4Q Earnings Outlook: Banks To Post Annual Profit Growth, Industrials Still Ailing

Summary:

Turkey’s banking sector is expected to deliver strong year-on-year profit growth in the fourth quarter of 2025, while quarter-on-quarter gains are likely to remain modest, according to a balance sheet expectations survey conducted by Matriks Haber. The survey points to sharp sectoral divergence, with insurance and industry showing resilience, while non-financial corporates face elevated earnings volatility driven by tax and inflation accounting effects.

Banking Sector: Strong Annual Growth, Limited Quarterly Momentum

Matriks Haber has released the results of its fourth-quarter 2025 balance sheet expectations survey, conducted with the participation of 22 brokerage firms, outlining market forecasts for banks and non-financial companies listed on Borsa Istanbul.

According to the survey, the banking sector’s net profit is expected to rise by 47.4% year-on-year, reflecting improved margins and sustained loan activity. However, quarter-on-quarter profit growth is forecast to remain relatively subdued at around 5.8%, as higher taxes, provisioning costs, and operating expenses limit sequential upside.

Brokerage firms noted that while net interest margins have continued to recover, particularly due to improvements in the TRY loan–deposit spread, this trend has been partially offset by rising tax provisions and credit risk costs.

Non-Financial Companies: Annual Recovery, Sharp Quarterly Decline

For non-financial companies, the survey highlights pronounced earnings volatility stemming largely from tax and inflation accounting effects.

Aggregate net profit in the non-financial sector is expected to increase by 83.6% year-on-year, signaling a recovery compared with the weak base of the previous year. However, profits are projected to decline by 49.2% quarter-on-quarter, underscoring the impact of accounting adjustments rather than underlying operational weakness.

Brokerage firms emphasized that net profit figures have become increasingly difficult to interpret in isolation, as temporary differences between accounting profit and taxable income have widened.

Insurance Sector: Balanced and Stable Outlook

The insurance sector stands out with a more balanced earnings profile. Survey participants expect sector profits to rise by 35.2% year-on-year, while quarterly net profit is projected to remain broadly flat.

Analysts noted that technical profitability and premium growth continue to support insurance companies, helping to cushion the impact of broader macroeconomic volatility.

Industry and Real Estate: Diverging Paths

In the industrial sector, companies are expected to return to positive profitability in the fourth quarter after posting losses in the same period last year, supported by cost normalization and stable domestic demand.

By contrast, the real estate sector is expected to experience a sharp contraction on a year-on-year basis. However, survey respondents anticipate a strong quarter-on-quarter rebound, driven by base effects and improved financing conditions relative to earlier quarters.

Earnings Season Timeline

The fourth-quarter earnings season on Borsa Istanbul began on January 26 with the release of Türkiye Sigorta’s results. The first bank to report fourth-quarter earnings will be Akbank, scheduled for February 2.

For non-consolidated banks and companies, the deadline for submitting fourth-quarter financial statements to the Public Disclosure Platform (KAP) is March 2, 2026. Consolidated financial statements must be disclosed by March 11, 2026.

Broad Participation from Brokerage Community

The Matriks Haber survey included contributions from 22 brokerage firms, including Ak Yatırım, Deniz Yatırım, Garanti BBVA Yatırım, Gedik Yatırım, Global Menkul, Halk Yatırım, HSBC, ICBC Yatırım, İş Yatırım, KuveytTürk Yatırım, OYAK Yatırım, QNB Invest, TEB Yatırım, ÜNLÜ & Co, Yapı Kredi Yatırım and Ziraat Yatırım, among others.

Survey participants broadly agreed that net profit readability has deteriorated, with earnings volatility increasing across sectors.

Accounting and Tax Effects Cloud Comparisons

Brokerage reports highlighted that the removal of inflation accounting under Turkey’s Tax Procedure Law (VUK), combined with continued inflation adjustments under IFRS standards, has created temporary discrepancies between accounting profits and taxable income.

These differences have inflated deferred tax expenses, complicating quarter-on-quarter and year-on-year comparisons and reducing the usefulness of headline net profit figures as standalone indicators.

Key Drivers in the Banking Sector

Survey respondents identified several key factors shaping bank earnings:

• Improvement in TRY loan–deposit spreads and net interest margins

• Rising tax provisions

• Higher provisioning expenses and non-performing loan inflows

• Increases in operating expenses, including personnel costs

• The impact of the CBRT’s rate cuts in Q4 2025 on loan and deposit pricing

• Resilient household consumption, credit card spending, and automobile sales

• A modest quarter-on-quarter improvement in PMI indicators

Non-Financial Outlook: Costs and Demand in Balance

For non-financial corporates, brokerage firms described a mixed earnings backdrop. Lower oil prices and favorable currency dynamics have helped contain input costs in certain sectors, supporting operational profitability.

At the same time, relatively resilient domestic demand has continued to support sales volumes, particularly in consumption-sensitive industries.

However, analysts cautioned that weakening manufacturing indicators among Turkey’s main trading partners and tighter export conditions have yet to provide clear recovery signals for export-oriented companies.

Conclusion: Sectoral Divergence Remains Pronounced

The Matriks Haber survey suggests that Turkey’s fourth-quarter earnings season will be marked by strong annual growth in banks and insurers, significant accounting-driven volatility in non-financials, and continued sectoral divergence.

Analysts expect investors to focus increasingly on operational performance, cash flow generation, and balance sheet strength rather than headline net profit figures alone.

Source: Matriks Haber

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