HALKB TI: 4Q22 Review (Oyak Yatırım)

Core revenues expand; fees strong
Halkbank posted 4Q22 net income of TL5,849mn (+36% q/q, +353% y/y), in line with market consensus (TL5,614mn); yet slightly above our estimate (TL5,506mn). Core revenues (NII + fees) grew %2 q/q on widened core spread (+18bp q/q, OYAKe: +22bp), higher CPI-linker income and strong fees. Fees rose 118% y/y thanks to growing loans, payment system contribution and dissipating regulatory pressures, while opex expanded above headline inflation by 91%. Net total CoR decreased to 603bp this quarter (3Q: 796bp) on released provisioning and intact asset quality. Trading line continued to be unsupportive of earnings in 4Q. ROE hiked to 28.4% in 4Q from 24.2% in 3Q and 12.1% a year ago.
NIM contracts on higher swap costs
TL spread widened 64bps q/q (OYAKe: +25bp) on lower deposit costs, while FX spread went up 58bps q/q. Despite expanded spread and higher CPI revenues, NIM went down 1.9ppt q/q (OYAKe: -1.1ppt) on q/q higher swap costs. Halkbank adjusted 4Q CPI-linker revenues using 22YE CPI of 64.3%, raised from 60% in 3Q. Halkbank gained market share in FX deposits in 4Q. TL loans grew 16.8% q/q vs +18.9% for state banks (SBs), while TL deposits expanded 18.6% q/q vs +26.5% for SBs. On FX (USD) side, loans went up 1.5% q/q vs +2.4% for SBs, deposits grew 14.4% vs +1.6% for SBs.
Asset quality appears good; further provisions are set aside
NPL ratio went down to 2.2% (-35bp q/q) and the ratio of stage 2 to total loans dropped to 6.8% in 4Q from 7.4% in 3Q. Stage 2 coverage rose to 45.4% in 4Q from 32.0% in 3Q. NPL coverage, on the other hand, rose to 82% (+2ppt q/q).
FY23E earnings and MP rating maintained
We foresee Halkbank’s 2023E earnings to decline 25% y/y to TL13bn, assuming that inflation retreats and linker yields drop in 2023. Halkbank trades attractively at 23E P/BV of 0.6x and 4.3x P/E, while 23E ROE stands at 14%. We maintain our Marketperform recommendation for the stock with a TP of TL12.10 per share.


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