Akbank TAS
IST:AKBNK.E
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Akbank TAS
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Dear friends. This is Hakan speaking, the CEO of Akbank. Thank you all for joining us today for our first quarter results. I hope you are all well. And today, I have with me, Turker, our CFO; and also Ege and Gulce from our IR department.
And first of all, as a country, we have gone through extraordinary times. As you know, a few months ago, we were struck by a heartfelt -- heartbreaking earthquake. and we are all deeply saddened. Our hearts are with those who have lost their lives, their families and the many whose lives have been dramatically changed. I have full confidence, together, we will endure and recover from one of the greatest disasters in our history.
Before leaving the floor to Ebru, I would like to share some highlights regarding the operating environment and our solid start to the year. Since our last call, global markets have received some positive signals indicating that worst is left behind on the multi-decade-high inflation front.
But now we have another challenge. Financial stability, which has been raised by the collapse of some U.S. banks, and then the takeover of Credit Suisse by UBS. Price versus financial stability discussions will likely to continue for quite a while.
In Turkey, the earthquake has hit economic activity, not only in the region, but also across the whole country. The President's team of strategy and budgets estimated the total economy cost of the earthquake as USD 103 billion, which is more than 10% of our GDP. Despite the adverse impact of the earthquake, current economic policies are putting strong emphasis on growth and employment. And this is mainly due to negative real rates, targeted credit facilities and fiscal easing.
Even with the projected slowdown during the second half, in our baseline, we think that 5% growth is attainable this year.
Turning to consumer prices. Annual inflation came down to 50% in March from 64% at the year-end. Looking forward, inflation is expected to decline further in the first half due to not only strong base impact, but also the relatively stable exchange rate and moderating imported cost pressures. We project annual inflation to be around 45% by year-end.
On the external balances, we are running a large trade deficit, and external financing need still remains. As you all know, we have the elections within a few days. Elections in every country usually come with some uncertainty in financial markets. At the same time, there are some ongoing regulatory changes which the banks respond to by taking several necessary actions. These regulatory changes have led to lower margins and have put pressure on overall profitability of the system. Nevertheless, banks remain healthy and resilient with solid capital buffers and liquidity.
That being said, for long-term success, the following has become even more important for banks: relative and higher capital and liquidity levels, prudent risk management, low cost base and efficiencies, ability to focus on future while struggling with the daily challenges, and agile management. And here, I'm extremely proud to say that Akbank ticks all the boxes.
With regards to the regulations, banks have implemented different strategies, making short-term cost spread evolution and broad trend comparison difficult. We continue to focus on keeping our balance sheet intact by avoiding maturity mismatch and keeping long-duration fixed rate bond purchases at minimum levels. Therefore, we achieved the 60% threshold for Turkish lira deposits in February, resulting in total size of fixed rate bond purchases to be limited at TRY 30 billion or only 2% of our total assets.
This strategy was implemented to maintain our lowest mismatch positioning among our peers. We made a choice for long-term versus short-term financial results, and we, without any doubt, preferred the long-term view and protected our capital for future profitable growth. But obviously, due to rising Turkish lira time deposit costs, this had some negative impact on our NIM, but that's okay, because it is only temporary and better than eroding our capital. And as you know, we do not carry any material mismatch on the foreign currency side, either.
And last but not the least, we took some proactive actions on the asset quality side and set aside TRY 930 million additional provisions for the earthquake.
Moving on to our organic growth achievements. As shared over the last 2 years, retail banking is a strategic focus area for us. And I'm extremely delighted to say that our outstanding momentum in customer acquisition, despite the earthquake, accelerated further during the first quarter as we gained 730,000 customers, new customers, on top of 2.3 million gained -- that we gained last year.
This year, 60% of new-to-bank customers were acquired via digital onboarding, resulting in our year-on-year digital customer acquisition to quadruple. This customer acquisition has resulted in record-high market share gains across the board in consumer loans, demand deposits and broad-based deposit base. Achievements on the customer acquisition has shown itself in an outstanding fee income evolution which continued to enhance quarter-on-quarter.
The importance of especially investing through cycles has been a key driver in this performance. Our level of sophistication and digitization and advanced analytics, ability to attract and keep new clients through digital, and most importantly, talent quality and attraction, all play key roles in this success.
Our customer-centric organization as well as our dedication to clients puts us in a position of strength. We will continue to leverage our strong capital, highest among peers, and invest, innovate and grow.
And now I'd like to leave the floor to Ebru for further details.
Thank you, Hakan-bey, and thank you all for once again joining us. We ended the quarter with TRY 10.71 billion net income, resulting in 3.6% ROA and 27.9% ROE, while maintaining a low leverage of 8.2x. Buffers remain both for ROA and ROE as we used 35% for CPI-linker valuation versus our year-end expectation of 45% inflation. Had we used 45%, our reported ROA and ROE would have been notably higher at 4.2% and 32.9%, respectively.
I am happy to share again that our strong momentum in customer acquisition has led us for a record remarkable 2.5x increase in fee income year-on-year, supporting our core revenue generation. Looking at the current run rate of our fee generation, there is significant upside to our full year guidance.
Moving on to the key drivers of our solid start to the year in more detail, starting with the growth. Our TL loans were up by around 14% year-to-date, where our focus remained on maturity mismatch and lucrative small tickets. Main contributor was consumer loans, up by 29% year-to-date.
As shared in several occasions, the bank's motivation in consumer and SME loans continues at full pace. This motivation has resulted in a record high broad-based 190 bps market share gain among private banks in consumer loans. This is on top of the 90 bps gained last year. We also gained 50 bps in consumer credit cards year-to-date.
In business banking, we shortened the maturities while maintaining our market share due to regulatory pricing caps. I would especially like to highlight our ongoing success in the SME segment, where we gained an additional 20 bps market share, reaching a cumulative of 220 bps since the beginning of last year.
Thanks to our advanced analytics and excellence in AI-based loan decision systems, the probability of default of the retail loan portfolio remains at low levels while growing. We are on track with our full year to TL loan growth guidance of around 40%, targeting market share gains and high-yield retail loans. Our 360 degrees customer-oriented holistic organization structure as well as our competitive products and advanced analytics solutions will continue to be supportive factors.
On the FX loan side, demand remained muted in the first quarter of the year. Our net FX loans were up only by 0.6% to $10.8 billion, which is in line with our low single-digit growth guidance, given our already delevered loan book on the FX side.
Moving on to the securities. Interest rate risk management remains in focus for our securities positioning as well. Our total securities were up by 13% year-to-date, mainly led by high-yielding TL corporate bond purchases from primary issuances, which have an average maturity of less than 1 year, and CPI-linker accruals. As a result, half of our total securities portfolio consists of floating rates, which includes CPI-linkers. As for our TL securities alone, more than 70% is floating.
TL fixed-rate securities, excluding these corporate bonds that we purchased, classified under fair value through other comprehensive income, or in other words, available for sale, is limited to only 8% of our total securities. Also, our treasury's proactive positioning in positive-yielding CPI linkers is helping to mitigate the negative impact of inflation.
Our CPI linker portfolio now stands at TRY 127 billion, which equates to 83% of our equity or 10% of our total assets. As shared earlier, a significant buffer remains with our 35% inflation valuation for CPI linkers versus our year-end expectation of 45% for inflation. Every 1% CPI has TRY 800 million net income, 7 bps NIM and 45 bps ROE contribution on a full year basis.
Moving on to our foreign currency securities, which make up 1/3 of the total, they were actually timely hedged against Fed rate hikes mainly back in 2021. Having met the regulatory 60% threshold in TL deposits as of February, we have been able to manage, as Hakan-bey mentioned as well, the regulatory fixed rate securities portfolio around TRY 30 billion, or 2% of our total assets. We used some portion of the fixed rate bonds portfolio for purchasing high yield, which is actually above 30%, up to 1-year maturity corporate bonds at primary issuances and utilizing mainly TL ref-indexed loans with significant positive spreads. We have a leading position in these high-yielding corporate bonds which stands at TRY 18 billion or around 1% of our total assets. This strategy helps mitigate toward the negative impact of the lower-yielding regulatory fixed rate commercial loans.
Also, for optimization purposes, switch transactions have been executed by selling bonds with higher marker prices to the Central Bank and replacing them with higher-yielding securities mainly through treasury auctions. Our prudent and agile ALM, along with our solid customer base revenue growth, will continue to be supportive for our net interest income evolution going forward.
On the funding side, we remain our focus on well-diversified and disciplined funding mix. Deposits continue to be our main source of funding with 65% share in total liabilities. Our total TL deposits were up by a solid 27% year-to-date, resulting in further 10 percentage points improvement in our TL LDR on top of an eye-catching 35 percentage points improvement last year, reaching 96% as of first quarter.
Worth to mention, that our sticky, low-cost TL time deposits and 0-cost demand deposits were also up an outstanding 27% and 28% year-to-date, respectively. Thanks to our sound customer franchise and our success in gaining further 730,000 customers just in the first quarter, our market share in TL deposits among private banks has increased significantly. Especially worth to underline our 180 bps market share gain in 0-cost demand deposits among private banks during the quarter.
Also, during the first 2 months of this year, we added 70 bps market share in the below TRY 1 million ticket size deposits, which supports our broad-based small ticket deposit base.
On the regulatory side, as I shared earlier, the TL share in total deposits remains above 60%.
We ended the first quarter with 4.8% NIM, in line with our guidance shared at the beginning of the year. During the quarter, regulations supporting the utilization strategy has led for deposit costs to rise significantly in the sector while most of the lending yields have been kept. This resulted in a notable decline in the TL core spreads. However, with regard to the 60% TL deposit regulation, banks have applied different strategies, making it difficult to compare NIM evolution.
With our management's focus on maintaining low maturity mismatch in order to keep the regulatory fixed rate bond purchases at low levels, we aim to reach 60% threshold as early as February. Our balance sheet is strategically designed for quick recovery in core spreads should there be a rise in lending rates going forward.
As proof, according to the change in the current value equity calculation of BRSA, Akbank has the lowest interest rate risk. This data is reported on a yearly basis. As a side note, 80% of our TL loans will either reprice or mature until year-end.
Also, I shared earlier the buffer remaining in our CPI linker valuation. Going forward, thanks to our solid customer deposit franchise and agile asset liability management, we remain confident in our full year NIM guidance.
As Hakan-bey mentioned earlier, our momentum in customer acquisition continues at full pace. Our active customer base reached 11.5 million with 730,000 addition in first quarter alone. 60% of our new-to-bank customers were acquired with digital onboarding, underlying the strength of our digital capabilities. We have further penetrated into demand deposits and the daily cash flows of our customers. We are also leveraging digital onboarding and holistically revamping our value proposition for young customers aged between 18 and 26.
Our active product portfolio, a function of active customer base and average cross-sell per customer, has increased by 35% year-on-year, reaching all-time high. This solidifies our customer based revenue generation for the coming periods.
The success in our digital strategy, which is based on our customers' journey, continues to show itself in the numbers, reached 9.5 million digital customers while also increasing the traffic as monthly average mobile login frequency is also at all-time high. Our active digital customer visits are mobile application more than once a day, giving us cross-sell opportunities. And most importantly, mobile active customers conducting financial transactions continues to increase, supporting sustainable fee generation.
So moving on to the fee side. We further excelled our outstanding performance across the board during the quarter. Our net fees and commission income is up by an outstanding 146% year-on-year and a remarkable 21% quarter-on-quarter. This is well ahead of our full year guidance of around 60%. Our strong customer growth has been reflected to the revenue base with all business lines positively contributing. This underlines the sustainability of our fee income generation going forward.
In addition to the solid customer acquisition, other reasons behind the achievement can be summarized as: product innovation and diversity; increased transactions; pricing, either due to currency impact or inflation; and obviously, the success of the digital channel's holistic approach.
Looking at the current run rate of our fee income, I can easily say that there is upside to our full year guidance, as I mentioned at the beginning of the presentation. Challenges though remain on the OpEx side due to both high global inflationary pressure as well as pass-through weaker currency. Our OpEx increased by 35% quarter-on-quarter, mainly driven by salary adjustments which we see as investments for our future. Also, we set aside -- we actually also had $700 million for the aid and donations related to the earthquake disaster. Adjusted for the earthquake and aid donations, quarter-on-quarter OpEx increase would be 26%, resulting in 37.5% cost to income. For year-on-year comparison, worth to note that there's a relatively low OpEx base as of the first quarter of last year.
Overall, our lower cost base versus peers give the bank flexibility and competitive advantage, and we will continue to be disciplined on our cost side.
Moving on to the asset quality. Our loan portfolio continues to perform well with continuation of strong repayment performance and almost no new net inflow into stage 2 when excluded for currency impact. Therefore, share of Stage 2 loans declined to 6.1% of gross loans, down by 5 percentage points year-to-date.
As for Stage 3, collection performance remains robust and broad-based, surpassing new NPL inflows, resulting in negative net new NPL evolution in the first quarter of the year. Hence, we completed the quarter with 2.5% NPL, which is in line with our full year guidance of below 3% with a further 30 bps improvement year-to-date.
Share of Stage 2 and Stage 3 in our gross loans, which would be deemed obviously a bit more problematic or potentially more problematic, continue to be limited at 8.6%, with strong coverage.
Our cost of credit evolution underlines actually our proactive provisioning as well as our healthy loan portfolio composition. We ended the quarter at 125 bps net cost of credit, excluding currency impact. This includes, as mentioned earlier, our cautious TRY 930 million provisioning for the earthquake, yielding a total of 58 bps impact. Excluding our cautious provisioning for the earthquake, our net cost of credit, excluding currency impact, would be at 67 bps, well below our full year guidance of around 100 bps.
Despite our solid loan growth, our coverage ratios have also further increased significantly year-to-date with further loan loss provision build of TRY 2.2 billion during the quarter. For Stage 1, our coverage ratio is at 0.8%, which is up from 0.7% at the end of the year. For Stage 2 and 3 loans, our coverage ratios increased by more than 200 basis points year-to-date to 18.5% and 69.7%, respectively.
We believe our robust build on the provision side, so that collateral values will limit the need for additional provisions, while our cautious provisioning related to earthquake is manageable within our full year guidance of 100 bps net cost of credit, excluding currency impact.
Our total capital, Tier 1 and core equity Tier 1 ratios, without forbearances, remained robust at 18.6% and 15.7%, respectively, despite negative impacts: driven from significant growth, which had 134 bps negative impact; solid dividend payment, 96 bps impact; and operational risk, which you all know is a sectoral implementation during the first quarter of every year, which had 132 bps impact. On the operational risk side, the main cohort of the methodology is the average net income over the last 3 years and thus directly correlated with the bank's financial performance.
Sound profitability also reflected onto our capital position as our internal capital generation added 114 bps to our capital year-to-date. Also, please note that adjusted for temporary risk-weight increase applied by BRSA, which is actually above Basel, our capital would be at 180 bps higher at an outstanding 20.4%.
To give some sensitivity analysis for those who are interested, 10% depreciation in TL results, for the first, obviously, 10%, 50 bps decrease in our capital ratios. While the impact, as you all know, diminishes for higher amounts of changes. And 100 bps increase in TL interest rates results in around 12 bps decline in our solvency ratio, again, with diminishing impact. Sound capital buffers continues to serve as shield against any challenge and as well as volatility and create significant ammunition for sustainable profitable growth.
On this slide, you may find the summary of our sound start to the year. As mentioned throughout the presentation, momentum continues across all business lines. And as a result, we remain confident in our full year guidance for all of our financial metrics.
Before moving on to Q&A, I'd like to give a few highlights regarding our ESG performance. During the first quarter, we continued to work towards our long-term sustainability targets. We are providing -- provided TRY 18 billion of sustainable finance year-to-date, bolstering our support to TRY 105 billion since the beginning of 2021. As you know, we have a commitment for TRY 200 billion by year 2030.
We also revised our sustainable finance framework in line with the needs of our stakeholders as well as international standards and best practices. Our framework, which has second-party opinion, has been published and shared with all of our stakeholders. This is another important milestone in our sustainable finance journey. The new document includes more comprehensive green and social use of proceeds as well as new green and social categories, such as hydrogen, climate adaptation and disaster relief.
As a part of our efforts to manage outside-in climate risk of our loan portfolio, we completed our geographical climate risk analysis for our project financed loans last quarter. We are also taking steps to implement changes across our operations to mitigate our environmental footprint.
We were able to decrease our Scope 1 and Scope 2 emissions by 28% year-on-year last year. To further reduce our operational emissions, we continued to build capacity across our branches for energy efficiency and waste management. For this purpose, as of last quarter, close to 50% of our branches have completed their trainings.
In order to mitigate our portfolio's impact on climate change, we have committed to become net-zero-backed by 2050, as you know. And plan to disclose our interim targets and sectoral approaches before the end of this year. And for more details, please check the annex of this presentation as well as our ESG presentations on our website.
This concludes our presentation, and we can now move on to the Q&A session.
Please either raise your hand or type your question in the Q&A box. And for those of you who are actually joining us through phone, please send an e-mail to investor.relations@akbank.com.
And I believe Waleed has his hand up. Waleed Mohsin, since the beginning of the presentation. But let me first allow them to talk. Waleed, the floor is now yours.
Waleed? Okay. We cannot hear you. So maybe I can move to [ Sofia ]. Please ask your question.
I would like to have a better view on the current forbearance measures that are in place in Turkey. So can you give us some context on that? And on the next month elections, I would like to have your view on what do you expect if Erdogan wins the election, and if the opposition wins, both in terms of asset quality, the environment on the banking system.
Hakan-bey, Turker-bey, I leave the floor to you.
Okay. Turker, why don't you answer the forbearance question? And then I share my thoughts...
I assume this relates to the capital adequacy calculations because we are using this terminology on that side. Actually, currently, for reporting purposes, we are using end of year exchange rates for capital adequacy calculation. So based on that, actually, our capital adequacy ratio, by the end of first quarter, is at 18.9%.
But since the end of year exchange rate is not deviating too much from and the first quarter exchange rates, also our calculation, without taking into consideration the forbearance, is similar to that level. It's at 18.6%.
And by the way, maybe it's also worth mentioning, as also Ebru perhaps mentioned, yes, on one side, we have some forbearances in defined by BRSA. But simultaneously, BRSA is -- has instructed the banking system in last year to use higher risk weights for some type of loans. And therefore, actually, this is also currently increase -- decreasing our capital adequacy ratio temporarily. So if you would correct our capital adequacy calculation for this increased risk weights and use Basel-equivalent risk weights, our capital adequacy ratio would be about 20%. Exactly speaking, 20.4%.
Just on that, the exchange rate is at the end of 2022, or 2021?
'22, actually. Last year, we were using '21. But since the beginning of this year, we are -- these figures are quite similar to each other.
And Sofia, before Hakan-bey answers, you can found all the details in our presentation in the footnotes regarding all the forbearances.
Yes. Sofia, regarding your second question. We have only a few days left, actually, before the election. So it's a bit difficult for us to predict the election results. But basically, we have 2 scenarios.
If the existing Party wins, still, we think that we might see some normalization, actually, in the economic policy framework. But how and how much, that is also a bit difficult to predict.
But if opposition comes, I think then, we can expect some back to conventional actually policies. So meaning some monetary policy adjustments, interest rate increases and so on. Maybe over time, normalization in the existing regulations and so on. So that is something that we can expect.
But I think your question, the asset quality, was more like on the interest rate adjustment side. So if -- so that is how I perceived your question. If there is an increase in the interest rates, then what will happen to the asset quality in the system? So that's how I understood your question.
And I think we are pretty comfortable. So I'm not only referring to our institution, but for the system in general. The companies, actually, big companies, midsized companies, even the SMEs actually, I mean, they were all profitable over the last couple of years, and they were really benefiting a lot from this low interest rate environment. So they accumulated capital. So if they have a relatively good business, which is the case actually in the overall system. So we should not be too much worried about the asset quality in the system.
And regarding our institution, that is a very similar situation. And as you know, Akbank has always been extremely good in risk management, credit policies and so on. That is still the case. We had some growth on the consumer loan side, so we gained a lot of market share over the last 2 years or so in retail loans, in SME loans as well.
But what I can tell you, actually, Ebru mentioned in her presentation, we have invested a lot actually in our infrastructure, advanced analytics. So we have invested in those systems many, many years back. So the first steps that we took was with a Silicon Valley-based company. So that took place about like almost 7, 8 years ago. And then since then, we have actually built our own talents within our own bank on AI, machine learning and so on.
So we really have quite a lot of sophisticated system. So we can really optimize growth, maturity, pricing, asset quality. So I'm very comfortable. I'm comfortable for the system, and I'm also extremely comfortable for our own institution.
And also, we have to keep in mind that, over the last again, couple of years, the FX risk in the corporate sector has been reduced dramatically. So FX loans have been decreasing year after year. The corporate sector closed their FX exposures. So that is another important factor that we have to keep in mind.
So asset quality-wise, I think that the system is okay, actually. And also Ebru mentioned that, in our case, we have lots of buffers, lots of provisions. So I'm quite comfortable with that.
Thank you, Sofia. And now Mehmet Sevim, please go ahead and ask your question.
Thanks so much for the presentation and also thank you for all the additional disclosures that you've provided.
I have just one clarification question on the capital sensitivities that you provided. The 12 basis points figure for 100 basis points of higher interest rates. I'm assuming this includes the impact that would arise from the security portfolios with the rising bond yields as well, right? So maybe if you could just tell us how you come to that level? That will be very helpful.
And then secondly, on the customer acquisition that you're currently doing, which is very, very impressive. I'd like to understand better the demographics of these new customers that you're acquiring and through what channels they're coming to Akbank. And actually, what they do with Akbank. For example, when -- is that simply because they are coming to you for higher interest rates on the deposit side? They're coming to you because they can get new loans? Or are they simply opening current accounts? So if you could give us any additional information on that front, that would be very helpful.
Hakan-bey, maybe I can the third question, if you don't mind.
Yes, please.
Mehmet-bey. Yes, actually, this interest rate sensitivity relates to the impact of our bond portfolio. And actually, the bonds, we are classifying under AFS, so fair value over -- through OCI. So in this sense, actually, it reflects the sensitivity of that portfolio for each 100 basis points interest rate increase.
But just keep in mind, this sensitivity is not linear, which -- when the amount of change is higher, the impact is becoming lower. So not actually -- we cannot say that 500 basis points would mean 60 basis points capital adequacy ratio impact, but lower than that.
Okay. Just maybe one clarification. Would you assume 100 basis points of interest rates would also lead to 100 basis points of higher yields? Is that correct? On the TL book.
Actually, we are applying it to -- actually, it is with regard to our existing portfolio. So the yield does not change. And if it's an FRM, surely, the yield of the FRM will increase. But from FRM portfolio, the capital adequacy ratio sensitivity is actually close to 0.
Mehmet-bey, regarding your customer acquisition question, so what I can actually share, I mean it really has nothing to do with the pricing. And I think it is mostly attributable to the digital sophistication and analytical sophistication of the bank which we have been investing year after year. So we have been investing like $150 million, even $200 million a year for the last so many years.
So I think we were the first bank to apply this mobile-first strategy. So that was like many, many years back. And again, all these AI/ML based infrastructures and so on. This is not only limited to lending decisions, but this is across the whole bank, marketing activities, digital marketing and so on. So therefore, we are using technology actually in a very efficient manner.
And when you look at the demographics of customers that we are acquiring, it is across the board. We see some young people, middle-aged people, wealthy people, deposit holders, people using installment loans, credit cards, insurance products. So I mean, it's a full range. So I cannot really tell you that it's just one specific group or one specific product-based type of an acquisition. So it is across the board.
And also, Akbank actually, now this is our 75th year. So we also have quite a lot of large customer base in our institution. So there is quite a lot of activation as well. Some of our dormant clients coming from the earlier period and so on.
So altogether, that is how we reach those numbers. So this is a very healthy and this is a very profitable growth. It has nothing to do with the pricing. And if you look at like 180 basis market share gain in demand deposits. So this is not an easy job. I mean, this requires a lot of sophistication. That requires a lot of strategy, that requires a lot of execution of actually excellence. And that is actually how it happens. So this -- you cannot buy demand deposits just with pricing and so on. So it is like -- so I think it's a very good example, so -- of what our colleagues are actually executing in our institution.
Waleed Mohsin will again try to ask his question. I think he had a problem on the connection.
I hope you can hear me now.
Yes, we can hear you loud and clear.
Perfect. Apologies for the trouble with the audio. First of all, thank you so much for the detailed presentation and highlighting the bank's buffers and the low interest rate risk. I had 2 questions with this regard.
Number one, I know it's difficult to lay out macro assumptions and sensitivities. But to the extent you can, it would be helpful if you could talk about perhaps some assessments that you've had from stress test scenarios, which would make us more comfortable in the sense that you've sensitized for high levels of rates and different scenarios on the FX side. So anything that you can share on that would be very helpful.
And also linked to this, given the agile structure of the bank and how you responded to previous episodes of macro volatility, I would also be interested in hearing how the bank can respond to sharp increase in interest rates, a sharp depreciation of the lira. You've done that in the past, but would be helpful, given -- especially given that the buffers have improved significantly, the rate risk is lower. So anything around these 2 points would be extremely helpful.
These are excellent questions. So Turker, if you like, let me start. And you if -- that's okay.
And actually, Waleed, your 2 questions are very much related, stress scenarios and so on. So I think the most important, crucial -- one of the critical parts that we have to manage is if there is a change in the interest rates in the country.
So what we have been actually trying to highlight through the whole presentation, actually, we have been actually trying really hard to minimize the maturity mismatch of the bank. So we have been doing this not only for the last 1 or 2 or 3 quarters, but we have been trying to do that for almost a decade. So as Ebru mentioned, we have the minimum actually maturity mismatch among the peers, and this is based on the BRSA calculations, which banks have to actually declare at the end of each year. So this is our -- first of all, our position to start with, okay?
And if there is an interest rate increase in the country, I think the impact of this on the banks will be different than what we used to experience in the past. So what I'm trying to say is the following. Because now, we have an unusual situation. Because when you look at the local currency, deposit rates in the country, there are cases today where the banks are offering around 30%, even higher, because of the regulations and so on. We want to comply with the regulations and so on. So there's a lot of actual competition on the local currency deposit sides, okay?
But when you look at the loans, there are caps, caps as low as like 13% and so on. So if there is an adjustment in the monetary policy. So if the banks have complete freedom with the new levels of interest rates. Let's say that now it is 8.5%, let's say that this is, I don't know, 20%, 30% or whatever. So what I'm trying to say is there will be relatively less movement on the deposit side because we are already paying a lot, market rates, for the deposits. But we cannot charge a similar amount, a higher amount, a higher interest rate, for the -- actually for the loans. So the adjustments on the loan side, will be much, much higher, significantly higher than the adjustment on the deposit side.
So in the past, it was not like this. So whenever there was an increase in the interest rates in the country, banks, all of a sudden, used to suffer. But I think this time, that will be much different than what we have been experiencing in the past. Maybe for a quarter or so, we might see a decrease in our NIM. But depending on the bank -- the fixed rate bond portfolio, et cetera, it's not only loans. Of course. I mean, we also have to look at bond portfolio as well. But if the bank was able to manage its actually mismatch position properly in the past, like in our case, interest rates actually increases, adjustments, will be in favor of the banks.
Maybe for the first quarter, we might see a little bit erosion, not much. But the following quarter, there will be a NIM expansion. Like in our case, we have a minimum, actually -- maybe we are an excellent actually example in this. So we have the minimum fixed rate bonds, but we tried hard for this actually altogether, telco, treasury, et cetera, all our people, business units and so on.
So we have this minimum fixed rate bond portfolio, only 2% of our assets. As Ebru mentioned, we were so, so careful regarding the maturities of our loans. So 80% of our loans will be -- either will be maturing or will be repricing this year. So we have positioned ourselves deliberately for a potential rate hike. So we were really very careful with this. So I am not really concerned about the sharp increases in the interest rates and so on.
So then the question was, maybe there might be another risk for the banks, which is the asset quality side. But that was one of the earlier questions. And on the asset quality side, I think that the banks will be, I guess, also would be very, very comfortable.
Regarding the FX. As you know, we don't take any FX positions. So this is a typical situation for Turkish banks, and this is also the case for Akbank. So if there is volatility in the exchange rate, this will not really hit our balance sheet because we don't take a position.
Then again, you might ask this question, how about the asset quality and so on. And as I mentioned in one of the earlier questions -- and also, the risk is less now in the country because the corporate sector used to have more actually FX loans in the past. So for example, again, our bank is a typical example. We used to have like USD 22 billion, something more than USD 20 billion worth of loans U.S. FX loans in the past. So now we have half of it.
So therefore, I am quite comfortable, especially with our institution, which we have been very careful in managing all these mismatches and so on, FX exposures and so on. But in general though, for the system, I think the system, I think, will be okay as well, the banks. I don't know whether I was able to answer all your questions, but this is what I wanted to share.
And Hakan-bey, maybe with regard to maybe from other perspective, actually also with regard to actually possible interest rate increase or currency depreciation scenarios. Also, we are periodically doing stress tests for our capital adequacy ratio. And in all these various scenarios, actually, our capital adequacy ratio is always at comfortable levels, so well above the minimum requirements of the BRSA. That's what I can share.
And also this comfortable positioning of Akbank, so these strong buffers, have also, again similar to last year, has led us to use our call option in our '28 Tier 2 of $400 million. As we have announced a month ago, and tomorrow actually, we will make the repayment of this bond issuance.
There is one more question, a written question that has come in from Cemal Dimirtas.
What is the share of Turkish lira deposits to be calculated for natural person and corporate entity in the total deposits, separately?
I guess we can say that we are comfortably above 60% for both of them.
I guess there are no more further questions. Gulce, do you see any questions on the e-mail side?
No, Ebru. Actually, most of the questions have already been answered. So we are done with the questions.
Okay. Thank you. Then I leave the floor to you, Hakan-bey, for closing remarks.
Okay, Ebru. Thank you very much. Again, thank you all for taking the time to join us today. And as I had mentioned, I'm very proud to say that, today, Akbank is the most ready bank to smoothly wade through any challenge and generate long-term stakeholder value in an ever-changing world.
And I, as usual, like to express my gratitude to all our people for rising to challenges, thinking outside the box, and which I think is very critical nowadays, innovating, executing, raising the bars and supporting our customers and being a source of strength, actually. So I also would like to thank all our stakeholders for their consistent trust and confidence in us, and look forward to meeting you all soon.
And until then, keep well. Thank you very much for attending. See you soon.
Thank you, Hakan-bey. And as IR, we are here to answer any further questions you may have. We are at your disposal. Have a lovely day, and see you all soon. Bye-bye.