16 February 2005 -

Report Summary

Isbank disclosed YTL 635.5 mn (US$ 475.5 mn) net profit on its 2004 BRSA bank- only statements, which is 15% below the market consensus of YTL 732 mn, while our expectation was higher at YTL 776 mn. Despite our before tax profit estimate is highly in line with the actual figure due to the higher than expected tax provision in the last quarter of 2004 we had over estimated the net income.
Despite lower than expected net earnings, Isbank achieved quite satisfactory growth rates and this trend is expected to be maintained in the next years. In addition, possible liquidation of non-core business assets is expected to improve the growth potential and increase the profitability of the bank .
With its US$ 11 bn market capitalization Isbank trades with 1.92X P/B and 23.13X P/E. Although the upside potential is limited according to our target valuation for the stock, we still maintain our "Buy" recommendation.

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