Good afternoon. Thank you for joining Garanti BBVA's first half 2026 financial results webcast. Today, representing Garanti BBVA, we are joined by our CEO, Mr. Mahmut Akten, our CFO, Mr. Atıl Özus, and our Head of Investor Relations, Ms. Ceyda Akınç. Following management's presentation, we will open the floor for questions. You can either use the raise hand function or submit your questions through the Q&A box. Without further ado, I will now hand over to management. Hello, everyone. We are pleased to be with you again following another solid set of results. First, let me begin with macroeconomic environment we are in. GDP growth was 2.5% in the first quarter. We now cast a similar level as of June. Activity is expected to recover modestly in the second half of the year thus we maintain our 3% growth forecast for the full year. On the right-hand side, you can find our inflation and interest rate forecasts. Higher food and energy prices slowed down the improvement in headline inflation. Nevertheless, preserved tight financial conditions and fiscal discipline have supported our 30% year-end CPI forecast. Authorities continue to pursue a carefully balanced policy mix, combining gradual monetary normalization with tight macro-prudential measures. We expect the funding rate to gradually converge toward the policy rate by September. The timing of the first easing step remains data dependent and may be affected by oil price volatility. If conditions allow, limited rate cuts might resume in the fourth quarter. Moving into current account deficit. Weak foreign demand and high commodity prices lead to a worsening in external balance, yet resilient tourism revenues and moderation in economic activity could prevent further deterioration. We now expect current account deficit to GDP to be around 3.5% versus around 2% estimate in the beginning of the year. Evolution of energy prices will determine the external outlook. Fiscal discipline on the right-hand side continues to support macroeconomic stabilization. Expenditure discipline remains broadly intact, while income taxes continue to support revenue performance. We expect fiscal deficit to be close to the medium-term plan target of 3.5% in 2026. Moving into our financials, I will start with the net income. In the first six months of the year, we generated TRY 64 billion in net income, up by 20% year-on-year while recording 28% return on equity. Well-defended NIR, robust fee generation, and stronger contribution from financial subsidiaries reinforce solid earnings delivery. On a quarterly basis, we had a single-digit decline in net income, mainly due to lower trading income and increased provision that I will elaborate more on the following slides. I would like to highlight that we used 27% CPI rate in the valuation of CPI linker income. If we had used 30% rate, our net income would have been close to TRY 2 billion higher. Our diversified revenue sources once again enabled earnings resilience. Moving into slide seven. Against the challenging macro backdrop, we managed to defend our sector-leading core banking revenues. Strong fee generation and the growing contribution from our financial subsidiaries helped cushion cyclical pressure on net interest income and trading. I will discuss net interest income and fees in more detail on the following slides. Here, I would like to briefly touch on trading income. In the first quarter, the upward shift in swap curves resulted in mark-to-market gains on our swap portfolio. As swap curves normalized in the second quarter and these short-term positions matured, this positive contribution faded. Lower client foreign currency activity also weighed on the trading income, therefore, w e had lower trading income in the second quarter. That said, trading income represents less than 5% of our gross income and more sensitive to market volatility. Our earnings profile continues to be driven by sustainable core banking revenues, namely interest income and fee generation. As a result, we delivered 43% year-on-year growth in core banking revenues. If we look at our asset mix, our total assets reached TRY 5.2 trillion and loans make up 55% of the assets, supporting sustainable and recurring revenue generation. We maintained our growth pace both in TL and foreign currency loans. In foreign currency securities, you may notice a sharp decline in the second quarter. This mainly reflects the maturity of our $3 billion short-term placement made in high-quality liquid assets at the end of the first quarter. Excluding this temporary impact, our foreign currency securities increased modestly QoQ. In TL securities, we continue to selectively increase our Floating Rate Notes. Moving into slide nine for further insight on TL loan portfolio. We maintained our disciplined growth strategy, further strengthening our presence in micro and small enterprises, while reinforcing our leading position in general purpose loans and credit cards. Now, let's look at the evolution of our assets quality. As our loan mix continues to evolve towards consumer lending and credit cards, we continue to proactively identify and classify these exposures. Accordingly, the Stage 2 share in total loans increased modestly to 12%, mainly reflecting higher SICR classifications, as you can see on the right-hand side. Importantly, 84% of the SICR portfolio is non-delinquent at all, highlighting our prudent and forward-looking risk management approach. The higher share of early-stage SICR exposures also lowered our Stage 2 coverage ratio. Consumer loans and credit cards now account for around 75% of the SICR portfolio, consistent with the evolving loan mix. Here, I would like to also mention that around 55% of new general-purpose loans are originated to salary customers, while credit cards revolving rates have remained broadly stable at around 35%. In terms of restructured loans, as you can see on the chart, it declined during the quarter following the migration of previously restructured loans into Stage 3 with the end of the related regulation. If we move on to NPL inflow, the trend observed in Stage 2 was also evident in NPL inflows. Around 70% of new NPL inflows was coming from consumer loans and credit cards. The end of restructuring regulation resulted in a temporary increase in NPL inflows during the second quarter, and effect may also continue in the third quarter. We expect it to normalize in the fourth quarter. In terms of cost of risk, as we discussed on the previous two slides, cost of risk increased during the quarter, reflecting three main factors. First, we updated our provisioning models to incorporate the latest macroeconomic assumptions. Second, we continued to see NPL inflows from consumer loans and credit cards as our loan mix shifted towards these segments, largely due to regulatory caps. Third, the end of the restructuring regulation led to the migration of previously restructured loans into Stage 3. While the first two reflect our portfolio strategy and operating environment, the regulatory migration effect expected to normalize in the fourth quarter. As a result, we continue to expect full-year consolidated cost of risk to finish within the guided range, though towards the upper end, due to combined impact of these quarter-specific factors and higher for longer interest rate environment. If we look at annual comparison on the right-hand side, first half 2025 cost of risk benefited from exceptionally large provision reversals. As provision reversals normalized in 2026, the year-over-year comparison naturally resulted in higher blended cost of risk. Moving on to funding. Similar to our asset strategy, we continue to rely on customer-driven funding sources. Total customer deposits reached TRY 3.5 trillion, constitutes 66% of total assets, and remain TL-heavy. Importantly, our share of free funds continues to be the highest among private banks, providing a key structural advantage for margin resilience. On foreign currency side, half of the decline was due to gold price-related parity impact, while the remaining decrease reflected customer shift from foreign currency into TL assets. On external funding, we maintained our diversified funding mix. Total external debt currently stands at $9.8 billion, of which $4.5 billion is short-term. Against this, we maintain a comfortable foreign currency liquidity buffer of $6.1 billion. We further diversified our funding mix in the second quarter. We successfully completed our first thematic syndicated loan. In addition, we completed three thematic bond issuances in line with Orange Bond principles on climate change adaptation. More recently, in July, we completed TRY 4 billion asset-backed securities issuance, further optimizing our capital structure. Moving on to net interest income. Our first half margin performance continued to stand out. The funding cost headwinds that emerged in March became more pronounced in the second quarter, putting pressure on margins and TL loan deposit spreads. Even so, we limited the quarterly decline in net interest income to just 5%. This quarter, as I mentioned in the beginning, we also revised up our CPI estimate to 27% from 23%, yet current inflation expectations still point to further upside. Assuming a 30% CPI assumption, net interest income would have been around TRY 3 billion higher, and year-to-date net interest margin expansion would have been 20 basis points higher. Let's move on to the P&L item fees. Our first half performance remained one of the strongest in the sector. Our fee base was up by 39% year-over-year and 12% QoQ. Strengthened payment systems continued to be the main driver of the growth. Money transfer fees, insurance fees, as well as asset management fees further gained momentum. Over the past year, we welcomed 2.4 million new customers, bringing our total customer base to 31 million. We also maintained our leadership in customer satisfaction, ranking first in Net Promoter Score across retail mass, SME, and mobile banking. Now moving into operating expenses. We are keeping our costs under control, growing in line with the budget, was up by 45%. We continue to have the lowest cost-income ratio among our peers. As always, we remained focused on capital generative growth, which is clearly reflected in our sector-leading capital ratios. Supported by strong earnings generation, we maintained our common equity Tier 1 ratio at around 12%. There was a limited decline in capital adequacy ratio due to sub-debt amortization impact. The foreign currency sensitivity to own capital adequacy ratio remains limited, and we have a strong TRY 149 billion excess capital, providing ample capacity to absorb market volatility while supporting future growth. With that, let me walk you through 2026 operating plan guidance. I will begin with the macro assumptions on the left as these form the foundations of our planning framework. Our January baseline macro scenario, while assuming 32% policy rate with 25% inflation. Since then, ongoing geopolitical developments, as you're all aware, and heightened uncertainty have led us to revise our macro assumptions twice. Our current base case assumes that funding costs will gradually converge towards policy rate by September. Now we expect year-end inflation to be around 30%. Against this macro backdrop, we maintain our loan growth guidance for both TL and foreign currency loans. As discussed earlier, we also remain on track to deliver our full- year consolidated cost of risk guidance. Although quarter-specific factors and higher-for-longer interest rate environment are likely to keep us towards the upper end of the guided range. Turning into margins, we have consistently communicated since April that funding costs would normalize only gradually. While we continue to expect margin expansion this year, the pace of improvement is likely to be modest than initially anticipated. Going forward, evolution of funding costs and macro-prudential measures will continue to be the key swing factors for margins. In terms of fees and OpEx, we are also on track with our expectations. Finally, regarding profitability, the upward revision to our inflation assumption naturally creates downside risk for our real ROE outlook. In nominal terms, however, our guidance looks achievable depending on rate evolution. This concludes my presentation. Now we can take your questions. Welcome to the Q&A session. As a reminder, you may ask questions by raising your hand or by using the Q&A box. When your name is called, please unmute yourself and proceed with your question. One moment for the first question. Let's begin with our first question from Mehmet Sevim, JPMorgan. Mehmet, please go ahead. Hi. Good evening. Thanks very much for your time. I have just one question on the deposit balances, please. It seems you've grown your TL deposit base quite significantly this quarter. I'm aware of the regulations. I was wondering if this is simply a function of regulation or was this a deliberate decision to shore up liquidity, maybe to be a bit more comfortable later in the year, or was there any other reason behind it? Given, obviously, your TL loan-to-deposit ratio has declined about 10 percentage points in a single quarter. I'm trying to understand if the steep NIM drop maybe is partly related to that and maybe if this is front-loaded and may result in a better performance later in the year. Connected to this, how are you thinking about the NIM evolution over the coming quarters, say, in different scenarios of the rate trajectory? Thanks very much. Thanks, Mehmet. Good questions. Number one, the decrease in NIM is mostly related to the post-war increase in the policy rate, or not more than policy rate, it's the funding rate by central bank, which has been increased. When we did have the first quarter, we had only one month of higher cost of funding, which was not reflected on the total deposit base. Therefore, I think we discussed this in the last meeting as well, we'll see NIM being affected with the cost of funding, and we have seen that all over our customer base. Yeah, deposit balances, we typically go beyond ratios regardless, and especially Q4 trends, we have more inflow. We also optimize sometimes duration based on our beliefs as well. When we see an opportunity, we grow. We actively manage our deposit base. It's partially reflected in our numbers. Really the real story is higher cost of funding and maybe more issues in the sector in terms of competing for deposit costs with the ratios at times. That's the reason overall cost of funding has been higher than the first quarter. That's affecting NIM. Going forward, when you look at the three lines in the last chart that shows our January, April, and I think it was June or July. Going forward, the policy normalization is not going to happen before September, it looks like. This is a much higher funding estimate than we have initially thought, which is affecting the NIM. We may or may not hit the 75 basis points that we have forecasted. It's a bit hard to say at the moment. In the beginning of the year, late last year, when we discussed about NIM improvement, we have been always, as you know, Mehmet, relatively cautious because there is so much variable, and we typically put numbers that we believe that we can hit. It is still 75 basis points achievable, but there is risks around it. The third quarter cost of funding will be still relatively high. The NIM will be relatively flat, fourth quarter, we expect more improvement. They say we are actively trying to manage between swap lines, between onshore, offshore, and deposit funding. Right, Atıl? Would you like to add anything? Yes, indeed. I mean, conservatively speaking, I think, as you said, the third quarter net interest margin could be similar to the second, and fourth quarter will be increasing. But also there's an upside risk, even in the third quarter, we may see some improvement in net interest margin. Compared to our 75 basis point improvement, our improvement could be modest, maybe 20 to 25 to 40 basis point improvement we can see over last year. Maybe, Atıl, it's only one-month data, in July, we have seen further improvement in cost of funding actually. Already, compared to exit deposit cost, we already achieved more than 100 basis point decrease. In a single month. It would be sustainable, but further improvements will only come probably in September when- Yes, sir. ... reductions happen. That's the reason one-month 100 basis points doesn't give us a lot of information. It looks like we might be better than this quarter or flat, cautiously, but very likely not below what we have achieved in terms of NIM. The fourth quarter at the moment looks a lot better. As I said, 75 basis points is still achievable. Not an easy target, but still achievable, depending on how things evolve. If you look at the last six, seven months of 2025, there was a good flow, and even January and February was very good months in terms of cost of funding. The situation with the war and further tightening of policy rate or funding rate has deferred our new development. NIM development is like this. We are hopeful that it will be better based on the one-month information as well. Hopefully, this answers your questions. Superb. It does. Thank you, Mahmut. Thank you, Atıl. Goldman Sachs, Ashwath PT. Our next question comes from Ashwath from Goldman Sachs. Please go ahead. I have a few questions. The first, I think it was mentioned that if the inflation assumption was to be revised upwards with 30%, that would add another 20 basis points in terms of the NIM. Perhaps that's also one of the levers that could be used, I suppose, in addition to lower funding costs if the rate cuts do happen or the policy rates normalize. Just wanted to check my understanding on that. The second part I wanted to ask was around fee growth and OpEx. Fee seems to be performing better than the guidance range, whereas OpEx is also at the lower end. Potentially, is that another lever to help achieve your ROE target for the year, or at least close to it? The final question I had was around the impact of the Romanian subsidiary sale. I was just wondering if you could quantify the impact of that in terms of an expectation of ROE in terms of basis points. Also whether that's embedded into your guidance of that, whether it's embedded into your guidance for the year when you're saying potentially downside risk to positive real ROE. Are you actually considering that, or is that something that is a bonus that could help you at the end of the year if it were to close, but not inside your guidance. Thank you. Good questions, three or 3+. I will go with the first two ones, and leave the last one to Atıl, who has been spending a lot of time on the subsidiary sale. Overall, the inflation assumption 27%-30%, it happened to be the case that we have not adjusted in the second quarter, just on time. I think major competitor in the sector, everybody is actually raising to 30%. We want to mention that because if we have made that adjustments, we are almost making the same number with Q1, despite the funding costs being significantly higher. These are, at the moment, within our forecast to reach to 75 basis points improvement. As I said to Mehmet as well, I am optimistic we will get close if we might hit the number or we might get very close, which includes this assumption. Now, you mentioned on your second questions, fee growth and OpEx. Those are really good points. Ceyda did not mention those upsides, in fees, actually, if you look at the numbers, we have been always very strong in payment area in terms of customer acquisition, in terms of fee generation. It has been really year-over-year, 35%, 36% is above inflation. Good growth in fees. Also you probably noticed two more areas, insurance and brokerage, and securities. There we had 65%-79% or so improvement. These are areas we have focused a lot in the past. I mentioned transactionality and wealth management areas is very important for us, in terms of ROE improvement as well, and light capital approach. For instance, in asset management, our company two years ago was number five in terms of ranking and profitability, and now it is number one. Similar in other areas as well, leasing, factoring, we are number one in profitability. Move to number one. We really care about those contributions. On the fee side, especially on wealth management, which is very important for us. I think in OpEx, we will try to optimize further our OpEx, going forward as well. There might be some upsides there in terms of contribution to the numbers by the year-end. Always we look at OpEx, partially investment as well, because majority of the OpEx cost also comes from customer acquisition costs. That is the reason I do not want to say we are very committed that we will have further upside. If we see opportunities for long-term sustainable growth in terms of investing in customer acquisition or technology, especially on AI side, we have been continuing to invest and we see the results, we will continue to do so. On both sides, we have extra pluses because of our strategy. Third one, question for you about- Romania. Romania. Yes. Currently, it's a process, and so far it's on track, and normally we expect it to be concluded in the mid-fourth quarter. This is the current expectation. Previously in the first quarter results, we thought that the net income impact will be over EUR 100 million, and the capital impact would be over 80 basis points, in terms of capital ratio. Return equity impact, depending on all these figures, could be subject to, let's say, FX hits or a couple of other things. Normal expectations around 1.3%-1.5% on return equity contribution, and it's included in our guidance that we could reach our nominal return equity target. Yeah. Thank you. Thank you. Our next question comes from Mustafa Kemal Karaköse, TEB Investment. Please go ahead. Hi. Thank you for the presentation. Do you hear me? Yes, we hear you. Yeah. My first question is about cost of risk guidance for 2026. You maintained cost of risk guidance for 2026, but parent company, BBVA, second quarter points out worsening outlook for the rest of the year. Especially we saw huge NPL inflow in July for the sector. Do you see a significant downside risk to your cost of risk guidance at the moment? Thank you. Yeah. Okay. That's a great question. First of all, BBVA way of calculating cost of risk is slightly different than us, their baseline was 200. They, I think, increased to 220. Number one is that. Number two, we mentioned in the past as well, today we briefly touched on it. There is a normalization in cost of risk overall, regardless of the segments, over time for the sector, not just for our bank. I'll give you a few data point. If you go back to 2017, for instance, the banking sector NPL ratio was 3.1%. Right now, it's again 3.1%, but in the meantime, between 2017 to 2020, it was between 4%-6% for the sector. Different segments, different issues. Then with COVID and low cost of funding, the NPL ratios was down to 1.7% for the sector, now it's normalizing a bit. Normalizing on the back of, there has been recently more NPL in credit card and so forth on consumer. As you recall, we discussed this, there has been two restructuring initiative by the regulators that we were allowed to do restructuring of the both credit card and unsecured lending. That basically is when you structure customers, when you extend the duration of your loan on the credit card to five years, you actually make it more affordable, make it possible for certain customers to pay back. Not everybody is able to do it, because maybe they lost their jobs and things like that regardless. We are deferring, we are moving the cost of risk from one quarter to another in those cases. The later second restructuring effort, if I'm right, Atıl, it was mid-April that we finished. Yes. Then 90 days start to come in. That's the reason those efforts are very helpful, and very much right thing to do, especially given that the duration of high interest rate environment now for almost two years, it helps. It also shifts cost of risk and NPL from one quarter to another. That's the reason we mentioned in the third quarter, the NPLs of the second restructuring will continue to flow in, but the fourth quarter, it will be normalized. There is two normalization. One normalization over years. There has been normalization of cost of risk and NPL when you look at the last 10 years. At the same time, this year and late last year, there have been two restructuring effort in credit cards, and GPL, unsecured lending. Third item, maybe third factor to think about is, since pretty much many of the loan products are capped, credit card, along with few business products like agriculture loans, things like that, is the main area that's not capped, and it has been growing above 40%. From our numbers as well, the majority of our NPL and cost of risk is related to retail at this time around. That affects those numbers as well, the overall relatively higher number than the past years. What we see is, there is a movement from one quarter to another on retail segments. Then in our presentation, we also show you the overall consolidated cost of risk numbers, which includes big-ticket items. Big-ticket items also deviates or make the numbers less apple-apple. It is actually last year, for instance, first half, we had several big-ticket collections and risk reversals, which affected or reduced the numbers so low, at some point, commercial cost of risk was negative in our numbers. There has been a baseline issue, too. In cost of risk, what I'm trying to say, there is more than one variable that affects. From one quarter to another, you see fluctuations because of these numbers. It's harder to explain in total. Right now, so far, we still believe that we are going to be within that 2%-2.5% range. On top, I'd like to say that as well, it's our BBVA culture as well, our BBVA ROR and pricing discipline. Those categories with slightly higher cost of risk also has very high ROR at the same time. That's the reason we continue to grow on those product lines. The one non-capped is credit card, which is very important in retail business. The unsecured lending, which is limited, is also still relatively profitable versus other products. We continue to use our cap and limits. Overall, we are not concerned much about the cost of risk. Maybe one thing I can add. Our guidance was 2%-2.5%. Now we're seeing it is also in the first presentation, we will be toward the upper end to 2.5%. Yeah. Within guidance, but toward the upper end. I think it's in parallel to what our parent also guides. We provide a range. Now we're saying it's toward the upper end, I think it's parallel. Yeah. Thank you. Question. Now moving on to the written questions. Our first questions comes from Valentina. She asks, could you briefly comment on the key drivers of the CET1 decline? Any RWA optimization plans? What is the effect sensitivity on CET1 ratios from 10% TL depreciation to dollar? Also CET1 sensitivity from interest rates. Thank you. Atıl, you want to take this one? Yeah. Yes. Thank you for the question. The first part was related to the decline in the second quarter. We have a sub-debt, and over the period, there is a part that it starts amortization. There is a negative impact on capital adequacy ratio. If we exclude that part during second quarter, our internal capital generation was enough to compensate for the RWA growth. In the third and fourth quarters, we will see that most probably our capital ratios will be increasing because of the internal capital generation. Impact of this amortization will be limited. In terms of sensitivities, in terms of the 10% depreciation in the currency, capital adequacy ratio is almost 15 basis points on total ratio, and 33 basis points on the CET1 ratio for 10% depreciation. The other one, could you remind? That was the third question. CET1 sensitivity from the interest rate. Ceyda? Our interest rate sensitivity on capital is very limited since we have a low share of available for sale securities. Therefore, very negligible impact. Only 3, 4 basis points impact we have. Okay. Thank you. Next written question comes from Hakan Aygün. He's asking, how do you see the evolution of NPL formation looking forward? Do you see any faster growth in your NPL figures, especially in July? Thank you. July will be pretty much flat or 2%, 3% lower than June, actually. Our most recent forecast is 2%, 3% below June. Overall, June, July, August, and maybe partially September, our NPL flow will be slightly higher than the second quarter number, just because of the restructuring flow. Now that those restructured loans are due, and they are now in, again, delinquency after 90 days passed. There's an impact of that, but not there's a significant deterioration, but we'll see definitely a bit of worse numbers than the second quarter, but fourth quarter will be relatively good versus the third quarter. In the meantime, maybe there will be another restructuring regulation, the numbers will be even more rosy, more positive when we come to the fourth quarter. As I said, when we look at the past, when we look at our vintages, at the same time, we follow the vintages very closely, like six months, 12 months, and 90 days. When we look at every product, we don't see any deterioration, actually. It's just that 52% of our Turkish loan growth is coming from credit card and non-cap area. There's a product mix issue in the NPL flow. In terms of ROA, in terms of return, in terms of cost of risk, we don't see any major issues. I've given you the exact number for July versus June, whatever it means for the quarter. Thank you for question, Hakan. It looks like we don't have any further question, and I think we are the second analyst earning, so there might have been sectoral questions in the past as well. Again, thank you for joining us today and your interest as well. This year is a milestone for us. We just celebrated in June our 80th year of Garanti BBVA, and it was very important milestone for us. In that, we always mention that we like to think about the future. In the eight years, that has been the case, always thinking about what we could do for transforming our bank. We continue to do that in our strategy, and I think you have seen some of the numbers today. Like we mentioned last year, we'll be better in wealth management, and we see that in the fees generation, for instance. We will see more of these going forward as well. This year, we just announced this week as well, we are the master global partner of the COP 31. That's going to happen in November in Turkey. We use, as you know in our strategy we mentioned in the past, sustainability is a growth engine for us. We like our climate ambition to turn to action, and we'll be happy to see all of you in COP 31. I like to note that as well. Overall, we finished a very strong quarter within the sector, and we believe that we have the right strategy with BBVA to compete globally and locally. This is reflected in our confidence as well that we will see every quarter strong results. That's all I will say. The same strategy long-term. I know there is some volatility quarterly numbers in certain items, but we feel like we are going to hit overall our baseline assumptions one way or another. As I said, by continue to focus on long-term value. Thank you very much again for listening us, and hopefully in three months, we'll be again together, go over the numbers. Have a nice vacation for those who haven't taken vacation like myself. Take care.