ALBRK 3Q22 Review (Oyak Yatırım)

Core revenues drops; fees strong
Albaraka posted a 3Q net income of TL254mn (-45% q/q, +563% y/y), below both market consensus (TL328mn) and our estimate (TL277mn). Higher-than-expected provisioning costs are to blame for our deviation. Core revenues (NII + fees) slid %17 q/q on high TL deposit costs and q/q almost flat fees. CPI-linkers comprise 26% of TL securities portfolio at Albaraka as of 3Q, yet their contribution to the top-line appears not enough to prevent core revenues from declining. In y/y terms fees rose 91% y/y thanks to growing loans and payment system contribution, while opex growth remained below headline inflation at 70% on lower non HR-related expenses. Net total CoR went south to 303bp this quarter (2Q: 471bp) on NPL write-offs and high collections. ROE declined to 14% in 3Q from 30.5% in 2Q.
Albaraka’s ROE appears to be low relative to those of conventional banks, which have enjoyed windfall gains from CPI-linkers so far in 2022. We think that Albaraka should focus more on improving efficiency and cost containment to push ROE further up. We expect TL deposit costs to remain high sequentially at Albaraka in 4Q as year-end deposit competition intensifies among banks, which, in turn, should reflect negatively on NIM. However, we envisage asset quality of Albaraka improving going forward through proactive NPL management, write-offs and high coverage levels.
NIM contracts; growth driven by TL loans
TL spread shrank 39bp q/q (OYAKe: -196bp) on high deposit costs, while FX spread grew 30bp q/q. Reflecting this, NIM lost 1.7ppt q/q (OYAKe: -2.5ppt). Albaraka’s TL loans grew 9.3% q/q, while TL deposits expanded 21.3%. On FX (USD) side, loans went down 8.1% q/q, while deposits contracted 3.6%.
Asset quality appears good; NPL rate drops further
The ratio of Stage-2 to total loans levelled out at 11.1% in 3Q (2Q: 11.5%). NPL ratio, on the other hand, went south to 2.4% (2Q: 3.8%) on the back of limited new NPL inflows and write-offs. NPL coverage remained flat at 71% (+28bp q/q).
FY22-23E earnings and MP rating maintained
We foresee Albaraka’s 2022E earnings to grow to TL1.3bn from TL104mn in 2021, while stay almost flat in 2023. Albaraka trades at 23E P/BV of 0.6x and 4.8x P/E, while 23E ROE stands at 14%. We maintain our Marketperform rating for the stock with a TP of TL2.71 per share.



Oyak Yatırım Menkul Değerler A.Ş.
                                   ***
                               Yasal Uyarı
 
 Burada yer alan yatırım bilgi, yorum ve tavsiyeler yatırım danışmanlığı kapsamında değildir.Yatırım danışmanlığı hizmeti ; aracı kurumlar, portföy yönetim şirketleri, mevduat kabul etmeyen bankalar ile müşteri arasında imzalanacak yatırım danışmanlığı sözleşmesi çerçevesinde sunulmaktadır.Burada yer alan yorum ve tavsiyeler, yorum ve tavsiyede bulunanların kişisel görüşlerine dayanmaktadır.Bu görüşler mali durumunuz ile risk ve getiri tercihlerinize uygun olmayabılır.Bu nedenle, sadece burada yer alan bilgilere dayanılarak yatırım kararı verilmesi beklentilerinize uygun sonuçlar doğurmayabilir.