Turkish Banks: Always a year away

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Turkish Banks: Always a year away

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Turkish Banks

Always a year away

Rating Change

It's about timing, not the direction – no more Buys 16 July 2026

We have long been among the strongest proponents of the Turkish bank rerating story, Equity

maintaining Buy ratings across the private banks for more than two years. The Turkey

investment case was straightforward: lower inflation, lower rates, faster book value Banks

growth and stronger capital generation. Yet what has repeatedly seemed just a year David Taranto >>

away has again been pushed out by sticky inflation and a slower-than-expected easing Research Analyst

cycle. The destination may be unchanged, but the wait for RoEs to exceed inflation is MLI+44 (UK)20 7996 7510

getting longer in a market where patience is not cheap. And even if/when real returns david.taranto@bofa.com

turn positive next year, their durability remains uncertain. We downgrade Akbank,

Garanti, Yapi and Isbank to Neutral, while reiterating Underperform on Halk and Vakif.

‘Re-rating’ story out (for now), ‘range-bound trading’ in

Exhibit 1: Rating and PO summaryWe expect 2Q26 to be the weakest quarter of the year. NIMs should compress as

Private banks downgraded to Neutralfunding costs rise by c.300bp, with any CPI-linker adjustment unlikely to offset the

pressure on NII. Trading income should normalize down, while costs and provisions drift Rating Rating PO PO Upside

higher. Earnings should then recover from 2H26 as easing resumes. But this recovery is New Old New Old

largely anticipated and unlikely to drive EPS upgrades. We expect private banks to AKBNK Neutral Buy 84.0 101.0 25%

GARAN Neutral Buy 159.0 185.0 26%

deliver c.25% RoEs in 2026, below both inflation (c.29%) and the CoE. While RoEs should YKBNK Neutral Buy 42.4 50.5 25%