20180928-法国巴黎银行-Sales_and_Trading_Market_Commentary_7页_263kb

Turkey Market Update Summary

Core Content Overview

This report provides an analysis of the current state of the Turkish financial and corporate sectors, focusing on the risks and policy responses related to macroeconomic and financial imbalances. It includes insights from meetings with policy makers, investors, banks, and corporates, as well as specific updates on key financial institutions and their exposure to foreign exchange (FX) fluctuations.

Main Risks and Policy Responses

• Financial and Macroeconomic Imbalances: The main risks for Turkish markets are linked to financial and macroeconomic issues, particularly the large open FX position.
• Policy Response: The Central Bank of Turkey (CBRT) and regulators are addressing these risks through a three-pronged approach:
  • Strong Monetary Policy: The CBRT has implemented rate hikes, which have been seen as an assuring step for the market.
  • Disciplined Fiscal Stance: The New Economic Program announced last week indicates fiscal reforms are underway.
  • Supportive Financial Sector Measures: These include forbearance measures for banks to address solvency and asset quality issues.

Key Financial Sector Insights

• FX Liquidity: Banks currently have sufficient high-quality FX assets to cover next 12 months of FX liabilities, including loans and eurobonds, totaling approximately $75bn.
• Solvency: The TRY depreciation is weakening banks' solvency ratios due to the high proportion of FX-denominated assets (around 45%). Forbearance measures include:
  • Allowing banks to report Risk Weighted Assets (RWA) using the currency level at the end of Q2.
  • Exempting banks from marking-to-market their Available-For-Sale securities when calculating solvency ratios.
• Asset Quality: NPL ratios are currently low, but there are risks due to private sector leverage and corporate open FX positions. However, banks do not expect NPL ratios to exceed 7–8% in the near future.

Corporate Sector Overview

• Corporate FX Exposure: Most corporate issuers have FX-linked revenues and do not maintain significant open FX positions, reducing the financial impact of TRY depreciation.
• Sector-Specific Analysis:
  • Garanti (GARAN): Year-end NPL ratio expected to be 4.5%, up from 3.4% in H1 18. No expectation of double-digit NPLs.
  • Akbank (AKBNK): FX loan growth has slowed, but FX liquidity is strong. TL15.5bn in CPI-linked portfolio provides a good hedge.
  • Is Bank (ISCTR): NPL ratio is 2.8%, with a year-end guidance of c.3%. Strong FX liquidity buffer.
  • Yapi Kredi (YKBNK): No expectation of double-digit NPLs in the next few years. Liquidity is strong.
  • Vakifbank (VAKBN): Does not require FX inflow until H1 19. Has a $5.5bn FX liability and is exploring alternative funding sources.
  • Halkbank (HALKBK): Low NPL ratio due to government-guaranteed SME and CGF lending.
  • Ziraat (TCZIRA): Lowest NPL ratio (1.5%) in the sector, with 25% of the loan book in retail and 20% in agriculture, both with low NPL.
  • Koc Holding (KCHOL): Maintains large cash positions. KCHOL is the largest exporter in Turkey, with 10% of exports. Tupras reduced oil imports from Iran.
  • Anadolu Efes (AEFES): Consumer demand may be affected by recent turmoil, but this is not yet visible. Runs an open FX position of $350–400mn.
  • Coca Cola Icecek (CCOLAT): Sparkling beverage sales are sensitive to consumer sentiment. Expect slowdown in domestic volumes in H2 18. Has an open FX position of $350mn, leading to non-cash FX losses in Q3 18.
  • Arcelik (ACKAF): Domestic market weak after tax incentives, but it only constitutes 35% of consolidated revenues. Focus on cost pressures and opex.

Legal and Regulatory Notice

This document is a marketing communication and is not a research report. It is intended for Professional Clients and Eligible Counterparties as defined under MiFID II and other regulatory frameworks. The views expressed may differ from those of the BNPP Research Department. BNPP may engage in transactions inconsistent with the views expressed and may trade as principal or make markets in the instruments discussed. No investment advice is provided, and the document does not constitute a prospectus or offer to buy/sell financial instruments.

Jurisdictional Information

• UK: Distributed by BNPP London Branch, authorized by ECB, ACPR, and FCA.
• France: Distributed by BNPP SA and BNPP Arbitrage, authorized by ECB and ACPR.
• Germany: Distributed by BNPP Niederlassung Deutschland, authorized by ECB and ACPR.
• Belgium: Distributed by BNPP Fortis SA/NV, authorized by ECB and ACPR.
• Ireland: Distributed by BNPP S.A., Dublin Branch, authorized by ECB and ACPR.
• Italy: Distributed by BNPP Succursale Italia, authorized by ECB and ACPR.
• Netherlands: Distributed by BNPP Fortis SA/NV, Netherlands Branch, authorized by ECB and ACPR.
• Portugal: Distributed by BNPP - Sucursal em Portugal, authorized by ECB and ACPR.
• Switzerland: Intended for Qualified Investors only.
• Canada: Not a prospectus or public offering. Only for institutional accounts or exempt under securities laws.
• United States: Distributed by BNPP Securities Corp. for institutional accounts only.
• Brazil: For information purposes only, not an offer or request for investment.
• Australia: Directed to Wholesale clients only, not Retail clients.
• China: Distributed by BNPP (China) Limited, a licensed commercial bank.
• Hong Kong: Distributed by BNP Paribas Hong Kong Branch, licensed as a Licensed Bank.
• India: Distributed to counterparties with knowledge of FX market risks and appropriate risk management policies.
• Indonesia: Not fully included in the text, but the document is intended for professional investors and regulated entities.