Turkish Banks: What to expect in 2Q26: Margins and asset quality under pressure

Research evidence excerpt

Turkish Banks: What to expect in 2Q26: Margins and asset quality under pressure

J P M O R G A N CEEMEA Equity Research

27 July 2026

Turkish Banks

What to expect in 2Q26: Margins and asset quality

under pressure

Akbank is set to open Turkish banks’ 2Q26 earnings season on Tuesday, 28th CEEMEA Financials

ACJuly. The 2Q print marks the quarter where margin headwinds from the March Mehmet Sevim

funding-cost spike (CBRT cost of funding up 3pp to 40% since then) feeds through (971) 4428-1784

in full, making NIM trajectory and outlook messaging once again the key focus for mehmet.sevim@jpmorgan.com

the sector. After a strong 1Q, where several banks posted high-20%s to low-30%s J.P. Morgan Securities plc

ROTE aided by resilient core spreads and elevated trading income, we expect a

materially softer 2Q as swap-adjusted NIM compresses across the group, trading

normalizes, and cost of risk steps up on softer recoveries and rising NPL migration.

This should drive a sequential decline in earnings and ROTE to 15%-25%.

Looking ahead, we see margins broadly flat to slightly down in 3Q, while beyond

that much depends on the CBRT’s rate path as geopolitical tensions continue to

complicate the outlook. On asset quality, we sense increased caution from

managements on the CoR trajectory, pointing to a potential further increase

towards 250+bp into 2H26-27E as lower recoveries are seen as the new norm, and

while banks highlight there is no structural change in sentiment so far, higher-for-

longer rates naturally create pressure. Against this challenging backdrop, we

reduce our 26E-28E EPS by 19%/8%/4% on average, mainly driven by NII and

cost of risk. Despite a strong start to the year, Turkish banks in our coverage are