Ladies and gentlemen, welcome to İş Bank 2026 first half financial results audio webcast. The event will be hosted by Ms. Ebru Özşuca, Deputy CEO, Mr. Mehmet Türk, CFO, Ms. Nilgün Osman, Head of IR and Sustainability. The presentation will be followed by a Q&A session. If you wish to ask a question, please raise your hand or use the Q&A box. Now I leave the floor to our presenters. Welcome to our earnings presentation for the second quarter. This is Ebru speaking, and thank you all for joining us. Before we turn to our financial results, I would like to briefly go over the macroeconomic backdrop of our operating environment and share our view for the remainder of the year. In the second quarter, the impact of the geopolitical tensions on the Turkish economy has become more evident. Even though the possibility of a peace deal increased in June, the conflict re-escalated again in July. Against this global backdrop, the elevated uncertainties have made it harder to build long-lasting forecasts. Due to a higher level of energy prices, 2026 year-end expectations for the current account deficit, inflation, and policy rate increased in the second quarter, while expectations for the GDP growth declined in Türkiye. Despite this change in expectations, the prudent monetary policy stance and maintained reserve buffers have supported risk perception toward Türkiye. Central Bank kept one-week repo auctions suspended and continued to fund the markets through the upper bound of the interest rate corridor. Macro-prudential measures were tightened to sustain macro-financial stability. Normalization in monetary policy is delayed under current circumstances, assuming the expected renewed ceasefire or peace negotiations remain on track, we expect that CBRT will be able to resume easing cycle in the coming period. Let me take you through the highlights. Throughout the quarter, we have witnessed the stabilization of the funding costs where it can be assumed that deposit rates have reached a plateau. The asset repricing is still an ongoing process which will provide further support to margin improvement. Fee income performance was once again remarkable, and we posted the highest quarterly increase among our peers. We believe, as a result, our strong positioning in this area will be sustained in the coming period. Asset quality indicators were intact. Both the NPL ratio and the net cost of risk remained within our guided levels. Last but not least, our capital and liquidity positions were maintained at solid levels. Here I would like to point out that, as you might have already seen in our public announcement, we have obtained the BRSA's approval to transition to the internal ratings-based approach. As of the next quarter, we will be disclosing our capital ratios in compliance with internal ratings-based approach, which is anticipated to provide further uplift to our capital ratios going forward. We will share the specific details in the relevant slides. Turning to the major P&L items. As a result of elevated funding costs, swap adjusted net interest income declined quarterly while posting a 181% year-on-year increase on a cumulative basis. Fee performance was once again strong, with year-on-year growth of 40% in line with our guidance. Our diversified fee base helped us achieve this outcome, payment systems, asset management, and bank assurance all supporting the annual increase. Annual OpEx increase moderated to 65% on a year-over-year basis from 70% in Q1. Subsidiary income continued to contribute steadily to the bottom line, up around 25% in the quarter. In the first half, return on equity was 14%, while return on tangible equity stood at 17%. Going forward, profitability ratios will strengthen as NIM recovers and core banking income gains momentum. Accordingly, we expect the year-end return on equity will increase to 20% and return on tangible equity to around 25%. I leave the floor to Nilgün for the details of the performance. Thank you, Ebru. Welcome all, and thank you for joining our webcast. In this slide, you can see the composition of our balance sheet. As of the end of first half, loan book continued to make up more than half of total assets, while share of the securities portfolios stood at around 17%. Consistent with our lending strategies, TL loans account for 65% of the book against 35% in FX. Within securities, TL share stands at 70% and FX at 30%. Moving on to the next page. In the second quarter, TL loans grew by 6.3%, bringing year-to-date growth to over 14%, in line with our full- year guidance of around mid-30s. During this period, while maintaining our focus on productive segments where our expertise and tailored solutions differentiate us, lending growth was broad based across the portfolio, reflecting our strategy of being the main bank of our customers. On a year-to-date basis, retail loans grew by 16%, while TL non-retail loans posted a 12% increase. FX lending was 2.2% year-to-date, in line with our projections. On the securities side, in the second quarter, besides the shorter term fixed bonds, floating rate notes, mainly TLREF ones, have been our primary preference. All in all, we believe that under current market dynamics, around 54% of floating rate composition will continue to contribute to our margin progress. During the period, the income contribution of CPI linkers stood at around TRY 12 billion, indicating a moderate increase compared to the previous quarter. Turning to the funding mix, deposits remained as our primary source of funding, accounting for 67% of total liabilities and close to three quarters of our funding base. Our deposit base reached TRY 3.4 trillion over the quarter, proving our leading position among private banks in total deposits. As for the currency composition, TL share rose to 57% from 55% at the end of March. Beyond deposits, we continue to strengthen our presence in capital markets and to make use of alternative external funding opportunities in line with our strategy of diversifying our wholesale funding sources and extending the maturity profile of our liabilities. In this period, we have successfully closed our $1.3 billion equivalent sustainable syndicated facility with a one-year tenor and continued issuances under our GMTN program with a sustainability focus. Additionally, in July, we successfully executed a $500 million 12-Year Non-Call 7 Tier 2 Eurobond issuance, marking the longest tenor Tier 2 market transaction across the CEEMEA region. We maintained our concentration on widespread, small ticket, granular deposit base. TL deposits grew by around 8% over the quarter, which brings the year-to-date increase to 11.4%. On the FX side, deposits declined by around 6% in the quarter. Our demand deposit base continues to rank first among private banks. As of the end of the second quarter, 43% of our deposits is comprised of demand deposits, providing substantial support to our funding cost base. Both TL and FX demand deposit shares were slightly higher than the previous quarter, nearly at 16% and 78%, respectively. In terms of composition, the retail share of our deposit base increased in the quarter, reflecting our continued focus on granularity. On the next page, we have the spread and net interest margin evolution. In March, at the initial phase of geopolitical tensions for defending our NIM under the uncertainty of the duration of the conflict, we relied more on swap and repo funding, which carried lower costs relative to marginal deposits. As a result, deposit costs were not significantly affected in the first quarter. However, as geopolitical risks proved persistent in the second quarter, deposit costs gradually went up inevitably. All in all, swap adjusted net interest income grew by 181% compared to the same period of previous year, while it came down quarterly. Nevertheless, swap adjusted net interest margin has been kept around 3% for the first half. Going forward, even with the assumption that interest rates will stay at their existing levels as cost increase being fully reflected to the deposit base, several factors are at play to support margin evolution simultaneously. Securities book was already contributing, as mentioned. On top of that, upward pricing adjustment of loans will become more visible as the repricing progresses. Taking into account that we haven't observed any easing on the monetary policy stance, coupled with ongoing geopolitical tension, we are revising our swap adjusted net interest margin guidance for 2026 to the range of 3.2%-3.4%. Needless to say that this indicates a delay rather than a disruption in the expected margin trajectory, which would resume into 2027 in line with the ongoing disinflation process. Moving on with net fees and commissions, fee income grew to 39.4% year-on-year in the first half, in line with our full- year guidance. Quarterly increase was remarkable at 19%, highest level among peers. All major fee lines contributed to growth. Payment systems continued to account for the highest portion of our fee base at 68%, growing 40% annually. Asset management stands out with 70% growth, supported by remarkable annual expansion in assets under management. Bank assurance grew 55%, while lending related fees and money transfers contributed 21% and 25% respectively. The strength in asset management is closely tied to our digital reach, powered by a massive digital footprint of 16 million customers, 97% of all non-branch transactions, and 80% of our commission revenue from digital channels is generated through İşCep. We expect to sustain this momentum going forward by leveraging our digital channels and continuing to improve the overall customer experience. Year-on-year OpEx growth stood at around 65% in the first half, while fee to OpEx ratio increased to 83% in Q2. As seasonality continues to smooth out for the remainder of the year, we see ourselves converging to the full- year guidance of mid-40s. Turning to asset quality, the trajectory was broadly stable in the second quarter, with key indicators generally tracking as expected. Compared with the previous quarter, net NPL formation rate was largely steady. On the other hand, collection rate remained robust at 20%, and the NPL ratio was 3.8% as of the end of June. Quarterly cost of risk was at 237 basis points, bringing the first half figure to 222 basis points within our guidance level. Coverage ratios remained solid, with the total coverage ratio for the loan book rising to 4.1%, indicating the highest level among peers. Overall, the portfolio continued to perform in line with our budget expectations. We are confident with respect to our full- year guidance of an NPL ratio of around 4% and the net cost of risk below 250 basis points. Next page shows the capitalization levels. At the end of June, our capital adequacy ratio increased to 15.4%, and Common Equity Tier 1 rose to 12.1%. As we have mentioned, starting from next quarter, we will be disclosing our capital ratios in compliance with the IRB approach in the calculation of credit risk. We expect the optimization that will be derived from this methodology to provide further support to our capitalization levels. If calculated with this approach for June figures, IRB approach would have delivered an impact of 190 basis points on our capital adequacy ratio and 220 basis points on our Common Equity Tier 1 ratio. Also, our July Tier 2 issuance will provide a positive impact of around 78 basis points on capital adequacy ratio. Sensitivity of our capital adequacy ratio to a 10% depreciation in TL is around 25 basis points, while sensitivity to 100 basis points increase in TL interest rates is around 5 basis points. Before moving to Q&A, we would like to touch upon our revised guidance. As we have mentioned, as a result of the delay that funding dynamics imposed on the improvement of net interest margin this year, we revise our 2026 guidance to 3.2%-3.4%, with an expected recovery trajectory to continue into the next year. In parallel with this, for 2026, we update our return on equity expectation to 20% and return on tangible equity expectation to 25% respectively. This concludes our presentation. Now we can open the floor for your questions. At the moment, as far as I can see, there are no audio questions. We have a couple of written questions, though, from Tomasz Noetzel, Bloomberg Intelligence. The first question is, could you please discuss rate and CPI assumptions in your guidance, and what's your view on 2027? For this year, our year-end CPI assumption is around 30%, and the policy rate could come down to 36% or more flattish, I can say. Of course, the trajectory of the inflation going forward will be mostly dependent on the energy and food prices. Going forward for the year 2027, although we have not budgeted yet, our preliminary expectations is the CPI could come down to 25% levels. In this respect, if the case goes like this, we can expect the policy rate to come down just below of 30% levels, somewhere around 28%-29%. As I said, these are not official expectations at the moment, but as a preliminary assumption, I can give those levels to you. Moving with Tomas' second question. If the one-week repo was to stay at 37%, what would be your NIM? I do understand the question, saying that the average cost of funding coming down to 37% levels, the policy rate and the average cost of funding will be at the same levels. Assuming the question is like that, I can say that our NIM guidance levels will be in range, which we have set 3.2%-3.4% at the moment. We have a question from [Ozan Evrenoglu, Union Company]. [Ozan], please unmute yourself and then ask your question. Thank you. I thank you for the presentation. I am looking at your profit and loss, I see the trading line weaker quarter-over-quarter, Also other operating profits surprise me on the downside. Could you give some more color as to what is going on? Thank you. In the second quarter, when we look to the whole trading line, as you can guess that the second quarter we benefited from the comparatively lower cost of swap funding, therefore the volumes and the cost rose. Of course, these are already reflected to our swap-adjusted net interest margin. On the FX trading side, we are continue to use the market opportunities. Of course, it is mark-to-market evaluation effects are also having a reflection. I can say that when we look to the whole first half year, it is we are just having a flattish trading income excluding the swap cost. Thank you very much. Also, the presentation, I saw the pension expense as well. Could you give some color onto that, too? First of all, on the other operating income, I think that was your first question. As you know, there is seasonality on the other operating income due to the reversals recorded in the first quarter, which are primarily about the collections. That's also reflected in the seasonality in the second quarter as well. With regards to the pension funds provisions, we have an actuarial assessment in the pension fund, and we accordingly set aside provisions every other quarter, and this quarter it was around TRY 1.7 billion. Thank you very much. Well, we have another question from Ashwath P.T., Goldman Sachs. Ash, please unmute yourself and ask your question. Thank you. Hi. Thank you very much for the presentation. I have three questions. The first one is on the NIM. It seems on the second quarter, the exit NIM is around 2.1%, and I see in the presentation you expect it to rise sequentially into 3Q and 4Q. May I understand what are the assumptions behind the expectations for the sequential increase, starting from 3Q itself? That would be my first question. The second question is on the OpEx side. Year-on-year, for one hedge, it's up 65%, which is materially higher than the guidance range of mid-40s. Again, wanted to understand why you would still keep the guidance range at around that level. Are there some offsets that you expect in the second half of this year to bring it back down towards that guidance level? The third question I have is around the asset quality side of the business. Pleasing to see that it's still broadly in check and hasn't materially risen. Just wanted to get a bit more color regarding the particular segments where there were pressure in terms of NPL formation, whether it's SMEs or retail or both, and what the expectations or what the current state of asset quality is in so far in the quarter to date in the third quarter so far. Thank you. Thank you, Ash, for the question. I will start with the NIM part of your question. As you said, we are expecting a net interest margin widening in the coming periods. When we look to what has been realized during the second quarter and now what we are just seeing, I can say that the tension persisted, as you know, through the second quarter and even into the third quarter. CBRT has not been in a position to ease the policy rate or liquidity conditions. We expect that the touch tends to be maintained until there is a ceasefire or a comparable improvement on that front. When we look to the figures, I can say that our swap, there will be a lot more pressure coming from the cost of our deposits. The increase in the deposits cost have already been reflected in the second quarter. I can say that we reached its peak levels towards the quarter end. The funding side will stabilize from now on. On the other side, the repricing of the asset book is ongoing and will become clearly visible from the third quarter onwards. On this basis, we expect the improvement trend to continue through the remainder of the year without needing to rely on rate cuts. A return to more normal conditions and resumption of the easing cycle that would follow would provide additional support to this outlook. I can say that we expect net interest margin to increase gradually over the final two quarters. I can say that under this assumption, as you know, our reflection of the policy rate is returning back to the average cost of funding, returning back to the policy rate of 37%. If any rate cut comes, it would be toward the end of the year, it has not a big effect from now on. It is a more conservative way of our assumption for the NIM trajectory, I can say. On the OpEx question, yes, it's increased by 65% in the first half. Our guidance of mid-40s of OpEx growth was based on two main assumptions, as you can remember in the start of the year, the collective bargaining agreement, and more importantly, a deliberate increase in business development spending. We have also shared a waterfall analysis of the OpEx in our slides, which you can also check. Those are after several years of maintaining a lean cost base. Salary promotions, customer acquisition campaigns are all planned and budgeted according to the start of the year. The increase was primarily driven by the non-HR expenses. The share of business development expenses increased by 4 percentage points to 27%. As we approach the year-end, it will be close to 30% as we calculated. As you know, the OpEx item is a fully controlled item, and there are base effects from last year in last quarter of the 2025. We will see its approach to our guided levels of mid-40s by the year-end. We are very confident about it. On the asset quality side, for 2026, we guided for an NPL ratio of around 4%, including the NPL sales, and net cost of risk below 250 basis points, which we are in line with. In the first half, inflows and collections did not diverge from our budget assumptions. Retail inflows continued, and the pace of SME inflows moderated to some extent. Overall, the trajectory was within the range of our expectations, and they remained manageable. We do not foresee any large ticket additions in the pipeline that would materially alter the outlook. Also, collection performance, on the other hand, is a key strength, with our collection rate continuing to be one of the highest among the peer group. NPL sales are also another part of our strategy, and as part of a broader toolkit. The amount of portfolio sold in the first half is about TRY 8 billion, and we may undertake some additional sales during the remainder of the year. That said, portfolio sales are supplementary to our core approach. We do not see any upside risks to our guidance. We expect an NPL ratio of around 4%, including the NPL sales, and net cost of risk below 250 basis points. Thank you very much. We have a few more written questions. I believe some of them have already been answered, but let's go over them together. Valentina Stoykova writes, can you please explain how do you see your NII and marginal outlook developing in the next two quarters and first half 2027? I think 2027. From the net interest margin evolution, I can give roughly how it will evolve. We are expecting around at least 50 basis points increase in the third quarter, and at least 100 basis points increase in the fourth quarter, I can say as a bottom- line. Okay. We have a couple of IRB questions from Valentina again, from BNP Paribas. Mustafa Kemal Karaköse says. Basically, the questions are focusing on where the positive impact on capital ratios will come from. Is this a one-off benefit or is it sustainable? Basically, these are the questions. Thank you for the question. Maybe I should just give a very general framework of the IRB approach. Under the new framework, internal models will be used to estimate risk parameters in the corporate and retail portfolios. The models will also be embedded in our credit approval, pricing, and capital planning processes. As of June 2026, as we have already shown on our presentation, the IRB approach will add 220 basis points to our CET1 ratio and around 230 basis points to Tier 1 ratio. Again, on the capital adequacy ratio, we are expecting addition of 190 basis points. It is coming from the, as I said, the internal models that will be used to estimate risk parameters in the corporate and retail portfolios, I can say. By each quarter, the calculations will be done accordingly. Okay. Our only remaining question is from Hakan Aydoğan, Ak Yatırım. Can you briefly discuss dynamics of your trading income generation in second quarter 2026? Can you give a guidance on the progress of this line in the second half of the year? I guess this has already been discussed. Right. Maybe just for going forward, I can say that excluding swap trading, we can just assume it as a flattish. I think Mustafa Kemal Karaköse from BNP Paribas also have an audio question. Mustafa, can you unmute yourself, please? Hi. Can you hear us? We can't hear you. I think there's a problem with the voice. Let's follow up after the call, Mustafa. Okay. If we can. I think we do not have any remaining questions. I'm handing over to our presenters for closing remarks. Thank you very much for your participation. Regarding the details, please stay in touch. Looking forward to seeing you all in person soon. Have a nice day going forward.