Akbank's Margin Recovery Delayed: Guidance Cut as Higher Rates Bite
The Turkish lender lowers its 2026 ROE and NIM outlook, pushing real ROE generation to 2027, while leaning on fee resilience, asset quality, and an enterprise-wide AI strategy.
AKBNK.IS · Earnings Call · 2026-07-28
The Long Road to Real Return on Equity
Akbank's second-quarter earnings call delivered a familiar but important update: the operating environment has deteriorated, and full-year targets are being dialed back. “While the long-term direction remains intact, higher funding costs are delaying both margin recovery and the sector's real ROE generation.” — Kamile Ebru GÜVENIR, Executive/Management · 2026-07-28 The bank now expects ROE of 23–25% (down from high 20s), swap-adjusted NIM of 3.2–3.5% (from around 4%), and a cost-to-income ratio in the high 40s (low 40s previously). The culprit is a persistently tighter funding environment, with the Central Bank holding policy rate at 40% and macroprudential measures further squeezing margins. Higher funding costs are not just a near-term blip; they are restructuring the entire earnings trajectory.
In the previous quarter's call, the CFO was still optimistic: “we are expecting like 4% of net interest margin, but we will be observing a gradual improvement in every quarter.” — Türker Tunali, CFO · 2026-02-03 That optimism has been replaced by a more cautious glide path. As Turker Tunali noted in the Q&A,
we expect gradual improvement in the net interest margin towards the end of third quarter and maybe mainly in the fourth quarter that we can reach this guidance -- revised guidance we've shared.
The bank is still aiming for that range, but the timing is clearly pushed out—evident in the fact that the cumulative NIM is hovering around 3% even as the second half begins.
Resilient Franchise, Rising Provisions
Despite the margin pressure, Akbank's fundamentals remain well-guarded. The bank continues to grow its loan book (TL loans up 8% YTD, FX loans up 3% in USD terms), driven by market share gains in business loans. customer franchise strength shows up in fee income—35% YoY growth in H1, fully covering operating expenses. The cost of risk is running at 220bps (excl. FX), in line with the full-year guidance, and the NPL ratio sits at 3.5%, with cost of risk carefully managed. The bank also continues to strengthen its buffer, with total provisions nearing TRY 85 billion.
The tone on asset quality is cautious but confident. The CFO noted that “the NPL formation is mainly happening on the retail side, consumer, credit cards, unsecured lending, as well as as part of SME.” — Türker Tunali, Executive/Management · 2026-07-28 Corporate stress remains limited, and the bank is actively using NPL sales to manage the book. This disciplined approach has helped reduce the private-bank NPL market share by 130bps YTD, underscoring a resilient fee and risk framework.
Capital and a Path Forward
Capital remains a bright spot. Total capital ratio improved to 16.4% during the quarter, helped by RWA optimization and a reversal of mark-to-market losses. Management also reiterated that the IRB application is on track, with a potential ~2% uplift to capital ratios expected next year, pending regulatory approval. “We can expect around 2% uplift to our capital ratio, both Tier 1 and CET1 as well as capital adequacy ratio.” — Türker Tunali, Executive/Management · 2026-07-28 This gives the bank strategic flexibility even as the pace of capital generation slows.
Looking ahead, the bank's strategy is increasingly anchored on AI and digital transformation. resilient fee generation is being supported by AI-driven personalization and collection capabilities, and the bank is pursuing an enterprise-wide AI approach. The bank is also confident in its ability to manage costs, with fee income targeting a 100% coverage of operating expenses by year-end.
The revised guidance reflects a more realistic view of the macro path. Real ROE generation is now likely deferred to 2027, as the bank navigates a 'higher-for-longer' environment. The direction remains intact, but the journey is longer than hoped.