Halister News

(Bloomberg) -- Second-quarter earnings at Turkish banks to decline 14% q/q, Deutsche Bank analyst Kazim Andac says in emailed research note.

• Spreads on lira-denominated loans narrowing by about 80bps on average after deposit rates surged
• Efforts to limit reliance on lira deposits and swap funding increasing significantly, boosting swap costs by an average 133% q/q across for Akbank, Garanti, Halkbank, Vakifbank, Yapi Kedi and Isbank
• Lira loans increasing about 7.5% in 2Q, driven by state banks, mainly through the Credit Guarantee Fund scheme
• Net interest income expected to remain almost stable q/q
• Swap-adjusted net interest margins tightening by 31bps q/q
• Asset quality strengthening further, backed by a deceleration in non-performing loans; sale of some souring loans will result in NPL ratio improving 18bps q/q, while cost of risk will decline a further 23bps in 2Q
• Costs seen increasing 4% over 1Q17 on variable compensation
• Akbank seen posting 23% y/y increase in 1H earnings on stronger top line growth and further relief in loan loss provisions
• Garanti earnings expected to retain its earnings momentum, with 17% y/y growth in the first half on strong credit growth, higher linker income and lower loan-loss provisions, which should offset the impact of a surge in swap costs and a decline in collections

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net Vernon Wessels, Paul Armstrong