Türkiye | Banking Sector Outlook December 2025

Summary

Banks’ operating environment started to improve after September with extending margins. On the other hand, the disinflation strategy of the monetary policy continues to be supported by macro-prudential measures, which we expect to be maintained to a large extent in 2026.

Key points

• Key points:
• Due to ongoing growth caps in credits, banks tend to keep returns higher in uncapped credits with stronger margins, whereas TL deposit costs come down but more slowly than the decline in the CBRT cost of funding.
• Overall credit growth maintains a moderate trend rate of 27-28% (not deviating much compared to inflation trend) since the end of 2Q25, helped by the subdued commercial lending mostly in FC.
• We forecast ROE levels to be slightly above our previous call of 26% by end 2025, led by a stronger than expected NIM recovery in 3Q25 (pioneered by private banks) and maintain our previous expectation of 28-31% ROE for deposit banks by 2026 end, depending on the gains over the inflation outlook and the room for the CBRT easing.
• The BRSA restructuring decisions ease the upward pressure on NPLs and there might be a new restructuring package in the next months. We still expect the currency adjusted cost of risk (CoR) in deposit banks to be nearly 150bps in 2025 and deteriorate up to around 200bps in 2026.
• Capital ratios improved further to 19% in October supported by the Tier 1 sub-debt issuances in the sector. The BRSA forbearances which had supported the capital ratios against TL depreciation has been terminated as of the start of 2026 which will likely have a negative impact of around 180-200bps on capital ratios.

Geographies

Topics

Tags