Q3 2024 Turkiye Is Bankasi AS Earnings Call Transcript
Key Points
- Turkiye Is Bankasi AS (IST:ISCTR) registered a 41% quarterly increase in swap adjusted net interest income, benefiting from asset repricing while controlling funding costs.
- The bank achieved a 13% quarterly increase in net fee income, with an impressive annual growth of 155%, driven by strong performance across various fee-generating businesses.
- Asset quality indicators remained robust, with an NPL ratio of 1.9%, supported by prudent policies and strong collection performance.
- Turkiye Is Bankasi AS maintained solid capitalization levels, with a capital adequacy ratio of 15.4% and a common equity tier one ratio of 12.6%, ensuring resilience against economic adversities.
- The bank's focus on sustainable funding resulted in 62% of total funding being ESG-related, reflecting a commitment to sustainability and diversified funding sources.
- The ongoing pressure on funding costs and delayed rate cuts have led to a downward risk on the net interest margin guidance for 2024, with expectations not meeting the initial 4% target.
- Operating expenses increased by around 30% due to salary adjustments and one-off payments, impacting overall cost management despite being budgeted.
- High inflation and macroprudential measures have created challenges, delaying the expected margin recovery and impacting profitability.
- The bank's cost of risk is expected to increase to around 150 basis points in 2025, indicating a slight normalization as the economy cools down.
- Despite a strong performance, the bank faces challenges in maintaining margins due to high funding costs and growth caps, which limit loan repricing.
Ladies and gentlemen, welcome to Isbank bank third quarter 2024 financial results audio webcast. Today, our presenters will be Ms. Izlem Erdem, CFO; Ms. Nilgun Yosef Osman, Head of IR and Sustainability.
As always, the presentation will be followed by a Q&A session. If you wish to ask a question, please raise your hand or type in the Q&A area. Now I hand over to Izlem .
Thank you.
Welcome to our earnings presentation for the third quarter. This is Izlem speaking.
Thank you all for joining us. Please let me start with a short summary of [macro art].
In the third quarter of 2024 the lacked impacts of tight monetary policy were more effective on industrial production. While services sector displayed a relatively resilient outlook in general.
Besides the increasing volatility in the global markets in August, the inertia in the services prices continues to be the main issue as there is still backward indexation.
Thus, the underlying trend of
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