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Economy 22 Dec 2023

Garanti BBVA CEO takes stock of 2023 and shares priorities for 2024

BBVA´s CEO in Türkiye, Recep Baştuğ, spoke recently to national news outlet Anadolu Agency on the country’s economy, the banking industry, his own bank’s performance in 2023 and what he expects for next year.

Recep Baştuğ stated that 2023 was divided into two phases. Prior to the May 2023 elections, growth took precedence, but post-election, there was a shift towards fighting inflation. A gradual normalization of monetary policy drove up interest rates, while a selective credit approach aims to relieve demand-driven pressure on inflation and the current account deficit. Macro-prudential policies further supported this carefully managed transition, while the pricing of the Turkish yield curve was successfully realigned in a crucial move to encourage capital inflows and promote economic stability.

According to Garanti BBVA’s Baştuğ the stabilization in the central budget/GDP ratio will be a reality by 2025. Growth is likely to slow down compared to previous years, with a sustainable outlook of 3.5 percent for 2024, driven by lower inflation and positive contributions from domestic and external demand, as already suggested by market pricing and recent assessments by the rating agencies, he said.

Türkiye’s five-year risk premium dropped below 300, indicating favorable conditions, and Baştuğ expects aligned interest rates and inflation will spur increased demand for lira-denominated assets, fostering a more predictable macro and investment environment going forward. Given the healthy coherence among inflation, the policy rate and loan-deposit rates, Garanti BBVA CEO explained, the market can now find its own pricing balance.

Recep Baştuğ, CEO de Garanti BBVA_opt

BBVA´s CEO in Türkiye, Recep Baştuğ.

A healthy balance sheet for Garanti BBVA

Garanti BBVA’s top priority as a bank in 2023 was to keep a healthy balance sheet. "On balance sheet management our focus was on the lira, and this will be our watchword in the coming period. Especially on deposits, we want to accelerate the conversion from the currency-protected scheme to standard lira deposits."

Garanti BBVA continues to lead lira-denominated demand deposit volume among private-sector banks. Baştuğ said: "This underscores our pivotal role as the primary bank for our customers. We've upheld our leadership in lira-denominated loans —securing over 1 percent market share growth among private-sector banks in the first nine months of the year— and continued to lead in retail banking. Our strong provision of 47 billion lira is the largest among private-sector banks. Our robust provisioning strategy and collection performance affirm our commitment to a strong and prudent stance.”

BBVA’s Turkish unit once again achieved one of the highest new customer gains, yet it differentiated from the competition by avoiding customer acquisition at a loss. Instead, as costs rise, it is paramount for the bank to strengthen ties to its existing 24 million customers and to leverage digital possibilities, since nearly 15 million customers use digital channels. The bank has now extended digital onboarding to corporate customers to expand  the digital product range. “This strategy enables us to serve a diverse customer base efficiently while adapting to the demands of the digital age,” Baştuğ explained.

One of a kind customer experience

Garanti BBVA delivers an unparalleled customer experience across all touchpoints, with AI and big data analytics as pivotal tools to gain a deeper understanding of customer needs. The bank's premier digital infrastructure and cutting-edge risk models underpin its commitment to optimal strength in services.

"Our goal,” Baştuğ said, “is to make all services available through mobile channels while offering human contact when required. We elevate the customer experience through smart, real-time, personalized content. By raising the digital share of our business, we enhance branch efficiency and enable employees to free up time for value creation."

In addition, Garanti BBVA leads the banking industry in sustainability. Baştuğ stated: "Our goal is to advance the green transition locally and decrease risk in carbon-intensive sectors. As the first Turkish bank with interim decarbonization targets beyond coal, we'll expand renewable energy finance, reinforcing our commitment to environmental progress."

The bank’s other priority is 'inclusivity.' Through programs like ‘Women Who Know Their Account’ and the longstanding women entrepreneur project, BBVA’s Turkish franchise bolsters financial literacy, encourages active involvement in economic and social spheres, and further diversifies its inclusivity initiatives.