Bank Asya reported TL 48.0mn net profit in 1Q11 (down by 32% q/q and down by 19% y/y). The results were head and shoulders below the market consensus estimate of TL 72mn and our estimate of TL 69mn. While quarterly RoE came at single digit level of 9.8%-lowest ever-, the trailing RoE continues its journey towards south with 13.3% (down by ~600bp y/y).
Deserves a recommendation downgrade, but we will wait for todays conference call. Bank Asyas 1Q11 can be described with muted growth both in loans and deposits, severe pressure on NIM and signals for asset quality deterioration. We are now biased for a recommendation downgrade for Bank Asya shares (from MP to UP) due to our key take away from 1Q11 results and the overall outlook of the bank. We will release a note following todays conference call. (full story)
Deserves a recommendation downgrade, but we will wait for todays conference call. Bank Asyas 1Q11 can be described with muted growth both in loans and deposits, severe pressure on NIM and signals for asset quality deterioration. We are now biased for a recommendation downgrade for Bank Asya shares (from MP to UP) due to our key take away from 1Q11 results and the overall outlook of the bank. We will release a note following todays conference call. (full story)
Lowest NIM ever. Although we haven�t seen a major distortion on cost of funding, the downward repricing in loans took its toll on NII and the quarterly NIM contracted by 110bp q/q to 4.2%. Blended loan yield fell by 160bp q/q (160bp on the Lira side and 120bp on the FX side), in a quarter of weak headline lending expansion with relatively higher growth in consumer segment, which is higher yielding.
Asset quality is a concern. The NPL ratio of Bank Asya diminished by 20bp q/q to 3.8%, however once we include the TL 50.1mn NPL write-off, the NPL ratio comes to 4.2%. Apart from that, the share of closely monitored loans in total performing loans sharply increased to 17.3% (almost doubled compared to the previous quarter) (the highest figure since March 2009), which calls for further asset quality deterioration in the coming quarters.
Tight CAR. 13.4% level is a tick above the effective legal floor. Given the lack of deposit growth (1.1% q/q contraction), tight liquidity level (liquid assets-to-total assets ratio shrank by 340bp q/q to 12.3%-lowest ever) and the limited equity we are unsure about the growth potential of Bank Asya in the coming quarters.
Flattish net fee income and moderate growth in opex. 4% y/y net fee income growth is almost nothing for Bank Asya. Besides that flattish NFI generation compared to 4Q10, despite the bank grew especially in consumer segment in 1Q11, is really a surprising performance. On the opex side 6% y/y growth is broadly in line with the inflation but the per head HR-cost growth of 11.6% y/y may be an indicator of a hardly controlled opex in the coming quarters.
