Türkiye Vakiflar Bankasi Türk Anonim Ortakligi (VAKBN) Q1 2025 earnings summary

Executive summary

• Net income reached TL 20,034 million in Q1 2025, up 67% year-over-year and 52% quarter-over-quarter, with ROAE at 35.44%, outperforming sector averages and market consensus by nearly 30%.

• Core banking revenues rose 28% year-over-year to TL 36.5 billion, with pre-provisioning profit of TL 30.2 billion, up nearly 200% year-over-year.

• Fee and commission income grew 45% year-over-year, with payment system fees comprising 54% of net fee & commission income.

• Deliberate release of TL 11 billion in free provisioning supported bottom line, with TL 4 billion remaining for future use.

• Total assets increased by 4.18% to TL 4,190 billion as of March 31, 2025.

Financial highlights

• Swap-adjusted net interest margin improved to 2.4% in Q1 2025; reported NIM at 2.3%.

• Net fees and commissions income rose to TL 15,370 million from TL 10,629 million year-over-year.

• Cost-to-income ratio improved to 32%, among the lowest in recent periods.

• Loans/deposits ratio rose to 85.13% from 79.18% at year-end.

• Allowances for expected credit losses increased to TL 28,222 million from TL 17,566 million.

Outlook and guidance

• NPL ratio expected to rise toward 2.5% by year-end 2025, with most inflows from retail and SME segments.

• Net cost of risk for the year guided above 100 basis points; mid-20s ROE remains a realistic target.

• Management expects continued growth in assets and loans, with a focus on supporting the real sector and maintaining strong liquidity.

• Ongoing focus on ESG initiatives and digital transformation to drive future performance.

• Net interest margin may contract in Q2 due to higher funding costs, but CPI-linked portfolio adjustments are expected to offset much of the impact.