June 24 (Bloomberg) -- Turkish banks rose, sending the benchmark gauge for lenders to the highest level in almost two weeks, after JPMorgan Chase & Co. said the industry’s ratings may improve after the third quarter and valuations are “looking appealing” following recent losses. (source)
The banking index added 1.4 percent to 128,855.1 by the 5:30 p.m. close in Istanbul. Turkiye Garanti Bankasi AS, the country biggest lender by market value, jumped 1.1 percent to 7.34 liras.
“We would be adding to Turkish exposure near current price levels,” analysts led by Paul Formanko in London wrote in a report on banks in central and eastern Europe, the Middle East and Africa. The brokerage kept its “overweight” rating on Turkish banks on a “long-term view,” recommending Garanti, Yapi & Kredi Bankasi AS and Turkiye Halk Bankasi AS.
The central bank has lifted reserve requirements for lenders four times since December by a total of 10 percentage points, helping damp earnings outlooks and fuel a 10 percent drop in the banking index this year. That compares with a 6 percent drop in the broader ISE National 100 Index. Banks make up about 40 percent of the ISE 100 gauge, according to data compiled by Bloomberg.
Turkish banking underperformance has been due to “uncertainty” over central bank measures to tackle loan growth that’s helping to drive up the current-account deficit, according to JPMorgan. Share price performance “will remain volatile over the second and third quarters as the markets focus on margin evolution and central bank policy measures,” it said.
Earnings Rebound
Earnings per share will probably decline 11 percent this year, followed by a 19 percent increase in 2012 and 21 percent gain in 2013, Formanko wrote in the report. Price estimates for banks were lowered to reflect “the full impact from regulatory, administrative measures and market trends,” he said.
Halkbank advanced 2.6 percent to 11.65 liras today, and Yapi Kredi gained 1.8 percent to 3.96 liras. JPMorgan cut its price estimate for Halkbank to 15 liras from 16 liras and lowered Yapi Kredi’s estimate to 4.9 liras from 6.4 liras.
JPMorgan cut Turkiye Is Bankasi AS to “underweight” from “neutral,” and Asya Katilim Bankasi AS to “neutral” from “overweight,” citing “limited upside potential” from revised estimates, according to the report. Isbank’s price estimate was reduced to 5.1 liras from 6.1 liras, while the projection for Akbank was raised to 7.5 liras from 7.4 liras.
Akbank gained 1.9 percent to 7.54 liras, and Isbank added 0.6 percent to 4.84 liras.
The ISE National 100 Index rose for a second day, rising 0.8 percent to 62,072.64.
--Editors: Stephen Kirkland, Linda Shen
To contact the reporter on this story: Benjamin Harvey in Ankara at bharvey11@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
