TR Banks 1Q12 Handbook

Quarterly Sector Update, 18 May 2012
Turkish Banks Quarterly Handbook P a g e | 1
Q112 highlights…
Derya Guzel
Banking Analyst
dguzel@sekeryatirim.com/+90 212 334 33 33 x228
The banking sector booked TRY6.0bn net income during Q112, up 14%
QoQ and 9% YoY. The quarterly rise in bottom line was driven by an
increased other income line (mainly higher dividend income) and
better-than-expected fees and lower opex. The industry ROE on a
12M rolling basis declined by 20bp to 14.8%. Among our bank
coverage VakifBank (+60%), Garanti (+9%), Halkbank (+8%) and Yapi
Kredi (+7%) managed to increase their net income on a QoQ basis,
whereas Isbank’s net income fell by 18% due to lower trading & FX
gains, lower fees and higher provisioning. Year over year Isbank
(+6.1%), Halkbank (+3.7%), Vakifbank (+2.6%) and Garanti (+1%)
managed to grow their bottom line, while in contrast Akbank (-25%)
and Yapi Kredi (-5.2%) posted lower net incomes.
Summary of balance sheet... Slower growth is observed on both
sides of the balance sheet during the March quarter. Loan growth
realised at 2.4% QoQ and 24% YoY. Quarterly growth was supported
by a 4.2% rise in Turkish Lira lending, while FX lending declined by
2.1%. On a QoQ basis Vakifbank (+5.2%) and Akbank (+5.2%) grew
their loan books above sector growth. Halkbank’s (+2.7%) loan growth
was in line with the sector, while Isbank’s (1.5%) and Garanti’s (-
0.6%) lagged the peers. Deposits in the system remained flat (+0.5%):
VakifBank (+7.7%), Halkbank (+6.5%) and Akbank’s (+4.1%) deposit
growth realised above the sector. The sector’s loans to deposit ratio
rose by 220bp to over 100% (TRY LDR 111% and FX LDR 81%).
Meanwhile, the system’s capital adequacy ratio remained flat at
16.6%, and among our covered banks Akbank (16.5%) and Garanti
(16.9%) maintained their well-capitalised positions. Asset quality
remained resilient during the quarter with NPL ratio remaining flat
QoQ at 2.7%.
P&L trends... Highlights of Q112 include: (a) lower fees; (b) lower
trading income; (c) rising loan-loss provisioning, and (d) slower
collections. Halkbank remained the sector’s top quarterly ROE
generator at 22.3%, followed by Denizbank (20%), TSKB (19%), Garanti
(18%) and Yapi Kredi (16%), which also generated above-sector ROEs
in 1Q12.
Valuation and Recommendations... We maintain our “Market
Perform” rating for Turkish Banks. Neither do we revise our
recommendation & target prices or yearly estimates following the
Q112 results, as they were mostly in line with our expectations. We
have the banks currently trading at 1.10x PBR and 7.2x PER on our
2012 estimates. Garanti and Halkbank remain the top picks within
our coverage universe.
Turkish Banks Quarterly Handbook
Seker Securities Research
SECTOR SNAPSHOT
TRYbn Sep-11 Dec-11 Mar-12
Assets 1,214 1,218 1,229
Loans 661 683 699
Deposits 684 694 696
LDR ratio (%) 96.7 98.2 100.4
CAR (%) 16.4 16.6 16.6
NPL ratio (%) 2.7 2.7 2.7
Headcount 181,277 181,418 181,415
Branches 9,841 9,834 9,886
ATMs 31,393 32,462 33,249
No of debit cards (m) 78.1 81.9 85.3
No of credit cards (m 50.1 51.4 52.2
Source: BRSA
Source: Matriks, pricing date 16 May 2012
MARKET PERFORM
Rating
Price
(16/05/2012) YTD Change
Relative to
ISE100
AKBNK Underperform 6.40 7.9% ‐4.8%
DENIZ N/R 15.15 23.2% 8.7%
FINBN N/R 3.68 ‐14.4% ‐24.5%
GARAN Outperform 6.16 4.4% ‐7.9%
HALKB Outperform 12.10 22.2% 7.8%
ISCTR Market Perform 3.98 23.6% 9.1%
SKBNK N/R 0.98 8.9% ‐3.9%
TEBNK N/R 1.82 26.4% 11.5%
TEKST N/R 0.70 12.9% ‐0.4%
TSKB N/R 2.23 24.8% 10.1%
VAKBN Market Perform 3.22 31.4% 16.0%
YKBNK Outperform 3.16 17.5% 3.7%
XU100 Market Perform 58,101 13.3% 0.0%
XBANK Market Perform 110,069 11.5% ‐1.7%
Year to date

Contents
Turkish banks share performance (WoW, MoM, YTD and YoY) ..........................................................................................................3
Turkish banks vs. EMEA Peers ..............................................................................................................................................................4
Sector Data ..........................................................................................................................................................................................5
Balance sheet growth trends (QoQ and YoY) ..............................................................................................................................6
Recruitment, branch & ATM additions (QoQ) .............................................................................................................................8
Growth in loans, deposits, earnings and fees by bank‐all ...........................................................................................................9
Profitability ratios by bank‐ all ................................................................................................................................................. 10
Productivity and efficiency ratios by bank‐all .......................................................................................................................... 11
Capital Adequacy vs. LDR ......................................................................................................................................................... 12
Asset quality trends (NPL) ........................................................................................................................................................ 13
1Q12 Market share for banks under coverage ......................................................................................................................... 14
QoQ Market share gains/losses for banks under coverage ..................................................................................................... 15
1Q12 Coverage banks asset mix ............................................................................................................................................... 16
1Q12 Coverage banks liability mix ........................................................................................................................................... 17
Coverage Banks 1Q12 Results Recap ............................................................................................................................................... 19
Akbank (AKBNK TI, Underperform, TP TRY 6.50) ..................................................................................................................... 20
Garanti (GARAN TI, Outperform, TP TRY 7.59) ......................................................................................................................... 22
Halkbank (HALKB TI, Outperform, TP TRY 14.70) ..................................................................................................................... 24
Isbank (ISCTR TI, Market Perform, TP TRY 4.22) ....................................................................................................................... 26
VakifBank (VAKBN TI, Market Perform, TP TRY 3.55) .............................................................................................................. 28
Yapi Kredi (YKBNK TI, Outperform, TP TRY 3.97) ...................................................................................................................... 30
Disclaimer ......................................................................................................................................................................................... 32

Turkish banks share performance (WoW, MoM, YTD and YoY)
Price
(16/05/2012)
Price
(18/05/2011)
YoY
Absolute
Ch.
YoY
Relative Ch to
ISE100.
AKBNK 6.40 7.17 ‐10.8% ‐2.1%
DENIZ 15.15 10.45 45.0% 59.0%
FINBN 3.68 4.89 ‐24.8% ‐17.5%
GARAN 6.16 7.04 ‐12.5% ‐4.0%
HALKB 12.10 11.63 4.0% 14.1%
ISCTR 3.98 4.92 ‐19.1% ‐11.3%
SKBNK 0.98 1.13 ‐13.0% ‐4.6%
TEBNK 1.82 2.17 ‐16.1% ‐8.0%
TEKST 0.70 0.93 ‐24.7% ‐17.4%
TSKB 2.23 2.38 ‐6.1% 3.0%
VAKBN 3.22 3.70 ‐12.9% ‐4.4%
YKBNK 3.16 4.15 ‐23.9% ‐16.5%
XU100 58,101 63,733 ‐8.8% 0.0%
XBANK 110,069 128,586 ‐14.4% ‐6.1%
YoY
Price
(16/05/2012)
Price
(09/05/2012)
WoW
Absolute
Ch.
WoW
Relative Ch. to
ISE100
AKBNK 6.40 6.40 0.0% 0.0%
DENIZ 15.15 14.00 8.2% 8.2%
FINBN 3.68 3.73 ‐1.3% ‐1.4%
GARAN 6.16 6.22 ‐1.0% ‐1.0%
HALKB 12.10 12.05 0.4% 0.4%
ISCTR 3.98 3.89 2.3% 2.3%
SKBNK 0.98 0.97 1.0% 1.0%
TEBNK 1.82 1.93 ‐5.7% ‐5.7%
TEKST 0.70 0.69 1.4% 1.4%
TSKB 2.23 2.19 1.8% 1.8%
VAKBN 3.22 3.04 5.9% 5.9%
YKBNK 3.16 3.12 1.3% 1.3%
XU100 58,101 58,093 0.0% 0.0%
XBANK 110,069 109,657 0.4% 0.4%
WoW
Price
(16/05/2012)
Price
(16/04/2012)
MoM
Absolute
Ch.
MoM
Relative Ch. to
ISE100
AKBNK 6.40 6.82 ‐6.2% ‐2.3%
DENIZ 15.15 15.60 ‐2.9% 1.1%
FINBN 3.68 4.00 ‐8.0% ‐4.2%
GARAN 6.16 6.96 ‐11.5% ‐7.9%
HALKB 12.10 12.70 ‐4.7% ‐0.8%
ISCTR 3.98 4.16 ‐4.3% ‐0.4%
SKBNK 0.98 0.97 1.0% 5.2%
TEBNK 1.82 1.96 ‐7.1% ‐3.3%
TEKST 0.70 0.76 ‐7.9% ‐4.1%
TSKB 2.23 2.21 0.9% 5.0%
VAKBN 3.22 3.28 ‐1.8% 2.2%
YKBNK 3.16 3.45 ‐8.4% ‐4.7%
XU100 58,101 60,479 ‐3.9% 0.0%
XBANK 110,069 118,905 ‐7.4% ‐3.6%
MoM
Price
(16/05/2012)
Price
(31/12/2011)
Ytd
Absolute
Ch.
Ytd
Relative Ch. to
ISE100
AKBNK 6.40 5.93 7.9% ‐4.8%
DENIZ 15.15 12.30 23.2% 8.7%
FINBN 3.68 4.30 ‐14.4% ‐24.5%
GARAN 6.16 5.90 4.4% ‐7.9%
HALKB 12.10 9.90 22.2% 7.8%
ISCTR 3.98 3.22 23.6% 9.1%
SKBNK 0.98 0.90 8.9% ‐3.9%
TEBNK 1.82 1.44 26.4% 11.5%
TEKST 0.70 0.62 12.9% ‐0.4%
TSKB 2.23 1.79 24.8% 10.1%
VAKBN 3.22 2.45 31.4% 16.0%
YKBNK 3.16 2.69 17.5% 3.7%
XU100 58,101 51,267 13.3% 0.0%
XBANK 110,069 98,753 11.5% ‐1.7%
Year to date
Source: Matriks, pricing date 16 May 2012
Price
(30/03/2012)
Price
(31/12/2011)
QoQ
Absolute Ch.
QoQ
Relative Ch. to
ISE100
AKBNK 6.90 5.93 16.3% ‐4.5%
GARAN 7.06 5.90 19.7% ‐1.7%
HALKB 12.75 9.90 28.8% 5.8%
ISCTR 4.27 3.22 32.6% 8.9%
VAKBN 3.38 2.45 38.0% 13.3%
YKBNK 3.60 2.69 33.8% 9.9%
XU100 62,423 51,267 21.8% 0.0%
XBANK 122,027 98,753 23.6% 1.5%
Coverage Banks‐ 1Q12 performance

Turkish banks vs. EMEA Peers
Turkish Banking index performance vs. MSCI EMEA Banks (rebased to 100)
Source: Bloomberg, pricing date 16 May 2012
80
85
90
95
100
105
110
115
120
125
130
02/01/12
09/01/12
16/01/12
23/01/12
30/01/12
06/02/12
13/02/12
20/02/12
27/02/12
05/03/12
12/03/12
19/03/12
26/03/12
02/04/12
09/04/12
16/04/12
23/04/12
30/04/12
07/05/12
14/05/12
MSCI EU Banks TR Banks MSCI EMEA Banks Russin Banks Polish Banks

Sector Data
Please note that the sources for data in this document: BRSA, Turkish Bankers Association, Turkish Banks Card Centre, company data
and Seker Securities estimates.

Balance sheet growth trends (QoQ and YoY)
Fig 1 Loans vs. asset growth (% QoQ) Figure 2 Loans vs. asset growth (% YoY)
Figure 3 Loans vs. deposit growth (% QoQ) Figure 4 Loans vs. deposit growth (% YoY)
Figure 5 LDR and LAR (%) Figure 6 CAR vs. Tier-1 (%)
‐4
0
4
8
12
Loan growth Asset growth
0
15
30
45
60
Loan growth Asset growth
‐4.0
0.0
4.0
8.0
12.0
Loan growth Deposit growth
0
15
30
45
60
Loan growth Deposit growth
20
40
60
80
100
120
Loans to deposits Loans to assets
10
15
20
25
CAR Tier‐1

Figure 7 Debit cards and credit cards (% QoQ) Figure 8 Debit cards and credit cards (% YoY)
Figure 9 Personnel and branch (% QoQ) Figure 10 Personnel and branch (% YoY)
Figure 11 Loans/deposits per branch (TRYm) Figure 12 Loans /deposits per employee (TRYm)
‐2
0
2
4
6
Debit cards Credit cards
‐5
0
5
10
15
20
25
Debit cards Credit cards
‐1
0
1
2
3
4
5
Headcount Branch network
0
3
6
9
12
15
18
Headcount Branch network
20
30
40
50
60
70
80
Deposits Loans
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Deposits Loans

Recruitment, branch & ATM additions (QoQ)
Figure 13 Banking sector QoQ branch additions
Figure 14 Banking sector QoQ hiring trends
Figure 15 Banking sector QoQ ATM additions
125
203
189
252
234
322
370
246
36 25
44
132
2
120
189
127
116
131 129
‐7
52
‐100
0
100
200
300
400
358
632 630 669
731
936
722
781
351 393
417
669 827
661
1,319
1,042
707
1,969
1,068
1,069
787
0
500
1,000
1,500
2,000
2,500
2,158
2,534
5,948
4,776
4,736
3,527
3,603
1,173
‐550
207
‐494
1,641
2,091
1,871
1,005
1,135
1,534
1,550
‐311
141
‐3
‐1,000
0
1,000
2,000
3,000
4,000
5,000
6,000

Growth in loans, deposits, earnings and fees by bank-all
Figure 16 Loans (QoQ) Figure 17 Loans (YoY)
Figure 18 Deposits (QoQ) Figure 19 Deposits (YoY)
Figure 20 Net income (YoY) Figure 21 Fees (YoY)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
‐10.0
‐8.0
‐6.0
‐4.0
‐2.0
0.0
2.0
4.0
6.0
0
5
10
15
20
25
30
35
40
45
‐15
‐10
‐5
0
5
10
15
20
‐40
‐20
0
20
40
60
80
‐50
0
50
100
150
200
250

Profitability ratios by bank- all
Figure 22 NIM (%) Figure 23 Fees as % of total assets
Figure 24 ROE (%) Figure 25 ROA (%)
Figure 26 Pre-provisions ROE (%) Figure 27 Pre-provisions ROA (%)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0.0
5.0
10.0
15.0
20.0
25.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
0.5
1.0
1.5
2.0

Productivity and efficiency ratios by bank-all
Figure 28 Loans per branch (TRYm) Figure 29 Loans per employee (TRYm)
Figure 30 Deposit per branch (TRYm) Figure 31 Deposit per employee (TRYm)
Figure 32 Cost to income ratio (%) Figure 33 Fee coverage of opex (%)
0
10
20
30
40
50
60
70
80
90
100
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0
10
20
30
40
50
60
70
80
90
100
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0
10
20
30
40
50
60
70
80
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0

Capital Adequacy vs. LDR
Figure 34 Banking sector LDR (1Q12)
Figure 35 Banking sector CAR in context (%)
Figure 36 Coverage banks CAR vs. LDR
111
81
100
0
20
40
60
80
100
120
LDR TRY LDR FX Total LDR
19.4
17.4 17.2 16.9 16.6 16.5 15.8
14.8 14.5 14.2 13.9 13.4 13.3
0.0
5.0
10.0
15.0
20.0
25.0
Minimum 8%, officially required 12%
AKBNK
GARANSector
VAKBN
YKBNK
HALKB
TSKB
ISCTR
60
80
100
120
140
12 14 16 18 20
LDR (%)
CAR (%)

Asset quality trends (NPL)
Figure 37 Banking sector NPL ratios in context (1Q12)
Figure 38 Banking sector NPL ratio evaluation based on weekly data (%)
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
NPL as of week ending
stands at 2.72% vs.
2.63% in Dec’12
5.9 5.8
4.8
3.5 3.3 3.2
2.8 2.8 2.7
2.1 1.9 1.7
0.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0

1Q12 Market share for banks under coverage
Figure 39 Loans (%) Figure 40 Deposits (%)
Figure 41 Assets (%) Figure 42 Branch network (%)
Figure 43 Headcount (%) Figure 44 Consumer Loans (%)
Akbank
9.5%
Garanti
9.3%
Isbank
12.2%
Vakifbank
7.0%
Halkbank
7.9%
Yapi Kredi
9.2%
Others
44.9%
Akbank
11.2%
Garanti
12.1%
Isbank
13.2%
Vakifbank
7.7%Halkbank
7.7%
Yapi Kredi
8.6%
Others
39.5%
Akbank
8.5%
Garanti
9.4%
Isbank
13.7%
Vakifbank
6.7%
Halkbank
7.4%
Yapi Kredi
8.2%
Others
46.0%
Akbank
10.6%
Garanti
11.9%
Isbank
13.3%
Vakifbank
8.6%Halkbank
8.3%
Yapi Kredi
9.7%
Others
37.6%
Akbank
11.5%
Garanti
12.0%
Isbank
13.5%
Vakifbank
9.4%
Halkbank
10.1%
Yapi Kredi
8.8%
Others
34.6%
Akbank
11.6%
Garanti
12.2%
Isbank
11.2%
Vakifbank
9.3%
Halkbank
6.6%
Yapi Kredi
10.3%
Others
38.8%

QoQ Market share gains/losses for coverage banks
Figure 45 Loan (ppt) Figure 46 Deposit (ppt)
Figure 47 Assets (ppt) Figure 48 Branch network (ppt)
‐0.50
‐0.25
0.00
0.25
0.50
‐0.75
‐0.50
‐0.25
0.00
0.25
0.50
0.75
‐0.50
‐0.25
0.00
0.25
0.50
‐0.25
0.00
0.25

1Q12 Coverage banks asset mix
Figure 49 Akbank (Assets TRY138bn) Figure 50 Garanti (Assets TRY149bn)
Figure 51 Halkbank (Assets TRY95bn) Figure 52 Isbank (Assets TRY163bn)
Figure 53 Vakifbank (Assets TRY95bn ) Figure 54 Yapi Kredi (Assets TRY106bn)
Liquid
assets
11%
Fixed
income
securities
33%
Loans
54%
Other
2%
Liquid
assets
15%
Fixed
income
securities
25%
Loans
56%
Other
assets
4%
Liquid
assets
9%
Fixed
income
securities
26%
Loans
61%
Other
assets
4% Liquid
assets
11%
Fixed
income
securities
25%
Loans
57%
Other
assets
7%
Liquid
assets
13%
Fixed
income
securities
20%
Loans
64%
Other
assets
3% Liquid
assets
12% Fixed
income
securities
18%
Loans
64%
Other
assets
6%

1Q12 Coverage banks liability mix
Figure 55 Akbank Figure 56 Garanti
Figure 57 Halkbank Figure 58 Isbank
Figure 59 Vakifbank Figure 60 Yapi Kredi
Deposits
58%
Interbank
funds
10%
Funds
borrowed
11%
S'holders
equity
13%
Other
8%
Deposits
56%
Interbank
funds
9%
Funds
borrowed
14%
S'holders
equity
13%
Other
8%
Deposits
75%
Interbank
funds
2%
Funds
borrowed
7%
S'holders
equity
10%
Other
6%
Deposits
58%
Interbank
funds
14%
Funds
borrowed
6%
S'holders
equity
12%
Other
10%
Deposits
69%
Interbank
funds
9%
Funds
borrowed
6%
S'holders
equity
11%
Other
5%
Deposits
58%
Interbank
funds
5%
Funds
borrowed
11%
S'holders
equity
12%
Other
14%

This page left blank intentionally

Coverage Banks 1Q12 Results Recap

Akbank (AKBNK TI, Underperform, TP TRY 6.50)
Bank-only net income came in at TRY556m (down 25% YoY and 1% QoQ), which
exceeded the CNBC-e consensus estimate of TRY519m. The sharp YoY decrease in
the bottom line was driven by trading and FX losses that the bank experienced
during Q112, vs. the trading and FX gain of the same quarter a year ago. Slower QoQ
net income was due to higher provisioning that Akbank booked during the quarter.
Total provisions almost doubled in 1Q12, vs. 4Q11, driven by higher general
provisioning, as the bank booked TRY 104 mn in general provisions in 1Q12 due to a
4% general provisioning obligation for new GPLs.
Balance sheet trends… Both loan and deposit growth at Akbank exceeded that of
the sector. On the lending side loan growth was at 5.2%, vs. the sector’s 2.4%.
Growth was driven by Turkish Lira lending, up 11% QoQ (mainly TL corporate loans
and TL SME loans, which grew 36% and 11% QoQ, respectively). FX loans, on the
other hand, grew by 4%. Akbank managed to gain a 30bps market share in loans in
QoQ terms. Deposit growth, on the other hand, realised at 4.1%, surpassing the
sector’s flat deposits QoQ. LDR climbed 100bps to 92.5%, vs. 91.5% in 4Q11. Asset
quality remained resilient on a slight decline in NPL ratio (1.6% in 1Q12, vs. 1.7% in
4Q11) thanks to the bank’s TRY33m NPL sale during 1Q12. Akbank maintained it’s
well capitalised position in the sector with a CAR ratio of 16.54%, vs. 16.98% a
quarter ago.
Multiples & Recommendation... We maintain our “Underperform” rating for the
bank with a 12M target price of TRY 6.50. By our 2012F estimates, the bank trades
at PER of 9.4x and PBR of 1.26x.

AKBNK bank-only results summary
Income Statement (TLm) 1Q11 4Q11 1Q12 QoQ Change (%) YoY Change (%)
Gross interest income 2,155 2,580 2,685 4.0 24.6
Interest expense -1,101 -1,426 -1,548 8.6 40.6
Net interest income 1,053 1,155 1,137 -1.5 7.9
Net fees 355 408 388 -5.0 9.1
Net trading and currency gains 133 -189 -68 -64.0 N/M
Revenues 1,542 1,374 1,457 6.0 -5.5
Cost -596 -643 -662 3.0 11.2
Operating income 946 731 794 8.7 -16.1
Other income 187 120 208 73.9 11.5
Provisions -207 -146 -289 97.4 39.4
Pre tax income 925 704 713 1.3 -22.9
Taxes -181 -154 -158 2.5 -13.1
Net income 744 550 556 1.0 -25.3
Balance Sheet (TLm) Mar-11 Dec-11 Mar-12 QoQ Change (%) YoY Change (%)
Cash and liquid assets 7,920 13,876 13,423 -3.3 69.5
AFS securities 35,469 37,872 40,490 6.9 14.2
HTM securities 5,788 4,823 4,574 -5.2 -21
Customer loans 58,216 70,306 73,958 5.2 27
Non performing loans 1,228 1,263 1,293 2.4 5.3
Total assets 113,725 133,552 137,664 3.1 21
Customer deposits 65,698 76,814 79,962 4.1 21.7
Borrow ed funds 11,171 16,770 15,157 -9.6 35.7
Shareholders' funds 16,781 17,554 18,204 3.7 8.5
Selected ratios Mar-11 Dec-11 Mar-12 QoQ Change (%) YoY Change (%)
NIM 3.6 3.2 3.1 -2.5 -14.7
ROA 2.4 1.9 1.7 -12.1 -30.5
ROE 16 13.9 12.5 -9.7 -21.5
LDR 88.6 91.5 92.5 1.1 4.4
Leverage (x) 6.8 7.6 7.6 -0.6 11.6
Cost income 38.6 44.6 45.5 1.9 17.7
Fee coverage of cost 59.6 64.8 58.5 -9.8 -1.9
Tier-1 CAR 18 16.5 15.7 -4.8 -12.7
Total CAR 18.9 17 16.5 -2.6 -12.4
NPL 2.1 1.8 1.7 -2.6 -16.8
Cost of risk 1.5 0.8 1.6 89.8 7.9

Garanti (GARAN TI, Outperform, TP TRY 7.59)
March quarterly net income came in at TRY861.7m, up 9% QoQ and c.1% YoY.
The bottom line exceeds both our and the consensus estimate (Seker 1Q12
TRY830m and consensus TRY827m). The QoQ increase in net income was driven
by a 20% rise in trading & currency gains that Garanti booked during the March
quarter (1Q12 trading gains TRY89m, vs. TRY74m in 4Q11) and lower provisioning.
Fees were also strong, as net fee and commission income climbed 6% QoQ, but was
down c.4% YoY due to the change in accounting and cap on mutual fund fees. Opex
increased 17% YoY, although management maintains their CPI+2-3% cost growth
guidance for the full year.
Balance sheet highlights… On the lending side Garanti’s loan growth lagged the
sector this quarter when looked at on an FX unadjusted basis. The loan book
declined by 1%, vs. the sector’s 2.3% growth (YoY loan growth came in at 18%).
Deceleration in lending book growth was driven by corporate loans, which shed 2%
QoQ. Consumer loans, on the other hand, grew 2% thanks to 4% growth in GPL loans
and 2% growth in mortgages. On an FX adjusted basis TL loans grew by 2.1% and FX
loans grew by 2%. Despite some pick up in the blended cost of deposits, the bank
managed to keep the loan – deposit spread stable during the March quarter. On the
funding side deposits on a QoQ basis declined 2%, vs. the sector’s 0.5% increase in
1Q as Garanti relinquished costly big ticket corporate deposit holders to keep the
cost of deposits under control. The share of loans within total assets decreased to
56%, vs. 57% in FY2011, whereas that of securities rose to 25% from a quarter ago.
Asset quality trends… Despite a slight deterioration in asset quality, all seems to be
in place for now. The NPL ratio stood at 1.88% in 1Q12, vs. 1.80 in 4Q11, due to
slower collections and new NPL inflow. Note that during their conference call
management emphasized possible asset quality problems in the SME segment going
forward.
CAR and ROE…Visible RWA optimization from Garanti and CAR ratio seems stable, at
16.92%, vs. 16.89% in 4Q11. ROE on a 12M rolling basis came in at 17.5%, vs. 18.5% in
1Q11.

GARAN Bank-only BRSA results summary
Income Statement (TLm) 1Q11 4Q11 1Q12 YoY Change (%) QoQ Change (%)
Interest expense (1,247) (1,634) (1,849) 48.3 13.2
Net interest income 1,002 1,557 1,342 33.9 (13.8)
Net fees 525 480 507 (3.5) 5.6
Net trading and currency gains 264 74 89 (66.4) 20.7
Revenues 1,792 2,111 1,938 8.2 (8.2)
Cost (705) (1,027) (825) 17.1 (19.7)
Operating income 1,087 1,084 1,113 2.4 2.7
Other income 277 149 74 (73.2) (50.1)
Provisions (249) (224) (109) (56.3) (51.3)
Pre tax income 1,115 1,009 1,078 (3.3) 6.8
Taxes (260) (219) (217) (16.5) (0.9)
Net income 855 791 862 0.8 9.0
Balance Sheet (TLm) Mar-11 Dec-11 Mar-12 Change (%) Change (%)
Cash and liquid assets 7,657 8,261 11,664 52.3 41.2
AFS securities 29,194 28,800 34,151 17.0 18.6
HTM securities 4,364 4,787 3,058 (29.9) (36.1)
Customer loans 70,376 83,813 83,330 18.4 (0.6)
Total assets 124,265 146,642 148,601 19.6 1.3
Customer deposits 74,534 84,543 83,253 11.7 (1.5)
Borrowed funds 18,203 20,524 21,104 15.9 2.8
Selected ratios (%) Mar-11 Dec-11 Mar-12 Change (%) Change (%)
NIM 3.7 3.3 3.4 (7.6) 2.8
ROA 2.5 2.2 2.1 (17.4) (4.0)
ROE 19.0 18.1 17.5 (8.1) (3.4)
LDR 94.4 100.9 100.1 6.0 (0.8)
Leverage (x) 7.7 8.3 7.9 3.3 (4.8)
Cost income 39.3 45.6 42.6 8.2 (6.7)
Fee coverage of cost 74.6 62.6 61.5 (17.5) (1.8)
Tier-1 CAR 15.6 14.6 15.4 (1.2) 5.2
Total CAR 18.2 16.9 16.9 (6.8) 0.2
NPL 2.1 1.8 1.9 (11.6) 4.9
Cost of risk 1.4 1.1 0.5 (64.4) (51.9)

Halkbank (HALKB TI, Outperform, TP TRY 14.70)
Bank-only net income came in at TRY544m (up 3.7% YoY and 7.9% QoQ), which
exceeded both our in house and consensus estimate (Seker TRY 528m, vs. CNBC-
e consensus of TRY518m). Quarter on quarter bottom line growth was driven by a
lower provisioning expense (down 58% QoQ) and lower taxes (down 21%, vs. a
quarter ago). ROE on a 12M rolling basis came in at 22.3%, vs. 25.1% in Dec-11.
Overall we note a strong set of results that are in line with our expectations.
Balance sheet trends… On the lending side Halkbank grew its loan book slightly
above the sector (HALKB 2.7%, vs. sector’s 2.3%) in 1Q12. Loan growth was driven by
TL lending, especially in the SME and consumer segments. Consumer segment loan
growth was driven by credit card loans, which registered an 8.8% rise QoQ. By our
calculations the blended yield of the loan book rose by 33bps thanks to increased
focus on higher yielding segments. On the funding side deposit growth was strong,
outpacing that of the sector (HALKB 6.5% QoQ vs. 0.5% in the sector) driven by lower
cost FX deposits, and hence a limited increase in cost of deposits. Meanwhile,
quarterly balance sheet growth of 3.7% was driven by lending growth.
Income statement highlights…Halkbank did a great job on the cost control front
and opex growth on QoQ basis was contained at 2.6% (12.5% YoY), mainly driven by
wage increases during the quarter. Fee growth was slower due to an accounting
methodology change, losing 17% QoQ but up 1.7% YoY. However, the management
now guides for higher fee growth in 2H12, vs. a year ago.
Multiples & Recommendation... We like the balance sheet growth and quality of
results published. We are maintaining our “Outperform” rating for the bank with a
12M target price of TRY 14.70. On our 2012F estimates the bank trades at PER of
6.4x and PBR of 1.40x.

HALKB Bank-only results summary
Income Statement (TLm) 1Q11 4Q11 1Q12 QoQ Change (%) YoY Change (%)
Interest expense -816 -1,064 -1,138 6.9 39.5
Net interest income 734 1,102 1,032 -6.4 40.5
Net fees 158 193 161 -16.8 1.7
Net trading and currency gains 98 64 14 -78.8 -86.2
Revenues 990 1,359 1,206 -11.3 21.8
Cost -414 -453 -465 2.6 12.5
Operating income 577 906 741 -18.2 28.4
Other income 163 140 99 -29.0 -39.0
Provisions -86 -348 -145 -58.4 67.9
Pre tax income 653 697 695 -0.3 6.4
Taxes -128 -193 -151 -21.7 17.4
Net income 525 504 544 7.9 3.7
Balance Sheet (TLm) Mar-11 Dec-11 Mar-12 QoQ Change (%) YoY Change (%)
AFS securities 7,989 9,220 9,730 5.5 21.8
HTM securities 12,745 13,998 14,559 4.0 14.2
Customer loans 47,567 56,216 57,714 2.7 21.3
Non performing loans 1,713 1,669 1,682 0.8 -1.9
Total assets 77,978 91,124 94,505 3.7 21.2
Borrow ed funds 4,158 6,291 6,285 -0.1 51.2
Selected ratios (%) Mar-11 Dec-11 Mar-12 QoQ Change (%) YoY Change (%)
NIM 4.1 4.0 4.1 1.0 -0.6
ROA 2.7 2.4 2.2 -6.1 -16.9
ROE 26.5 25.1 22.3 -11.2 -15.8
LDR 84.4 84.9 81.8 -3.6 -3.1
Leverage (x) 10.0 10.5 9.6 -9.3 -4.2
Cost income 41.8 39.1 38.6 -1.4 -7.6
Tier-1 CAR 15.3 13.7 13.2 -3.5 -13.5
Total CAR 16.0 14.3 14.5 1.4 -9.5
NPL 3.5 2.9 2.8 -1.8 -18.6
Cost of risk 0.7 2.4 1.0 -59.4 36.5

Isbank (ISCTR TI, Market Perform, TP TRY 4.22)
Bank-only net income came in at TRY708mn (up 6.1% YoY, but down 18.0%
QoQ), which exceeded both our in-house and consensus estimates (Seker TRY
615mn, vs. CNBC-e consensus of TRY613mn). The QoQ net income fall was due to
lower trading & FX gains, lower fees and higher provisioning. On the other hand the
YoY rise was supported by higher NII and fees booked during the quarter. Opex
control was impressive with a QoQ cost decline of 4.1%, while the YoY rise of 7.1%
was one of the lowest amongst peers. ROE on a 12M rolling basis came in at 14.9%,
vs. 16.9% a year ago.
Balance sheet highlights… Isbank grew its loan book by 1.5% during 1Q12, lagging
the sector’s 2.4%. Growth in total loans was driven by local currency lending,
especially in SME loans, which climbed 8% QoQ. Commercial and Corporate Loans on
the other hand declined by 2%. On the funding side deposit growth also lagged the
sector and large cap peers. Isbank’s deposits on a QoQ basis declined by 4.1%
(driven by a fall in the Turkish Lira deposit base), vs. the sector’s flat growth. By
our calculations, we see that Isbank managed to increase blended loan yields by
30bp QoQ, although as blended deposit cost also rose (27bp QoQ), it ended the
quarter with a flat spread on 4Q11. The 1Q12 NIM decline on a cumulative basis was
limited, at around 5bp, vs. 4Q11. Driven by slower deposit growth total LDR for the
bank reached 98.7%, vs. 93.2% in 4Q11. Asset quality was intact during the quarter,
as the NPL ratio remained flat QoQ at 2.12%. Isbank saw a slight rise in NPL inflow
on slower quarterly collections. CAR ratio was at 13.86%, vs. 14.07% in 4Q11.
Multiples & Recommendation… Overall good set of quarterly results. We maintain
our “Market Perform” rating for the bank with a 12M target price of TRY 4.22. By
our 2012F estimates the stock trades at PER of 7.0x and PBR of 0.88x.

ISCTR Bank-only results summary
Income Statement (TRYm) 1Q11 4Q11 1Q12 QoQ Change (%) YoY Change (%)
Interest expense -1,317 -1,788 -1,979 10.7 50.2
Net interest income 1,118 1,315 1,312 -0.2 17.3
Net fees 304 403 370 -8.2 21.7
Net trading and currency gains 99 279 82 -70.7 -17.5
Revenues 1,521 1,996 1,764 -11.7 15.9
Cost -794 -893 -850 -4.8 7.1
Operating income 728 1,104 914 -17.2 25.6
Other income 433 345 362 5.2 -16.2
Provisions -326 -350 -386 10.3 18.3
Pre tax income 835 1,099 891 -18.9 6.7
Taxes -167 -235 -183 -22.2 9.0
Net income 667 864 708 -18.0 6.1
Balance Sheet (TRYm) Mar-11 Dec-11 Mar-12 QoQ Change (%) YoY Change (%)
Cash and liquid assets 13,696 13,780 12,890 -6.5 -5.9
AFS securities 27,938 28,653 29,420 2.7 5.3
HTM securities 12,956 13,466 11,563 -14.1 -10.8
Customer loans 70,542 91,621 93,038 1.5 31.9
Total assets 138,408 161,669 162,584 0.6 17.5
Customer deposits 91,132 98,313 94,284 -4.1 3.5
Borrow ed funds 8,321 11,148 10,200 -8.5 22.6
NIM 3.4 3.0 3.0 0.3 -12.2
ROA 2.1 1.8 1.7 -2.3 -18.7
ROE 16.9 15.0 14.9 -1.1 -12.3
LDR 77.4 93.2 98.7 5.9 27.5
Leverage (x) 8.1 9.0 8.5 -5.3 5.9
Cost income 52.2 55.3 48.2 -12.9 -7.6
Fee coverage of cost 38.3 41.0 43.6 6.2 13.7
Tier-1 CAR 14.6 12.6 12.1 -4.5 -17.3
Total CAR 16.6 14.1 13.9 -1.5 -16.3
NPL 3.2 2.1 2.1 0.2 -33.9
Cost of risk 1.9 1.5 1.6 5.9 -12.5

VakifBank (VAKBN TI, Market Perform, TP TRY 3.55)
Bank-only net income reads at TRY420mn (up 2.6% YoY and 60% QoQ), thus 27%
above the CNBC-e consensus of TRY330mn and 10% above our estimate of
TRY381mn. Quarterly bottom line growth was driven by higher trading & FX gains
booked in 1Q12 (more than tripled to TRY107mn). Other lines that have supported
net income growth are: 56% rise in other income (dividends and collections), lower
provisioning (down 12% QoQ) and decline in cost (down 1.5% QoQ). ROE on a 12M
rolling basis came in at 13.3%, vs. 13.5% in Dec-11.
Strong growth on both sides of balance sheet… During 1Q12 VakifBank’s loan
growth outpaced that of the sector. At 5.2% QoQ vs. 2.4% in the sector and loan
growth was driven by higher yielding Turkish Lira loans (9% QoQ) especially SME and
retail overdrafts. Thanks to healthy growth in TRY loans the bank was able to
improve its blended loan yield by 93bps to 10.2%. On the funding side deposit
growth of 7.7% QoQ also outperformed the sector (vs. flat growth in the sector).
Deposit growth was driven by 7% QoQ rise in Turkish Lira deposits and 9% QoQ
growth in FX deposits. FX deposit growth was driven by a USD920mn syndication that
the bank rolled over during the quarter (98% rollover ratio). Blended cost of deposit
rose by 58bps to 5.96%, vs. 5.38% in Dec-11. The LDR at the bank improved by 200bp
to 92%, vs. 94% in 4Q11. Thanks to above sector loan growth and better than
expected collections, asset quality improved and NPL ratio realized 3.5%, vs. 3.6% a
quarter ago.
Multiples & Recommendation… Overall we note a good set of quarterly results and
above-sector balance sheet growth. Yet before amending our estimates for the full
year we prefer to see improvement in fee income growth and observe the pace of
collections. Hence for now we maintain our “Market Perform” rating for the bank
with a 12M target price of TRY 3.55. On our 2012F estimates the bank trades at PER
of 6.8x and PBR of 0.77x.

VAKBN Bank-only results summary
Net interest income 700 808 822 1.7 17.3
Net fees 118 147 89 -39.0 -24.2
Net trading and currency gains 38 23 107 358.8 182.5
Revenues 856 978 1,018 4.1 18.9
Cost -452 -519 -511 -1.5 13.0
Operating income 404 459 507 10.5 25.5
Other income 280 178 279 56.7 -0.5
Provisions -182 -297 -261 -12.2 43.1
Pre tax income 502 340 525 54.4 4.6
Taxes -93 -79 -105 34.2 13.2
Net income 409 262 420 60.4 2.6
AFS securities 12,445 13,139 13,164 0.2 5.8
HTM securities 4,822 5,972 5,823 -2.5 20.8
Customer loans 46,962 57,309 60,284 5.2 28.4
Total assets 76,291 89,184 94,650 6.1 24.1
Borrow ed funds 6,615 8,237 6,054 -26.5 -8.5
NIM 3.7 3.4 3.4 -1.1 -9.6
ROA 1.7 1.4 1.4 -4.3 -19.8
ROE 15.1 13.5 13.3 -2.1 -12.5
LDR 96.5 94.0 91.9 -2.3 -4.8
Leverage (x) 8.7 9.6 9.6 0.0 10.4
Cost income 52.8 55.6 50.2 -9.7 -4.9
Tier-1 CAR 13.4 12.2 12.1 -1.4 -10.0
Total CAR 14.6 13.4 13.4 -0.2 -8.8
NPL 4.5 3.6 3.5 -3.6 -21.5
Cost of risk 1.5 2.0 1.7 -16.1 13.0

Yapi Kredi (YKBNK TI, Outperform, TP TRY 3.97)
Bank-only net income reads TRY507m (up 6.8% QoQ and down 5.2% YoY), which
came in 3% above our TRY 490m estimate and 6% above the consensus of
TRY478m. The growth in quarter on quarter bottom line growth was driven by
higher dividend income received from subsidiaries (up 17% QoQ and 32% YoY) and
efficient cost control (opex down 0.3% QoQ). ROE on a 12M rolling basis came in at
15.8%, vs. 16.5% in 4Q11.
Slower volume growth when compared to sector driven by a decline in FX
business…In order to increase loan yields and maintain deposit cost the bank’s main
focus was to grow on Turkish Lira business during the quarter. Yapi Kredi’s loan
growth stayed behind sector and large cap peers that reported so far. Lending
growth remained almost flat QoQ (Yapi 0.5% vs. 2.4% sector) driven by decline in FX
lending. However Turkish Lira lending growth was strong (4% QoQ). On the deposit
side we observe similar trend, where Yapi released big ticket higher cost FX deposits
which was replaced by cheaper cost Eurobond. On our calculations the bank
improved its blended loan yields by 41bp thanks to re-pricing of loan book which
able the bank to maintain cumulative NIM flat QoQ basis.
Efficient cost control lead to decline in opex QoQ… Management did a good job on
cost control front, opex on QoQ basis declined by -0.3% and up 10% YoY. Yearly
increase was driven by non-HR (increase in branch tax) and other cost (increase in
world loyalty point expenses). Cost to income ratio remained flat when compared to
4Q11.
Multiples & Recommendation... The results are in line with our estimate and we
don’t deem 1Q12 results to represent full year picture as guided by Yapi’s
management during the conference call. We are maintaining our “Outperform”
rating for the bank with a 12M target price of TRY 3.97. On our 2012F estimates the
bank trades at PER of 6.7x and PBR of 0.99x.

YKBNK Bank-only results summary
Net interest income 791 923 966 4.6 22.1
Net fees 417 502 385 -23.2 -7.7
Net trading and currency gains 16 -63 -32 -49.6 N/M
Revenues 1,225 1,362 1,320 -3.1 7.8
Cost -662 -730 -728 -0.3 9.9
Operating income 562 632 592 -6.4 5.2
Other income 395 214 248 15.9 -37.2
Provisions -297 -207 -230 11.0 -22.6
Pre tax income 660 639 610 -4.6 -7.6
Taxes -125 -165 -103 -37.5 -17.9
Net income 535 475 507 6.8 -5.2
Cash and liquid assets 6,279 11,873 10,055 -15.3 60.1
AFS securities 6,595 7,056 7,114 0.8 7.9
HTM securities 11,526 12,537 11,788 -6.0 2.3
Customer loans 54,947 67,780 68,123 0.5 24.0
Total assets 89,615 108,103 106,032 -1.9 18.3
Customer deposits 53,242 63,517 61,479 -3.2 15.5
Borrow ed funds 8,718 13,723 11,671 -14.9 33.9
NIM 3.8 3.3 3.3 1.2 -13.1
ROA 2.4 1.8 1.7 -5.4 -27.9
ROE 19.4 16.5 15.8 -4.7 -18.6
LDR 103.2 106.7 110.8 3.8 7.4
Leverage (x) 8.3 9.2 8.6 -6.7 3.7
Cost income 54.1 55.1 55.2 0.1 2.0
Tier-1 CAR 8.7 7.1 6.8 -3.3 -21.8
Total CAR 14.9 14.7 14.8 0.4 -0.8
NPL 3.2 3.0 3.2 5.8 -1.9
Cost of risk 2.1 1.2 1.3 9.3 -38.6

Ş E K E R S E C U R I T I E S R E S E A R C H
Şeker Yatırım Menkul Değerler A.Ş. TEL: +90 (212) 334 33 33
İnönü Cad. Tumşah Han No: 36 Fax: +90 (212) 334 33 34
Beyoğlu – İSTANBUL E-mail: research@sekeryatirim.com
TURKEY Web: http://www.sekeryatirim.com/english/index.aspx
For additional information, please contact:
Research
Kadir Tezeller Head of Research +90 (212) 334 33 33 ktezeller@sekeryatirim.com
Derya Guzel Banking +90 (212) 334 33 33 x228 dguzel@sekeryatirim.com
Burak Demirbilek Utilities, Aviation, Iron-Steel, Beverage +90 (212) 334 33 33 x128 bdemirbilek@sekeryatirim.com
Selahattin Aydin Cement & Technical Analyst +90 (212) 334 33 33 x251 saydin@sekeryatirim.com
Ezgi Gulbas Autos, Oil & Gas, Retail +90 (212) 334 33 33 x201 egulbas@sekeryatirim.com
Volkan Dukkancik Telecoms, REITs, White Goods, Glass +90 (212) 334 33 33 x257 vdukkancik@sekeryatirim.com
Okan Uzun Banking, Insurance, Conglomerates +90 (212) 334 33 33 x245 okan.uzun@sekeryatirim.com
Engin Degirmenci Database Associate +90 (212) 334 33 33 x334 edegirmenci@sekeryatirim.com
Economy & Politics
Ibrahim Aksoy Economist +90 (212) 334 91 04 iaksoy@sekeryatirim.com
Institutional Sales
Batuhan Alpman Head +90 (212) 334 91 01 balpman@sekeryatirim.com
Atakan Andic Sales Trader +90 (212) 334 91 02 aandic@sekeryatirim.com
Selin Gursel Trader +90 (212) 334 91 03 sgursel@sekeryatirim.com
Hulya Oztan Kuru Sales Representative +90 (212) 334 33 33 x361 hkuru@sekeryatirim.com
Murat Senalp Sales Representative +90 (212) 334 91 05 msenalp@sekeryatirim.com
Disclaimer
I, Derya GUZEL, hereby certify that the views expressed in this research accurately reflect my personal views about the
subject securities and issuers. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to
the specific recommendations or views expressed in this report.
This report has been prepared by Şeker Yatırım Menkul Değerler A.Ş. (Şeker Securities, Inc.). The information and opinions
contained herein have been obtained from and are based upon public sources that Şeker Securities considers to be reliable. No
representation or warranty, express or implied, is made that such information is accurate or complete and should not be relied
upon, as such. All estimates and opinions included in this report constitute our judgments as of the date of this report and are
subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation
for the purchase or sale of a security. Investors must make their own investment decisions based on their specific investment
objectives and financial position and using such independent advisors as they believe necessary. Şeker Securities may, from time
to time, have a long or short position in the securities mentioned in this report and may solicit, perform or have performed
investment banking, underwriting or other services (including acting as adviser, manager, underwriter or lender) for any
company referred to in this report and may, to the extent permitted by law, have acted upon or used the information
contained herein, or the research or analysis upon which it is based, before its publication. This report is for the use of
intended recipients and may not be reproduced in whole or in part or delivered or transmitted to any other person without the
prior written consent of Şeker Securities. By accepting this document you agree to be bound by the foregoing limitations.
Copyright © 2012 Şeker Securities, Inc.

TR Banks 1Q12 Handbook

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à TR Banks 1Q12 Handbook

Similaire à TR Banks 1Q12 Handbook (20)

TR Banks 1Q12 Handbook