Yapi ve Kredi Bankasi (YKBNK) Q1 2026 earnings summary

Executive summary

• Net profit for Q1 2026 reached TL 20.3 billion, up 78% year-over-year and more than doubling sequentially, with return on tangible equity at 31.5% and return on assets at 2.2%, driven by strong top-line growth and resilient asset quality.

• Pre-provision profit rose 37% quarter-over-quarter and 78% year-over-year, supported by robust margin expansion and effective spread management.

• Central bank actions and fiscal support helped mitigate geopolitical and macroeconomic volatility, with the Disinflation Program expected to continue at a slower pace.

• The bank maintained strong capital buffers, with a consolidated Capital Adequacy Ratio (CAR) of 14.1% and Tier-1 ratio of 11.6%.

• Non-performing loan (NPL) ratio stood at 3.8%-4.1%, with prudent provisioning and a provisions-to-gross loans ratio of 3.6%.

Financial highlights

• Net interest margin widened by 56 basis points sequentially and 93 basis points year-to-date, reaching 3.2%.

• Core revenues rose 30% quarter-on-quarter and 64% year-over-year, supported by high trading gains and improved loan-deposit spreads.

• Net fees and commissions income increased 34% year-over-year to TL 32.4 billion, offsetting lower payment system contributions.

• Operating expenses rose 35% year-over-year, with fee coverage over OpEx at 91% and cost-to-average asset ratio down to 3.9%.

• Total and foreign currency liquidity coverage ratios were 133% and 382%, respectively.

Outlook and guidance

• 2026 guidance maintained: TL loan growth target at 30%, NIM improvement of at least 100bps, fee growth in line with inflation, and cost growth capped at 35%.

• RoTE expected to remain in the high-mid twenties, with Q1 actual at 31.5%.

• Cost of risk projected between 150-175 bps; inflation assumptions revised upward, potentially reaching close to 30%.

• Expecting a temporary dip in net interest margin in Q2, with recovery in Q3 and further improvement in Q4, barring escalation in geopolitical tensions.