The December quarter results came in marginally better than consensus. The sources of positive surprise to earnings include higher-than-expected yields on CPI-linkers, NPL reversals and somewhat better-than expected F&CI. However, full year results have demonstrated yet again that Turkish banks continue to struggle to grow earnings with profits falling two years in a row.

Akbank, Garanti and TSKB top the equity valuation tables with price to book multiples above 1x. (2015). The remaining banks are trading at least 20% below book. Halkbank's current valuation implies excessively high cost of equity, which is out of sync with its peers.