The following is a summary of the Turkiye Garanti Bankasi A.S. (TKGBF) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Garanti Bank reported a third quarter net income of ₺22.4 billion, culminating in a nine-month net income of ₺67 billion, representing a year-on-year growth of 27% when adjusted for last year's provision reversal.

• The bank achieved a return on average assets of 3.5% and a return on average equity of 33%, maintaining highest performance metrics in the sector.

• Core banking revenues grew by 58% year over year. Net fees and commissions grew by 18% quarterly and 2.5 times cumulatively year over year.

• Increase in provisions reached ₺76.5 billion, the highest among private banks, translating into a total cash coverage of 4.5%.

• Net interest income including swap costs for the quarter was ₺25 billion, with core net interest income increasing to ₺12.2 billion despite tightened macroprudential measures.

Business Progress:

• The bank has sustained robust growth in net fees and commissions, led by its payment systems business.

• Continued investment in digital capabilities has increased the number of digital active customers to 16.3 million, encompassing 89% of total sales.

• Garanti has maintained market leadership in Turkish Lira loans and deposits, achieving significant growth in preferred lending areas such as investment, export, and earthquake-affected area loans.

Opportunities:

• The bank anticipates further improvement in net fees and commissions and core net interest margins in the upcoming quarters, fueled by a dynamic payment systems business and favorable regulatory environments regarding inflation and interest rates.

Risks:

• Increase in consumer loan and credit card NPL inflows, suggesting potential deteriorations in asset quality.

• Anticipated higher cost of risk in 2025 expected to reach between 200 bps to 250 bps, primarily driven by consumer loans.

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