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Garanti BBVA announces 1H24 financial results.

Garanti BBVA announces 1H24 financial results.

Garanti BBVA solidified leadership in TL loans reaching 1 Trillion liras 

Türkiye Garanti Bankası A.Ş., announced its financial statements dated 30 June 2024. Based on the consolidated financials, the Bank’s net income in the first 6 months of the year recorded as TL 44 billion 589 million 810 thousand. Asset size realized at TL 2 trillion 617 billion 425 million 188 thousand and the Bank’s contribution to the economy through cash and non-cash loans was TL 1 trillion 981 billion 600 million 187 thousand. Actively managing the funding base, customer deposits continued to be the main funding source; 71% of assets are funded via customer deposits. Customer deposit base reached to TL 1 trillion 833 billion 789 million 635 thousand with 14.4% growth in the first 6 months of the year. Preserving the strong capital stance, Bank’s capital adequacy ratio was realized at 15.2%^*. The Bank delivered an ROAE (Return on Average Equity) of 34.2% and an ROAA (Return on Average Assets) of 3.7%.

*Calculated without the forbearance introduced by BRSA

Commenting on the topic, Garanti BBVA CEO Recep Baştuğ said: “The first half of 2024 was a period in which the impact of Turkey's strategies in economic management became evident. Higher reserves and increased predictability in the exchange rate clearly reflect the positive outcomes of the Central Bank's accurate steps. The exit from the KKM and the process of de-dollarization have started to take place naturally. These developments, were also confirmed by the rating agencies’ recent rating upgrades that will bring Turkey’s rating towards its deserved place. We have started to observe the positive impact of this situation on foreign borrowing costs. We expect that rating upgrades will continue in the coming period and that will further improve the foreign funding conditions for Turkey.”

Recep Baştuğ continued his words as follows: “The predictability in the exchange rate has led to significant foreign inflows. However, the current foreign flow is short-term in nature. We foresee a process in which short-term investors will be replaced by long-term investors in the coming period. The most important determining factor in the realization of this expectation will be inflation. Inflation will start to decline in the second half of the year with the contribution of the base effect. However, in order for us to permanently get out of the inflation spiral, it will be critical to reserve the current commitment also next year and support the program with structural reforms.”

By pointing out that the tightening steps brought about by regulations continue to put pressure on the profitability of the banking sector, Baştuğ further explained how Garanti BBVA differentiated from the sector in the second quarter of 2024 with the following words: “As a bank, for a sustainable growth, we have maintained our focus on loan-driven asset growth and deepening our customer relationships. We refrained from irrational competition for salary promotions and customer acquisition in this way, which imposes material costs on the balance sheet in the short / medium term. We managed our operational expenses under control. Our high asset quality and prudent provisioning policy, which is the result of our usual transparent and prudent approach, continued to be one of the key topic supporting our performance. This approach is clearly reflected in our solid balance sheet and return on equity of 34%, which positively differentiates us from the sector. Although we are the most profitable bank in the sector, profitability rates across the sector continue to remain below inflation due to the impact of regulations, resulting in capital consumption. Since strong capital is the foundation of the banking sector, it will be important for the sustainable growth of the sector that both inflation and regulatory pressure decrease in the coming period.”

Stating that the syndicated loan was once again renewed in line with sustainability criteria, Baştuğ continued his words as follows: “Our syndicated loan received the 'Best Syndicated Loan Among Financial Institutions' award at the EMEA Finance Achievement Awards. In addition, the projects that we provide financing and intermediation services for also won awards. These awards are very valuable for us as they emphasize the recognition of our country's important projects in the international arena and their compliance with certain criteria. As Garanti BBVA, we continue to provide financing to Turkey's leading investments under the healthiest conditions and to serve the efficiency and sustainability of institutions.”

Stating that technology is the most important accelerator in Garanti BBVA's healthy growth strategy, Recep Baştuğ concluded his views, concluding that; “Our main priority is to use technology in a way that always serves the benefit of our customers. Digital transformation opens the door to a world that makes our customers' lives even easier, responds to their daily needs, personalizes recommendations according to their lifestyles, and offers more than just financial services.  In this direction, we will continue to utilize productive artificial intelligence in our business processes in a way that will create value for our customers and play a pioneering role in the sector.”

Garanti BBVA’s Selected Consolidated Financial Indicators – 30 June 2024

Turkish presentation regarding BRSA consolidated financial results of Garanti BBVA as at June 30, 2024 can be retrieved from Garanti BBVA Investor Relations website at the address of www.garantibbvainvestorrelations.com.

Summary Financial Data on Operating Results of Accounting Period:

▪ Average return on assets is 3.7%.

▪ Average return on equity is 34.2%.

▪ Support provided to economy through performing cash and non-cash credits reached TL 1 trillion 981 billion 600 million 187 thousand.

▪ Market shares of total performing loans, TL loans and FX loans are respectively 10.8%, 11.8% and 8.8%.

▪ Since the beginning of the year, total customer deposits grew by 14.4% and market share reached 10.6% level.

▪ Share of customer demand deposits in total customer deposits reached 40%.

▪ Capital adequacy ratio is recorded as 15.2%*, above the required level of 12.1%.

▪ Non-performing loans ratio is recorded as 1.8%.

*Calculated without the forbearance introduced by BRSA