Market watch (Şeker Yatırım)

Outlook:
The BIST100 Index started Wednesday on a negative trend before fluctuating in a narrow band during the day, closing at 8,024.37, down 0.10%. While the Industrial Index declined by 0.70%, the Banking Index rose by 0.42%. Momentum at the BIST has decelerated in the absence of significant short-term expectations. Yet, sales will likely present buying opportunities for the medium term, as long as rational policies continue to be implemented and foreign investor interest prevails. In the medium term, the strengthening of global risk appetite and the rise in fund flows to EMs will continue to support the BIST. In general, we think that industrial stocks may remain pressured by weakening domestic demand and expectations regarding inflation accounting. Banking stocks may maintain their positive divergence with the support of foreign interest. Profit sales continue in global markets. Yesterday, the U.S., European and Asian Stock Markets closed the day with declines, while this morning, the U.S. futures and German DAX futures were bearish and Asian stock markets were mixed. In general, we expect economic data and statements from Fed members to continue impacting risk appetite. The VIOP30 index closed the evening session down 0.24%. Locally, we expect the Benchmark Index to start Thursday positively and thereafter see further fluctuation and profit taking. SUPPORT: 7,980 - 7,895 RESISTANCE: 8,095 - 8,150.
Money Market:
The Lira was negative yesterday, weakening 0.08% compared to the USD to close to 30.1321. In addition, the currency appreciated by 0.10% against the basket composed of $0.50 and €0.50. Meanwhile, the local fixed income markets were negative. The ten-year benchmark bond was traded within a range of 27.15%-27.31%, ending the day at a high of 27.31%, 17 bps above its previous closing.
Sector News:
Moody's has affirmed the Baseline Credit Assessments (BCA) and long-term LC deposit and long-term issuer ratings of all 17 banks that it rates in Turkiye, and changed the outlook to 'Positive' from 'Stable'. This follows the agency's decision to change the outlook on the Government of Turkiye's issuer rating to 'Positive' from 'Stable' and affirm the rating of the sovereign at B3.
The affirmation of the BCAs reflects (1) a track record of resilient performance from the Turkish banks, despite unorthodox government policies and institutional weakening over many years, and (2) Moody's expectation that the relaxing of past unorthodox government policies would take time to sustainably improve the banks' operating environment.
The rating agency expects the Turkish banking sector's NPL ratio to rise as the economy slows, and profitability to face some pressure. Trading income is expected to cool in a more stable operating environment, while operating costs are expected to remain elevated and driven by inflation. Moody's also expects lower inflation-indexed securities income and thinner margins due to lower inflation and high local currency deposit costs to exert some pressure on profitability.
For 2024, we model eye-catching rebound in net fee and commission income and unprecedented trading gains normalizing amid relatively low volatility and moderate growth, but remaining supportive of profitability. We foresee a rebound in NII due to improving loan-deposit spreads. We model 18% (BBG consensus: +20%) and 31% earnings growth YoY for 2024E and 2025E. ROAE should reach 28.9% for 2024E, down from 32.2% for 2023E.
Company News:
For Isbank (ISCTR.TI; OP) our 4Q23 net income estimate is TRY16,103 (-22% QoQ, -32% YoY) with a quarterly ROAE of 31%. Strong growth and market share gains in TRY loans and deposits (QoQ: 18% and 24%), soaring swap funding costs, and an eye-catching and best-in-class 45% QoQ rise in fee and commission income are the major highlights of the quarter.
Unlike other private banks, we expect a trading loss of TRY1bn in 4Q23 triggered by elevated swap funding costs, vs. TRY4.9bn trading gain posted in 3Q23.
We model a strong 500bps QoQ improvement for the loan-deposit spreads. Due to different valuation method used for CPI linkers, unlike other private banks, we model a relatively limited 3% QoQ rise in CPI linker revenues. On the negative side, we estimate an elevated TRY10bn swap funding cost. NIM (adjusted) is expected to print slightly below 2% for 4Q23, and approximately 4% on a cumulative basis for YE23.
On the asset quality side, cumulative CoR (net) should rise to 110-120bps in YE23 from 85bps in 9M23 on NPL formation. Subsidiary income of TRY8.5bn, flattish OPEX, and an effective tax rate of 10% are the other highlights. Slightly Positive.
4Q23 financials announcement date: Second week of February.

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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.