Turkiye Vakiflar Bankasi Turk Anonim Ortakligi Unsponsored ADR

VakifBank reported Q4 2025 net income of TRY 28.1 billion and full-year net income of TRY 70.1 billion, up 73% from TRY 40.4 billion in 2024. Excluding TRY 4 billion of free provisioning, Q4 net income would have been TRY 32.1 billion, up 170% QoQ. Reported Q4 ROAE was above 38%, or close to 44% without the free provisioning, and full-year ROAE was almost 26%. Reported quarterly net interest margin was 6.0%, with swap-adjusted NIM at 5.4%, up 2.4 percentage points QoQ; full-year swap-adjusted NIM was 3.4%, up 110 bps from 2.3% in 2024. Q4 fee income was TRY 19.4 billion and full-year fee income was almost TRY 73 billion, up 56% YoY. Full-year OpEx was TRY 118 billion, up 61% YoY, and cost-to-income was 40% versus a sector average of 41%. The bank guided for 2026 Turkish lira lending growth in the mid-20s, hard currency lending growth in single digits, swap-adjusted NIM around 4.5%, fee income growth above 40%, OpEx growth above inflation, and net cost of risk around 150 bps.

Ali Tahan framed the quarter as one of the bank’s strongest in the peer group, emphasizing that the results were “as guided and expected.” He highlighted the sharp NIM expansion, strong fee generation, and the bank’s ability to end 2025 with a better base for 2026. His tone was upbeat but still disciplined, repeatedly noting that guidance assumes rate cuts pass through to deposit costs and that competition and regulation could affect volume outcomes.

Tahan pointed to a strong profitability mix: free provision of TRY 4 billion in Q4, TRY 8 billion of free provisions outstanding at year-end, and reported capital strength from earnings, asset revaluation, and AT1 issuance. Reported CET1 was 11.4%, Tier 1 was 14.4%, and total CAR was 16.7%; on a bank-only basis without forbearance, CET1 was about 10% at year-end, up from about 9% a quarter earlier. He also cited deposit growth of 26% YoY, demand deposits of TRY 1.1 trillion, total international funding above $12.8 billion in 2025, and a $500 million AT1 issued at an 8.2% yield.

Analysts focused on macro assumptions, the conservativeness of the mid-20s TL loan growth outlook, NIM drivers, liquidity, and capital. Management said it uses the government’s OVP assumptions except for inflation, where it relies on market participants’ expectations in the mid-20s, and it expects 800 bps of policy-rate cuts in 2026 to take the rate to around 30% by year-end. On growth, management said it is starting conservatively but does not want to lose market share, especially in non-retail lending. On funding, it said FX liquidity is ample, with hard currency free liquidity coverage at almost 2x, and that it plans to focus on longer-duration IFI and DPR funding, with only one public Eurobond issuance planned.