Yapi ve Kredi Bankasi (YKBNK) Q3 2024 earnings summary

Executive summary

• Net profit for the first nine months of 2024 was TL 22.4 billion, down 54% year-over-year, with a quarterly net profit of TL 5 billion, reflecting prudent provisioning and a challenging macro environment.

• Return on tangible equity stands at 16.3–16.4%, and return on assets at 1.4%.

• Strong customer franchise with ~16.5 million customers and a demand deposit share of 44%, highest among peers.

• Prudent risk management with increased provisioning, especially for unsecured consumer loans, and robust asset quality.

• Capital adequacy and liquidity ratios remain well above regulatory requirements.

Financial highlights

• Pre-provision profit rose 32% quarter-on-quarter, with core revenue margin widening by 73 basis points.

• Net fee and commission income surged 132–145% year-over-year, covering 97–98% of operating expenses.

• Operating costs increased 76–77% year-over-year, mainly due to HR cost increases.

• Net interest margin improved, with exit NIM above 4.5% and core revenue margin at 4.6–6%.

• Net profit for 3Q24 was TL 5.0 billion, down 30% sequentially.

Outlook and guidance

• Year-end guidance maintained: real growth in TL loans, double-digit FX loan growth, NIM (including swaps) around 2%, exit NIM above 4.5%.

• Core revenue margin expected around 6%; fee growth above 100%; cost growth below 65%; net cost of risk below 75 bps.

• Return on tangible equity expected in the mid-to-high twenties (positive with inflation accounting).

• Margin and EPS improvement expected mainly in the second half of 2025, contingent on rate cuts and easing macroprudential measures.

• Downside risk to NIM and revenue margin guidance due to macro conditions.