Garanti BBVA consolidates its leadership in loans in local currency, reaching 1 trillion lira
Türkiye Garanti Bankası A.Ş. has released its financial statements for the period ending June 30, 2024. According to its consolidated statements, the bank’s net income in the first six months of the year came to TRY 44.59 billion. Total assets stood at TRY 2.6 trillion, while the bank’s contribution to the economy through cash and non-cash loans amounted to TRY 1.98 trillion.
The local franchise continues to actively manage the funding base, with customer deposits being the main source of funding (71 percent of assets are funded via customer deposits). More precisely, customer deposits totaled TRY 1.83 trillion, up 14.4 percent in the first six months of the year. The bank’s capital adequacy ratio stood at 15.2 percent,* revealing a strong capital position. The bank also delivered an ROAE (Return on Average Equity) of 34.2 percent and an ROAA (Return on Average Assets) of 3.7 percent.
In the words of Recep Baştuğ, CEO at Garanti BBVA: “Türkiye’s economic strategies began to pay off in the first half of 2024. Higher reserves and a more predictable exchange rate clearly illustrate the success of the central bank’s actions. Moreover, the country’s exit from the KKM scheme and the de-dollarization process have been natural progressions of this positive trend.”
This improvement was also noted by the rating agencies in their recent upgrades, as Türkiye looks to rebuild. The local franchise has started to see the positive impact of this situation on foreign borrowing costs. It expects the rating upgrades to continue looking ahead, which will further improve the foreign funding conditions for Türkiye.
Recep Baştuğ explained that greater predictability in exchange rates has led to significant foreign investment, but from short-term investors. Garanti BBVA expects these short-term investors to be replaced by long-term investors as inflation declines in the second half of the year due to the base effect. The Garanti BBVA CEO noted that ensuring commitment to the program next year and adopting the necessary structural reforms would help the country to permanently escape spiraling inflation.
Baştuğ stressed that Garanti BBVA was the most profitable bank in the sector, despite regulatory pressure on the industry. The bank continued to focus on loan-driven asset growth and building relationships with customers as part of its goal for sustainable growth. Garanti BBVA therefore made an effort to keep operational costs under control, avoiding irrational competition for wage increases and customer acquisition, which result in significant costs on the balance sheet in the short- to medium-term.
Garanti BBVA’s asset quality remained high, with a prudent provision policy that was reflected in the bank’s strong performance. Return on equity stood at 34 percent, setting the bank apart from its peers. Despite being the most profitable bank in the industry, profitability remains below inflation across the sector due to the impact of regulations. This resulted in capital consumption. Recep Baştuğ emphasized that: “Reductions in both inflation and regulatory pressure will be crucial in the coming period as strong capital is the foundation of the banking sector.”
Garanti BBVA recently renewed its syndicated loan with sustainability criteria, which was named the 'Best Syndicated Loan Among Financial Institutions' award at the EMEA Finance Achievement Awards. Projects for which Garanti BBVA provides financing and intermediation services were also recognized with awards. “These awards are very valuable to us as they represent international recognition of our country's important projects and their compliance with certain criteria. As Garanti BBVA, we will continue to provide financing to Türkiye's leading investments under the best conditions, enhancing the efficiency and sustainability of the country’s institutions.”
Recep Baştuğ also discussed technology, adding that it is the key to Garanti BBVA’s sustainable growth strategy. “Our main priority is to use technology in a way that always benefits our customers. Digital transformation opens the door to a world that makes our customers' lives easier and meets their daily needs, with personalized recommendations based on their lifestyles, offering much more than just financial services. We will therefore continue to use artificial intelligence in our business processes in a way that will create value for our customers and play a pioneering role in the sector.”