Earnings 1Q24: Garanti BBVA gets off to a strong start
Garanti BBVA announced its financial results for the first quarter of 2024. The bank’s net income for the first three months of the year stood at TL 22.48 billion; total assets were TL 2.46 trillion; and cash and non-cash loans reached TL 1.85 trillion. Customer deposits represented 71 percent of assets - the main source of funding. The total deposit base reached TL 1.75 trillion, up 9.3 percent this quarter. Garanti BBVA’s capital adequacy ratio was 15.4 percent,* its return on average equity (ROAE) was 36 percent, and return on average assets (ROAA) was 3.9 percent.
*Does not include the forbearance introduced by BRSA
Garanti BBVA CEO Recep Baştuğ noted that the economic rebalancing that began last year continued in the first quarter of 2024. Banks’ balance sheets have witnessed the natural consequences of monetary tightening policies. “While our loan growth remained within regulatory limits, pressure on funding costs continued,” he said. In the remainder of the year, he anticipates that efforts to combat inflation will continue, especially with high interest rates. “We expect to see the results of sound and healthy policies, especially in the second half of the year. We believe that if inflation falls to central bank target levels, the current tightening measures can be eased in a controlled manner,” the CEO stated.
Greater predictability in the management of the economy has also had a positive impact on interest from foreign investors. Garanti BBVA expects the percentage of foreign currency protected deposits (which represent a significant portion of the bank’s balance sheets) to decrease more rapidly due to higher rates for deposits in TL and reasonable exchange rates.
In February, Garanti BBVA issued $500 million of Tier 2 subordinated debt, attracting strong interest from international investors. The interest rate was U.S. Treasury + 409 bps (8.38 percent), making it the most cost-effective subordinated debt issuance by a bank in recent years. “We consider the growing number of debt issuances by Turkish banks and higher foreign demand for these issuances as positive developments for the sector,” Recep Baştuğ stressed.
Garanti BBVA focuses on sustainability, especially in terms of combating the climate crisis and promoting inclusive growth. “Promoting the green transformation and raising awareness are among our top priorities,” the CEO emphasized. The bank’s total financing for renewable energy surpassed $6 billion. “Today, one out of every four wind energy plants is financed by Garanti BBVA, positioning us as the market leader. In addition, our commitment to supporting women entrepreneurs since 2006 has been an inspiration for new programs in the banking sector and other industries,” he added. Financial support for women entrepreneurs exceeded TL 200 billion over the past five years. Promoting entrepreneurship is one of the bank’s strategic priorities, with a focus on both women entrepreneurs and technology.
Garanti BBVA seeks to encourage sustainability in all segments of society, with the support of digitization. The number of digital customers rose to 15.5 million, and transactions on digital channels increased to 98 percent. In the future, the bank plans to take advantage of artificial intelligence to provide personalized customer service.
“With our robust capital structure and sustainable growth strategy, Garanti BBVA will continue to contribute to Turkey's economic and social development. I extend my thanks to all my colleagues who contributed to our successful first quarter results, as well as to all our stakeholders who have trusted and supported us.” Recep Baştuğ concluded.