Q2 2026 Turkiye Is Bankasi AS Earnings Call Transcript
Key Points
- Fee income performance was remarkable, posting the highest quarterly increase among peers with 19% growth and 40% year-on-year growth.
- Asset quality remained intact with NPL ratio at 3.8% and net cost of risk within guided levels, supported by robust collection rates of 20%.
- Capital and liquidity positions were solid, with capital adequacy ratio at 15.4% and CET1 at 12.1%, and approval for IRB approach expected to add 190-220 basis points to capital ratios.
- Strong deposit franchise with TL deposits growing 8% quarterly and demand deposits comprising 43% of total deposits, supporting funding costs.
- Management expects profitability to strengthen with year-end ROE guidance of 20% and ROTE of 25%, driven by NIM recovery and core banking income momentum.
- Successful external funding activities, including a $1.3 billion sustainable syndicated facility and a $500 million Tier 2 Eurobond issuance, diversifying funding sources.
- Swap adjusted net interest income declined quarterly due to elevated funding costs, with NIM guidance revised down to 3.2%-3.4% for 2026.
- Geopolitical tensions and elevated uncertainties have made forecasting difficult, leading to higher expectations for current account deficit, inflation, and policy rate.
- OpEx growth remained high at 65% year-on-year in the first half, significantly above the full-year guidance of mid-40s, though management expects convergence by year-end.
- Trading income was weaker quarter-over-quarter, impacted by mark-to-market effects and higher swap funding costs.
- Other operating income was negatively affected by seasonality and a TRY 1.7 billion pension fund provision in the second quarter.
- Deposit costs gradually increased in the second quarter as geopolitical risks persisted, pressuring margins despite stabilization expectations.
Ladies and gentlemen, welcome to Isbank 2026 first half financial results audio webcast. The event will be hosted by Ms. Ebru Ozsuca, Deputy CEO; Mr. Mehmet Turk, CFO; Ms. Nilgun Osman, Head of IR and Sustainability. (Operator Instructions)
Now I leave the floor to our presenters.
Welcome to our earnings presentation for the second-quarter. This is Ebru speaking, and thank you all for joining us. Before we turn to our financial results, I would like to briefly go over the macroeconomic backdrop of our operating environment and share our view for the remainder of the year. In the second-quarter, the impact of the geopolitical tensions on the Turkish economy has become more evident.
Even though the possibility of a peace deal increased in June, the conflict reescalated again in July. Against this global backdrop, the elevated uncertainties have made it harder to build long-lasting forecasts. Yet due to a higher level of energy prices, 2026 year-end expectations for the current account
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