4Q22 Earnings Preview (Oyak Yatırım)

4Q22 earnings start tomorrow with Arcelik
Within our coverage universe Arcelik is expected to announce its financials tomorrow followed by Akbank and Otokar on January 31st. Deadline for 4Q22 results reporting is March 1st for unconsolidated financials & insurance companies and March 13th for consolidated industrials & insurance companies. Banks will also announce their unconsolidated financials until March 1st. We expect our coverage universe’s aggregate earnings to increase by 209% y/y in 4Q22, mainly driven by the 321% y/y jump in bank’ earnings, while non-financials’ earnings should also rise by 159% y/y.
Expansion in core revenues support banks earnings in 4Q
Banks’ earnings season is to kick off with Akbank as of January 31st, followed by Garanti and Yapi Kredi. We expect earnings to expand 20% q/q and 321% y/y for the banks in our coverage in 4Q22. Core revenues (NII + fees) should rise 28% q/q on high CPI-linker yields linked to upward CPI adjustment and strong fee expansion (17% q/q, 120% y/y). Core spread, on the other hand, should drop on lower TL loan yields and relatively higher TL deposit costs. CPI-linkers should sequentially be the main supporter of top-lines in 4Q. We expect 66bp q/q decline in TL spread leading to a 46bp lower core spread in 4Q vs 3Q for our coverage, while state names will stand out among peers by their superior performance at TL spread management in 4Q in contrast to 3Q. Banks should switch partly to TL deposits from repos for funding to increase the share of TL deposits in total deposits to lessen their low-yield government bond purchase requirement. Private banks put effort to grab more market share in TL loans, especially in retail loans. Reflecting all, we foresee 2.1ppt q/q NIM widening for top-tier banks in our coverage.
Fee income should go further up from last year’s lows as loan volume keeps growing. Trading line should be less supportive of earnings in 4Q due to weakness in currency trading, despite declining swap costs. We expect opex to rise above inflation fueled by high HR costs on salary and wage increases. Subsidiaries income and collections are to support other banking income in 4Q. We envisage net CoR to climb in 4Q on potentially higher coverage at most banks on precautionary provisioning. Among top-tier banks we expect the highest q/q EPS growth from Isbank, followed by Vakifbank. Among mid-cap banks, Albaraka is to post 83% higher net earnings q/q thanks largely to real-estate revaluation gains. In y/y terms, we expect the highest q/q EPS growth from Albaraka, followed by Garanti and TSKB.
Non-financials’ total net profit to rise by 159% y/y, yet stay flat q/q
Stronger operating profitability, together with lower FX losses and higher asset revaluation gains should result in a much better bottom line performance for non-financial companies compared to the previous year. On a q/q basis we foresee total net earnings to remain flat for non-financials. We expect the aggregate net income of non-financials to increase by 159% y/y with the biggest contribution coming from Koc Holding (weak base), Tupras (high product cracks and weaker TL), Torunlar REIT (asset revaluation gains), Enerjisa (asset revaluation gains) and Sabanci Holding (weak base). In terms of y/y net income growth (excluding companies that return to positive bottomline from negative), we expect Enerjisa, Tupras, Aygaz, Odas and Alarko Holding to be the leading companies. On the contrary, Kardemir, Petkim, Kordsa, Cimsa and Cemtas are likely to report weaker net profit figures y/y.
EBITDA of non-financials to post 80% y/y increase despite a 16% q/q contraction
We expect total EBITDA of non-financials to be 80% above the previous year on the back of a stronger top line performance. On the other hand, we calculate a 16% EBITDA contraction on a q/q basis mainly due to weaker seasonality. Within our coverage highest contribution to our aggregate EBITDA growth forecast come from Turkish Airlines, Tupras, Pegasus, Sisecam and Dogus Otomotiv. In terms of y/y EBITDA growth ranking, Odas, Pegasus, Dogus Otomotiv, Akcansa and Tav Airports are expected to post highest eye-catching performance within our coverage. On the flip side, Petkim, Aygaz, Kardemir, Cemtas and Kordsa could post weaker EBITDA performance y/y.

Oyak Yatırım Menkul Değerler A.Ş.
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