Turkiye Garanti Bankasi A.s Stock Earnings Reports

Garanti BBVA reported solid H1 2026 results with TRY 64 billion net income (up 20% YoY) and a 28% ROE. Management expects modest GDP recovery (3% full-year) and raised year-end CPI to ~30%, with limited rate cuts possible in Q4 depending on data. Core banking revenues grew strongly (+43% YoY) supported by resilient net interest income (NII) and very strong fee growth (fees +39% YoY), driven by payments, insurance and asset management. Net interest margin (NIM) faced pressure in Q2 from higher funding costs after the Central Bank’s post-war funding rate increases; management limited the quarterly NII decline to ~5% and still views a ~75bp NIM improvement versus last year as achievable but with risk. Loan mix continues shifting toward consumer and credit cards, increasing Stage 2 exposure (12%) and driving higher provisioning needs; cost of risk rose in Q2 due to updated models, retail NPL inflows and the end of restructuring regulations, and management now expects full-year cost of risk to be within guidance but toward the upper end (~2.5%). Deposits remained the primary funding source (deposits = 66% of assets) with a comfortable FX liquidity buffer ($6.1bn); external debt $9.8bn. Capital remains strong (CET1 ~12%) with TRY 149bn excess capital; a quarterly decline was driven by sub-debt amortization and is expected to be mitigated by internal generation. Management reiterated loan growth guidance for both TL and FX loans, expects modest margin expansion over the year (with Q3 likely flat vs Q2 and improvement in Q4), and highlighted potential upside from continued strong fees and disciplined OpEx. The planned sale of the Romanian subsidiary is expected to close around mid-Q4 and could add >80bp to capital adequacy and contribute positively to ROE (~1.3–1.5% ROE uplift), and is considered within achievable targets.