Banks will start to disclose their Q1 24 financials with Garanti before the market open on April 29, followed by Akbank, Yapı Kredi and TSKB the following days.
We expect 1Q24 to be the weakest quarter of the year, where margins continue to be pressured across the sector. We expect the over 50% increase in swap costs and the decreasing contribution of CPI-linker bonds will cause contractions in net interest margins. In addition, we expect increased operational expenses due to HR-costs to be another factor to pressure net profitability during the quarter. While we expect net fee income to continue its development with an average increase of 14%, we expect operational expenses to increase by an average of 23%. In addition, while we expect a flattish provision expenses, we expect higher tax expenses to occur this quarter compared to last quarter due to the quarterly low base. As a result, we expect a sharp decline of 32% QoQ (+8% YoY) in net profit within our coverage universe.
We expect Vakıfbank, which we expect to show a net profit increase, and TSKB, with almost flat results, to stand out. Despite decreasing margins at Vakifbank, mostly due to lower CPI-linker bond yields, we expect a 20% increase in net profit due to one-off high provision reversals resulting from the macro model update. Despite the decline in TSKB‘s margins due to high swap costs and the normalized subsidiary and commission income, we expect its net profit to remain close to flat this quarter, with the CoR remaining below the sector. We expect a relatively limited decrease in Akbank‘s net profit compared to its private peers, due to low CoR with one-off high collection revenues and its relatively low swap cost. While we expect a pressuring in margins and sharp decreases in net profitability for Garanti, Yapı Kredi and Isbank, we expect Halkbank to double its net profit with its high tax income, as it is at a financial loss according to the Tax Procedure Law.
Gedik Investment