In This Article:
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Net Income: TRY 44.6 billion in the first half of 2024, representing a 32% year-on-year growth.
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Return on Average Assets: 3.7% year-to-date.
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Return on Average Equity: 34.2% year-to-date.
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Core Banking Revenue Growth: 7% sequentially and 63% year-on-year.
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Net Interest Income Growth: 18% in the quarter.
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Turkish Lira Loan Growth: 27% in the first half of 2024.
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Foreign Currency Lending Growth: 4% year-to-date.
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Net Fees and Commissions: Near TRY 42 billion, with a three-fold growth year-on-year.
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Cost to Income Ratio: 42%.
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Operating Expenses Growth: 71% year-on-year.
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Capital Adequacy Ratio: 15.2% without BRSA forbearance.
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Core Equity Tier 1 Ratio: 12.8%.
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Total Provisions on Balance Sheet: TRY 70.4 billion.
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Leverage Ratio: 8.3x equity.
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Digital Active Customers: Almost 16 million.
Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Turkiye Garanti Bankasi AS (IST:GARAN) reported a 32% year-on-year growth in earnings, reaching TRY 44.6 billion in the first half of 2024.
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The bank achieved a robust 27% growth in Turkish lira loans in the first half of the year, maintaining leadership in Turkish lira lending.
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Core banking revenue grew by 63% year-on-year, driven by a customer-focused approach and strong performance in net interest income and net fees and commissions.
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The bank's net interest margin guidance remains stable, with expectations of improvement in the second half of the year.
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Turkiye Garanti Bankasi AS maintains a strong capital position, with a consolidated capital-ex ratio of 15.2% and core equity Tier 1 of 12.8%, well above regulatory requirements.
Negative Points
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The bank experienced a significant increase in Stage 2 loans, with a TRY 18.5 billion rise largely due to small ticket size retail and credit card loans.
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Net NPL inflows suggest a deterioration, with a notable increase in retail and credit card portfolio NPLs.
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Despite strong earnings, the bank's capital generation could not fully offset the negative effects of market and credit risk.
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The cost of risk is expected to rise, with guidance indicating an increase to 125 basis points for the year.
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Swap costs have increased significantly quarter-on-quarter, impacting overall financial performance.
Q & A Highlights
Q: Can you elaborate on the contribution of remuneration to the net interest margin (NIM) from the conversion efforts of KKM deposits, and how do you expect this to evolve in the second half? A: Recep Bastug, CEO: We have received full remuneration from the Central Bank, amounting to around TRY 11 billion in the first half, which has been added to our NIM. We do not see any risk to our flat NIM guidance for the second half, especially expecting improvement in the fourth quarter due to asset repricing and stabilized deposit costs.