GARAN 2Q25 Review (Oyak Yatırım)

Core revenues expand; ROE remains high

Garanti posted 2Q25 net income of TL28,326mn (+12% q/q, +26% y/y), above both market consensus (TL23,389mn) and our estimate (TL23,648mn). Core revenues (NII + fees) widened by 12% q/q on higher core spread (+1ppt q/q) and strong fee growth. Lower funding costs (mainly TL deposits) helped core revenues to grow. Indeed, TL spread grew by 1.4ppt q/q driven by retreated TL deposit costs. Swap costs rose to TL2.9bn in 2Q from TL0.7bn in 1Q on higher swap utilization. Reflecting these and q/q almost stable CPI-linker income, swap-adjusted NIM declined by only 47bp q/q. Fees remained strong manifested by 16% q/q and 60% y/y expansion thanks to growing loans, new client acquisition and payment system contribution. Opex expanded by 14% q/q and 72% y/y driven by HR-related expenses. Net total CoR declined to 184bp this quarter from 225bp in 1Q led by large-ticket provision reversals. NPL coverage remained unchanged at 65% in 2Q. NPL ratio climbed to 3.0% (+35bp q/q) in 2Q on some new NPL inflows. All in all, ROE inched up to 31.6% in 2Q from 30.2% in 1Q, yet down from 33.7% a year ago.

Garanti keeps its 25E ROE guidance of low-30s unchanged on 3ppt higher NIM, large-ticket provision releases and strong fees. We expect 17% earnings growth for Garanti with a ROE of 31% in 2025.

25E earnings and MP rating maintained

Garanti trades fully at 26E P/BV of 1.5x and 4.3x P/E, while 26E ROE stands at 35%. We kept our TP unchanged, implying null upside potential. We maintain our Marketperform rating for the stock.

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