• The dedollarization of the balance sheet continues in the quarter
  • Improvement of the NPL ratio and NPL coverage ratio
  • The cost of risk remains at low levels
  • Net attributable profit of the third quarter negatively impacted by the hyperinflation adjustment and the increase in the tax rate

Business activity (1)

(1) Excluding repos.

Net interest income / AVERAGE TOTAL ASSETS
(Percentage at current exchange rate)

Operating income
(Millions of euros at current exchange rate)

Net attributable profit (LOSS)
(Millions of euros at current exchange rate)

Financial statements and relevant business indicators (Millions of euros and percentage)

Income statement Jan.-Sep. 23 ∆% ∆% (1) Jan.-Sep. 22 (2)
Net interest income 1,581 (19.3) 21.3 1,961
Net fees and commissions 630 35.9 103.6 463
Net trading income 798 35.0 102.4 591
Other operating income and expenses (699) 4.6 (41.5) (668)
Gross income 2,310 (1.6) 184.0 2,347
Operating expenses (1,046) 33.1 93.6 (786)
Personnel expenses (589) 29.7 94.1 (454)
Other administrative expenses (346) 46.4 116.9 (236)
Depreciation (112) 16.4 44.0 (96)
Operating income 1,264 (19.0) n.s. 1,561
Impairment on financial assets not measured at fair value through profit or loss (84) (70.4) (55.5) (285)
Provisions or reversal of provisions and other results (91) 28.3 75.0 (71)
Profit (loss) before tax 1,089 (9.7) n.s. 1,205
Income tax (658) (26.1) 8.6 (890)
Profit (loss) for the period 431 36.7 n.s. 315
Non-controlling interests (64) n.s. n.s. 18
Net attributable profit (loss) 367 10.2 n.s. 333
Balance sheets 30-09-23 ∆% ∆% (1) 31-12-22 (2)
Cash, cash balances at central banks and other demand deposits 11,493 89.6 175.9 6,061
Financial assets designated at fair value 4,134 (20.5) 15.6 5,203
Of which: Loans and advances 1 (75.4) (64.1) 3
Financial assets at amortized cost 50,311 (2.5) 41.8 51,621
Of which: Loans and advances to customers 37,466 0.1 45.6 37,443
Tangible assets 1,471 21.3 66.4 1,213
Other assets 1,863 (3.9) 37.5 1,938
Total assets/liabilities and equity 69,272 4.9 52.4 66,036
Financial liabilities held for trading and designated at fair value through profit or loss 2,089 (2.3) 42.2 2,138
Deposits from central banks and credit institutions 2,447 (14.8) 24.0 2,872
Deposits from customers 51,104 10.3 60.5 46,339
Debt certificates 2,777 (14.2) 24.9 3,236
Other liabilities 4,333 (8.6) 30.5 4,741
Regulatory capital allocated 6,521 (2.8) 41.1 6,711
Relevant business indicators 30-09-23 ∆% ∆% (1) 31-12-22
Performing loans and advances to customers under management (3) 37,493 0.8 46.7 37,191
Non-performing loans 1,991 (23.3) 11.5 2,597
Customer deposits under management (3) 49,775 9.2 58.9 45,592
Off-balance sheet funds (4) 7,894 13.8 65.6 6,936
Risk-weighted assets 53,056 (5.7) 36.9 56,275
Efficiency ratio (%) 45.3 33.5
NPL ratio (%) 3.8 5.1
NPL coverage ratio (%) 100 90
Cost of risk (%) 0.26 0.94

(1) At constant exchange rate.

(2) Balances restated according to IFRS 17 - Insurance contracts.

(3) Excluding repos.

(4) Includes mutual funds and pension funds.

Macro and industry trends

Since the general elections held in May 2023, there are increasing signs of changes in economic policy in general, and monetary policy in particular, which point to a gradual reversal of the current macroeconomic distortions. Benchmark interest rates were increased from 8.5% to 35% in October and may continue to rise further in the coming months in order to curb inflation, which reached 61.5% in September on a year-on-year basis, and thus provide greater stability for the Turkish lira. Economic growth is expected to reach 4.5% in 2023 (the same forecast as three months ago) and 3.5% in 2024 (150 basis points higher than the previous forecast), supported by a still dovish fiscal policy. Despite the high uncertainty, due in large part to doubts about the duration and scale of the current economic policy fine-tuning, it is likely that the pace of GDP growth will slow down. Eventually, pressures on inflation will ease, although it will remain at high levels, fueled by fiscal stimulus, exchange rate depreciation and the high momentum of the repricing process, among other factors.

As for the Turkish banking system, the effect of inflation remains strong. Total lending in the system increased 57.7% on a year-on- year basis in August, at similar levels to the previous months. The credit stock continued to be driven by the rise of consumer finance and credit cards (+110.3% year-on-year) while credit to businesses grew slightly less (+46.9% year-on-year). Total deposits increased at the end of August to 68.5% on a year-on-year basis. Turkish lira deposits continued to grow in the same month (+114.3%), while U.S. dollar deposits grew much more slowly (+28.6%). Dollarization stood at 42% at the end of August 2023 (versus 55% a year earlier, boosted by regulatory measures put in place since last year to encourage the growth of Turkish lira deposits). The system's NPL ratio continued to fall in recent months and in August 2023 was 1.61% (77 basis points lower than in the same month of 2022) and capital indicators remained at more than comfortable levels on the same date.

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, 2023 is used, reflecting the considerable depreciation by the Turkish lira in the last year, in particular during the second quarter of 2023, with a negative impact in the accumulated results at the end of September 2023. Likewise, the Balance sheet, the Risk-Weighted Asset (RWA) and the equity are affected.


The most relevant aspects related to the area’s11 activity in the first nine months of 2023 were:

  • Lending activity (performing loans under management) increased by 46.7% between January and September 2023, mainly driven by the growth in Turkish lira loans (+42.0%). This growth was mainly supported by the performance of credit cards and, to a lesser extent, of loans to companies. Foreign currency loans (in U.S. dollars) increased by 4.5%, favored by the increase in activity with customers focused on foreign trade (with natural hedging of exchange rate risk).
  • Customer deposits (74% of the area's total liabilities as of September 30, 2023) remained the main source of funding for the balance sheet and increased by 58.9%. The positive performance of Turkish lira time deposits (+93.7%), which represent a 80% of total customer deposits in local currency, is noteworthy. Balances deposited in foreign currency (in U.S. dollars) continued their downward path and decreased by 11.1%, with transfers from foreign currency time deposits to Turkish lira time deposits observed under a foreign exchange protection scheme. Thus, as of September 30, 2023, Turkish lira deposits accounted for 61% of total customer deposits in the area. For its part, off-balance sheet funds grew by 65.6%.

The most relevant aspects related to the area’s activity in the third quarter of 2023 were:

  • Lending activity (performing loans under management) increased by 8.0%, mainly driven by the growth in Turkish lira loans (+11.3%). On the other hand, the foreign currency loan balance remained stable compared to the end of the previous quarter (-0.8%).
  • In terms of asset quality, the NPL ratio decreased 36 basis points from that at the end of June 2023 to 3.8% and 126 basis points below the figure at the end of 2022 mainly due to higher activity, supported by recoveries and repayments in the wholesale segment, which continued in the quarter. The NPL coverage ratio recorded an increase of 307 basis points in the quarter to 100% as of June 30, 2023, mainly due to a decrease in non-performing balances, which is higher than the decrease of provisions.
  • Customer deposits increased by 3.1%, mainly thanks to the performance of Turkish lira time deposits (+11.8%) and off-balance sheet funds, which grew by 19.1%. On the other hand, balances deposited in foreign currency (in U.S. dollars) remained flat (-0.7%).


Turkey generated a net attributable profit of €367m during the first nine months of 2023, which compares positively with the accumulated result reached at the end of September 2022, both periods reflecting the impact of the application of hyperinflation accounting.

As mentioned above, the year-on-year comparison of the accumulated income statement at the end of September 2023 at current exchange rate is affected by the strong depreciation of the Turkish lira in the last year (-37.8%). To exclude this effect, the highlights of the results for the first nine months of the year at constant exchange rate are summarized below:

  • Net interest income recorded a year-on-year growth of 21.3%, mainly due to the growth in Turkish lira loans, as well as higher income from the securities portfolio in Turkish lira. This is partially offset by the decline in the Turkish lira spread.
  • Net fees and commissions increased by 103.6%, favored by the performance in payment systems fees, money transfers, brokerage activity, guarantees and asset management.
  • NTI showed an excellent performance (+102.4%) thanks to the increase in the results of the Global Markets unit, favored by foreign exchange operations and portfolio sales.
  • The other operating income and expenses line showed a balance of €-699m, which compares favorably with the previous year. This line includes, among others, the loss in the value of the net monetary position due to the country's inflation rate, which stood below the loss recorded in the first nine months of 2022, partially offset by the income derived from inflation- linked bonds (CPI linkers), which were higher in relation to those obtained in the first nine months of 2022. It is also worth highlighting the improved performance of the results of Garanti BBVA's subsidiaries, also included in this line.
  • Operating expenses increased by 93.6%, with growth both in personnel, as a result of salary improvements to compensate for the loss of purchasing power of the workforce, and in general expenses, where higher expenses in technology stand out, as well as the institutional donation made by the BBVA Group to help those affected by the earthquake that struck an area in the south of the country last February.
  • Impairment on financial assets decreased by 55.5%, mainly due to improvements in credit quality and the repayments in the wholesale segments, which led to a significant improvement in the accumulated cost of risk as of September 30, 2023 to 0.26% from the 0.89% at the end of September of the previous year.
  • The provisions and other results line closed September 2023 with a higher loss than in the same period of the previous year, mainly due to the update of the provisions for commitments with personnel and also as a result of higher provisions for contingent risks and commitments.
  • Lastly, the accumulated tax expense at the end of September 2023 reflects both the positive impact of the revaluation, for tax purposes, of Garanti BBVA's real estate and other depreciable assets that has generated a credit in corporate income tax rate -mainly in the first quarter of the year-, due to the higher tax base of the assets, and the increase of the corporate tax rate in Turkey from 25% to 30%, with retrospective application from January 1, 2023, which has negatively impacted the financial statements since the third quarter.

In the third quarter of 2023, the net attributable profit stood at €-158m, mainly due to the negative adjustment for hyperinflation, which has been significantly higher than in the previous quarter due to the higher inflation rate registered in the third quarter (25.1% vs 6.4% in the previous quarter), as well as to the tax rate increase mentioned above.

11 The variation rates of loans in Turkish lira and loans in foreign currency (U.S. dollars) only refer to Garanti Bank. Thus they exclude the subsidiaries of Garanti BBVA, mainly in Romania and Netherlands.