3Q12, 22% above our estimate and 20% higher than CNBC-e consensus, for a strong tangible ROE of 17%. Net operating income easily beat our expectation by 10%, outperforming our forecasts in all of NII, fees, and costs. Higher-than-forecast specific provisions were offset by lower general provisions.
BUY rating maintained with 17% upside potential to target price
We maintain our BUY rating while increasing our TP by 13% on higher medium-term profitability assumptions. The key downside risk to our call is a sudden slowdown in the economy with rising unemployment figures pushing SME and credit-card NPL ratios higher. The main upside risk is to our estimates is better-than-expected NIM evolution.
We expect several measures to help solve the tight CAR issue
YKB continued growing high-margin TRY loans while TRY retail deposits were up 5%. NIM dropped 9bp vs. our 24bp contraction estimate due to 36bp L-D spread expansion. NPL inflows were faster-than-expected as the NPL ratio rose 35bp q-q vs. our 30bp forecast; but coverage remained flat at 66.5% vs. our 65% call, explaining part of higher-than-expected 34bp q-q rise in net CoR. Fees/opex trend improved strongly as fees grew 1% y-y (+15% in adjusted terms vs. -6% in 1H12) while opex rose 3% y-y (vs. +12% in 1H12). CAR declined to 13.2% after Basel-II but should improve sharply via measures such as: 1) sub-debt, 2) MTM gains and lower risk-weight on Eurobonds, and 3) its insurance subsidiary sale.
We increase our net profit forecasts by 3% in 2012 and 6% in 2013, driven mainly by better fees-to-opex evolution. We assume 18% loan growth for 2013 accompanied by flat NIM and 20bp higher CoR on a y-y comparison. Due to 50bp higher ROE assumption across our estimation horizon, we also increase our DDM-based TP by 13% to TRY5.46 from TRY4.85.
Beat 3Q12 estimates easily at the net operating income level
Yapi Kredi Bank reported TRY542m net profit in 3Q12, 22% above our estimate and 20% higher than CNBC-e consensus, for a strong tangible ROE of 17%. Net operating income easily beat our expectation by 10%, outperforming our forecasts in all of NII, fees, and costs. Higher-than-forecast specific provisions were offset by lower general provisions.
BUY rating maintained with 17% upside potential to target price
We maintain our BUY rating while increasing our TP by 13% on higher medium-term profitability assumptions. The key downside risk to our call is a sudden slowdown in the economy with rising unemployment figures pushing SME and credit-card NPL ratios higher. The main upside risk is to our estimates is better-than-expected NIM evolution.
We expect several measures to help solve the tight CAR issue
YKB continued growing high-margin TRY loans while TRY retail deposits were up 5%. NIM dropped 9bp vs. our 24bp contraction estimate due to 36bp L-D spread expansion. NPL inflows were faster-than-expected as the NPL ratio rose 35bp q-q vs. our 30bp forecast; but coverage remained flat at 66.5% vs. our 65% call, explaining part of higher-than-expected 34bp q-q rise in net CoR. Fees/opex trend improved strongly as fees grew 1% y-y (+15% in adjusted terms vs. -6% in 1H12) while opex rose 3% y-y (vs. +12% in 1H12). CAR declined to 13.2% after Basel-II but should improve sharply via measures such as: 1) sub-debt, 2) MTM gains and lower risk-weight on Eurobonds, and 3) its insurance subsidiary sale.
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