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Economic results 29 Jul 2020

Garanti BBVA supports the Turkish economy with TL 49 billion increase in loans; defers payments on over 800,000 loans


Turkey’s Garanti BBVA announced its financial results for the first half of the year. Based on the consolidated financials, the bank’s net income in the first six months of the year totaled TL 3.33 billion (approximately €407.61 million). Asset size reached TL 486.67 billion and the bank’s contribution to the economy through cash and non-cash loans was TL 367.14 billion. Actively managing the funding base, deposits continued to be the main source of funding, with 63 percent of assets funded through deposits. The total deposit base reached TL 306.88 billion with 11 percent growth in the first six months of the year. Preserving its strong capital position, the bank’s capital adequacy ratio stood at at 17.4 percent.* The bank’s ROAE (Return on Average Equity) was 13.1 percent and ROAA (Return on Average Assets) was 1.6 percent.

Garanti BBVA CEO Recep Baştuğ commented on the bank’s performance in this environment marked by the Covid-19 pandemic, which began in March in Turkey and remains significant. “During this period, Garanti BBVA continues to be cautious and prioritize the health of our employees and our community. Currently, 82 percent of our headquarter employees and 16 percent of our branch employees are still working from home. We have provided uninterrupted service to our customers thanks to our strong technological infrastructure and the fact that we were the first bank to adapt to the new operating environment. In addition, we have continued to meet our customers’ needs for the deferral and restructuring of their loan payments during this challenging period. In this context, as of the first half of the year, we have deferred and restructured the payments of more than 800,000 loans totalling TL 35 billion. And we have also extended our support to the economy significantly with a TL 49 billion loan increase,” he said.

Garanti BBVA CEO Recep Baştuğ

With the high level of uncertainty, there was increased demand for liquidity - mainly from corporates. Garanti BBVA provided the largest support to the real sector in recent history in terms of both liquidity and loan restructuring. Any eligible business or consumer was granted loans, leading to record high growth of 28 percent in corporate lending  in Turkish lira. Within this scope, Garanti BBVA originated TL 6.6 billion CGF loans. Thus, the total loan growth in Turkish lira in the first half of 2020 reached 21 percent - the highest increase among private sector banks. Loan demand is expected to fall following such high levels of loan disbursement. Going forward, the primary source of demand is likely to come from consumers, as this extraordinary demand on the corporate side normalizes. In fact, demand for consumer loans already started to pick up in June and is expected to grow in the upcoming period.

Garanti BBVA’s strong capital adequacy ratio of 17 percent allows the bank to meet the demand for loans. “Capital, asset quality, and liquidity are key aspects of banking at all times. Our capital has been the main support factor throughout this period. With respect to asset quality, we are the bank setting aside the highest loan provisions, and our conservative approach will continue. In terms of liquidity, in the middle of the outbreak, we could renew our syndication with a roll over ratio of around 90 percent, totaling 700 million dollars - further proof of the trust in us and our country,” Garanti BBVA’s CEO explained.

Looking forward, Garanti BBVA will continue to focus on sustainable finance and development to create value, Recep Baştuğ added. He also took a moment to express his gratitude: “I would like to sincerely thank all my coworkers and our stakeholders who trust and support us.”

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