16 February 2005 -

Report Summary

Akbank disclosed YTL 1,020.5 mn (US$ 768 mn) net profit on its 2004 BRSA bank- only statements, which is 8.6% below the market consensus of US$ 834 mn, while our expectation was higher at US$ 908 mn. Our net interest income estimate is highly in line with the actual figure, while higher operating expenses and monetary losses were the major reasons for lower than expected earnings.
Despite lower than expected net earnings, Akbank achieved very satisfactory growth rates and this trend is expected to be maintained in the next years. In addition, a possible adjustment on the past taxation may create a huge benefit for Akbank in 2005.
With its US$ 9,058 mn market capitalization Akbank trades with 2.00X P/B and 9.76X P/E. According to our target market capitalization of US$ 11,350 mn, we see a 25% upside potential and recommend a "Buy" for the stock.

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