The strong Euro continues to put pressure on European stocks. Growth stocks beat value stocks. Technology, fundamentals, today's rise, energy, aviation, and banking stocks cannot participate in the rally.
After a long hiatus in the presence of Turkey participating in the global recovery. Emerging Markets in Turkey MSCI remained behind 0.9% (1.7%). But we are at least participating in the upside.
The positive surprise today is that banks (1.9%) beat industrial stocks (-0.1%) after strong July earnings. July's strong earnings could partially offset the margin contraction in the third quarter and save time.
In an environment where exchange rate pressure continues and interest rates are rising rapidly, we see banks beating industrial stocks as value-based development. The proportion of the banking industry remains close to the lower levels.
The trajectory of the US and Asian futures indicates a slightly positive opening (0.5%) on the Istanbul Stock Exchange. Will the bank’s shares continue to rise? Will auto stocks continue to decline after SCT regulation? “Are essential questions on our minds.
News and Macroeconomics
July's Strong Wife Can Save 3Q
• The Turkish banking sector made a net profit of 8.25 billion TL in July. The net profit figure, which increased by 1.40% on a monthly and yearly basis (compared to the same month of the previous year), was 38 billion TL in the first seven months of the year and recorded an increase of 38% compared to the same period in 2019. The July 2020 profit was one of the highest monthly net profit numbers the industry had ever achieved. Behind the strong earnings is the monthly jump in margins, as well as the significant drop in provisions expenses compared to the previous month. While the gross monthly net interest margin increased from 4.8%, the June level, to 5.4%, the increase in equity yields and the strengthening of foreign currency loan margins are important factors. Most likely, banks have increased their income receivables for this portfolio by increasing the inflation expectations used in valuing TÜFEX securities. As a result, the sector's return on equity increased from 7.4% in July to 17.6%, the level of the previous month. Another factor in the high profitability is that the saving expenses have decreased by 25% on a monthly basis, from 11 billion TL to 8.5 billion TL. The cost of risk decreased by 200 basis points to the level of 270 basis points on an aggregate basis again. We expect provisioning expenditures to increase in the coming months. The continuing uncertainty created by the pandemic will cause loans to accelerate, especially in the last quarter.
• When analyzing on the basis of bank groups, we see that the strong profit performance of the public banks this year is continuing. The profitability performance of this group for the first seven months was at a high level due to the lower profits of the previous year and the fact that they benefit more from the low interest environment. However, with the new tightening in the coming period, public bank margins are expected to decline rapidly compared to the first half. In fact, the profitability of private banks appears to keep pace with the public banks in July. The net monthly profit of this group was 48%. In short, while we expect profitability to decline in the coming months compared to the first half, July's extremely strong earnings are a very positive development in terms of defending profitability.
After the increase in SCT, cancellations began to appear in the auto market
• According to the news in Dunia Newspaper, after the value-added tax increased, customers started canceling their auto orders and demanding the return of the deposits paid. In the news, the previous market forecast of 750,000 units for 2020 has been reduced to 600-650,000 units. Industry players are expected to campaign sales by sacrificing their profits in order to increase their sales in the fourth quarter.
It is an investment
Hibya Haber Ajansı