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Akbank Fourth-Quarter Profit Missed Estimates, Shares Drop

Akbank TAS, the Turkish bank part-owned by Citigroup Inc., reported a 20 percent slide in profit in the fourth quarter, which missed all analysts’ estimates, as interest income fell and it made a loss from trading. The shares slumped the most this month.

Net income at Akbank, Turkey’s second biggest listed bank by market value, dropped to 551 million liras ($313 million) from 690 million liras in the fourth quarter of 2010, when subtracting full-year earnings reported to the Istanbul Stock Exchange today from nine-month profit made earlier. That was less than all 13 estimates in a Bloomberg survey, which averaged 635.8 million liras.

“I was disappointed with these results,” Cihan Saraoglu, an analyst at UniCredit SpA, said in a telephone interview. “The fall in profit comes from the trading line” and a decline in revenue from interest, he said.

Akbank is among Turkish banks trying to boost profit after the central bank tightened monetary policy by lending at higher rates than the benchmark 5.75 percent one-week repo rate and curbed loan growth that accelerated to almost 40 percent in the first half of 2011. Banks also had to deal with the impact of an 18 percent slide in the lira last year, the biggest fall among global currencies tracked by Bloomberg. The currency has gained 7.1 percent in 2012.

Trading Losses

Net interest income decreased an annual 6.6 percent to 3.99 billion liras last year, Akbank told the bourse. The bank made a loss of 119.2 million liras from trading in 2011 compared with a profit of 32.9 million liras the previous year, it said.

Akbank fell as much as 4 percent on the Istanbul Stock Exchange, the biggest drop since Jan. 31, after rising before the earnings were released. The price fell 3.1 percent to 6.82 liras at 5:30 p.m., crimping gains this year to 13 percent.

Book Value

Concern that Akbank is trading at a premium prompted UBS AG to lower the company to “sell” from “neutral” on Jan. 20. Of 33 analysts, one recommends buying Akbank, 16 say investors should hold the share and 16 say sell, according to Bloomberg data. Akbank trades at 1.52 times book value compared with 1.63 for the benchmark MSCI emerging markets bank index.

Ates Buldur, analyst at Credit Suisse Securities in Istanbul, said Akbank also lowered provisioning for non-performing loans from 100 percent, a move he said might “disappoint the market.” The company will perform better in the first quarter of this year after the lira reversed last year’s losses, he said.

“I expect the initial market reaction to be negative but it will be short-lived,” Buldur said. “The trading loss comes from the bank’s lira and foreign exchange swap. When the lira appreciates in the first quarter, this trend will be reversed.”

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