Türkiye Vakiflar Bankasi Türk Anonim Ortakligi (VAKBN) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 reached TL 20,034 million, up 67% year-over-year and 52% quarter-over-quarter, significantly outperforming sector averages and exceeding market consensus by nearly 30%.

• ROAE averaged 35.4% for the quarter, the highest among listed banks and above the sector average of 28.9%.

• Core banking revenues (net interest income plus net fee and commission income) rose 28% year-over-year to TL 36.5 billion, with fee and commission income up 45%.

• Pre-provisioning profit surged to TL 30.2 billion, nearly 200% higher than Q1 2024.

• Total assets increased by 4.18% to TL 4,190 billion, with performing loans up 11.53% and deposits up 3.74%.

Financial highlights

• Swap-adjusted net interest margin improved to 2.4% in Q1 2025; reported NIM at 2.3%.

• Cost-to-income ratio improved to 32%, among the lowest in recent history and best among listed banks.

• Net fees and commissions income rose to TL 15,370 million, with payment system fees comprising 54% of net fee & commission income.

• Loans/deposits ratio rose to 85.13% from 79.18% at year-end.

• Allowances for expected credit losses increased to TL 28,222 million, reflecting heightened credit risk.

Outlook and guidance

• NIM expected to contract in Q2 due to higher funding costs, but CPI-linked portfolio adjustments should offset much of the impact.

• Central bank funding costs anticipated to decrease in H2 2025, supporting NIM.

• NPL ratio guided to reach 2.5% by year-end, with most inflows from retail and SME segments.

• Continued focus on fee income growth, digitalization, and sustainable banking initiatives.

• Management expects continued growth in assets and loans, with a focus on supporting the real sector and maintaining strong liquidity.