Banks stocks continue upward trajectory with bullish target prices

Bank stocks have been attracting attention with their recent performance on the Borsa Istanbul. Closing 2023 at 8,717 points, the BIST Banking Sector Index (XBANK) tested 11,664 points in Tuesday's trading before closing at 11,384 points. This marks a 30.59% increase since the beginning of 2024, outperforming the BIST100 index, which rose by 21% during the same period.

Banks predominantly price in the macroeconomic balances and risk premium of Türkiye's credit default swap. Positive developments in both indicators are supporting bank stocks. Despite high interest rates, the implementation of rational policies before elections and their confirmation afterward are contributing to a positive outlook for banks.

The Banking Sector Outlook report released by Halk Yatirim on Tuesday states that the strong outlook in the banking sector will continue. This is attributed to the continuation of appropriate monetary policies aligned with the economy's dynamics and the anticipated decrease in inflation following this quarter.

The report also suggests that factors such as normalization in the loan/deposit spread and an increase in fee/commission income will balance the expected decline in profitability in the sector.

Here are the evaluations and target prices for banks for the next 12 months, as stated in the report by Halk Yatirim:

These target prices indicate a potential return of between 22% and 38%.

Source: Newsroom