Turkiye Garanti Bankasi (GARAN) Q2 2024 earnings summary

Executive summary

• Net income reached TL 44.6 billion in H1 2024, up 32% year-on-year, with a 34.2% ROAE and 3.7% ROAA, reflecting strong core banking revenue growth and robust profitability.

• Maintained sector leadership in core banking revenue, TL lending, payment systems, and digital customer base, with nearly 16 million active digital customers.

• Achieved robust Turkish lira loan growth of 27% in H1, with market share gains in consumer and business loans.

• Asset quality showed normalization in NPL inflows, mainly in retail and credit cards, with strong recoveries and prudent provisioning; NPL ratio stable at 1.9%.

• Strong capital position with CAR at 15.2% (without regulatory forbearance) and excess capital of TL 65 billion.

Financial highlights

• Net income was TL 44.6 billion in H1 2024, up 32% year-on-year; total assets reached TL 2.62 trillion.

• Core banking revenues grew 63% year-on-year to TL 81 billion; net interest income rose 57% to TL 57.7 billion.

• Net fees and commissions income increased 193% year-on-year to TL 41.8 billion, mainly from payment systems.

• Operating expenses grew 84% to TL 45.2 billion; cost/income ratio at 42%, with fees covering 93% of operating expenses.

• Customer deposits grew 14.4% to TL 1.83 trillion, funding 70% of assets.

Outlook and guidance

• Maintains flat net interest margin guidance for 2024, expecting visible margin expansion in H2.

• Expects year-end margin around 5%, with potential for further improvement in 2025 as policy rates ease.

• Asset quality guidance unchanged; expects cost of risk to rise to 125 bps in 2024 and above 200 bps in 2025 due to normalization.

• Management expects inflation to decline in H2 2024 and anticipates further rating upgrades and improved foreign funding conditions.

• Operating expense growth to remain above inflation for the year.