BRSA: Banks’ 1H22 total profit increases fivefold and reaches 169.1 billion liras

According to the monthly data of the BRSA; While the total profit of the banks was 169.1 billion liras in the January-June period, this figure was 33.8 billion liras in the same period of the previous year.

Ave. NPL rate fell to 2.49%, compared to 3.66% last year.

Ave. standard capital adequacy remained unchanged at 18%.

Ave. core capital adequacy remained unchanged at 14%.

Total assets amounted to TL 11.7 trillion, compared to TL 6.73 trillion last year.

Total loans amounted to TL 6.27 trillion compared to TL 3.91 trillion last year.

Net interest margin decreased by 109 basis points month-on-month to 7.7% in June due to higher loan spreads and securities yields. Operational revenues (net interest + commission) increased by 22% on a monthly basis, with commissions increasing by 13% on a monthly basis. The strong 21% month-on-month increase in operational costs partially suppressed net profitability. The 10% decrease in net provision expenses (provisions-other income) on a monthly basis has been a factor supporting net profitability.

Thus, the net profit of the banking sector in the first half of the year amounted to TRY 169 billion, corresponding to an annual increase of 401%. Since comparisons are generally made for banks with respect to the previous quarter, it is observed that there is a 67% quarterly profit increase when we compare the relevant period. In the balance sheet period, especially on the private banks side (five publicly traded banks have announced balance sheets so far: Akbank, Yapı Kredi, Garanti BBVA, TSKB and QNB Finansbank), it is seen that the profit outlook in the first half continues to be positive, while the year-end expectations are generally revised upwards. is seen. This reveals that many banks are optimistic about interest margins and profitability expectations for the remainder of the year. Considering the recent breakthroughs of the BRSA, loan rates, weighted funding interest margin, and developments in the FX-linked deposit system, we would evaluate the profitability of banks as positive unless the government takes a move to break the current trend.

We estimate that loan pricing will be high in 2022 due to increased geopolitical risks and macroeconomic environment, high risk profile, asset-liability management of private banks and inflation. While we expect public banks to be more effective in loan outflows with government subsidies, we think that the selective approach of the BRSA and the CBRT in commercial loans may pose a downside risk in loan growth. As for loan rates, we consider that the impact of the latest regulations may increase costs. In our current risk parameters and data analysis, we calculate the growth in total loan volume (TRY+FX) as 49% and total deposit volume as 43% in 2022.

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