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February 27, 2008 |
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TURKIYE VAKIFLAR: Fitch Holds Issuer Default Rating at BB- Fitch Ratings has affirmed Turkiye Vakiflar Bankasi T.A.O.'s ratings as follows -- Long-term foreign currency Issuer Default Rating (IDR): affirmed at 'BB-' (BB minus) -- Short-term foreign currency IDR: affirmed at 'B' -- Long-term local currency IDR: affirmed at 'BB' -- Short-term local currency IDR: affirmed at 'B', -- National Long-term rating: affirmed at 'AA(tur)' -- Individual rating: 'C/D' -- Support rating: '4' -- Support Rating Floor: 'B+' The Outlooks for the Long-term IDRs and the National Long-term rating are Stable. Vakifbank's IDRs are driven by the bank's intrinsic financial strength, which is supported by its long-established franchise in Turkey, improved core deposit base and efficiency and adequate capitalisation. These are balanced by potential asset quality problems in a volatile operating environment. Increase in Vakifbank's net income was mainly driven by better trading results and one-off gains from tax rebates in 9M07. The net interest margin continued to narrow in 2006 and 9M07, reflecting higher competition. Vakifbank's fee and commission generation remains lower than that of its peers, representing a limited 11% of total operating revenue. The management plans to overcome this operational weakness by focusing more on cross- selling opportunities. Asset quality continued to improve in 2006 and Q307. The NPL ratio declined to 5.2% at end-Q307 (2006: 5.4%) with total reserve coverage of 112%. Vakifbank has a well-diversified core deposit base and also has good access to international capital markets. Vakifbank was adequately capitalised at end-Q307, with a consolidated Tier-1 CAR of 15%. Free capital continued to improve mainly as a result of reduced fixed assets and participations. Vakifbank is the sixth-largest bank in Turkey by assets, with 441 branches. Its main shareholder, with a 58.45% stake, is the General Directorate of Foundations, and 25.2% of the shares are listed at the Istanbul Stock Exchange, issued through an IPO. |
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