Garanti BBVA announced its second-quarter profit above expectations

Garanti BBVA

In the second quarter of 2023, Garanti BBVA reported a net profit of 18.47 billion TL, surpassing the expectation of 15.9 billion TL. The bank’s return on equity for the first half of this year was 38.6%, while its return on assets stood at 4.8%.

In the first quarter of 2023, Garanti BBVA announced a net profit of 18.47 billion TL, exceeding the expectation of 15.9 billion TL.

Comparatively, the bank’s solo net profit was 12.9 billion TL in the same quarter of the previous year, and it was 15.7 billion TL in the preceding quarter. In the entirety of 2022, the bank achieved a net profit of 58.5 billion TL. Thus, there was a 17% increase in net profit on a quarterly basis.

During the January-June period, the bank’s average return on equity was 38.6%, and its return on assets was 4.8%. By the end of 2022, the bank’s return on equity was 51%, and the average return on assets during the same period was 5.4%.

The capital adequacy ratio (CAR) for this quarter was 17.7%, the core CAR was 15.5%, and the CAR including excess reserves was at 18.2%.

The credit growth rate continues, albeit at a slower pace compared to previous quarters, due to the impact of regulations. Turkish Lira (TL) denominated live loans have grown by 28% since the beginning of the year, reaching 611 billion TL, while TL customer deposits have also increased by 80% during the same period, reaching 767.4 billion TL. The volume of Foreign Currency Indexed Deposits constituted more than 65% of the total term TL deposits.

The net interest margin has continued to decline in this quarter. Including swap costs, the net interest margin decreased from 6.9% in the previous quarter to 5.8%. TL loan yields remained at relatively stable levels on a quarterly basis. The declining trend in TL loan yields came to an end as of June, while the increase in interest rate differentials between Foreign Currency loans and deposits continued. The estimated inflation used for the valuation of inflation-indexed bonds remained at 35%.

As for Garanti Bank’s non-performing loan ratio, it decreased from 2.7% at the end of 2022 to 2.1% by the end of June 2023.

In the second quarter, the bank’s net fee and commission income growth further accelerated, with a quarterly revenue increase of 20%. This growth was driven by robust credit expansion, increased transaction activity, and ongoing digitalization efforts.

During this quarter, the bank achieved a 9% increase in net fee and commission income, reaching 7.3 billion TL. The growth in net fee and commission income for the first six months of the year amounted to an impressive 105% compared to the same period last year. On the other hand, operational expenses remained stable on a quarterly basis, but there was a cumulative increase of 131% in the first six months on a year-on-year basis.

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