GCM Investment 2Q25 Earnings Outlook: Sector Divergence and Selectivity Key for Investors

As Turkey navigates a volatile mix of domestic political shifts and global geopolitical risks, GCM Yatırım forecasts a highly selective 2Q25 earnings season marked by sectoral divergence.

The second quarter of 2025 has seen a notable shift in market sentiment. While macroeconomic uncertainty has somewhat diminished, volatility remains elevated due to a mix of global geopolitical tensions, trade policy risks, and shifting domestic political dynamics. Against this backdrop, attention now turns to the corporate earnings season, beginning July 21 with Turk Sigorta (TURSG) and wrapping up by August 19 for consolidated companies.

Reporting Deadlines

• Non-consolidated firms and banks must report by August 11, 2025

• Consolidated firms and banks have until August 19, 2025

A Balancing Act: Macroeconomic Context

Turkey’s macroeconomic story in Q2 was shaped by a return to tighter monetary policy after the Central Bank hiked rates, reversing the Q1 easing. This tempered the optimism that had emerged earlier in the year. Meanwhile, inflation continued its downtrend, marking the 13th consecutive month of annual disinflation as of June. This environment has had varying impacts on companies’ pricing behavior and cost structures, leading to an increasingly fragmented performance outlook across sectors.

Adding to this complexity are rising geopolitical risks—particularly tensions in the Middle East—that have triggered energy price volatility and heightened regional risk perception. Domestically, political developments have weighed on investor sentiment and market pricing at times, reinforcing the need for sector-specific positioning.

Banking: Margin Compression, Fee Income in Focus

Despite subdued loan demand, banks are expected to maintain earnings momentum via fee and commission income. However, the positive impact of Q1 rate cuts on net interest margins (NIMs) is likely to have been reversed in Q2 due to renewed rate hikes.

• Akbank (AKBNK) stands out with its focus on digitization and efficiency.

• NIMs may show modest compression, but non-interest income should partially offset margin pressure.

• If inflation continues to decline and the Central Bank resumes easing in H2, funding costs may fall and credit demand could pick up, reviving NIMs.

Industrials: Currency Tailwinds for Exporters

Currency dynamics re-emerge as a key driver for exporters. The EUR/USD rally throughout Q2 should benefit companies with euro-based revenues, especially those selling to the European market.

• Exporters in auto parts, white goods, and chemicals may see stronger earnings due to FX-driven revenue growth.

• However, signs of a broad-based industrial recovery remain tentative.

Transportation: High Demand, Rising Costs

The summer tourism season has lifted both domestic and international travel demand. Passenger volumes and capacity utilization surged.

• Turkish Airlines (THYAO) remains resilient, thanks to its diversified cargo-passenger model and FX-based income.

• Pegasus Airlines (PGSUS) could post solid results due to its low-cost structure and sensitivity to domestic demand, although labor costs remain a challenge.

Telecommunications: Inflation-Proof Cash Flows

The telecom sector has shown strong resilience amid inflation, backed by its pricing power and FX-based revenue structure.

• Türk Telekom (TTKOM) benefits from a wide subscriber base and infrastructure investments.

• Turkcell (TCELL) continues to grow via mobile data and corporate services.

• Both companies are likely to report strong cash flow and margin performance.

Insurance & Leasing: Interest Income Supports Earnings

The insurance sector stands out as a Q2 winner. High interest rates have turned investment portfolios into major profit engines, while rising premium volumes bolster technical income.

• Turk Sigorta (TURSG) could strengthen its market leadership with a balanced product mix and broad sales network.

• Leasing and factoring firms may begin showing signs of recovery despite H1 margin pressure, as rate cut expectations revive credit demand.

• That said, elevated funding costs will remain a drag on profitability in the near term.

Outlook: Selectivity Is Essential

With inflation gradually easing, markets are now watching the Central Bank for potential rate cuts in the second half, which could reshape credit dynamics and margin profiles across sectors. For now, however, stock-picking will be key as sectoral divergence and political risks continue to drive dispersion in financial results.