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bne Turkey Daily ListExecutive Summary:
This is bne's Turkey daily newsletter, a list of the top stories in the country this morning. To manage your delivery options: click here: | ||
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| 1. Turkey's inflows to equities accelerated last week as well as outflows from bond market |
| BGC Partners |
| February 17, 2012 1- EQUITY: In February 6-10 foreigners were net buyers of another hefty US$307 mn after buying US$366 mn two weeks ago. In January, foreigners were net buyers of US$474 mn and US$72 mn in December. 2- BONDS: The CBT data once again showed that foreign investors were net sellers of US$1,444 mn in that week and benchmark bond yield increased from 9.2% to around 9.5%. 3- FX MARKET: TL depreciated by 0.7% last week with foreign capital outflows. We still think that cross-currency deals, options, structured products, repo transactions, custody definition problems and switches from fixed income to money market by foreigners complicate to form a relationship between the foreign flows & currency. Meanwhile, since the beginning of the year we observe that locals bought FX by around US$5 bn. 4- FX RESERVES: CBT's gross FX reserves recovered further from US$77.0 bn to US$77.4 bn (excluding gold worth of US$11.1 bn) as of February 10. TO SUM: On a 52-week rolling basis, net foreign inflows in the equity market increased further to +US$0.56 bn last week from +US$0.07 bn two weeks ago (its peak was +US$2.6 bn in May 2011), while 52-week rolling net foreign inflows in the bond market declined from US$10.8 bn to US$8.8 bn (peak was US$18.5 bn in end-April 2011). |
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| 2. Turkey demands compensation for any loss of Iranian oil |
| bne |
| February 17, 2012 Tupras, Turkey's top oil refiner, wants compensation for added costs due to any lost Iranian oil imports, reporters Reuters. This is despite Ankara saying that there is no official change to the oil trade with Tehran. Tupras' existing oil contract with Iran ends in August, while planned United States sanctions are set to begin at the end of June, with details to be made clear in May. "Our trade conditions with Iran are very good. We asked the Americans whether our probable losses will be compensated in the event of an embargo," Turkey's Koc Energy Group chairman Erol Memioglu said. Tupras obtains about 30% of its crude oil from Iran. |
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| 3. Turkish white goods reported 8% yoy growth in exports in January |
| Erste |
| February 17, 2012 According to the White Goods Industrialists' Association (TURKBESD), total domestic white goods sales in January 2012 rose 6.9% y/y (up 2.1% m/m) to 447k units. Exports, meanwhile, increased 8.1% y/y to 960k units in January 2012. The domestic white goods sales growth in January was higher than our current 3% growth expectation for the domestic market for FY12. However, January figures are not indicative of the full-year sector performance, as January sales constitute just 6% of total annual sales historically. Thus, the announced January figures are market- neutral for both Arcelik and Vestel WG. |
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| 4. Turkish Airlines, 'fastest growing European airlines' |
| Erste |
| February 17, 2012 Turkish Airlines' GM Temel Kotil said that the company is the third largest airlines in Europe with the youngest fleet of 178 aircraft, aiming to position itself among the 10 largest airlines in the world. Mr. Kotil reiterated the 2012 targets of (i) carrying 38mn passengers and (ii) opening 18 new destinations on top of the 218 destinations as of end-2011. According to Mr. Kotil, Istanbul is the best located city in terms of airport transportation and that they want to fly to every destination in the world, with a focus on transfer passengers. Mr. Kotil also emphasized the importance of Africa in their growth plans, as Africa has the largest stake in their total number of passengers at 60%. The GM's comments are in line with his previous comments and broadly reiterate the company's already announced guidance. We welcome and appreciate the company's growth story, despite the short-term negative consequences on profitability. |
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| 5. Enjoy the ride, but buckle-up! |
| SEB |
| February 17, 2012 While last autumn's flight to liquidity inflicted serious damage on EM assets, the abundance of liquidity now will serve as an EM-supportive driver this year. We also expect fundamentals to be a key market driver. This will benefit Emerging Markets (EM) generally as they have improved sharply during the last decade in absolute terms and, especially in relation to developed markets (DM). The size of fiscal deficits, public and private sector indebtedness, the soundness of banking systems, and FX reserve levels are all part of this. However, GDP growth is probably the variable most in focus. We have raised our EM GDP forecast since November by 0.5%-points to 5.7% this year and 6.0% in 2013. While the improved outlook, especially for the US, is supportive the most important factor is that EM lending conditions will not deteriorate as much in response to the Eurozone crisis as we previously expected. Furthermore, the regular tool box of economic policies is still available to EM. With inflation falling towards targets, we see scope to ease monetary policy in these countries. The rally in EM stocks, bonds and currencies since early January has been propelled by a massive increase in liquidity provided by major central banks, reduced contagion risks from the Eurozone crisis and an improved macroeconomic outlook for the US and many EM. Will it continue? Our answer is yes and no. While risks are more symmetrical than previously, more bad news is inevitable. Two risks stand out; setbacks in attempts to ring fence the Eurozone crisis resulting in renewed financial market stress and a possible credit crunch; secondly, increased tension in the Middle East with repercussions for the oil price and inflation, forcing EM central banks to tighten monetary policy. While timing these and other risks is intrinsically difficult, we believe the market, dazzled by its recent strong run, is ripe for correction and will succumb when the appropriate trigger materialises. We are therefore cautiously positioned right now. We refrain from chasing the market. While rally momentum has eased slightly of late, it has nevertheless performed strongly. Consequently, our trading strategy involves positioning for a near-term correction of the recent rally and we look to buy USD/HUF. However, our more sanguine assessment of both real and financial economic fundamentals going forward implies that market drivers will be largely supportive for EM assets. Therefore, in all except the very near-term, we look to go long fundamentally strong and/or high carry EM currencies. EM bonds are set to gain from the benign inflation environment and from a catch up to the spread tightening that has already occurred in other high yield markets. While equities have performed very strongly so far this year, valuations indicate further potential. Highly attractive buying opportunities may materialize if the recent rally suffers a setback. The key risks for EM remain external and threaten to make the road forward a bumpy one. As a hedge against the downside risks to our main scenario, we recommend buying a call in EUR/CZK. Enjoy the ride, but buckle-up! |
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| 6. Eurozone: Bailout 2.0 almost there? |
| ING |
| February 17, 2012 Yesterday's Eurogroup conference call did not deliver any results. Next stop for the Eurozone crisis talks is Monday. It will probably not be the last stop. It was a very brief press statement. Yesterday's Eurogroup meeting had not been cancelled but was shortened to a conference call to discuss Greece. After the conference call, the only official statement released was rather short on new information. Eurozone finance ministers are keeping the pressure high on Greece. The official statement only gave a wrap-up of latest developments, acknowledging the Greek efforts, while at the same time stressing the still missing measures. As it stands now, Greece still has topresent additional consolidation measures of 325bn euro and needs to present assurances by all political leaders that austerity measures and structural reforms will continued after the elections. Also yesterday, Greece had taken some action to fill both gaps. On the commitment front, while PASOK leader Papandreou had already ticked the box by sending his commitment letter on Tuesday, the ND leader Samaras followed yesterday sending his in turn. On the 325 million shortfall front, intense contacts had been reactivated with the troika at a technical level but no details have been agreed, yet. Reading between the lines of yesterday's Eurogroup statement, some Eurozone countries are still pushing hard for a further loss of Greek sovereignty to ensure that the plans are really implemented. It looks as if earlier proposals like a European controller for Greece or a frozen account for the next bailout package are not off the table. The latter matches recent public statements by German finance minister Schaauble, who hinted at a further loss of Greek sovereignty and even at postponing the April elections. The next showtime for the Eurozone debt crisis will be Monday 20 February. This will be the next meeting of Eurozone finance ministers when they hope to find an agreement on a next second bailout package for Greece. The official statement sounds encouraging that there will be a decision. However, it will not be an easy meeting. There seems to be a high level of irritation and mistrust from an increasing number of Eurozone countries vis-a-vis the Greek. It looks as if more austerity measures alone will not do the deal. What do Eurozone countries need to agree to a second bailout package Judging from latest statements and developments, it could be the following: Obviously, the additional 325bn euro expenditure cuts by the Greek and credible political commitment by all political parties, preferably even postponing the elections. Moreover, further measures to increase surveillance and ensure implementation of any bailout programme. A clear hint to a reinforced presence of the troika in the Greece and to the French-German idea of the creation of an escrow account meant to prioritise debt servicing. Furthermore, there needs to be an agreement on PSI (which has we have heard so often of the last weeks "is about to be finalized"). Finally, there is still the pending issue of ECB participation. Given latest ECB comments, the latest from Bundesbank president Weidmann, the ECB is still hesitant to "officially" finance any bailout package. Foregoing profits on its Greek bond holdings seems to be an option but how is still unclear. The option to hold all Greek bonds to maturity and redistribute profits (or not yet realised profits) to national central banks looks like the preferred one. National central banks could then transfer the profits to their governments. However, this option would not reduce Greece's debt burden. Moreover, it is questionable how this would fit into national legislation. In Germany, for example, it was recently agreed that the Bundesbank profit transferred to the government will gradually be reduced to 2.5bn euro per year. Selling its Greek bonds to the ECB is probably still the most practical option. The big question would be at which price. The list of unsolved issues for the next Eurogroup meeting on 20 February is not short and the devil is in the details. Latest growth disappointments could even undermine the Troika's debt sustainability analysis. With latest developments, it cannot entirely be excluded that the Eurozone even finds a way to bridge Greece's March funding problems without agreeing on a second bailout package. Maybe it is a bit too sceptical but even Monday's meeting might not yet bring the all-encompassing Greek package. |
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| 7. FATF steps up fight against money laundering and terrorist financing |
| OECD |
| February 17, 2012 The Financial Action Task Force, the global standard-setter in the fight against money laundering and terrorist financing, has revised the Recommendations after more than two years of efforts by member countries. The Recommendations are used by more than 180 governments to combat these crimes. The revisions, made with inputs from governments, the private sector, and civil society, provide authorities with a stronger framework to act against criminals and address new threats to the international financial system. The cost of money laundering and underlying serious crime is very large, estimated between 2 and 5% of global GDP. The revision will enable national authorities to take more effective action against money laundering and terrorist financing at all levels - from the identification of bank customers opening an account through to investigation, prosecution and forfeiture of assets. At the global level, the FATF will also monitor and take action to promote implementation of the standards. The revised FATF Recommendations now fully integrate counter-terrorist financing measures with anti-money laundering controls, introduce new measures to counter the financing of the proliferation of weapons of mass destruction, and they will better address the laundering of the proceeds of corruption and tax crimes. They also strengthen the requirements for higher risk situations and allow countries to take a more targeted risk-based approach. Giancarlo Del Bufalo, the President of the FATF, said: "Adoption of the revised Recommendations demonstrates countries' shared commitment to fight money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction." "The revised Recommendations include requirements for stronger safeguards in the financial sector, strengthened law enforcement tools and improved international cooperation." The main changes are: - Combating the financing of the proliferation of weapons of mass destruction through the consistent implementation of targeted financial sanctions when these are called for by the UN Security Council. - Improved transparency to make it harder for criminals and terrorists to conceal their identities or hide their assets behind legal persons and arrangements. - Stronger requirements when dealing with politically exposed persons (PEPs). - tax crimes. - An enhanced risk-based approach which enables countries and the private sector to apply their resources more efficiently by focusing on higherrisk areas. - More effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets. - Better operational tools and a wider range of techniques and powers, both for the financial intelligence units, and for law enforcement to investigate and prosecute money laundering and terrorist financing. |
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| 8. A govt at last, but Bosnia's future remains uncertain |
| bne |
| February 17, 2012 Though Bosnia-Herzegovina has finally got a new government after more than 14 exhaustive months from the general elections in October 2010 there is little cause for optimism that an end to the country's political paralysis is in sight. An economist and former finance minister of the Bosnian Federation (the Croat-Muslim part of the country's two entities), Vjekoslav Bevanda, is the new chair of the new Council of Ministers. Zlatko Lagumdzija of the Social Democratic Party (SDP), who dropped his previously determined bid to become prime minister, will serve as foreign minister. As in the previous government, Serb parties will control the main economic portfolios with former prime minister Nikola Spiric as finance minister whilst the ministerial posts of defence and security will be filled by Bosniak parties. By finally securing agreement on the 2011 budget, Bosnia's political elites averted a potentially catastrophic crisis that would have left state institutions which had already been functioning on temporary financing without money for salaries and other expenses. This is likely to provide only a short-term fix, however. Click to read more |
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| 9. Croatia's budget receives lukewarm response |
| bne |
| February 17, 2012 Croatia's new centre-left coalition government had been hoping that the spending cuts outlined in its draft budget proposal would be enough to retain its investment grade credit ratings and maintain investor confidence. But on February 15, Fitch Ratings poured cold water on this. The draft budget, sent to parliament on February 13 for approval, envisages nominal spending cuts of HRK3.6bn (€480m), which should help trim Croatia's budget deficit to 2.8% of GDP this year, down sharply on the end-2011 figure of 5.5% of GDP. Among the headline cuts, the government plans to shave HRK1.95n off the country's public sector wage bill by reducing overtime payments and slashing temporary employment contracts, while subsidies to the agriculture sector and the state railway company HZ will be cut by HRK817m and HRK543m respectively. On the revenue side, the government is looking to raise as much as HRK3.5bn by raising VAT rate from 23% to 25% and is hoping to garner HRK2bn from privatisations, including the sale of stakes in insurer Croatia Osiguranje and savings bank HPB. On the borrowing front, Croatia is looking to raise at least $1.3bn through international bond sales in Japan and the US. Commenting on the government's financing plans, Prime Minister Zoran Milanovic told state news agency Hina: "This is not the ideal budget proposal, but it's the best we could do. This budget will not lead to an explosion in investment, but without the adopted measures we can't move forward." Click to read more |
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| 10. Czech economy first, but probably not last, of CEE to enter recession |
| bne |
| February 16, 2012 GDP data for the fourth quarter of 2011 released on February 15 revealed the Czech Republic as the first country in CEE to slip back into recession, weighed down by the heavy reliance of its small economy on exports to the Eurozone. Elsewhere, despite positive surprises in both Hungary and Slovakia, analysts still worry the rest of the region could soon follow suit. Given that both Germany and the overall Eurozone did slightly better than expected - limiting contractions to 0.2% and 0.3% quarter on quarter, respectively - the Czech economy's drop of 0.3% in the last three months of 2011 disappointed. Following a drop of 0.1% in the third quarter, that tips the country back into technical recession. Analysts at Komercni Banka called the figures a "big surprise given the real data from the domestic economy developed very well in the last few months of last year (industry, construction, foreign trade)." Commentators from several banks express their curiosity to see a breakdown of the figures, which will be available on March 9. However, whatever the technical aspects, the result is unlikely to improve much in the first half of 2012, KB suggests. "We expect that the economy should drop 0.2% on quarter in the first quarter of 2012 and stay flat in the second quarter. The EMU's economy has been in a recession since the fourth quarter of 2011, German factory orders fell 8% cumulatively between July and November, and a declining trend is visible even in new car registrations in the euro area. The external factors therefore drag on the performance of the Czech economy. In the whole year 2012, we expect Czech GDP to add just 0.1% after a 1.7% rise last year." Click to read more |
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| 11. Turkish academics unite against oppression at universities |
| Hurriyet Daily News |
| February 17, 2012 Academics have raised their voice to denounce the "oppression and intimidation" they say they are encountering at Turkish universities. "Academics are being intimidated, fired or suspended from their positions by rectors or the Higher Educational Council [YOK] because of their research topics or political ideas. And there are hundreds of university students that are being prosecuted or suspended from the university on accusations of 'aiding terrorist organizations.' The situation is outrageous," Galatasaray University Professor Ahmet Insel told journalists at a press conference in Istanbul. Click to read more |
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| 12. Turkish prosecutor to investigate the leaking of documents |
| Hurriyet Daily News |
| February 17, 2012 The Istanbul specially authorized Deputy Chief Prosecutor's Office yesterday launched an investigation into the leaking of certain documents from the ongoing Kurdistan Communities Union (KCK) probe. The details of the investigation were not clarified as the Daily News went to print yesterday. Meanwhile, the Istanbul Police Department has ordered the removal of nine officers from their posts in the anti-terror and intelligence departments in charge of monitoring the outlawed Kurdistan Workers' Party (PKK) on Feb. 15 and reassigned them to other cities. Click to read more |
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| 13. Turkey lawmakers differ on footage from air raid |
| Hurriyet Daily News |
| February 17, 2012 Villagers slain mistakenly in the Dec. 28, 2011, air raid at the Iraqi border are easily recognizable as civilians in footage taken by a drone during the strike, lawmakers who saw the images at Parliament's Human Rights Commission said, while the panel's chairman cautioned against early conclusions. Tasked with investigating the politically explosive incident, the commission watched the footage Feb. 15 behind closed doors. Lawmakers said they were emotionally overwhelmed and some fought back tears. Military technology experts and a General Staff representative were present at the session. The raid killed 34 teenagers and young adults involved in cross-border smuggling, which is widespread in the impoverished region. Click to read more |
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| 14. Turkey warns Greek Cyprus on oil drilling ahead of Israeli PM visit |
| Hurriyet Daily News |
| February 17, 2012 Turkey warned Thursday that it will not allow under any circumstances foreign oil companies to conduct unauthorized oil and natural gas exploration and exploitation activities in the Eastern Mediterranean and will take all necessary measures to protect its rights in the areas within its continental shelf. Turkey's strong worded warning came after an announcement published in the EU Official Journal dated 11 February 2012 that the Greek Cypriot administration has called for a new international tender for off-shore hydrocarbon exploration and exploitation within its so-called economic exclusive zone. Click to read more |
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| 15. Turkish BDP deputies to start hunger strike Monday |
| Hurriyet Daily News |
| February 17, 2012 Peace and Democracy Party (BDP) lawmakers will begin a two-day hunger strike Feb. 20 in Ankara to support two arrested deputies who have already begun fasting to protest prison conditions. Five of the BDP's 29 deputies are in prison even though they were elected to Parliament last year. Selma Irmak and Faysal Sariyildiz began their action Feb. 15, while the remaining 24 deputies will join them Feb. 20 and 21 in a show of solidarity, co-chair Gultan Kisanak told the Hurriyet Daily News yesterday. Click to read more |
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| 16. Turkey's intel bill not licence to kill' |
| Hurriyet Daily News |
| February 17, 2012 The main opposition vowed yesterday to ask the Constitutional Court to scrap a bill intended to shield intelligence officials from prosecution, while the government mulled changes in the draft to narrow its scope. "If the bill is signed into law, we will naturally go to the Constitutional Court. The bill is a great risk for democracy. It would plunge the state into illegality," Republican People's Party (CHP) leader Kemal Kilicdaroglu said on NTV television. Stepping back in the face of objection, the ruling Justice and Development Party (AKP) was considering revisions to the wording of the bill, as well as the scope of protection it would provide. Changes are likely to indicate that those who have protection while carrying out "special tasks" would be not be just anybody, but "public officials assigned to certain non-operational duties," Deputy Prime Minister Bekir Bozdag said. Click to read more |
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| 17. Aggressive competitors, smugglers irk oil company in Turkey |
| Hurriyet Daily News |
| February 17, 2012 Turkey's ever-growing gasoline market is feeling the pain of becoming more regular as one of the leading companies complains about both vast discounts implemented by new players in the field and a major shift in relations between the stations and distributors. It was impossible to drop prices by more than 10 percent, like stations of some small distributors are doing today, as this rate exceeds the regular profit margin, said Fikret Ozturk, chairman of Opet, which is partly owned by Koc Group, Turkey's largest conglomerate. Click to read more |
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| 18. The best January budget performance in Turkey |
| ING |
| February 17, 2012 In January 2012, the central administration budget balance recorded a TRY1.7bn surplus, the highest ever. The unemployment rate remained practically unchanged at 9.1% in November. In January 2012, the central administration budget balance recorded an historically high surplus of TRY1.7bn, up by 73.1% YoY, on the back of strong revenue growth of 19.5% and a modest increase in non-interest expenditures, despite a rise of 41.7% in interest expenses in the same period. Meanwhile, the primary balance realized was TRY7.1bn, with a realization rate of 24.5%, a result of seasonal factors, but still better YoY. A strong revenue performance in January 2012 stemmed from a 32.7% rise in income tax, TRY1.2bn in revenues from tax restructuring (TRY14.5bn in total since 2011; the government projects TRY10bn for this year) and 24.5% growth in VAT on imports (mostly due to an average 18.5% rise in average USD/TRY YoY in the same period, as we think total imports remained flat YoY in January), while a special consumption tax dropped by 2.7%. Regarding expenditures, a relatively modest 12.1% YoY increase in non-interest expenditures is attributable to a mere 2.8% increase in current transfers and falling expenditures for goods & service purchases, despite hefty 16.1% growth in personnel expenditures. Overall, the January 2012 central budget performance shows a good start to the year, signaling continuing adherence to fiscal discipline by the government, in our view. Meanwhile, TurkStat announced unemployment statistics for the November period (covering Oct-Dec 2011). Following a slight increase in October 2011, the unemployment rate remained flat at 9.1%, but inched down in seasonally adjusted (SA) terms to 9.3% from 9.4% a month ago. Currently, the unemployment rate is fluctuating around the low levels seen since 2005. The data in general prove the improvement trend in the SA unemployment rate since the beginning of 2009 as a result of strong job creation in the Turkish economy, while growing labor force participation seems set to stabilise around 9.3-9.4% on the back of easing domestic activity in recent months. |
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| 19. Consumer confidence in Turkey recovers slightly |
| Hurriyet Daily News |
| February 17, 2012 The consumer confidence index rose about 0.2 percent in January compared to the previous month, according to data released yesterday by the Turkish Statistical Institute (TUIK). Click to read more |
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| 20. Sacked workers in Istanbul, Turkey protest against Hey Tekstil firm |
| Hurriyet Daily News |
| February 17, 2012 Some 420 workers in Istanbul have started a protest in front of the factory entrance to the Hey Tekstil company, demanding that the firm pay four months of unpaid wages and severance after laying off 5,000 workers across the country. Yusuf Cicek, who has been working for over 10 years at Hey Tekstil, told newsportal EmekDyas.net that the company had been paying his wages only sporadically over the past three years and that no reason had been given for the lay-offs. iek plans to camp outside of the factory entrance until Hey Tekstil provides him with back-pay and compensation. Click to read more |
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| 21. Iran nuke row nixes Turkey's oil efforts |
| Hurriyet Daily News |
| February 17, 2012 Global instability stemming in part from tensions between Washington and Tehran over the latter's nuclear program are resulting in increased domestic energy costs in Turkey despite Ankara's best efforts to import more affordable energy resources, Energy Minister Taner Yildiz said yesterday. "Energy prices continues to rise with the pressure triggered by the global political instability in spite of all of Turkey's efforts to bring down the prices through bilateral agreements," said Yildiz during a Turkey-South Africa Joint Economic Commission meeting in Ankara. Click to read more |
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| 22. Turkish Arcelik's worse than expected 4Q11 net earnings |
| Erste |
| February 17, 2012 Arcelik reported TRY 92.1mn in net profit for 4Q11 (down 6.5% y/y, down 39% q/q), lower than both our expectation of TRY 138mn and the consensus estimate of TRY 145mn. The deviation between our estimate and the announced net profit stemmed from higher than expected OPEX (mainly due to the Defy acquisition and new market penetrations), as well as one-off expenses. The company recorded TRY 30.5mn in expenses in 4Q11, stemming from recalling particular models of Beko fridge freezers sold in the UK. Although revenues are higher than the market consensus, the announced net profit figure and EBITDA margin are significantly below the market consensus. The results were disclosed at the end of the second session yesterday and we saw the negative impact of the results on the share price. The share price underperformed the ISE100 by 1.3% yesterday and by 6% over the past month. We will revise our valuation model; however, we maintain our Buy recommendation for Arcelik. The company increased its consolidated revenues 30% y/y and 3% q/q to TRY 2,394mn (our expectation: TRY 2,250mn, consensus: TRY 2,262mn) in 4Q11. The company benefited from strong growth in the domestic market (17% y/y) and the EUR appreciation against the TRY (24% y/y) in export sales in 4Q11. EBITDA increased 35% y/y (declined 25% q/q) to TRY 194mn (our expectation: TRY 247mn, consensus: TRY 252mn) and the EBITDA margin slightly improved, by 0.3pp y/y (3pp q/q deterioration) to 8.1% in 4Q11 (our expectation: 11.0%, consensus: 11.1%). Management's FY12 guidance: 5% growth in domestic market unit sales, greater than 20% growth in international unit sales (including the impact of the Defy acquisition), 20% growth in total revenues in TRY terms, 11-11.5% EBITDA margin. |
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| 23. Turkish Airlines launches flights to the Somali capital of Mogadishu |
| Hurriyet Daily News |
| February 17, 2012 Turkish Airlines announced yesterday it is to launch flights to the Somali capital of Mogadishu Mar. 6., Hurriyet Daily reports. The flights will leave Istanbul Atatrk Airport for Mogadishu on Tuesdays and Thursdays, and Mogadishu for Istanbul on Wednesdays and Fridays, the statement said. |
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| 24. Turkey's bank Isbank plans to open more branches |
| Hurriyet Daily News |
| February 17, 2012 Isbank posted strong credit growth of 43 percent last year and is preparing to open new branches in Iraq, Georgia, and Pakistan, the bank's top executive said yesterday. "We are planning to open branches in Baghdad, Batumi and Karachi," said Adnan Bali speaking to Hurriyet Daily News at the sidelines of a press meeting held in Istanbul. "In addition, our talks to acquire a bank in Azerbaijan continue. The bank's representative office in China might also be turned into a branch if Turkey gets more plugged into the Asian market," he added. Isbank purchased Russian Bank Sofia in October 2010 for approximately $40 million, Hurriyet Daily reports. |
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| 25. Turkey's Halkbank business model continued to deliver strong results in 4Q11 |
| Erste |
| February 17, 2012 Strictly in parallel with the tax?purposed financials, Halkbank posted a TRY 504mn net profit in its 4Q11 reading, remaining flattish q/q. The announced bottom line is in parallel with our TRY 507mn estimate, and TRY 512mn consensus estimates. The bank's quarterly RoE declined slightly to 23.8% ? yet is still expected to be the highest amongst our coverage universe. Halkbank closed 2011 on a TRY 2,044mn net profit, which corresponds to 2% annual growth - versus the sector's 10% decline for the same period- which implies 25.5% RoE. The results once again yield a strong operational performance for the quarter, supportive of our positive view on Halkbank. We continue to favour the bank over other banks in our coverage, and maintain our Buy' recommendation with a target price of TRY 14.60. Strong growth in deposits provided some relief on LDR. In the underlying quarter, Halkbank registered a mere 2% q/q expansion in its total lending, which is lower than the sector average of 3.6%. Growth was mainly driven by cooperative loans, which jumped by 7.4% q/q for the period. Although retail loan growth was low at 2.4%, we consider the full year performance eye-catching on 31.5% annual acceleration. Meanwhile, on the funding front, similar to the general sector trend, the bank reduced its exposure to repo funding, with the aim of protecting margins. Accordingly, this item slipped by 44% q/q, as the bank concentrated on deposit gathering, which in turn rose by 6% q/q. More importantly, demand deposits grew by 7% q/q. This strategy not only supported margins, but also provided additional relief on the loans to deposit ratio - which declined from 88% to 85% in 4Q11. Deposit expansion was mainly driven by local currency deposits. Significant margin improvement. As we had been expecting, Halkbank scored a 40bps improvement in its loan deposit spreads, enabled by a 50bps increase in loan yields. Additional support came from CPI linked government bonds, which had a 30bps positive impact on margins (as yields rose from 7% to 24%). With regards with deposit costs, the bank benefitted from the CBT's RRR decision during the quarter (TRY deposit costs rose slightly from 6.9% in 3Q11 to 7.1% in 4Q11). Overall, the NIM itself expanded by 100bps in 4Q11, to 5.0%. All in all, we observe a 30% jump in net interest income for the quarter. After delivering above sector growth rates in the first three quarters of the year, Halkbank's total commission based income declined by 1% in 4Q11, being hurt by seasonality factors. However, for full year 2011, the bank registered 46% fee growth, which is one of the strongest figures within our coverage. OPEX growth was at around 5% q/q, which is due to seasonality factors, and is in line with our projections. Fees now cover 43% of total operational expenditures, thus marking improvement from 31% at end-2010. The cost to income ratio is at 34.5%, which is one of the lowest figures within our coverage universe. Slight deterioration in cost of risk. Halkbank's bad loans remained almost unchanged for the quarter, enabling it to have a flattish NPL ratio for the period of 2.9%, which is sustained by the absence of NPL write-off or selling. However, there is a TRY 186mn discretionary provisioning due to unexpected developments in the market, while there is no clear deterioration in bad loan generation according to bank management. As a consequence, the bank's cost of risk slightly deteriorated to 0.5% from 0.3% a quarter earlier, while it believes that this is a temporary rise. The main problematic areas were the textiles and food & beverage sectors, which comprise small corporate loans. |
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| 26. Turkish Is Bankasi raising forecasts; retaining sell |
| Renaissance Capital |
| February 17, 2012 Revenue boosted by low deposit costs and trading. Isbank recorded strong core NII of TRY1.3bn in 4Q11, mainly thanks to a decline in average deposit costs. This performance was further boosted by FX and trading gains, while 4Q11 fee income was up by 28% YoY. Hence core revenue rose 55% YoY in 4Q11. FY11 core revenue growth was +6%, better than Isbank's peers. Costs under control. YoY opex growth was 8% in 4Q11 and 9% in FY11 we see this as a strong performance. Cost of risk burden remained very low in 4Q11 and FY11. In 4Q11 collections accelerated and provisions fell, leading to a negligible cost of risk burden. Full-year net CoR also remained at a very low 30 bpts. We raise our 2012-2013E adjusted EPS by 10%. Running our model post-FY11 results, we raise our reported net income to TRY2.4bn in 2012E and TRY2.6bn in 2013E, while our adjusted EPS forecasts for 2012 and 2013 are now 10% higher, at TRY0.44 and TRY0.48, respectively. We also raise our TP to TRY3.9, from TRY3.7; but reiterate our SELL rating. We adjust our earnings for employee dividends paid and non-cash dividend income; hence we forecast adjusted RoE of 11% for Isbank in 2012-2015. Also we apply a 20% conglomerate discount in our SoTP valuation, yielding a TP similar to that in our dividend discount model. |
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| 27. Turkey's Cimsa Cimento acquired controlling stake in Afyon Cimento Turk Sanayii |
| Hurriyet Daily News |
| February 17, 2012 Cimsa Cimento, a Sabanci Holding subsidiary in the Turkish cement industry, has acquired a controlling stake in local rival Afyon Cimento Turk Sanayii, according to a company press release. A share purchase agreement was signed Feb. 15 between Cimsa and Afyon imento for the sale of shares representing 51 percent of Afyon, owned by Parcib SAS. The agreed purchase price is 57.5 million Turkish Liras, Hurriyet daily reports. |
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