Dear friends, this is Kaan speaking. Thank you for joining us. I hope you are all well. Today, we will first walk you through our financial performance, underpinned by disciplined balance sheet management, strong fee momentum, resilient capital metrics, and continued progress across our strategic priorities. Our earnings reflects not only the current operating environment, but also the structural strengths of our business model. Building on this performance, we will share our guidance for the years ahead, shaped by a prudent assessment of the operating environment. Our focus remains on risk-adjusted returns, reflecting our commitment to sustainable profitability and prudent risk management. At the same time, we will frame these near-term priorities within our three-year outlook, where we see clear opportunities to reinforce earnings durability, enhance efficiency, and deepen customer penetration.
Our direction remains centered on executing today, while positioning the bank for consistent and profitable growth over the coming years. Dear friends, before moving on to our bank, I would like to briefly touch upon the operating environment. Global financial conditions and risk appetite are expected to remain favorable for emerging markets, supported by continued Fed rate cuts, along with a tight spread and subdued commodity price environment. World growth remains resilient despite trade policy uncertainties, driven by AI and technology investments, and more supportive financial conditions. In Türkiye, domestic demand and economic activity continue to grow, albeit at a more moderate pace. Consumer inflation is on a gradual downward trend. Central Bank is expected to be attentive to inflation risk with cautious and measured rate cuts, while macroprudential regulations are set to remain in place and fiscal consolidation is underway.
Against this backdrop, we expect the banking sector's profitability to continue in a gradually improving trend, while asset quality deterioration is likely to proceed in a contained and orderly manner. Let's move on to our bank. On this slide, you can see how our core strengths have translated into tangible financial outcomes. Our strong capital position, with 16.8% total capital and 13.6% Tier 1, actively enable growth, providing the flexibility to manage the balance sheet with agility and dynamically allocate assets and liabilities across cycles. This disciplined approach is supported by prudent provisioning, with further increase in our gross coverage to 3.7%. While growing, effective risk management has kept Stage 2 + Stage 3 loans limited, below 11% of total loans, preserving earnings stability as we grow.
At the same time, operational discipline is reflected in our leading 106% fee- to- OpEx performance. As a result, we continue to deliver strong market share gains in our priority segments, such as business banking loans, where we added 100 basis points in second half of the year, while maintaining our dominant positioning in general purpose loans with over 19% market share. Supported by our continued focus on our customer acquisition and deepening relationship, we have sustained strong momentum in fee income market share, reaching 17.8% by the end of 2025. All of this position us to further scale a resilient earnings platform and unlock sustained long-term growth potential in the period ahead.
Dear friends, Akbank has made solid progress against the three-year targets we have shared with you on a regular basis. The achievements delivered to date are clear proof of what we are capable of executing going forward. This progress provides a strong and credible foundation for the next three years as we continue to build sustainable, customer-driven revenue streams. Importantly, this three-year period is not a destination, but a stepping stone, positioning us for an even stronger, more ambitious journey ahead. On this slide, we have summarized our roadmap.
Dear friends, we are committed to further strengthen our innovation capabilities by developing differentiated offerings across the group that enhance our value proposition and support scalable, AI-enabled operating models. Innovation will be accelerated by rapidly testing and scaling AI, blockchain, and hyper-personalization. We will leverage generative AI to provide proactive self-service recommendations across our channels, and equip our frontline teams with tools to provide seamless services to our customers. We aim to expand integrated solutions together with our subsidiaries and broader ecosystem that will further deepen customer engagement and unlock new scalable growth opportunities in targeted areas.
In parallel, we will continue to invest in future-ready talent to reinforce execution and sustain innovation momentum. Ongoing efficiency gains, alongside deeper customer penetration, reinforced by value chain network, will remain key priorities across our franchise. Collectively, these factors will enable the consistent delivery of return on equity above inflation on a sustainable basis starting this year. Here, we outline our financial KPIs for the next three years, translating our strategic plan into measurable targets. The strong dynamism and motivation felt across the bank at every level continues to support execution and momentum. First, over the next three years, in total business banking loans, we aim to increase our market share by another 300 basis points.
We target to grow in cash as well as non-cash loans in both Turkish lira and foreign currency. We already started to build the foundation last year by gaining 100 basis points market share in the segment during the second half of the year. Second, our ambition in consumer loans also continues. On top of last three years' market share gains of 440 basis points in consumer loans, we aim to gain further 100 basis points until 2028. Customer deposits will remain the primary source of funding for our growth, while demand deposits will continue to reinforce balance sheet strength. Accordingly, moving on to our third ambition, we aim to gain 200 basis points market share in Turkish lira demand deposits, building on top of the 240 basis points gained over the last three years.
Fourth, after achieving over 100% of fee- to- OpEx ratio, our homework is to maintain full coverage of OpEx going forward. This will support us—Just, just a second. This will support us to reach our fifth ambition, which is a cost-income ratio below 35%. These targets will feed into our leadership positioning in capital while driving solid growth, at the same time delivering a return on equity above inflation starting this year. Having navigated multiple cycles, I have full confidence in our people's capabilities and execution. I would like to sincerely thank our teams for their outstanding dedication, as well as our stakeholders for their continued trust and confidence.
I will now pass it over to Ebru to walk you through our results and guidance. Following that, to Çağrı, and I will be happy to answer any questions you may have. Thank you.
Ebru, over to you.
Thank you, Kaan. Moving further into the details, our net income up, was up by 35% year-on-year to TRY 57,224 million, resulting in an ROE of 21.5% and an ROA of 1.9% for the full year. During the same period, we achieved a solid revenue growth, up by 50% year-on-year to TRY 222,033 million, thanks to robust fee income generation and NII building momentum in the second half of the year. Our quarterly net income was up by 30% to TRY 18,317 million, leading for our quarterly ROE to show a sequential improvement to 24.9%, up from 21% in the third quarter.
The quarterly ROE improvement was underpinned by our focus on deepening client relationships and strong cross-sell execution, which continued to fuel fee income, while agile ALM and margin accretive growth has been reflected in our solid NII evolution. As we move ahead, our sustainable growth mindset, sound balance sheet, and analytical capabilities will drive further NII enhancement and anticipated rate cut cycle, leading to an ROE above inflation starting this year. Moving on to the balance sheet. Last year, our TL loan growth reached 42%, surpassing our full-year guidance of over 30%. Foreign currency loan growth of 10% also came in well above our mid- to single-digit full-year guidance. We strategically accelerated our loan growth in the second half, delivering strong market share gains in both foreign currency and TL business loans while supporting NII evolution.
To put in numbers, we captured 80 basis points market share in foreign currency loans and 110 basis points market share in TL business loans during this period among private banks. At the same time, we maintained our already solid position in consumer lending. This performance, for sure, illustrates the effectiveness of our targeted growth strategy, laying a strong foundation for our 2028 targets while preserving risk-return discipline. Moving on to securities. The share of securities in total assets remained stable around 23%, while the composition reflects our balanced approach, maximizing yields. We selectively increased foreign currency security exposure, supported by timely buildup of NIM-accretive Eurobond investments. Foreign currency securities grew by 35% year-on-year in dollar terms, lifting their share in total by 7 percentage points year-on-year to 34%.
On the TL side, we are well-positioned in long duration and higher-yielding fixed-rate securities, complemented by TLREF-indexed bond portfolio with decent spread, providing potential for further book value growth through mark-to-market gains. As highlighted before, share of our CPI linkers has been strategically reduced by 31 percentage points since 2022, reflecting a deliberate shift in portfolio composition. Active, yield-focused portfolio management has enabled timely repositioning of our securities and reinforces margin resilience going forward. On the funding side, our low TL LDR and strong deposit franchise have allowed us to optimize funding costs while selectively advancing growth. Our demand deposit share in total deposits increased by 5 percentage points year-on-year to 33%, supporting further margin improvement.
Sticky and low-cost TL time deposit share in TL time deposit remains solid at 58%. Looking ahead, our well-structured balance sheet, combined with sound deposit mix, provides a solid foundation for continued NIM enhancement. Let's move on to the P&L. As you know, our NIM had started to recover during the third quarter, thanks to improved funding dynamics. This trend was sustained during the fourth quarter, backed by disciplined balance sheet management. Our swap-adjusted NIM expanded by 40 basis points quarter-on-quarter. On a CPI-normalized basis, quarterly NIM performance was even stronger at 60 basis points. This is adjusted for the one-off valuation impact in the third quarter of the CPI.
Looking forward, our unwavering focus on profitable growth and effective funding strategies will remain key drivers, supporting the anticipated gradual NIM expansion throughout this year. Accordingly, the quarterly evolution will remain sensitive to both the pace of disinflation and also the magnitude of the rate cuts. Last year, our net fees recorded a robust growth of 64%, ending the year above our guidance of around 60%. The growth was broad-based across all business lines, reflecting strong customer engagement, continued innovation, and diversified product portfolio. Sector-wide fees have benefited from the high interest rate environment.
However, our diversified fee structure and growth in customer base positions us well to mitigate the cyclicality of the payment system fees in the lower interest rate environment. Cost increase remained well below, actually well below our guidance and also was contained last year, while it was up by, on a year-over-year basis at 33%, while our guidance is at 40%. Having stabilized cost increase around inflation levels, we had the lowest OpEx base among all of our peers as of third quarter last year.
And as you know, we're the first one to announce, so we will be keeping a close eye on this particular parameter. This is a reflection of our disciplined cost management and operational efficiency. However, our full-year cost-to-income ratio remained around 50%, reflecting continued pressure on NII. As for this year, improving NII dynamics, along with resilient fee income base, are expected to drive a gradual improvement in cost-to-income ratio toward low 40s. As Kaan just shared, our mid- to long-term ambition remains unchanged, with cost-to-income ratio targeted below 35% by 2028. Cost discipline embedded across our workforce and branch network, alongside a targeted application of AI to enhance efficiency and scalability, will all be instrumental in achieving our targets.
On that note, let's now move on to our superior fee coverage of OpEx. Starting from an already high level, our broader operating footprint and deeper customer penetration, alongside disciplined cost management, translated into a stronger fee coverage. Our strong momentum in fees across all business lines led for our market share gain among private banks to advance by 1.4 percentage points to 17.8% last year. More importantly, the total market share gain in fees among private banks since end of 2022 has reached 3.9 percentage points. And at the same time, the fee-to-OpEx ratio has increased by 20 percentage points to 106% in just one year. With full coverage of OpEx now firmly in place, our aim is to sustain this level through this year and beyond.
Let's move on to asset quality. Retail-led NPL inflows continue to be the persistent trend across the sector as a reflection of the macro environment. Despite this backdrop, our NPL market share among private banks has continued to decline, extending the trend observed since early 2025, with a further 150 basis point improvement in the last quarter. The share of Stage 2 + Stage 3 loans remains contained at 10.8% of gross loans, underscoring the sound quality of our portfolio. Please also note that the restructured loans represents only 3.4% of the total loan portfolio. Meanwhile, our share in bankruptcy applications stands at less than 4%, which is well below our natural market share, mirroring disciplined underwriting and proactive risk management. Supported by prudent provisioning, our total provisions increased to nearly TRY 71 billion, reflecting the continued build-up of our reserve buffers.
As a result, our coverage ratios remain solid, with gross coverage at 3.7% and Stage 2 + Stage 3 coverage at 21%--28.1%, reinforcing balance sheet resilience. Excluding currency impact, net cost of credit ended the year at 214 basis points, slightly above our guidance, while NPL ratio was fully in line at 3.4%. So looking ahead, as we continue to grow, our disciplined risk framework, supported by advanced analytics, AI-driven credit decisions in retail, together with the diligent tracking of our corporate and commercial loan portfolio, all position us well to preserve asset quality and contain potential cost of risk pressure for this year.
Moving on to capital. Our total capital, Tier 1 and Common Equity Tier 1 ratios remain robust at 16.8%, 13.6%, and 12.5%, excluding the regulatory forbearances. This reflects prudent capital allocation while driving profitable growth. As for sensitivity, 10% depreciation in TL results in around 30 basis point decrease in our capital ratios, while the impact diminishes for larger FX moves. Similarly, 10 basis point increase in TL interest rates would lead to an impact of approximately 10 basis points on our solvency ratios, demonstrating limited sensitivity and the strength of our capital. Overall, our strong capital buffers continue to anchor balance sheet resilience and support long-term profitable growth.
Before moving on to Q&A, I'd like to share a few highlights regarding our non-financial performance. As highlighted in our ESG video at the beginning of this call, we continue to advance in our sustainable action plan with measurable results. As a result of our non-stop dedication, we are happy to be among one of the few institutions globally to receive CDP's highest A rating in climate change, water security, and forests, reinforcing our leadership and sustainability. In this context, we are very excited and proud that COP 31 will be taking place in Türkiye this year. It reflects Türkiye's growing commitment to climate action and highlights the increasing importance of sustainable finance and climate risk management for our region.
We will continue to support the transition to a low-carbon and inclusive economy in line with our long-term objectives. This slide highlights the snapshot of our 2025 financial performance, and we have shared throughout the whole presentation. But a last note, as we have shared, the main deviation was related to the pressure on net interest margin, and this was due to the tighter-than-expected monetary policy and the divergence between deposit costs and policy rate.
Last but not least, our 2026 guidance. Looking forward, as shared at the beginning of our presentation, we are committed to strengthening further our already robust positioning in consumer loans while accelerating market share gains in Turkish lira and foreign currency business loans, including non-cash loans. Our focused growth and funding adaptability will sustain further NIM improvement this year, and accordingly, our net interest income will be supported by both volume growth and further improvement in margins through ongoing disinflation, obviously. Our resilient fee engine, combined with the cost discipline, will contribute to the full coverage of OpEx.
Improving net interest margin or NII dynamics and resilient fee income base is expected to translate into a gradual improvement in cost-income ratio towards the low 40s. Asset quality will continue to be a priority area in the sector, while our disciplined risk framework will limit cost pressure, leaving flattish cost of credit trend for this year. To sum up, our well-structured balance sheet, along with risk-return-focused growth, is to support further NII enhancement in the anticipated rate cut cycle, leading to an ROE above inflation starting this year. This concludes our presentation, and we can now move on to the Q&A session. Please, as always, raise your hand or type your question in the Q&A box. And for those of you who are calling us by telephone, please send your questions by email to investor.relations@akbank.com.
David, please go ahead and ask your question. The first question comes from David Taranto from Bank of America.
Good afternoon. Thanks for taking my questions. The first one is about the growth. Historically, Akbank's market share was significantly higher. I remember back in 2007, 2008, it was close to 12%, but the bank deliberately gave away market share until 2020, at some point falling towards 7%. And in the last few years, you have reaccelerated the growth, regained market share across multiple segments, and that strategy is continuing according to the presentation. So my question is, what do you consider to be the natural market share for Akbank in the medium term? And B, assuming a normalized regulatory environment, i.e., relaxation of growth caps, when should we realistically expect Akbank to converge towards that natural market share? And second question is about the margins.
Historical NIM averaged around 4%, and your 2026 outlook points to return toward these normalized levels. However, as rate cycle, rate cut cycle progresses, one would expect NIM to temporarily exceed the cycle averages. Even so, macroprudential measures limit how far this can go. So, what do you see as the main upside and downside risk to your NIM guidance for this year? And, how do you expect deposit rates to move relative to the policy rate, given the constraints by the macroprudential framework? And finally, on costs, Akbank kept the cost growth relatively controlled versus sector in the past few years, but high inflation and the regulatory pressure still pushed the nominal cost base meaningfully higher.
You point to medium-term cost-to-income target of low-mid 30% levels, and I was wondering, what are the key operational levers and timeline to move towards that cost of risk levels? The reason why I'm asking is, in a declining inflation environment, at some point, revenue growth is going to decelerate. Not maybe for this year or perhaps next year, but eventually. So reducing cost-income ratio could become a bit more challenging in this environment. So would appreciate to hear your plans to limit the cost growth. And maybe one more thing, what are your macro expectations for 2026, please? Thank you.
Hi, David, this is Türker. Thank you very much. I'll try to answer your questions, please, but at the end of my answer, if I missed anything, please ask again. To start with the market share evolution, as you're right, like in the past, like maybe like 15 years ago, we used to have like about 10% market share in the sector, in some of the products. But as you may know, like in the last 10 years, there have been some periods where actually the state banks actually have acquired some market share from the private sector. So actually, that's why actually now we are seeing ourselves below 10% threshold.
But definitely as Ebru and Kaan have shared, like we have like the ambition of growing the bank in the upcoming years as well. So, therefore, like, if we can achieve these market share gains as we have, like, put onto the table on the, especially on the business, lending side, as well as further increasing our, market positioning in, on the consumer side, I would assume that everything evolves as we're expecting. We should, again, see 10% levels, maybe not for all of the products, because maybe we will deliberately grow the, grow the bank in some areas, and maybe we will be more, slower in some areas. It will--
The time will show this based on our macro expectations, but definitely the aim of the bank is leveraging our superior capital and growing the bank, and again, seeing that type of market share levels within the sector. With regards to our NIM trajectory, actually, for full year, as Ebru has shared, we are expecting like 4% of net interest margin, but we will be observing a gradual improvement in every quarter. So probably, so we will be, it's very likely that we, we will see the highest NIM towards the end of the year. That would therefore, actually also support our NIM evolution for upcoming year.
Maybe in long term, maybe it's, maybe it's too early to talk about, but in a normalized world, maybe at a, with a, with an inflation of level of ±10%, let's say, that 4% is the normalized level, but definitely going into 2026, we may, expect a higher net interest margin. And as I just repeat, a, gradual improvement in net interest margin. What may be the, like, upsides, to this NIM trajectory? As we have shared at, at the very beginning of our presentation, our, like, base case scenario for the macro outlook is like, 22%-25% year-end inflation, with a policy rate of 28%-31%, so with a really sizable real rate.
When we made, when we prepared as guidance, we were more on the more maybe on the conservative end, i.e., maybe 24%-25% year-end inflation with a policy rate of roughly maybe 30%-31%. If this inflation trend evolves like better than this, like bringing the year-end inflation to the level of maybe low twenties or close to 20% or 22%-20%, and enabling a policy rate coming down to less than 28%, something like that, that will definitely bring an upside. But having said that, maybe also another thing which will be also important to monitor, that was also one of your questions, like the deposit rates versus policy rates.
As we've seen in the last probably three, four months after the phasing out of the KKM scheme, because up until that time when we had the KKM in the system, FX-protected deposit scheme, the sector was. It was easier for the sector to meet this TL deposit ratio requirement of the central bank. But once this KKM scheme has phased out, it became more challenging, and that's why actually, especially starting from fourth quarter, middle fourth quarter or fourth quarter onwards, we've seen a divergence between the deposit rates and the policy rate. Maybe just to give an example, towards the end of the year and beginning of this year, like, we've seen maximum deposit rates going up to 41% versus policy rate of 38%.
That's why Central Bank has made a recalibration, like, a few weeks ago, like extending the reporting period for TL deposit ratio requirement, and also, like, giving some buffers, so to manage the deposits rates. But to be frank with you, so far there is still some gap. Maybe not like 41%, but still we are observing rates like close to 40%. So still this divergence is to be observed in the market. So we'll see actually how it's going to evolve, whether we may see further calibration from Central Bank. These will be, like, important factors to observe in the coming period.
Maybe final remark with regard to your question on the OpEx. I think at Akbank, we've done a quite, like, good job this year, actually. You know, when you look at 2024 or 2023, like OpEx growth was way above the inflation, so there was a divergence. There were different factors to that, so inflation, inertia, supply, demand, issues globally, which was also creating USD inflation. But this year, actually, there was a normalization. So like low 30s OpEx growth versus, again, 31% inflation is, I think, is a really, we delivered a strong performance that way. Actually, we were able to convert OpEx growth to the inflation. So it's, again, our guidance for 2026 is considering, like, an average inflation of, like, maybe high 20s to for this year. So we will be again maintaining our cost discipline. And in the upcoming years, like, with inflation going down, as you are, as you have, like--
I understand what you are. How we are, like, assessing it. But the increase of revenues, revenues may go down, but not to forget, currently we are operating with growth caps, so there is really a huge growth potential. I would assume this volume growth will be absorbed, maybe these high interest rates, et cetera, et cetera, or high spreads, maybe for some time. Therefore, at this, for Akbank, I can say the aim of the bank will be to fully cover its operating expenses with with its fee income generation. And not to forget, it's a really journey, you know, we are always looking for efficiency areas in every aspect. So this will be all we expect them also to be supportive in this low thirties of cost-to-income ratio ambition.
Yeah. Maybe, David, I would like to add something, maybe enhance the importance of the growth for Akbank, especially for 2026. You know, you know that our strong capital base will continue to provide us strategic flexibility. And of course, we are going to in search of sustainable growth across the segments, but as you know, there are some segments in line of business that we would like to grow more, such as business loans, you know, SMEs. So in the same time, when we look into our, maybe quarter on quarter, the growth performances, such as, you know, FX loan, Turkish lira loans, actually, we have the capacity to flexibly to grow in a very smart way.
So, we are still on the, you know, finding new avenues to build up a new platform and market share for FX loans. And, you know, we are going to be more on the infrastructure projects, multinationals, blue-chip companies. So, but in the same time, of course, this is gonna reflect our prudence and quality-focused approach. So I would like to enhance what Türker told before. Yeah, we're gonna grow.
Thank you very much. All clear, all clear on my end. Thanks.
Okay, thank you, David. Next question comes from Aswath P T from Goldman Sachs. Aswath, please, please go ahead and ask your question.
Yeah, hi. Thank you for the presentation. I have a few questions. The first being your guidance for FX loan growth of greater than 10%. Does that also reflect the recent updates to the macroprudential framework, where I think the growth limit for the eight-week growth limit for foreign currencies has been reduced from 1% to 0.5%? The second question I have was around the ROE. You mentioned you expect 2026 to be high 20s. Would that be a natural expansion of NIM through the year, like you said earlier, due to the peak in probably the second half of 2026? And would it be fair to say that's when you actually expect that the real ROE would actually turn positive towards the second half of the year?
More generally, my third question would be more generally over a longer term, where perhaps inflation does come down to the mid- to low-20s, perhaps next year or the year after, where do you see the normalized level of NIMs and the normalized level of ROEs for, for the bank? Thank you.
Hi, Aswath, this is Türker. This latest change of, like, on the FX loan growth cap side, actually, that was announced after we have actually prepared our guidance. But having said that, when we look at our fourth quarter performance, in only the fourth quarter, we grew our FX loan book by 5%. I think it shows the, like, the flexibility of the bank in tapping areas which are exempt from growth cap. Again, we will be looking at this picture in this, in a similar manner. So therefore, actually, as of today, we don't see any downside risk to our guidance. With regard to NIM and ROE relationship, as I-- actually, your thinking is right.
We expect NIM to gradually improve, bring us to a 4% NIM for full year. So that will definitely support our ROE evolution throughout the year as well. Like, if we say, what is real ROE? ROE above inflation, you're right. Probably, maybe not in the first quarter and second quarter, let's wait and see how also inflation evolves. But definitely in the second half of the year, we should see that the ROE moves above CPI in the second half of the year.
With regard to the normalized level of net interest margin at ROE, like maybe not, it's not a short-term topic, but assuming like inflation goes down to ±10% levels in medium to long term, maybe as of today, we can use like roughly 4% of net interest margin as a starting point together with like ±20% ROE. Meaning like maybe, let's say, real ROE, if you define ROE minus inflation as real ROE, then probably like 10% real ROE will be the ambition of the bank in the medium to long term. I hope that was clear.
Yes, thank you very much.
You're welcome.
The next question comes from Simon Nellis. Simon, please go ahead and ask your question.
Oh, hi. Thanks for the opportunity. My question is around your fee growth guidance for this year of above 30%. So I guess that's nicely above your inflation expectations. I mean, given that inflation is falling, that there's some, you know, regulatory tightening on fees, I mean, how comfortable are you with that? And can you just unpack a bit how you expect to get to +30% growth on fees? Thanks.
Hi, Simon. Actually, this is why we have guided this above 30%.
Sure.
This is already taking into consideration the expected tightening on the interchange commissions by Central Bank. By the way, they didn't do it in January, so one month is maybe--a ctually, two months are like now unchanged. So let's wait and see actually how it goes. Maybe a small item, and very recently, one of the regulatory changes was also like the fee caps on FX lending have been removed by the authority in the last week. That will be, to some extent, also supportive as well. That was also integrated into our guidance.
Got it. Okay.
But we feel comfortable.
You feel comfortable still, despite those headwinds? Okay. Thank you.
I think it's a result, obviously, of our significant market share gains over the last few years in customer acquisition. I mean, that's probably gonna be a supportive factor of the fee growth above the inflation expectation as well.
Got it. Thank you.
We have some written questions. So maybe the first question I can ask from Mariana, from William Blair: "Hi, thank you for the presentation. Could you please explain the increase in Stage 2 loans on a quarter-on-quarter basis regarding NPL inflows? Are you seeing inflows from other segments in addition to SME, retail, like, addition to retail, SME commercial?" This is our first question.
Hi, Mariana. First of all, maybe to start with the, like, NPL inflows. Actually, when we say retail, actually, we mean actually consumer plus also SME. So that was also the case in the fourth quarter, mainly led by consumer, also some extent also coming from SME. These were the areas where we've seen the majority of NPL inflows. So in the fourth quarter, no change compared to third quarter. With regard to this increase in Stage 2 loans, as we had also from time to time shared with the investor community in the last quarter of the year, we are always revisiting our IFRS 9 model, and based on that, calibration, like, inflows because of the model, so rating deterioration, in other words.
So after our calibration, there has been some increase in Stage 2 loans. But whereas our restructured loan book has stayed the same, like 3.4%, almost same like in the third quarter. So that was the main driver of this Stage 1 to Stage 2 composition change of roughly 2%.
Regarding NPLs?
Actually, as I said, this is mainly retail driven.
Okay. So, moving on to the next question, capital levels and Basel IV impact, will you see AT1s or Tier 2s to shore up capital? Vinod Suvarna .
Hi, Vinod. Like, Basel IV will be effective if no change, start in the second half of the year. And as of today, the impact is for Akbank is quite limited, roughly like 20 basis points in, 20 basis points-- 20 basis points. With regard to our, like, wholesale funding strategy, you know, our practice, we are always, like, looking for opportunities in the market. And as you know, again, this year, we have a really, evenly distributed, redemption schedule. One of them is also the Tier 2, where we are, again, stick to our benchmark price, the call option of our Tier 2. We will look actually at all products based on maturity profile, and like, cost, and based on that, we will like, we will decide which path to go.
Yeah, maybe just to put these in numbers, as you probably know, this month in February, we have a $500 million Eurobond redemption, and then in July, we have a $500 million Tier 2 as subdebt. As Türker mentioned, you know, we always try to go by market practice, depending on, obviously, on BRSA approval. The more, the more important issue for us is that we like to obviously diversify the products and also diversify the maturities, and extend the maturities. Actually, you probably have seen this in our latest also syndication loan, where we have three different tranches: one year, two year, and three years. So we will be doing the same for this year for also our syndicated loans as well, and as well as for, obviously, our maturities on the other products side.
And I don't see any other question here that hasn't been answered, so maybe we can move on to-- I don't see anyone raising their hand as well, so maybe I can leave the floor to Kaan for closing remarks.
Thank you. Thank you, Ebru. Dear friends, thanks a lot again, especially for your continued interest and engagement. We are very happy with that. To conclude, we enter the period ahead with confidence in our strategy and our ability to deliver. Our guidance reflects a balanced outlook grounded in prudent assumptions, disciplined execution, and a strong focus on sustainable profitability. With our solid capital position, as I mentioned earlier, our resilient balance sheet structure, and diversified business model, we are well positioned to navigate the evolving macro environment while continuing to create long-term value for all stakeholders.
Technology remains a key enabler of our strategy, supporting deeper customer engagement, operational efficiency, and scalable growth. We will continue to invest selectively in digital capabilities and process transformation and of course, as well as our people, Akbankers, while maintaining a disciplined approach to risk and capital allocation.
Dear friends, we look forward to meeting many of you in the coming period and continuing our dialogue in more detail. Thank you for joining us today. We appreciate your trust and continued engagement. Bye for now.
For those of you who have additional questions, please do feel free to reach out to Investor Relations team. We are always at your disposal and look forward to seeing all of you throughout the year. Bye-bye.