AKBANK TURK ANONIM SIRKETI TURKEY ADR

Macroeconomic outlook & key operating stance (what management expects) - Global environment remains challenging (geopolitical uncertainty, high energy prices, persistent inflation), while Turkey shows resilience supported by prudent macro policies, external balances, and reserve buffers. - Management expects monetary policy to remain tight enough to sustain disinflation; economic activity is moderating and inflation trend is improving despite cost-push pressures. - For banking: declining funding costs should gradually support NIM recovery, but high interest rates and weaker domestic demand continue to weigh on asset quality and profitability → stress on disciplined risk management.

Profitability & guidance signals (good news + still painful margin pressure) - 9M net income: TRY 45.933bn; ROE 19.4%. Adjusted ROE: 20.1% excluding a TRY 1.7bn Competition Board penalty. - NIM pressure: high funding costs weighed on Q3; Q3 marked the “trough” in NIM, with gradual recovery already underway in Q4. - Forecast/guidance framing: - Management still expects exit NIM to work toward the revised band of ~3.2%–3.5% (Q3 challenged; Q4 expected improvement). - For 2027: disinflation expected to continue but pace slower than previously forecast; rate cuts likely continue gradually. - Full-year profitability recovery expected progressively as funding pressure eases; Q4 NIM improvement should feed into earnings.

What’s driving earnings: asset mix shift + funding cost actions (opportunities) - Strategic repositioning: continued rebalancing from securities to loans to improve risk-adjusted yields. - TL loans / total TL assets: increased +8pp since 2024 to 60%. - Business loans share: up +3pp YTD to 64% (aligns with 3-year plan). - Securities management: active management of fixed-rate vs TLREF exposure; upcoming redemptions next year (including some negative carry TL securities) may create reinvestment opportunities at better yields. - Deposit franchise / funding: 58% sticky low-cost TL time deposits; management successfully passed through CBRT effective 300 bps policy normalization to deposit pricing. - Rate cuts positive for margins: CBRT additional 100 bps cut on Oct 22 expected to further lower TL funding cost → supports NIM improvement in coming quarters.