Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Turkiye Halk Bankasi AS (IST:HALKB, Financial) reported a 30.8% year-over-year increase in total assets, reaching 2.9 trillion liras in the third quarter.
- The bank's securities portfolio expanded by 12.7% quarter-on-quarter, contributing to asset growth.
- Net fees and commissions grew by 12.9% quarterly and 172% year-on-year, outpacing inflation.
- The bank's loan-to-deposit ratio decreased to 61.2%, indicating a strong deposit base.
- Turkiye Halk Bankasi AS (IST:HALKB) maintained a prudent approach to provisioning, with an NPL coverage ratio of 62.4% in line with the sector average.
Negative Points
- The bank's loan share in total assets decreased to 48.8% due to weaker loan growth.
- NPL ratio deteriorated to 2% from 1.5% in the previous quarter, with no NPL sales.
- Net income decreased by 14% quarterly, resulting in a return on equity (ROE) of 11.3%.
- The bank's stage two ratio increased slightly to 7.5%, indicating potential credit risk.
- FX deposits contracted by 1.4% quarter-on-quarter, reflecting ongoing de-dollarization.
Q & A Highlights
Q: Can you provide an overview of Turkiye Halk Bankasi's asset growth and the main drivers behind it?
A: Total assets increased by 30.8% year over year, reaching 2.9 trillion TRY in the third quarter. The primary driver was the solid growth of the securities portfolio, which expanded by 12.7% quarter on quarter. This growth was supported by ongoing treasury activities and high volumes of securities issuances. However, higher tier loan rates have put additional pressure on loan demand. (Unidentified_2)
Q: How has the loan portfolio evolved, and what are the key trends in loan growth?
A: Total loans increased by 4.9% quarterly, mainly driven by business loans, particularly in the form of export loans. SME loans grew primarily in standard segment categories. The overall loan growth was below sector growth due to tight monetary policy and weak TL loan demand. FX loans make up almost 77% of total loans, and cooperative loans, which are 20% of total loans, have been successfully repriced. (Unidentified_2)
Q: What is the current status of the bank's asset quality, particularly regarding NPLs?
A: The NPL ratio increased to 2% from 1.5% in the previous quarter, with half of the inflows coming from a one-off NPL. The stage two ratio slightly increased to 7.5%. Despite no NPL sales, the NPL coverage stands at 62.4%, in line with the sector average. The bank maintains a prudent approach to provisioning. (Unidentified_2)
Q: How has the bank's deposit base changed, and what are the implications for funding?
A: Total deposits increased by 8.2% quarterly and nearly 30% year on year. TRY deposits account for nearly two-thirds of total deposits. The loan-to-deposit ratio decreased to 61.2%, and only 4.3% of total liabilities are derived from FX wholesale funding, compared to the sector average of 17.3%. This positions the bank to benefit from upcoming rate cuts. (Unidentified_2)
Q: What are the expectations for profitability and capital adequacy moving forward?
A: The bank expects earnings growth momentum in 2025, driven by a positive TL core spread and potential rate cuts. The consolidated CAR is at 13.9%, with a CET1 ratio of 10.2%. The bank has authorization for up to 40 billion TRY in sub-debt issuance and is in contact with qualified investors to measure demand. Internal capital generation is expected to sustain or boost capital buffers. (Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
