Equity / Mid Cap.

/ Banking

Review of 3Q11 Financials

15 November 2011

MARKETPERFORM
Upside Potential*
Reuters: ASYAB IS
Stock Data Price at 14 11 2011 12-Month Target Price Mcap (mn) Float Mcap (mn) No. of Shares Outstanding Free Float (%) Avg.Daily Volume (3M, mn) Market Data ISE 100 US$ Spot Rate US$ 12-Month Forw ard
Price Performance (%) 1 Mn

Bank Asya
Bloomberg: ASYAB TI

16%
US$ 1.08 1.29 976 507 900 mn 52.00

TRY 1.93 2.24 1,737 903

Bank Asya 3Q11 Solo Figures: Results were broadly in line with estimates
Bottom-line slightly below estimates Loan growth again above the averages NIM improved on higher LtD spreads and securities yields Asset quality deteriorated Marketperform maintained
Bottom-line slightly below estimates. Bank Asya disclosed TL 61mn net earnings in its 3Q11 solo financials (up 9% QoQ), slightly lower than the market consensus estimate of TL 63mn and our above consensus estimate of TL 65mn. In a nutshell, stronger top-line driven by widening NIM and 11% IEA growth more than compensated for lower NPL recoveries, soaring provision expenses and opex growth. Our deviation mainly stemmed from higher than anticipated loan book growth within the quarter which inflated NII beyond our estimate. Other income/expense figures were broadly in line. Management will hold a conference call today @ 17:00 CET, in which focus would mainly be on further deteriorating asset quality that hindered improving NIM and top-line outlook, in our view. Loan growth again above the averages. Bank Asya once again outperformed its peers in terms of loan growth both in TL and FX side. TL loan book grew 6.5% QoQ in 3Q11, while FX loan placements registered 7.7% QoQ growth in US$ terms. Blended loan yields improved 35bps QoQ to 10.2% in 3Q though remained below the average of its rivals mainly due to low presence in consumer segment. On the deposit side, Bank Asya remained slightly below its peers on the FX side while TL deposit contraction was similar to its peers. That said, the bank refrained from costly deposits and obtained a favourable funding cost comparing with its peer group and its blended cost of deposits eased 20bps QoQ to 5.0% in 3Q. Rest of the asset growth was funded with money market and external borrowings whilst loan-to-deposit ratio further stretched to 110% in 3Q. NIM improved on higher LtD spreads and securities yields. Bank Asyas quarterly NIM widened 53bps QoQ to 5.3% on the back of 55bps improvement in blended loan to deposit spreads and 76bps increase in securities yields. Supported with the strong loan growth, NII improved 20% QoQ in 3Q. Net fees were 4% QoQ higher on the back of both non-cash loans and banking activities while lower fee expenses also fed the growth. Net trading income came down 11% QoQ to TL 9mn due to higher FX losses. Other income was 6% QoQ lower owing to further weakening NPL recoveries. Opex increased 4.4% QoQ on the back of 9 new branch openings. Asset quality deteriorated. Better operating figures were overshadowed with NPL inflows within the period as asset quality is still a major point of concern for the bank.
Please refer to important disclaimer at the end of this report.

22.9

12.6 TRY 55,876 1.78 1.9145

3 Mn 7 7 0

12 Mn -44 -55 -30

TRY US$ Relative to ISE-100

-1 3 6

Price / Relative Price

5.0 4.0 3.0 100 2.0 1.0 0.0 01-09 11-09 50
ASYAB Relative to ISE 100

TL

Relative

200 150

09-10

07-11
1.72

0
3.49

52 Week Range (Close TRY)

Bulent Sengonul
bsengonul@isyatirim.com.tr +90 212 350 25 66

Kutlug Doganay
kdoganay@isyatirim.com.tr +90 212 350 25 08

15/11/2011

Bank Asya

Gross NPLs were 12% QoQ higher or TL 54mn in 3Q, slightly above our anticipation, and specific provision expenses soared 55% QoQ to TL 38mn. Likewise, the annualised specific CoR increase 35bps QoQ to 116bps in 3Q. NPL ratio worsened 14bps QoQ to 3.7% while cash coverage declined to 58% from 64% in the previous quarter, which came as a relief for the bottom-line. Marketperform maintained. 3Q financials were broadly in line with estimates however deteriorating asset quality and normalising cash coverage in the periods ahead will raise question marks regarding the banks earnings outlook going forward. The level of loans at watch still compels us to follow a wait and see strategy for the bank. Trading at 6.1x 12E P/E and 0.7x 12E P/BV, we maintain Marketperform call for Bank Asya shares.

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Bank Asya
2009 1,055 600 258 94 459 301 2010 1,022 594 249 45 530 260 YoY (3.1%) (1.1%) (3.5%) (52.0%) 15.5% (13.7%) 3Q10 238 142 59 13 130 66 4Q10 287 170 67 8 146 71 1Q11 252 144 67 13 134 48 2Q11 241 150 62 9 138 55 3Q11 271 179 64 8 144 61 QoQ 12.1% 19.5% 3.8% (10.8%) 4.4% 9.2% YoY 13.6% 25.4% 8.6% (36.6%) 10.3% (8.0%)

Bank-only, BRSA (TL m n) Operating income Net interest income Commission income Net trading income Operating expense Net income

Bank-only, BRSA (TL m n) Banks Loans NPLs Securities Deposits Foreign funding Shareholders' equity Total assets Loans/Total assets Securities/Total assets Non-core assets/Total assets Fixed assets/Total assets Equity/Total assets Borrow ed funds/Total assets Gross NPL ratio Loan loss reserve ROAE ROAA NIM Adj. NIM (trading & FX) Adj. NIM (trading, FX & LLPs) Yield on IEAs Cost of funds Spread Cost/income ratio Cost/Average assets Cost of risk, annualised
So urce: Is Investment

2009 147 8,197 456 161 9,137 191 1,708 11,609 70.6% 1.4% 1.2% 2.7% 14.7% 1.6% 5.4% 71% 19.4% 3.1% 6.6% 7.6% 5.2% 14.3% 9.0% 5.3% 47.8% 4.7% 269

2010 187 10,955 447 474 11,167 622 1,942 14,513 75.5% 3.3% 1.0% 2.4% 13.4% 4.3% 4.0% 68% 14.2% 2.0% 5.3% 5.7% 4.2% 10.7% 5.8% 4.9% 54.3% 4.1% 110

YoY 26.9% 33.6% (2.0%) 195.3% 22.2% 225.0% 13.7% 25.0% 487bps 188bps (21bps) (23bps) (133bps) 264bps (138bps) (275bps) (512bps) (107bps) (128bps) (191bps) (102bps) (354bps) (322bps) (32bps) 649bps (60bps) (159bps)

3Q10 61 61 (6) 252 163 58 68 325 73.0% 3.5% 1.1% 2.9% 14.1% 4.4% 4.9% 70% 14.4% 2.0% 4.7% 5.1% 4.2% 9.7% 5.8% 3.8% 57.8% 4.0% 93

4Q10 22 1,295 (40) 14 1,179 45 74 1,273 75.5% 3.3% 1.0% 2.4% 13.4% 4.3% 4.0% 68% 14.9% 2.1% 5.7% 5.9% 4.1% 10.4% 5.0% 5.3% 52.4% 4.2% 83

1Q11 49 377 (6) 100 (119) 54 39 (7) 78.1% 4.0% 1.0% 2.5% 13.7% 4.7% 3.8% 65% 9.8% 1.3% 4.8% 5.3% 3.2% 9.7% 4.9% 4.8% 56.2% 3.7% 120

2Q11 (139) 714 (4) (7) 234 374 57 1,110 77.1% 3.6% 0.9% 2.4% 13.1% 6.7% 3.5% 64% 11.0% 1.5% 4.8% 5.1% 4.1% 9.8% 5.1% 4.7% 59.3% 3.7% 81

3Q11 42 995 54 305 595 447 59 1,596 75.8% 5.1% 0.9% 2.2% 12.2% 8.7% 3.7% 58% 11.7% 1.5% 5.3% 5.6% 4.1% 10.2% 4.9% 5.3% 54.8% 3.5% 116

QoQ n.m. 39.4% n.m. n.m. 154.1% 19.7% 4.4% 43.9% (138bps) 143bps (3bps) (23bps) (87bps) 198bps 14bps

YoY (30.0%) 1,526.4% n.m. 20.9% 264.6% 666.5% (12.3%) 391.2% 280bps 159bps (16bps) (64bps) (192bps) 434bps (118bps)

Increm ental changes

Increm ental changes

(673bps) (1,240bps) 68bps 0bps 53bps 47bps (2bps) 47bps (14bps) 61bps (455bps) (15bps) 35bps (265bps) (54bps) 67bps 49bps (13bps) 57bps (92bps) 148bps (309bps) (48bps) 23bps

ASYAB Estimated Financials Income Statement Net Profit Shares Income Net Income Balance Sheet Loans (net) Deposits Shareholders' Equity Ratios NIM ROAE Cost/Income NPL ratio Valuation metrics P/E x P/BV x

2009 600 301 8,197 9,137 1,708 8.1% 19.4% 43.5% 5.4% 10.1 2.5

2010 594 260 10,955 11,167 1,942 6.0% 14.2% 51.9% 4.0% 6.7 0.9

2011E 722 237 13,231 13,467 2,172 5.8% 11.5% 53.6% 4.5% 7.3 0.8

2012E 880 283 15,854 16,267 2,443 6.0% 12.3% 52.6% 4.0% 6.1 0.7

2013E 1,017 310 19,214 19,567 2,739 5.8% 11.9% 54.1% 3.7% 5.6 0.6

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Bank Asya

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