Turkiye Garanti Bankasi (GARAN) investor relations material

Executive summary

• Net income for Q1 2026 reached TL 34 billion, up 32% year-over-year, driven by strong core banking revenues, robust loan growth, and expanding spreads.

• Return on equity was 30.3%, supported by sector-leading CET1 ratio of 12% and capital generative growth.

• Customer deposits exceeded TL 3 trillion, representing 66% of total assets, with a strong focus on Turkish lira deposits.

• Sale of Romanian subsidiary is underway, with related items reclassified as discontinued operations for fair comparison.

• Total assets stood at TL 4.78 trillion, with loans comprising 56% of total assets.

Financial highlights

• Net interest margin expanded to 6.1% in Q1, outperforming expectations due to lower TL deposit costs and effective duration gap management.

• Net fees and commissions income grew 42% year-over-year, led by payment systems, money transfer, insurance, and asset management fees.

• Operating expenses rose 57% year-over-year, mainly due to salary adjustments, but cost-income ratio remained stable at 46.3%, the lowest among peers.

• Non-performing loans ratio increased to 3.2%, with coverage ratio at 3.1%.

• Net profit for Q1 2026 was TL 33.6 billion, up 32.4% from Q1 2025.

Outlook and guidance

• Revised year-end policy rate assumption to 35% and inflation outlook higher, expecting inflation above 30% until September.

• 2026 TL loan growth guidance raised to 40% YoY, above the initial 30-35% range; FC loan growth expected to remain mid-single digit.

• Funding costs expected to rise further in Q2 2026, with margin compression likely but recovery anticipated in H2 as loan repricing catches up.

• Net cost of risk (excluding currency impact) expected at 2-2.5%.

• Downside risk to ROE from higher inflation and margin pressure, but nominal targets may still be met.