Patience Pays Off: Turkish Bank Stocks Deliver Outsized Returns for Long-Term Investors

Turkish banking stocks have delivered blockbuster returns to long-term investors, defying macroeconomic volatility and geopolitical noise. Over the past five years, the country’s largest private banks have outperformed most sectors on Borsa Istanbul, becoming a cornerstone of many institutional and retail portfolios, according to financial commentator (Ms) Zeynep Aktas writing for Ekonomim.com.

Garanti Bankası leads with an eye-catching 2,024% gain since 2020, followed by İş Bankası (+1,730%), Yapı Kredi (+1,564%), and Akbank (+1,343%). All four rank among Turkey’s most valuable listed companies, thanks to their scale, strong balance sheets, and investor-friendly practices.

“For those with a multi-year view, banks have offered the best risk-adjusted returns in the Turkish market,” said Ali Erenbaş, a portfolio manager at a local asset management firm. “Despite cycles of inflation and currency depreciation, the big names have delivered real value through margin growth and re-rating potential.”

Bank Stocks Propel Borsa Istanbul’s 2025 Momentum

While Borsa Istanbul 100 Index (BIST 100) has shown mixed performance in 2025 amid cautious monetary tightening and capital outflows, the BIST Banks Index is up 8.4% year-to-date, reinforcing the sector’s resilience and centrality.

Halkbank has been the standout performer, rallying 61% in the first half of the year. Şekerbank (+49%) and Albaraka Türk (+37%) also posted strong gains, benefiting from asset restructuring and higher net interest margins. Other heavyweights like Vakıfbank, İş Bankası, and Garanti Bankası remain in positive territory, backed by robust quarterly earnings and improving asset quality.

“We’re seeing a re-rating of Turkish bank stocks as investor risk appetite gradually returns,” said Murat Sancar, banking analyst at Istanbul-based brokerage firm. “The sector is under-owned by foreign funds and still trading at attractive valuations compared to EM peers.”

Valuations Still Offer Room to Run

Despite the rally, P/B ratios remain undemanding for many Turkish banks. T.S.K.B. (1.05), İş Bankası (1.12), Vakıfbank (1.16), and Albaraka Türk (1.16) all trade close to book value. Even Garanti Bankası, the priciest name at 1.70x P/B, still looks inexpensive compared to historical multiples and European counterparts.

“Valuations are not stretched, especially when you consider the recovery in loan growth and declining NPL ratios,” noted Serra Demirer, research director at a global investment bank’s Istanbul office. “The sector’s capital buffers are strong, and the top-tier banks are well-positioned for earnings upside.”

Garanti remains Turkey’s largest listed bank with a market capitalization of 578 billion TL, followed by İş Bankası, Akbank, and Yapı Kredi. These names offer liquidity, scale, and consistent dividend policies, making them a preferred choice for both local and global investors.

Outlook: Still a Core Bet Amid Monetary Normalization

Experts expect Turkish bank shares to remain a core holding in 2025, particularly as the Central Bank’s gradual normalization strategy opens the door to more predictable macro conditions.

“If inflation continues to ease and the Central Bank maintains real positive rates, banks will benefit from both credit expansion and a stable cost of funding,” said Demirer. “It’s a sweet spot for financial stocks — especially the large-caps.”

That said, risks remain. Continued weakness in the Turkish lira, geopolitical tensions, and the potential for snap political decisions could reintroduce volatility. But for now, banking remains the crown jewel of Borsa Istanbul’s recovery narrative.

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