We value the bank using a warranted equity valuation approach that assumes our 2027E ROE of 26.7% is sustainable, a cost of equity of 27% and a growth rate of 12%. This approach implies a fair value P/BV multiple of 0.98x in 2027E. Applying this multiple to our 2027E BVPS forecast and discounting this value to twelve months from now along with the discounted value of expected dividends suggests a fair value per share of TL 70, our target price.

We rate the stock High Risk given considerable macro uncertainty, frequent regulatory intervention, and the volatile market environment (exchange rates and interest rates).

We consider the following risks to the investment case and achievement of our target price. The major industry-specific risks are: (i) interest rate risk; (ii) local currency risk; (iii) asset quality risk; (iv) regulatory risk; and (v) competitive risk. The company-specific risks are: (i) relatively high contribution of credit cards on fee income and regulatory risks in this business line. We note that the operating environment and investor sentiment is highly sensitive to the political risk environment; better/worse developments in the political risk environment could lead to better/worse share price performance than anticipated. If the impact on the company from any of these factors proves to be more negative than we anticipate, then the stock will likely have difficulty achieving our financial and price targets. Conversely, if any of these factors proves to have less of an effect than we anticipate, the stock could materially outperform our target.