BRSA Banking Sector Data – May’23 (Oyak Yatırım)

Banking industry posted profit of 45.6bnTL (+18% m/m, cumulative +44% y/y) in May. Despite narrowed core spread on rising deposit costs coupled with lower securities yield on the back of weakened CPI-linker support, higher trading gains on favorable FX transactions, elevated dividend income from participations and retreated net provisions explain the monthly increase in net earnings to a large extent. The monthly TL spread (-1.7%) kept declining sequentially m/m by marking a 1.2ppt drop, indicating a weak earnings quality for 2Q23.
Some of the highlights are listed below:
• Earnings quality keep dropping after 22YE; in fact, net interest income declined by 19% m/m. Core spread retreated by 59bp on elevated TL deposit costs, while the rise in loan rates lagged behind. As a result, net interest margin dropped by 88bp.
• Commission revenues remained strong posting 119% y/y growth thanks to payment system and asset management fees coupled with decent loan growth. Opex growth, on the other hand, surged by 147% y/y on non-HR expenses, influenced by high inflation.
• Net provisioning expenses, which increased at the end of 2022 due mainly to prudence, went back to normalized levels in 2Q. Net cost of risk remained low in May on high reversals.
• Return on equity rose to 35% in May from 29% a month ago and 41% a year ago.
If we compare private banks (PB) and state banks (SB), the profit of PB went north by 31% m/m, while the profit of SB increased by 11%. The divergence between the results stemmed mainly from the difference in asset and liability pricing of the two groups, namely loan/deposit spreads.
• Return on equity 40.4% at PB (Dec’22: 50.3%); 16.7% in SB (Dec’22: 17.2%) compared to May 2022’s respective levels of 46.6% and 30.2%.
Our view: The trend in sector profitability is not promising for 2Q23. We expect earnings quality to weaken on lower linker income and contracting core spread. We expect commission revenues to remain high in 2Q in tandem with opex. Provisioning costs have a potential to remain low in 2Q on the back of intact asset quality and strong collections. We continue to prefer banks that make active pricing on the loan and deposit side and manage asset quality proactively.



Oyak Yatırım Menkul Değerler A.Ş.
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                               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.