‘Ain’t No Sunshine’ for Turkish Banks as Rates Rise, HSBC Says

Dec. 1 (Bloomberg) -- Tighter monetary policy, quickening inflation, a wider current-account deficit and greater risk aversion due to European debt problems mean a year of lower earnings for Turkish banks, HSBC Holdings Plc said in a report.

The U.K. bank lowered its target prices for all banks it covers, while downgrading Yapi & Kredit Bankasi AS, Turkiye Vakiflar Bankasi AS and Turkiye Is Bankasi AS to “neutral” from “overweight.”

Domestic risks are already reflected in prices for Turkish banks, which have underperformed emerging-market banking stocks by about 20 percent since the end of September, according to the report by analyst Tamer Sengun.

Global uncertainties, however, “could have a dramatic impact on the stock prices, either for the better or for the worse,” according to the report. “We would expect to become more positive on Turkish banks when the policy makers find a way to contain the sovereign debt crisis in the euro zone.”

The report is titled “Ain’t no sunshine: rates have gone higher,” following a survey issued in September titled “Sunshine through the clouds.”

--Editors: Alan Purkiss, Chris Peterson

-0- Dec/01/2011 08:22 GMT

-0- Dec/01/2011 08:25 GMT

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net -0- Dec/01/2011 08:09 GMT