We upgrade Yapi Kredi to Buy (from Neutral): We expect Yapi to be one of the biggest beneficiaries of rate cuts within our Turkey banks coverage: we model 2025E/26E NIM (excl. swap costs) for Yapi at 6.0%/5.7% which compares with GSe NIM of 4.0% in 2024E and last 10-year average NIM of 5%. We forecast an ROE of 35%/28% in 2025E/26E which implies a real return of c.3%/c.8% over the average Bloomberg inflation forecast of 32%/20.5% in 2025E/2026E. On our analysis, Yapi Kredi trades at 0.8x/0.6x PB25E/PB26E which, in our view, implies an attractive level of valuation as we expect
ROE of Yapi to exceed both inflation and our COE assumption of 28% in both 2025E/26E. Our implied target P/TBV’26E for Yapi is 1.0x P/B which implies c.53% TL return on share price (and c.20% in US$ terms). Our new ROE/COE-based price target for Yapi is TL46.0 (up from TL37.0) on estimate changes.
We reiterate Buy on Akbank: We expect Akbank to be one of the biggest beneficiaries of rate cuts within our Turkish banks’ coverage: we model 2025E/26E NIM for Akbank at 5.8%/5.7%, which compares with GSe NIM of 3.5% in 2024E and last 10-year average NIM of 5%. We forecast an ROE of 35%/30% in 2025/26E, implying a real return of c.3% /9% over the average Bloomberg inflation forecast of 32%/20.5% in 2025E/2026E. On our analysis, Akbank trades at 1.0x/0.8x PB25E/PB26E, which implies an attractive valuation level as we expect the ROE of Akbank to exceed both inflation and our COE assumption of 28% in both 2025E/26E. Our implied target P/TBV’26E for Akbank is 1.1x P/B which implies c.50% TL return on share price (and c.19% in US$ terms). Our new ROE/COE-based price target for Akbank is TL94.0 (up from TL77.0) on estimate changes.
We remain Neutral on Garanti: While we also expect Garanti to be one of the biggest beneficiaries of rate cuts in Turkey, we believe this is already priced in following stock outperformance over 2024E (relative to Turkish banks peers). We model 2025/26E NIM for Garanti at 7.1%/6.6% vs. 5% in 2024E and last 10-year average of 5.8%. We forecast ROE of 36%/31% in 2025E/2026E which implies a real return of 3%/11% in 2025E/2026E. On our analysis Garanti trades at 1.2x/1.0x PTB25E/PB26E, while our implied target P/B’26E ratio for Garanti is 1.2x which implies 28% TL return on share price. Our new ROE/COE-based price target for Garanti is TL163.0 (up from TL119.0) on estimate changes.
We downgrade Isbank to Neutral (from Buy): While we expect a significant year-over-year improvement of NIM for Isbank (we model 2025/26E NIM at 5.4%/4.7% vs. 1.5% in 2024E and last 10-year average of 4.5%), on our analysis, the composition of Isbank’s interest asset mix allows for a lower absolute NIM level compared to other private sector peers (mainly due to lower share of TL loans in asset mix). We model Isbank ROE at 34%/25% in 2025/26E implying 1%/5% real return over average Bloomberg inflation forecast of 32%/20.5% in 2025/2026E. On our analysis, Isbank trades at 0.8x/0.7x P/B 2025/26E, while our implied target P/B 2026E for Isbank is 0.8x implying 20% TL return on share price. Our new ROE/COE-based price target for Isbank
Goldman Sachs