Akbank T/A/S S/Adr

Dear friends, this is Kaan speaking. Thank you for joining us. I hope you are all well. Today, we will first walk you through our financial performance underpinned by disciplined balance sheet management, strong fee momentum, resilient capital metrics, and continued progress across our strategic priorities. Our earnings reflect not only the current operating environment, but also the structural strengths of our business model. Building on this performance, we will share our guidance for the years ahead, shaped by a prudent assessment of the operating environment. Our focus remains on risk-adjusted returns reflecting our commitment to sustainable profitability and prudent risk management. At the same time, we will frame these near-term priorities within our three-year outlook, where we see clear opportunities to reinforce earnings durability, enhance efficiency, and deepen customer penetration. Our direction remains centered on executing today while positioning the bank for consistent and profitable growth over the coming years. Dear friends, before moving on to our bank, I would like to briefly touch upon the operating environment. Global financial conditions and risk appetite are expected to remain favorable for emerging markets, supported by continued Fed rate cuts along with a tight spread and subdued commodity price environments. World growth remains resilient despite trade policy uncertainties driven by AI and technology investments and more supportive financial conditions. In Turkey, domestic demand and economic activity continue to grow, albeit at a more moderate pace. Consumer inflation is on a gradual downward trend. Central bank is expected to be attentive to inflation risk with cautious and measured rate cuts, while microprudential regulations are set to remain in place and fiscal consolidation is underway. Against this backdrop, we expect the banking sector's profitability to continue in a gradually improving trend while asset quality deterioration is likely to proceed in a contained and orderly manner. Let's move on to our bank On the slide, you can see how our core strengths have translated into tangible financial outcomes. Our strong capital position with 16.8% total capital and 13.6% tier one actively enable growth, providing the flexibility to manage the balance sheet with agility and dynamically allocate assets and liabilities across cycles. This disciplined approach is supported by prudent provisioning with further increase in our gross coverage to 3.7%. While growing, effective risk management has kept Stage 2 plus Stage 3 loans limited, below 11% of total loans, preserving earning stability as we grow. At the same time, operational discipline is reflected in our leading 106% fee-to-OPEX performance. As a result, we continue to deliver strong market share gains in our priority segments, such as business banking loans, where we added 100 basis points in second half of the year, while maintaining our dominant positioning in general purpose loans with over 19% market share. Supported by our continued focus on our customer acquisition and deepening relationship, we have sustained strong momentum in fee income market share, reaching 17.8% by the end of 2025. All of these position us to further scale a resilient earnings platform and unlock sustained long-term growth potential in the period ahead. Dear friends, Akbank has made solid progress against the three-year targets we have shared with you on a regular basis. The achievements delivered to date are clear proof of what we are capable of executing going forward. This progress provides a strong and credible foundation for the next three years as we continue to build sustainable, customer-driven revenue streams. Importantly, this three-year period is not a destination, but a stepping stone positioning us for an even stronger, more ambitious journey ahead. On the slides, we have summarized our roadmap. Dear friends, we are committed to further strengthen our innovation capabilities by developing differentiated offerings across the group that enhance our value proposition and support scalable AI-enabled operating models. Innovation will be accelerated by rapidly testing and scaling AI, blockchain, and hyper-personalization. We will leverage generative AI to provide proactive self-service recommendations across our channels and equip our frontline teams with tools to provide seamless services to our customers. We aim to expand integrated solutions together with our subsidiaries and broader ecosystem that will further deepen customer engagement and unlock new scalable growth opportunities in targeted areas. In parallel, we will continue to invest in future-ready talent to reinforce execution and sustain innovation momentum. Ongoing efficiency gains alongside deeper customer penetration reinforced by value chain network will remain key priorities across our franchise. Collectively, these factors will enable the consistent delivery of return equity above inflation on a sustainable basis starting this year. Here, we outline our financial KPIs for the next three years, translating our strategic plan into measurable targets. The strong dynamism and motivation felt across the bank at every level continues to support execution and momentum. First, over the next three years, in total business banking loans, we aim to increase our market share by another 300 basis points. We target to grow in cash as well as non-cash loans in both Turkish lira and foreign currency. We already started to build the foundation last year by gaining 100 basis points market share in the segment during the second half of the year. Second, our ambition in consumer loans also continues. On top of last three years market share gains of 440 basis points in consumer loans, we aim to gain further 100 basis points until 2028. Customer deposits will remain the primary source of funding for our growth, while demand deposits will continue to reinforce balance sheet strength. Accordingly, moving on to our third ambition, We aim to gain 200 basis points market share in Turkish red demand deposits, building on top of the 240 basis points gained over the last three years. Fourth, after achieving over 100% of fee-to-OPEX ratio, our homework is to maintain full coverage of OPEX going forward. This will support us Just a second. This will support us to reach our fifth ambition, which is a cost-income ratio below 35%. These targets will feed into our leadership positioning in capital while driving solid growth, at the same time delivering and returning equity above inflation, starting this year. Having navigated multiple cycles, I have full confidence in our people's capabilities and execution. I would like to sincerely thank our teams for their outstanding dedication, as well as our stakeholders for their continued trust and confidence. I will now pass it over to Ebru to walk you through our results and guidance. Following that, turker, and I will be happy to answer any questions you may have. Thank you. Ebru, over to you.

Thank you, Kanbei. Moving further into the details, our net income was up by 35% year-on-year to $57,224,000,000, resulting in an ROE of 21.5% and an ROA of 1.9% for the full year. During the same period, we achieved a solid revenue growth, up by 50% year on year to $222 billion and $33 million, thanks to robust fee income generation and NII building momentum in the second half of the year. Our quarterly net income was up by 30% to $18,317,000,000, leading for our quarterly ROE to show a sequential improvement to 24.9%, up from 21% in the third quarter. The quarterly ROE improvement was underpinned by our focus on deepening client relationships and strong cross-sell execution, which continued to fuel fee income, while agile ALM and margin-equative growth has been reflected in our solid NII evolution. As we move forward ahead, our sustainable growth mindset, sound balance sheet, and analytical capabilities will drive further NII enhancement and anticipated rate cut cycle, leading to an ROE above inflation starting this year. Moving on to the balance sheet. Last year, our TL loan growth reached 42%, surpassing our full year guidance of over 30%. Foreign currency loan growth of 10% also came in well above our mid- to single-digit full-year guidance. We strategically accelerated our loan growth in the second half, delivering strong market share gains in both foreign currency and tail business loans while supporting NII evolution. To put in numbers, we captured 80 basis point market share in foreign currency loans and 110 bps market share in tail business loans during this period among private banks. At the same time, we maintained our already solid position in consumer lending. This performance for sure illustrates the effectiveness of our targeted growth strategy, laying a strong foundation for our 2028 targets while preserving risk return discipline. Moving on to securities. The share of securities and total assets remained stable, around 23%, while the composition reflects our balanced approach, maximizing yields. We selectively increased foreign currency security exposure, supported by timely build-up of NIM accretive Eurobond investments. Foreign currency securities grew by 35% year-on-year in dollar terms, lifting their share in total by 7 percentage points year-on-year to 34%. On the TL side, we are well-positioned in long-duration and higher-yielding fixed-rate securities, complemented by TL REF Index bond portfolio with decent spread, providing potential for further book value growth through mark-to-market gains. As highlighted before, share of our CPI linkers has been strategically reduced by 31 percentage points since 2022, reflecting a deliberate shift in portfolio composition. Active, youth-focused portfolio management has enabled timely repositioning of our securities and reinforces margin resilience going forward. On the funding side, our low TLDR and strong deposit franchise have allowed us to optimize funding costs while selectively advancing growth. Our demand deposit share in total deposits increased by 5 percentage points year-on-year to 33%, supporting further margin improvement. sticky and low-cost TL time deposit share in TL time deposit remains solid at 58%. Looking ahead, our well-structured balance sheet combined with sound deposit mix provides a solid foundation for continued NIM enhancement. Let's move on to the P&L. As you know, our NIM had started to recover during the third quarter thanks to improved funding dynamics. This trend was sustained during the fourth quarter backed by disciplined balance sheet management. Our swap adjusted NIMP expanded by 40 basis points quarter on quarter. On a CPI normalized basis, quarterly NIMP performance was even stronger at 60 basis points. This is adjusted for the one-off valuation impact in the third quarter of the CPI. Looking forward, our unwavering focus on profitable growth and effective funding strategies will remain key drivers supporting the anticipated gradual NIM expansion throughout this year. Accordingly, the quarterly evolution will remain sensitive to both the pace of disinflation and also the magnitude of the rate cuts. Last year, our net fees recorded a robust growth of 64%, ending the year above our guidance of around 60%. The growth was broad-based across all business lines, reflecting strong customer engagement, continued innovation, and diversified product portfolio. Sector-wide fees have benefited from the high interest rate environment. However, our diversified fee structure and growth in customer base positions us well to mitigate the cyclicality of the payment system fees in the lower interest rate environment. Cost increase remained well below, actually well below our guidance, and also was contained last year, while it was up on a year-on-year basis at 33%, while our guidance is at 40%. Having stabilized cost increase around inflation levels, we had the lowest OPEC space among all of our peers as of third quarter last year. And as you know, we're the first one to announce, so we will be keeping a close eye on this particular parameter. This is a reflection of our disciplined cost management and operational efficiency. However, our full-year cost-to-income ratio remained around 50%, reflecting continued pressure on NII. As for this year, improving NII dynamics, along with resilient fee-income base, are expected to drive a gradual improvement in cost-to-income ratio toward low 40s. As Kambe just shared, our mid- to long-term ambition remains unchanged with cost-income ratio targeted below 35% by 2028. Cost discipline embedded across our workforce and branch network alongside a targeted application of AI to enhance efficiency and scalability will all be instrumental in achieving our targets. On that note, let's now move on to our superior fee coverage of OPEX. Starting from an already high lever, our broader operating footprint and deeper customer penetration alongside disciplined cost management translated into a stronger fee coverage. Our strong momentum in fees across all business lines led for our market share gain among private banks to advance by 1.4 percentage points to 17.8% last year. More importantly, the total market share gain in fees among private banks since end of 2022 has reached 3.9 percentage points. And at the same time, the fee to OPEX ratio has increased by 20 percentage points to 106% in just one year. With full coverage of OPEX now firmly in place, our aim is to sustain this level through this year and beyond. Let's move on to asset quality. Retail-led NPL inflows continue to be the persistent trend across the sector as a reflection of the macro environment. Despite this backdrop, our NPL market share among private banks has continued to decline, extending the trend observed since early 2025 with a further 150 basis point improvement in the last quarter. The share of Stage 2 plus Stage 3 loans remains contained at 10.8% of gross loans, underscoring the sound quality of our portfolio. Please also note that the restructured loans represent only 3.4% of the total loan portfolio. Meanwhile, our share in bankruptcy applications stands at less than 4%, which is well below our natural market share, mirroring disciplined underwriting and proactive risk management. Supported by prudent provisioning, our total provisions increased to nearly 71 billion TL, reflecting the continued build-up of our reserve buffers. As a result, our coverage ratios remain solid, with growth coverage at 3.7% and Stage 2 plus Stage 3 coverage at 28.1%, reinforcing balance sheet resilience. Excluding currency impact, net cost of credit ended the year at 214 basis points, slightly above our guidance, while employee ratio was fully in line at 3.4%. So looking ahead, as we continue to grow, our disciplined risk framework, supported by advanced analytics, AI-driven credit decisions in retail, together with the diligent tracking of our corporate and commercial loan portfolio, all position us well to preserve asset quality and contain potential cost of risk pressure for this year. Moving on to capital, our total capital Tier 1 and core equity Tier 1 ratios remain robust at 16.8, 13.6, and 12.5%, excluding the regulatory forbearances. This reflects prudent capital allocation while driving profitable growth. As for sensitivity, 10% depreciation in tail results in around 30 basis point decrease in our capital ratios, while the impact diminishes for larger FX moves. Similarly, 10 basis point increase in tail interest rates would lead to an impact of approximately 10 basis points on our solvency ratios, demonstrating limited sensitivity and the strength of our capital. Overall, our strong capital buffers continue to anchor balance sheet resilience and support long-term profitable growth. Before moving on to Q&A, I'd like to share a few highlights regarding our non-financial performance. As highlighted in our ESG video at the beginning of this call, we continue to advance in our Sustainable Action Plan with measurable results. As a result of our non-sub-dedication, we are happy to be among one of the few institutions globally to receive CDP's highest A rating in climate change, water security, and forests, reinforcing our leadership and sustainability. And in this context, we are very excited and proud that COP31 will be taking place in Turkey this year. It reflects Turkey's growing commitment to climate action and highlights the increasing importance of sustainable finance and climate risk management for our region. We will continue to support the transition to a low-carbon and inclusive economy in line with our long-term objectives. This slide highlights the snapshot of our 2025 financial performance, and we have shared throughout the whole presentation. But a last note, as we have shared, the main deviation was related to the pressure on net interest margin, and this was due to the tighter than expected monetary policy and the divergence between deposit costs and policy rate. And last but not least, our 2026 guidance. Looking forward, as stated at the beginning of our presentation, we are committed to strengthen further our already robust positioning in consumer loans while accelerating market share gains in Turkish Lira and foreign currency business loans, including non-cash loans. Our focused growth and funding adaptability will sustain further NIM improvement this year, And accordingly, our net interest income will be supported by both volume growth and further improvement in margins through ongoing disinflation, obviously. And our resilient fee engine, combined with the cost discipline, will continue to contribute to the full coverage of OPEX. Improving net interest margin dynamics and resilient fee income base is expected to translate into a gradual improvement in cost-income ratio towards the low 40s. Asset quality will continue to be a priority area in the sector, while our disciplined risk framework will limit cost pressure, leading to a flattish cost-of-credit trend for this year. To sum up, our well-structured balance sheet, along with risk-return-focused growth, is to support further NII enhancement in the anticipated rate cut cycle, leading to an ROA above inflation starting this year. This concludes our presentation, and we can now move on to the Q&A session. Please, as always, raise your hand or type your question in the Q&A box. And for those of you who are calling us by telephone, please send your questions by email to investor.relations at akbank.com. David, please go ahead and ask your question. The first question comes from David Toronto from Bank of America.

Good afternoon. Thanks for taking my questions. The first one is about the growth. historically, AkBank's market share was significantly higher. I remember back in 2007, 2008, it was close to 12%, but the bank deliberately gave away market share until 2020, at some point falling towards 7%. And in the last few years, you have reaccelerated the growth, regained market share across multiple segments, and That strategy is continuing according to the presentation. So my question is, what do you consider to be the natural market share for Akpang in the medium term? And B, assuming a normalized regulatory environment, i.e. relaxation of growth caps, when should we realistically expect Akpang to converge towards that natural market share? And second question is about the margins. Historical NIM averaged around 4% and your 26 outlook points to return toward these normalized levels. However, as rate cut cycle progresses, one would expect NIM to temporarily exceed the cycle averages, even so macroprudential measures limit how far this can go. So what do you see as the main upside and downside risk to your NIM guidance for this year? And how do you expect deposit rates to move relative to the post rate, given the constraints by the macroprudential framework? And finally on costs, Akbank kept the cost growth relatively controlled versus sectors in the past few years, but high inflation and the regulatory pressure still pushed the nominal cost base meaningfully higher. You point to medium-term costly income target of mid 30% levels. And I was wondering what are the key operational levers and timeline to move towards that cost of risk levels? The reason why I'm asking is in a declining inflation environment, at some point, revenue growth is going to decelerate. Not maybe for this year or perhaps next year, but eventually. So reducing cost income ratio could become a bit more challenging in this environment. So I would appreciate to hear your plans to limit the cost growth. And maybe one more thing, what are your macro expectations for 26, please? Thank you.