TSKB Company Update (Oyak Yatırım)

Risk-reward profile improves

Positioned favorably for further growth
We expect investment appetite in Turkiye to improve in 2023, especially on green energy front, which, we believe, will reflect positively to TSKB’s operational performance. TSKB funded the highest number of renewable energy projects in the last decade. Sustainability-linked investments, such as solar and wind energy, have recently been on high gear in Turkiye on the back of high energy costs and increased awareness. TSKB has diversified sources of long-term low-cost funding and has almost none currency mismatch. Besides, high capital adequacy and strong liquidity provide TSKB an upper hand to grow.

TSKB is exempted from recent regulations stipulating banks to buy G-bonds and pay commissions if their TL deposits share in total is less than 50% or conversion rates of 10% to 20% for currency protected deposits. TSKB gained market share in TL loans in 3Q, posting a striking 40% q/q expansion. We expect TSKB’s 23E FX-adjusted loan contraction to retreat to 3%, driven mostly by TL loan disbursements, from 22E 11%. TSKB operates relatively freely in pricing loans vs deposit banks, which, in turn, supports its TL loan yields. We expect TSKB’s loan yields to borrowing spreads to widen by 40bps in 4Q22 and 1.7ppt in 2023.

We increase our TP for TSKB to TL5.12 from TL3.88 on its high growth potential backed by strong liquidity (LCR at 513% vs top-tier banks 194% as of 3Q) and solid capital base (CAR at 20% vs top-tier banks 18% as of 3Q), upward revision in 23E earnings on changed net interest income and fee income forecasts (refer Page 2 for details), and increased long-term ROE assumption on elevated efficiency of the bank.
Asset quality is intact; free provisioning appears strong
TSKB has free provisions of TL720mn as of 9M22, comprising 6.5% of its market capitalization. TSKB has an NPL ratio of 3.1% as of 3Q with a coverage as high as 81%. Total provisioning coverage, on the other hand, stood at 204% of NPLs, the second highest among banks in our coverage. We think TSKB is a safe bet as for potential asset quality risks in 2023.
Attractive valuation; OP maintained
We foresee TSKB’s 2022E earnings to grow 275% y/y to TL4.1bn, while contracting by a mere 2% in 2023 to TL4bn, assuming that inflation retreats and linker yields drop in 2023. TSKB trades at 23E P/BV of 0.8x and 2.7x P/E, while 23E ROE stands at 31%. We maintain our Outperform rating for the stock with a revised TP of TL5.12 per share


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.