Bloomberg News

Turkish Banks Cut at Goldman on Earnings, Monetary Policy

June 01, 2011

(Closes share prices in fourth and fifth paragraphs.)

June 1 (Bloomberg) -- Turkish banks had their price estimates cut at Goldman Sachs Group Inc., which cited weaker earnings and possible unexpected changes in the central bank’s monetary policy.

Goldman reduced the estimates of the six Turkish lenders it covers and now has “sell” ratings for all but one bank, according to an e-mailed report today. Turkiye Garanti Bankasi AS, the biggest bank by market value, had its estimate reduced to 6.59 liras from 7.89 liras. Akbank TAS, part-owned by Citigroup Inc., was cut to 5.50 liras from 6.03 liras.

“We expect Turkish banks’ valuations to be dented by an uninspiring earnings growth profile, in the context of banks in central and eastern Europe, the Middle East and Africa,” William Mejia, an analyst at Goldman, said in the report. “At the same time, we believe Turkish banks’ valuation and fundamentals could be negatively affected by unexpected changes in monetary policy, which our economists believe look increasingly possible in the context of Turkey’s growing external imbalances, and the central bank’s current approach.”

The banking index fell less than 0.1 percent to 128,805.7 at 5:30 p.m. in Istanbul. The main ISE National 100 index gained 0.3 percent.

Goldman cut Turkiye Halk Bankasi AS, a state-run bank, to “neutral” from “buy” with a price estimate of 14.36 liras. Halkbank fell 0.4 percent to 11.60 liras. Turkiye Vakiflar Bankasi TAO was reduced to “sell” from “neutral” and its price estimate lowered to 3.48 liras from 4.71 liras.

Turkiye Is Bankasi AS’s estimate was downgraded to 4.26 liras from 5.03 liras, Goldman said. The price estimate of Yapi & Kredi Bankasi AS, part-owned by UniCredit SpA, was cut to 4.24 liras from 4.98 liras.

After lowering the benchmark lending rate in December and January to a record low of 6.25 percent, Turkey’s central bank is raising banks’ reserve requirements instead of interest rates to tackle the loan growth it says is widening the current- account deficit.

There is a slowdown in the expansion in loans and the central bank will track data for “a while longer” before deciding whether more action is needed to curb lending, according to an e-mailed statement by the bank today.

--Editors: Linda Shen, Peter Branton

To contact the reporter on this story: Mark Bentley in Ankara at

To contact the editor responsible for this story: Riad Hamade at

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