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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