Hello, everyone. This is Ebru Guvenir speaking, Head of IR and Sustainability at Akbank. I'd like to thank you all, first of all, for joining to hear about our second quarter performance. I hope everyone is well. Today, I have with me Turker, our CFO, and Şebnem, our head of Treasury, and Gulce, as well as our other IR team members, Cankat and Bahçem as well. Before moving on to our solid second quarter results in detail, I would like to share some highlights regarding the operating environment. Since our last call, global inflationary pressures have eased somewhat, but core inflation also proved to be sticky at elevated levels. On the other hand, labor markets remain strong, and economic activity, particularly in services, defied recession expectations. The likelihood of a recession in U.S. has been revised downwards by various institutions.
Following March and April, financial stability concerns have become more muted, and the prospects for advanced economy policy rates have readjusted towards the tight for longer phenomena, as was the case in February. When turning back to the domestic economy, the adverse impact of the earthquake on production and spending proved temporary. While the COVID costs will continue to shape fiscal balances, economic growth, and inflation in the medium term. Given the recently introduced fiscal consolidation measures with the broad-based increase in taxes and the tightening in quantitative loan policies, we believe the economy will be steered towards a rebalancing path regarding the pace and composition of aggregate demand. We contemplate a soft landing scenario for the second half of the year and project the GDP growth to be around 4% for the full year.
The policy actions towards rebalancing, along with the considerable adjustment in exchange rates, are expected to facilitate an improvement in the current account balance, which will help mitigate the external financing needs for the rest of the year. Nevertheless, inflation pressures remain for the rest of the year as well, with the recent developments on exchange rates and adjustments in taxes and administrative prices and the wage increases. Therefore, annual inflation most probably troughs at 38% in June. We project annual consumer inflation to be at the high 50s by year-end. With the elections behind, there has been a policy shift towards normalization in central bank policy rates, as well as the existing regulatory environment. The easing of the TL deposit ratio and the very recent adjustments in loan rate caps multipliers is expected to support margins, which were eroded in the second quarter of the year.
Despite these challenges, banks remain healthy and resilient with solid capital buffers and liquidity. Moving on to Akbank's strategic and agile balance sheet achievements. We continue to have a superior capital buffers with our newly issued July Tier 2 actually, our capital adequacy ratio would even be higher at 17.8%. While growing, key focus remained on keeping our balance sheet intact by avoiding maturity mismatch and keeping long duration, fixed rate bond purchases at minimum levels. Our strategy resulted in a total size of fixed rate bond purchases for CBRT pledge to be limited at only 2% of our total assets, which has been the lowest among peers. Regards to the regulations, banks have implemented different strategies, making short-term cost with evolution and growth trend comparison very difficult.
With the latest normalization steps of this CBRT, going forward, we believe comparability will also be simplified. Due to rising TL in time deposit costs, avoiding fixed rate bond purchases had some negative impact on our NIM, which is obviously temporary. We made a choice for long-term versus short-term profitability and protected our capital for future profitable growth. I am very happy to share that we have already started to see improvement in our marginal NIM. While growing, we continue to apply prudent risk management and build provisions. Thanks to our solid risk approach, our Stage 2 plus Stage three loans in total is limited to only 8.7%, and both have strong coverages, actually, at all-time high. As for liquidity, we feel very comfortable on both TL and foreign currency.
Our low LDRs on both sides gives us a lot of ammunition for growth more than ever. Retail banking remains a strategic focus area for growth. I am happy to share that we added a solid $1.3 million net active customers year to date. This is on top of the net $2.3 million acquired last year, taking our active customer base to $12 million, up by 45% in the last one and a half years. Looks like we may have to revise up our additional $5 million target that we had shared with you earlier this year for 2025. This customer acquisition has resulted in record high market share gains across the board in consumer loans, broad-based deposit base, and demand deposits. Over the last one and a half years, while acquiring customers, we have also increased our cross-sell.
All these achievements have shown itself in fee income evolution, which continue to enhance on a quarter-on-quarter basis, resulting in our fee income market share among private banks to surge by 240 basis points just in the first five months of the year. This is the latest data available by BRSA, monthly data. The importance of especially investing through the cycles has been a key driver in this performance. We ended the quarter with a record TRY 20 billion 307 million net income, up by an eye-catching 90% quarter-on-quarter, resulting in a solid 5.8% ROA and 50.3% ROE.
This takes our first half net income to a robust TRY 31 billion, up by 47% year-on-year, with an ROA of 4.7% and ROE of 39%, which is well ahead of our full year guidance. Buffers remain for both ROA and ROE, as we use 40% for our CPI linker valuation. Our strong momentum in customer acquisition has enhanced our quarterly fee income, up by quarter-on-quarter 34%, supporting our core revenue generation. Another strong muscle of the bank has been our treasury management, which has always demonstrated capability in generating high returns. This quarter is no exception. With the agility and balance sheet management, timely hedges, and strong customer-related business, we leveraged our exquisite treasury management to further boost our net income. Our customer-centric organization, sound balance sheet management, and significant excess capital, puts us in a position of strength.
Now moving on to key drivers of our solid first half performance in more detail. Our TL loans were up by 23% year to date, where our focus remained on maturity mismatch and lucrative small tickets. The main contributor was consumer loans, up by 50% year to date, as the bank's motivation in high-yielding small tickets continues at full pace. This motivation has resulted in a record high and broad-based 270 basis point market share gain among private banks in consumer loans. This is on top of the 90 basis points gained last year. We also gained an eye-catching 90 basis points market share in consumer credit cards year to date, driven by our strong customer acquisition. In business banking, however, we temporarily failed to grow due to regulatory pricing caps. Latest normalization steps make us more comfortable to grow going forward.
This is showing itself in the latest market share gains. Thanks to our advanced analytics and excellence in AI-based loan decision systems, the probability of default of the retail loan portfolio remain at low levels while we have been growing. Our 360 degrees customer-oriented, holistic organizational structure, as well as competitive products and advanced digital solutions, will continue to be supportive factors for our growth. On the FX loan side, demand remained muted in the first half of the year, in line with our guidance. Our net FX loans were down by 1.6% to $10.5 billion as of second quarter. Moving on to the securities slide. Interest rate risk management remains in focus for our securities positioning as well.
Our total securities were up by 25% year to date, mainly led by the high-yielding TL corporate bond primary issuances, which amounted to TRY 21 billion and have an average maturity of less than 1 year. Almost half of our total securities portfolio consists of floating rates, which includes CPI linkers. As for TL securities alone, more than 70% is floating. TL fixed rate securities, excluding these corporate bond issuances, classified under fair value through other comprehensive income, or in other words, available for sale, is limited to only 5% of total securities. Also, our treasury's proactive positioning in positive-yielding CPI linkers is helping to mitigate the negative impact of inflation. Our CPI linker portfolio now stands at TRY 120 billion, which equates to 71% of our equity or 8% of our total assets.
As shared earlier, buffer remains with the 40% valuation that we are using for the CPI linkers, and our October to October inflation expectation, for now, is actually over 50%. Every 1% CPI has TRY 650 million net income, 7 basis points NII, and 40 basis points ROE contribution on a full year basis. As shared in several occasions, our foreign currency securities, which make up around 40% of the total, were timely hedged, like mainly 2 years ago, against Fed rate hikes. Having met the 60% TL deposits in total as of February, we have been able to manage the regulatory fixed rate securities portfolio around only 2% of our total assets, which has actually been well below our peers.
Similar to first quarter, we continued with high yielding, averaging around 33% corporate bonds at primary issuances, and moreover, granted mainly TL-linked index loans with significant positive spreads. As a result, we maintain our leading position in these high-yielding corporate bonds, which stand at TRY 21 billion and around 1.5% of our total assets, and this strategy mitigates some of the negative impact of the lower-yielding regulatory fixed rate bonds. For optimization purposes, switch transactions have been executed by selling bonds with higher market prices to CBRT and replacing them with higher-yielding securities, mainly through treasury auctions. As for our clean trading line, which boosted our bottom line, many factors contributed.
Namely, broad-based customer business through all channels in both FX trading and rates due to widened spreads, proactive positioning of balance sheet hedges, as well as the trading team's ability to leverage any arbitrage opportunities in the market. As we have demonstrated in the past quarters, over and over again, we have confidence in delivering solid performance in the trading line going forward. Thanks to the strong looks of the bank, we were able to mitigate the pressure on profitability due to regulatory limitations suppressing NIM. On the funding side, we maintain our focus on well-diversified and disciplined funding mix. Deposits continue to be our main source of funding, with 66% share in total liabilities.
Our total TL deposits were up by 39% year-to-date, while our sticky low-cost TL time deposits surged by 54% in the same period, with the share in TL time deposits standing a solid 65%. Our zero-cost TL demand deposits were also up by an outstanding 36% year-to-date, respectively. Thanks to our sound customer franchise and our success in customer acquisition, our market share in widespread consumer-only TL deposits among private banks has increased significantly over the last one and a half years. Especially, worth to underline, our 170 basis point market share gain in TL time deposits, which support our small to key deposit base. Our market share in demand deposits among private banks also increased by 90 basis points, while our commercial demand deposit market share increased by 220 basis points in the same period.
On the regulatory side, as I shared earlier, the TL share in total deposits is about 60% since February. ESG remains as a key priority in wholesale funding, reaching 57% of the outstanding, including our recent Tier 2 issuance. Our $500 million social syndicated loan in April, which is a first in Turkey, will be used to support the trade finance transactions of our customers affected by the earthquake. We just completed a $300 million sustainable and Gender Tier-two issuance this week. Thanks to the joint efforts of three IFIs based in different jurisdictions from Asia to U.S., this marks the issuance of the first Gender Tier-2 in the world, and also supports our green SME and commercial clients through our sustainability strategy and recently enhanced Sustainable Finance Framework.
Our foreign currency LCR, when adjusted for our strategic three-month swap positioning, actually, which were not included in this calculation, would be above 400%, similar to our first quarter LCR. Moving on to the NIM. We ended the first half of the year with 4.3% NIM, in line with our guidance set at the beginning of the year. During the first half, regulations supporting liberalization strategy have led for deposit costs to rise significantly in the sector, while most of the lending yields have been capped. This resulted in a notable decline on TL core spreads. Our management's focus remained on maintaining low maturity mismatch. We proactively comply with the regulations in order to keep the regulatory fixed-rate bond purchases at low levels. Our balance sheet is strategically designed for a quick recovery in core spreads.
We have a sizable TLREF-indexed loan portfolio with high spreads, as well as overdraft loans, which has already started to reprice after CBRT's rate hikes. Thanks to this positioning, around 80% of our total TL loans will either reprice or mature until year-end, both of which within the next 3 months. Our treasury has timely locked in three-month swaps ahead of the rate hike cycle, which will be supportive for NIM evolution going forward. I can comfortably share that marginal NIM bottomed out in the beginning of the 3rd quarter, and as I shared earlier, there are still buffers remaining because of CPI and inflation valuation. Going forward, thanks to agile ALM, improving and proactive maturity mismatch management, as well as our solid customer deposit franchise, we remain confident in our full-year NIM guidance.
I mentioned earlier, but just to share a few more numbers, our momentum in customer acquisition continues at full pace. Our active customer base reached 12 million, up 45% in the last 1.5 years. Similar to first quarter, 60% of our new-to-bank customers were acquired via digital onboarding, underlying the strength of our digital capabilities. We have further penetrated into demand deposits and the daily cash flows of our customers by almost doubling salary and pension customers over the last 1.5 years. We continue to leverage digital onboarding and holistically revamping our value propositions also for our young customers. Our active product portfolio, which is a function of active customer base and average cross-sell per customers, has actually increased by 32% year-on-year, reaching all-time high. This solidifies our customer base revenue generation for the coming periods.
Our digital strategy, which is based on our customer's journey, continues to show in the numbers. We have reached 10 million customers, up by over 51% over the last one and a half years. A digital customer enters our mobile app 31x a month, so more than once a day, supporting sustainable fee income. On the commission revenue side, we further extended our outstanding performance across the board. Our net fees and commission income was up by an eye-catching 154% year-over-year, and 34% quarter-over-quarter. This is well ahead of our full year guidance of around 60%, indicating a significant upside for the year.... All business lines continue to contribute positively, underlying the sustainability of our fee income generation going forward.
As I shared earlier, more importantly, it is worth to underline that we have gained 240 basis point market share among private banks, according to the latest BRSA monthly data as of May. On to the OpEx side. Challenges remain on the OpEx. Our OpEx was actually down on a quarterly basis by 2%, but was up on a yearly basis when adjusted for the one-offs of the earthquake to about 155%. However, our low OpEx base does provide leverage and gives us significant competitive advantage and obviously a lot more flexibility during an inflationary environment. Obviously, cost discipline will also continue. As proof, you can see here that our cost-income ratio improved to 32% despite the inflationary environment. Moving on to asset quality.
Our loan portfolio continues to perform well, with continuation of strong repayment performance and almost no net inflow into Stage 2, when excluded for currency impacts and provisions, as you know, for the currency side, are fully hedged. As for Stage 3, collection performance remained robust and broad-based, surpassing new NPL inflows, resulting in negative net new NPL evolution in the first quarter, in the second quarter of the year. Hence, we completed the quarter with a further 30 basis point improvement in NPL ratio to 2.1%, which is in line with our full year guidance of below 3%. Share of the Stage 2 and Stage 3 in our gross loans, which would be deemed potentially problematic, continue to be limited at 8.7% with strong coverage.
Meanwhile, all leading indicators regarding asset quality evolution remain intact, thanks to our prudent risk management and healthy loan portfolio composition. Our cost of credit evolution underlines our proactive provisioning, as well as our healthy loan portfolio composition. We ended the first half of the year at 114 basis points net cost of credit, excluding currency impact, including 20 basis points of proactive earthquake-related provisioning. Excluding our cautious provisioning for the earthquake, our net cost of credit, excluding currency, would be at 94 basis points, just in line with our full year guidance, around 100 basis points. Despite our solid loan growth, our coverage ratios have further increased significantly year to date, and an additional loan loss provision build of TRY 5.4 billion. For Stage one, our coverage ratio is at 0.8, up from 0.7.
For Stage 2 and Stage 3 loans, our coverage ratios increased more than 200 basis points year-to-date, to 18.5 and 70.1%, respectively. As for Stage 2 and Stage 3 coverage, there's a slight year-to-date decrease, given the increased level of Stage 2 loans, mostly related to the currency increase. We believe our robust provision build and solid collateral values will limit the need for unforeseen additional provisions. Our total capital, Tier one and Common Equity Tier 1 ratios without forbearances remain quite robust at 17.1 and 14.9%, respectively, despite the negative impacts that have been driving from credit growth, for example, which was 181 bps, but 121 bps of that is actually due to currency.
The Tier 2 call, which we actually did as well, which had around 81 basis points impact, negative impact. While our strong profitability also reflected onto our capital position, as our internal capital generation added a solid 186 basis points to our total capital quarter-on-quarter and reaching almost 300 basis points year-to-date. Worth to note that adjusted for the $300 million worth of Tier 2 issuance that we just completed this week, actually, or yesterday, our capital ratio would be at 17.8%. Also, please note that adjusted for the temporary risk weight increase applied by BRSA, our capital would even be 140 basis points higher at an outstanding 19.2%.
To give some sensitivity, 10% depreciation in TL results around 45 basis point decrease in our capital ratios, while impacting issues for higher amounts of changes. 100 bps increase in TL interest rates results in 7 bps decline in our solvency ratio, again, with a diminishing impact. Our sound capital buffers will continue to serve as a shield against any unprecedented challenges and volatility, but also create significant ammunition for sustainable profitable growth. On this slide, we find a summary of our solid first half performance. Though there are challenges on the OpEx side, the revenue generation capabilities of the bank, including the significant upside potential in fees, creates upside potential for our full year ROE guidance. Now, moving on to the few, actually, slides on the ESG side, and then we will open the lines for Q&A.
In first, it's actually in second quarter, we remained committed to our long-term ambition in supporting the sustainable transformation of our economy. We have provided TRY 47 billion of sustainable finance year to date, totaling the support to TRY 135 billion since the beginning of 2021. Almost 70% of our 2030 targets, which obviously shows that there could be revisions coming forward. On the ecosystem side, we also continue to contribute to the system for a more inclusive, innovative economy. We are proud to introduce our co- entrepreneurship banking solutions with a dedicated team, actually, in our SME banking division. We've designed solutions that meet both the financial and non-financial needs of the entrepreneurs with various partnerships. For more details, please do check the annex of the presentation as well as our ESG presentations on our website.
This concludes our presentation, we're now moving to the Q&A session. Please do raise your hand if you have any questions or type in the Q&A box. For those of you who are joining us through telephone, do send your questions to us by email at investor.relations@akbank.com. The first question comes from Waleed Mohsin. Waleed, please go ahead and ask your question.
Hi, good evening. Thank you much for the presentation. A few questions, please. First of all, starting with your comments on margin, which you mentioned has dropped during the quarter. If you could kindly talk about the TL deposit and TL loan spreads that you're seeing. We've been hearing that, you know, deposit costs have been coming up, coming down, so wanted to get a sense of where you are pricing your new time deposits. So that would be the first question. Secondly, you briefly touched upon it, Ebru, but if you could still perhaps elaborate a little bit more on how are you adjusting your balance sheet to some of the recent regulatory changes.
Then linked to this, my third question, which is: What are your expectations around, you know, further regulatory changes, and what part of the current regulatory setup is the most challenging for the bank? My fourth and final question, a comment, please, on the tax rate expectation for second half of this year and into 2024. Thank you.
Hi, Waleed. Maybe I can start, then maybe also Şebnem may also contribute. With regard to the latest margins on the TL side, yes, as we have also mentioned, after end of second quarter, with some simplification steps on the regulatory side, deposits costs have come down from mid-30 up to 40% levels currently to mid-20% levels lately. On the loan side, as you know, because of the rate hike and its reflection to the interest rate caps for the lending side, currently we are pricing our commercial loans at around 25% levels. Consumer loans are priced up to 40% levels, blended drops at 30% levels.
We can say new business or new marginal core spread is generated at 5% spread, excluding demand deposit impact. Also, you know, last, a few days ago, there was some additional announcements made by Central Bank. It will also create additional room for further repricing, additional repricing potential on the TL loan side. On the regulatory changes side, what we may expect, as we are also hearing from the economy team, there may be additional normalization steps coming from the special Central Bank. Actually, they have already started to simplify on the rate cap side, and also increase on the credit card interest rates, et cetera, and also simplification on the conversion requirements from FX deposits to TL deposits.
I think this will continue going forward. Maybe one question was: what is the most challenging regulation that we are having right now? I would say it is the existing, the latest conversion requirements from FX deposits to TL. Every month we have to convert at 10% from FX to TL. On the tax rate impact side, this 5% corporate tax rate increase will be reflected into third quarter figures, also going forward, we will apply it. What I can say is actually for full year ROE, this additional 5% corporate tax will have roughly 2% ROE impact for full year.
That's actually what I can say, actually, with regard to your questions, and maybe also Şebnem may add some additional details.
Maybe just a quick remark. Hi, Waleed. You had a question on the rebalancing side of the balance sheet as well. On the rebalancing side, actually, the regulation is still quite strict because there's a 3% cap on the loan growth of lots of the products, and that cap has been decreased to 2.5%, actually, very recently. So it's quite difficult to rebalance the portfolio as far as the loan portfolio is concerned. However, we still have room for improvement in the optimization side, and we believe that there might be some more changes in the regulation moving forward for the rest of the year, which might enable us to rebalance the portfolio. Currently, we are still tied to the regulations.
Got it. Thank you much. That's very helpful. One follow-up, please. On the tax side, it will not be applicable retroactively, right? For second quarter, it doesn't get impacted.[inaudible]
No, Waleed, it will like, it's retrospective as well, but we will reflect this 5%, this impact of the first half into our third quarter figures. That actually, the tax charge in third quarter will include first half as well.[inaudible]
Correct. Correct. Okay, thank you. Thank you for clarifying. Thank you much.
You're welcome.
Thank you.
Until we see some more hands risen, there actually are some questions online I'd like to ask. I see here, could you please share your views on your expectations regarding the credit developments for the next half of the year? There's a lot of asset quality questions coming up.
Credit partners.
Yes, exactly.
Yeah. Actually.
Both on growth and asset quality.
Yeah.
Mm.
On the growth side, actually, as also as Şebnem has mentioned, we have to stick to this 3% monthly growth ratio with 2.5% growth limitation on a monthly basis, which regard there are some surely exemptions. Nevertheless, even though we have it actually, we believe we can meet our full year guidance of 40%. With regard to asset quality evolution, as Ebru has also shared, also second quarter figure evolution was quite intact.
Net inflow into Stage 2 and Stage 3 was close to 0, actually, except for the currency impact, and as a result of which, actually, our Stage 2 and Stage 3 ratios have improved in the second quarter. Going forward, when we look at the latest trend, we don't expect a major change in this trend. We don't expect a significant deterioration in the asset quality, maybe which may be linked into a high inflation or higher interest rates. Nevertheless, as you know, we are continuing to book additional provisions, and we will not deviate from this strategy going forward. All in all, we are currently confident with our guidance and with our provisioning trend.
Next question comes in from Konstantin. Konstantin, please go ahead and ask your question. Konstantin?
Yes. Hello. Thanks a lot for the presentation. Thank you very much and for taking my questions. I had two quick questions that I wanted to ask. The first one, could you please comment. There has been a discussion that Turkish lira deposit rates have started to come down quite notably, and this in part related to some easing in the de-dollarization regulations from the central bank. Could you please comment what are the major steps or what specific measures have been changed, which constitute this softening of the regulation? I believe there was a discussion of that some conversion rates or targets from FX into Lira have been tweaked or changed.
What, what exactly contributed from the regulatory standpoint, to, this material drop in the Turkish lira deposit rates? The second question, going forward from now on, into the year end, what's your take, are the credit conditions going to tighten, to soften from the current levels? What, what? Because credit growth is quite constrained, as of now, so should we expect some acceleration or, how should we think about this going forward? Thank you.
Hi, Konstantin. Maybe I can start with your question regarding TL deposits. First of all, as you know, we had to meet 60% TL deposit, total deposits, ratio requirements until end of June. Now, it is down to 57%, so it is giving us some room in this respect. Secondly, the conversion ratios were from TL effectables to TL deposits, were much tighter in the past, and we had to meet these conversion ratios separately for consumer deposits and commercial deposits. Now, we are able to meet this 10% conversion ratio in total. Actually, you can again maneuver between commercial loans and consumer loans.
Rollover from existing FX protected deposit scheme is also take into consideration, so partially take into consideration in this conversion ratio calculation, and this is also taking, so, giving us some room in bringing down our deposit cost. With regards to credit conditions going forward, yes, now we currently have this 2.5% monthly growth cap on the commercial loans, except for investment loans or export type of loans. Going forward, whether these may be, there may be some relief in these ratios, you know, next year, in the first quarter, there will be municipal elections, and maybe ahead of these elections, central bank may revisit these limitations in the coming months. We'll wait and see.
This is, thank you very much. Just a quick, factual confirmation. Do this 10% conversion target, so that's the target per month, right? From FX into the Turkish lira. The level of this level was unchanged, right? 10% it was in the past, and it remained at 10%, there were some-
Well, actually, it was.[crosstalk]
Supplementary.
Actually, it was roughly. There were two ratios, actually. It was actually, there was a 10% ratio and additional 5%. Actually, in simple terms, it was 15%, and we had to meet it separately for consumer commercial. Now, it's down to 10, and rollovers are also taken into consideration. That way, actually, it is a bit easier than in the past to meet this conversion. Actually, in the past, we had to, the denominator was fixed to end of March. Now we are using always the last month's figure as the denominator.
Okay, thank you very much. Thank you. Extremely useful. Thanks a lot.
Sure.
The next question comes from Pinar Ugurlu. Pinar, you can ask your question.
Hello. Thank you very much for taking my question. I have 2 questions, really. One, you have posted some TRY 25 billion in trading gains and losses, and bulk of it, almost all of it, comes from derivatives, derivative transactions rather than FX. I would like to understand the nature of these transactions and whether this sort of phenomenal number can be repeated, if the currency rate doesn't move much, meaning that, if the Turkish lira dollar parity stays where it is it repeatable, the derivative gains? I might have missed my second question: Where do you stand on the Turkish lira deposit rate ratio on real persons and corporates? What is the current rate right now for you? I assume you're about 57%, but what's the ratio right now?
Hi, Pinar. I'll take the questions. The second one is quite straightforward. We are higher than 57%, quite comfortable on that. On the trading income side, actually, the result was not a surprise. If you look at our past performance, quarter-over-quarter, over the years, over the past 5 years, actually, we have been delivering our performance relative to our peers. This quarter was very volatile market environment, actually. When you look at the trading income, there are a variety of factors in the breakdown of the profitability. TRY 2 billion was coming from the fixed income trading, actually. The main portion was coming from FX trading and sales.
When you look at the FX trading and sales, it was coming from the client business, very well spread around all kinds of customers: corporate customers, commercial customers, retail customers, and all the channels, actually, both mobile and the branches and the treasury sales department as well. It was very well diversified. What was very lucrative is the spreads we had because of the currency volatility. On top of that, FX trading profits, we had balance sheet positioning both on the TL and the FX side. Our trading desk had very talented team looking for arbitrage opportunities, and they try to make the most of these opportunities at all times. Looking forward, moving forward, I'm pretty confident that we will again deliver strong results.
I think the past performance shows that we can deliver that.
Thank you very much. On the sort of income statement breakdown, it looks like the FX trading was actually at a loss for you, but you have posted a lot of derivatives, that are derivative trading gains. That's why I asked. I thought it was FX trading, but it's booked as a derivative.
Maybe-
Is it more like a forwards or?
Sorry. Maybe the team can turn to the next page to show the clean trading, because we, as you know, Pinar, we try to make sure that we classify it in accordance to the analyst, because it's very difficult for you to look at the overall, you know, footnotes and understand the cleaning, clean, let's say, trading income. If you look at the annex of the let's say, of our presentations and our cheat sheet, you can see here basically the details regarding the overall clean trading. Maybe, Şaban, you'd like to comment just if you want to.
Actually, Pinar, hi, this is Turker. In the BRSA format, actually, these lines of trade, affects income and derivative income and loss lines. They are actually mixing to each other. Off balance sheet, FX part of the swap is going to the FX income loss line. Therefore, actually, as Ebru has mentioned, we should refer to the presentation, investor relations presentation.
Okay. Thank you very much.
You're welcome.
You're welcome. There are a few, let's say.
... written questions that have come through. One of them is regarding the first half results indicating inflation-adjusted ROE.
yes, we are currently finalizing our first half inflation adjusted financials. What I can say is actually, based on draft calculations, our inflation-adjusted ROE for first half is at ±10% levels.
Okay. Another written question is regarding the swap cost. There seems to be a gain. Can you please specify what has happened there?
In our swap book, there are also some IRS transactions where we have a net reserve position, and this net reserve position has strengthened because of the market conditions, especially in the second quarter. Therefore, actually, this time it was a swap gain as well, not swap cost. We made this, we made also for these transactions, we made a reclassification for the first quarter. Therefore, actually, first quarter figure has also turned into a small positive figure compared to our first quarter presentation. That was just a reclassification between trading income line and the swap cost line.
Okay. Another question is regarding your full year NIM guidance, so between 4%-5%. Do you expect any fluctuations, or do you expect a stable trend for NIM for the remaining parts of the year, and hence your ROE guidance for the remaining of the year?
Yes. Actually, now in the, we are starting third quarter, from a lower net interest margin. As you know, we ended second quarter at 3. So second quarter only was 3.8. But I think all in all, also with potential adjustment to our CPI linker estimation, I think full quarterly NIM will again evolve at similar levels. So we will stick to our 4%-5% full year guidance. With regard to ROE, our latest forecast for full year showing that our profitable trend is at similar levels to the first half of the year.
We have to keep in mind that we will have to reflect this additional 5% corporate income tax for the second quarter into the third quarter. Also, it will also include a first off tax impact as well. What I can say is actually, all in all, our ROE for full year is expected to be at mid 30% levels.
Okay. Simon, next question comes from Simon.
Hi, thanks for the opportunity. Quick one from me. Sorry if I missed this, but can you tell us how much of your TL deposits are FX protected deposits? I'd just be interested in your thoughts about, you know, how you think the authorities might unwind that scheme, and when that could happen, or if you think it might happen, when it might happen.
Hi, Simon. Yeah, hi. I can maybe answer the first part. Around 55% of our TL time deposits are FX protected. Lately, maybe.
Yes. Hi, Simon,
Hi.
The FX protected deposit size has become very high. Actually, it's 3 trillion TL. Tomorrow, we are gonna have Central Bank's press conference, actually. That's gonna be the first time we're gonna see the Governor talking to the press and taking questions. That meeting will probably, we're hoping and the market is expecting, that we'll have a guidance for the next for the rest of the year, how the monetary policy is gonna evolve and how the regulations are gonna evolve moving forward. Maybe we could have a sense from that meeting. My personal belief is, we will have this FX protected deposit until the end of this year, and then we will probably have an exit plan moving forward to the next year.
What kind of rate environment do you think is needed to exit from that smoothly? Because I guess, you know...
Everything is gonna drill down to inflation levels. Probably, we might be seeing some more rate hikes, gradual rate hikes. That's the guidance we're getting, from the Central Bank. I think tomorrow we'll have more insight on these, forecasts.
Got it. Thank you. Thank you very much.
Thank you, Simon, for your question. As of now, I see that there are no further questions. I'd like to thank you all for joining us today, and if you have anything further to ask, please do reach out to our investigations team. We are more than happy to help you out. Until we see you later on in the year, I wish you all a very happy summer. Bye-bye.