In This Article:
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Turkiye Is Bankasi AS (IST:ISCTR) reported a significant expansion in net interest income, registering the highest improvement in its peer group.
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The bank's cost control measures led to a 5% quarterly decline in operating expenses, with annual increases well below inflation levels.
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SME loans, a focus area for the bank, saw a growth of close to 14%, contributing to a strong asset quality and market share of 22% among private banks.
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The bank maintained a robust liquidity position, with FX liquid assets more than enough to cover external liabilities, and an FX liquidity coverage ratio of 256%.
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Turkiye Is Bankasi AS (IST:ISCTR) achieved a return on tangible equity of about 18% in the first quarter, indicating strong profitability.
Negative Points
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The current account deficit widened in the first two months of 2025, increasing to $12.8 billion.
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There was a net tightening in monetary policy due to unexpected market volatility, which could impact future financial performance.
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The budget deficit reached 36.8% of the year-end target in the first quarter, indicating fiscal challenges.
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Flows to non-performing loans (NPL) increased slightly, although they remained manageable.
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The bank's net interest margin may face pressure due to recent monetary policy changes, potentially delaying improvement in net interest income.
Q & A Highlights
Q: Can you please share your thoughts on how you expect the most recent regulatory changes to affect your net interest income (NII) and net interest margin (NIM) going forward? Are there any changes to your financial year '25 guidance? A: The recent macroprudential measures by the central bank are estimated to have a 5 basis points positive impact on our NIM. As of the end of the first quarter, we are largely on track with our budget estimates, and we haven't experienced any significant deviations. We will closely monitor monetary policy actions and consider revising our guidance if necessary. Currently, we maintain the guidance disclosed at the beginning of the year.
Q: What are the current trends in deposits, and is there any dollarization tendency in the market? A: Due to market volatility, there has been growth in fixed deposits, but Turkish interest rates are high enough to support deposit bases, preventing significant dollarization. The demand for foreign currency was more from corporate clients for liquidity management rather than market concerns. Adjusting for exchange rate and precious metals price changes, the actual growth in fixed deposits is around 3.5%.