Turkey
Highlights for the period January - September 2026
- Dynamism in lending activity, driven by loans in Turkish lira
- Positive performance of recurring revenues
- More negative hyperinflation impact in the year-on-year comparison
- Solid performance of net attributable profit
BUSINESS ACTIVITY (1)
(VARIATION AT CONSTANT EXCHANGE RATE COMPARED TO 31-12-25)
(1) Excluding repos.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATE)
OPERATING INCOME
(MILLIONS OF EUROS AT CURRENT EXCHANGE RATE)
(1) At constant exchange rate: +69.4%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CURRENT EXCHANGE RATE)
(1) At constant exchange rate: +60.1%.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | Jan.-Sep.26 | 𝚫 % | 𝚫 % (1) | Jan.-Sep.25 (2) |
| Net interest income | 3,357 | 57.1 | 74.8 | 2,137 |
| Net fees and commissions | 1,837 | 14.7 | 28.9 | 1,602 |
| Net trading income | 171 | (49.7) | (45.6) | 340 |
| Other operating income and expenses | (280) | (7.7) | (26.6) | (303) |
| Gross income | 5,085 | 34.7 | 55.1 | 3,776 |
| Operating expenses | (2,047) | 24.0 | 37.9 | (1,651) |
| Personnel expenses | (1,191) | 25.1 | 39.8 | (952) |
| Other administrative expenses | (652) | 24.8 | 39.5 | (523) |
| Depreciation | (204) | 16.2 | 23.4 | (176) |
| Operating income | 3,038 | 42.9 | 69.4 | 2,125 |
| Impairment on financial assets not measured at fair value through profit or loss | (1,138) | 70.5 | 91.6 | (667) |
| Provisions or reversal of provisions and other results | (40) | 214.0 | 210.4 | (13) |
| Profit (loss) before tax | 1,860 | 28.7 | 56.7 | 1,445 |
| Income tax | (923) | 36.8 | 54.2 | (674) |
| Profit (loss) for the period | 937 | 21.6 | 59.3 | 771 |
| Non-controlling interests | (148) | 20.6 | 55.3 | (123) |
| Net attributable profit (loss) | 789 | 21.8 | 60.1 | 648 |
| Balance sheets | 30-09-26 | 𝚫 % | 𝚫 % (1) | 31-12-25 (2) |
| Cash, cash balances at central banks and other demand deposits | 8,991 | (0.8) | 5.5 | 9,061 |
| Financial assets designated at fair value | 5,896 | 17.7 | 26.5 | 5,010 |
| Of which: Loans and advances | 16 | (13.0) | (4.1) | 18 |
| Financial assets at amortized cost | 80,857 | 12.2 | 21.8 | 72,047 |
| Of which: Loans and advances to customers | 61,621 | 14.7 | 24.6 | 53,745 |
| Tangible assets | 2,052 | 7.7 | 14.3 | 1,905 |
| Other assets | 3,222 | 20.2 | 28.5 | 2,680 |
| Total assets/liabilities and equity | 101,018 | 11.4 | 20.5 | 90,702 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 1,838 | 8.8 | 8.0 | 1,690 |
| Deposits from central banks and credit institutions | 4,881 | 36.9 | 46.3 | 3,565 |
| Deposits from customers | 69,242 | 9.9 | 19.1 | 62,984 |
| Debt certificates issued | 7,696 | 2.6 | 12.6 | 7,502 |
| Other liabilities | 7,110 | 24.2 | 31.7 | 5,726 |
| Allocated regulatory capital | 10,252 | 11.0 | 21.4 | 9,235 |
| Relevant business indicators | 30-09-26 | 𝚫 % | 𝚫 % (1) | 31-12-25 |
| Performing loans and advances to customers under management (3) | 60,784 | 14.5 | 24.5 | 53,080 |
| Non-performing loans | 3,427 | 22.7 | 34.9 | 2,793 |
| Customer deposits under management (3) | 68,624 | 9.7 | 18.9 | 62,535 |
| Off-balance sheet funds (4) | 27,028 | 2.8 | 13.3 | 26,290 |
| Risk-weighted assets | 80,625 | 12.7 | 23.0 | 71,551 |
| RORWA (5) | 1.6 | 1.4 | ||
| Efficiency ratio (%) | 40.3 | 44.4 | ||
| NPL ratio (%) | 4.2 | 3.9 | ||
| NPL coverage ratio (%) | 76 | 76 | ||
| Cost of risk (%) | 2.55 | 1.94 | ||
| (1) At constant exchange rate. (2) Revised balances with no significant impacts. For more information, please refer to the “Business Areas” section. (3) Excluding repos. (4) Includes mutual funds and pension funds. (5) For more information on the calculation methodology, as well as the calculation of the metric at the consolidated Group level, see Alternative Performance Measures at this report. |
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Macro and industry trends
During the second quarter of 2026, the Turkish economy has maintained the path of gradual deceleration observed since mid-2025, largely due to the loss of dynamism in private consumption. BBVA Research forecasts a certain recovery in economic growth, which would leave GDP growth for the whole of 2026 at 3.0% (the same figure as the previous forecast) and raise it to 3.5-4.0% for 2027. The easing of geopolitical tensions in the region and the maintenance of selective measures to support activity are key to confirming this scenario.
Regarding price performance, inflation fell to 29.7% in September and is expected to end the year at 30% (unchanged from the previous scenario). In 2027, it could remain at the upper end of the 25-30% range given the context of energy costs, fiscal and credit stimuli, and the difficulties in anchoring price expectations. In this environment of growth and inflation, the central bank reduced interest rates from 37% to 36% at its last monetary policy meeting held on October 22, in line with expectations, and could undertake some additional cuts during 2027 to place them in an estimated range of 35-30%.
The Turkish banking system continues to be affected by inflation. The total volume of lending in the system increased by 36.2% year-on-year at the end of August 2026. According to data as of the end of August the stock of credit continues to grow in the consumer loan and credit card portfolios (+38.9% year-on-year), in mortgages (+35.6% year-on-year), and in corporate lending (+35.2% year-on-year). Total deposits grew by 32.4% year-on-year, with growth largely evening out between US dollar deposits (+36.2%) and Turkish lira deposits (+30.3%). The dollarization of the system increased slightly to 37.0% in August 2026, from 35.9% a year earlier. Regarding the system's NPL ratio, it continues on an upward trend and stood at levels of 3.14%, also as of the end of August 2026. For their part, capital indicators remain above the regulatory minimum, although tighter for public banks.
Unless expressly stated otherwise, all comments below on rates of changes for both activity and results will be presented at constant exchange rates. These rates, together with changes at current exchange rates, can be observed in the attached tables of the financial statements and relevant business indicators. For the conversion of these figures, the end of period exchange rate as of September 30, 2026 is used, reflecting the depreciation by the Turkish lira in the last twelve months. Likewise, the balance sheet, Risk-Weighted Assets (RWA) and the equity are affected. Additionally, the activity, results, and relevant management indicators of the area include, on an ongoing basis, the contribution of the subsidiaries in Romania included in the sale agreement with Raiffeisen Bank SA.
Activity15
The most relevant aspects related to the area's activity during the first nine months of 2026 were:
Lending activity (performing loans under management) recorded an increase of 24.5% (in line with the cumulative inflation rate in the period, which stood at 24.3%), driven by Turkish lira loans (+26.3%). This growth was largely supported by the performance of credit cards (+30.2%) and, to a lesser extent, by corporate loans (+32.3%), although all products showed a positive performance. For their part, loans denominated in foreign currency (in U.S. dollars) remained flat (+0.5%), with the deleveraging in commercial loans being offset by the remaining portfolios.
Customer deposits (68.5% of the area's total liabilities as of September 30, 2026) remained the main source of funding for the balance sheet and increased by +18.9% mainly explained by the positive performance of Turkish lira time deposits (+21.3%), which represent 52% of total customer deposits) and, to a lesser extent, by the performance of U.S. dollar deposits (+6.1%). For its part, off-balance sheet funds grew by 13.3%.
The most relevant aspects related to the area’s activity in the third quarter of 2026 were:
Lending activity (performing loans under management) increased by 7.7% (above the quarterly inflation rate, which stood at +5.6%), driven by the growth in Turkish lira loans (+9.5%, mainly boosted by credit cards) while the balance of U.S. dollar denominated loans remained stable (-0.3%).
In terms of asset quality, the NPL ratio stood at 4.2% (6 basis points above the ratio reached as of the end of June), with a widespread increase in non-performing balance. On the other hand, the NPL coverage ratio recorded an increase of 97 basis points during the quarter, standing at 76% as of September 30, 2026.
In the favorable evolution of customer funds during the quarter (+3.9%), the performance time deposits (+6.0%) stands out.
Results
Turkey reached a net attributable profit of €789 million in the first nine months of 2026, which compares very favorably with the result achieved in the same period of the previous year, mainly as a result of the strong performance of net interest income and, to a lesser extent, fees, that is, recurring revenues from the banking business.
As mentioned above, the year-on-year comparison of the cumulative income statement at the end of September 2026 at current exchange rate is affected by the depreciation of the Turkish lira over the past twelve months (-12.3%), with a less pronounced decline in the quarter (-4.5%). To isolate this effect, the highlights of the results during the first nine months of 2026 at constant exchange rates are summarized below:
Net interest income experienced a year-on-year growth, mainly driven by the dynamism of lending activity and the increased remuneration of certain Turkish lira reserves by the central bank, as well as a decrease in the cost of wholesale funding.
Net fees and commissions recorded an increase, driven by the solid performance in fees and commissions associated with payment methods, followed by those related to asset management, guarantees and brokerage activity.
Decrease in NTI, due to a weaker results in foreign exchange operations, partially offset by improved results in Global Markets.
The other operating income and expenses line had a balance of €-280 million, which represents a less negative result compared to the same period of the previous year. This line incorporates, among other items, the loss on the net monetary position together with its partial offset by the revenue derived from inflation-linked bonds (CPI linkers). The net impact of both effects was more negative in the first nine months of 2026, compared with the same period of 2025 and was partially offset by the results of certain subsidiaries of Garanti BBVA and the performance of the insurance business, whose contribution was increased in both cases.
Operating expenses continued to grow, although below the growth in gross income, with the consequent improvement in efficiency. In personnel expenses, the increase was centered on fixed remuneration to the staff, associated with salary reviews in the context of high inflation. For their part, general expenses also grew, highlighting the higher technology expenses.
Regarding the impairment on financial assets, higher provisions were recorded, which is explained by the growth of the activity, higher requirements in retail portfolios and lower releases in the wholesale portfolio. Meanwhile, the cumulative cost of risk as of September 30, 2026 stood at 2.55%, an increase of 18 basis points compared to the cumulative figure for the previous quarter.
In the third quarter of 2026, the net attributable profit of Turkey, at current exchange rates, stood at €258 million, which represents a decrease compared to the previous quarter, mainly as a result of the performance of NTI and impairment on financial assets. This was partially offset by growth in net interest income, supported by lending activity increase in Turkish lira and customer spreads increase, also in Turkish lira, together with lower operating expenses.
15 The variation rates of loans in Turkish lira and loans in foreign currency (U.S. dollars) are calculated based on local activity data and refer only to Garanti Bank and therefore exclude the subsidiaries of Garanti BBVA, mainly in Romania and Netherlands.
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