PREVIEW-Turkey’s Garanti bank Q1 net profit seen up 45 pct

* Garanti Q1 earnings

* Due May 14

* Net profit seen up 45 pct at 943 million lira

ISTANBUL, May 11 (BestGrowthStock) – Garanti, the Turkish lender
part-owned by General Electric (GE.N: ), is seen posting a 45
percent rise in first-quarter net profit helped by fee income,
lower expenses and declining bad loans as the economy rebounds.
The average forecast in a Reuters poll of 13 analysts was
for net profit of 943 million lira ($620 million), sharply up
from 651 million the previous year and accelerating from a
fourth-quarter figure of 880 million lira.

“We expect Garanti’s earnings to remain solid in the first
quarter of the year due to stable and strong fee revenue
performance, lower operating expenses and higher trading gains
when compared quarter-on-quarter,” analyst Kazim Andac at
Deutsche Bank wrote in a research note.

Garanti, which has almost 800 branches, is favoured by
foreign investors for its large free-float. It enjoyed strong
increases in net interest income last year as the central bank
slashed interest rates by a total of 10.25 percentage points.

This enable highly-regulated Turkish banks to borrow more
cheaply while keeping the cost of their loans higher.

Early predictions by the banking sector watchdog BDDK that
2010 would be a tougher year look to have been unfounded as
consumer appetite for loans has recovered and non-performing
loans have eased amid expected economic growth of 5.2 percent
this year, according to the International Monetary Fund.

However, interest rate rises by the central bank could
squeeze net interest income and margins later this year.

The BDDK has said it expects loan growth of 10 to 15 percent
in 2010. Garanti said early this year it wants to outpace the
market with a 17 percent increase in lira loans and a 12 percent
rise in foreign-exchange loans.

Despite Garanti’s profitability, General Electric has not
managed to sell its 20.85 percent stake in the Istanbul-based
lender, its desire to divest the asset was first made public in

The stake is valued at around $3.8 billion and does not
bring control of the bank, two factors that are said to have
deterred potential buyers.

Garanti shares have risen 10.7 percent since the start of
the year, outperforming a 7.3 percent rise in the Turkish
banking sector (.XBANK: ).

The following figures are in millions of lira:

Net 943 958 705-1004 13 651

Forecasts provided by: AKInvest, Cheuvreux, Deutsche Bank,
Eczacibasi Securities, EkspresInvest, Erste Securities,
FinansInvest, Global Securities, HSBC, Is Invest, Meksa
Securities, Oyak Securities and Tera Stock Brokers.

Stock Report

(Reporting by Ebru Tuncay and Alexandra Hudson; editing by
Karen Foster)

PREVIEW-Turkey’s Garanti bank Q1 net profit seen up 45 pct