Akbank TAS
IST:AKBNK.E
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Akbank TAS
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Hello, everyone. This is Ebru Guvenir speaking, Head of IR and Sustainability at Akbank. And I'd like to thank you all, first of all, for joining to hear about our second quarter performance. I hope everyone is well. Today, I have with me Turker, our CFO; and Sebnem, our Head of Treasury; and Gulce as well as our other IR team members, [indiscernible] and [indiscernible] as well. Before moving on to our solid second quarter results in detail, I would like to share some highlights regarding the operating environment.
Since our last call, global inflationary pressures have eased somewhat, but core inflation also proved to be sticky at elevated levels. On the other hand, labor markets remain strong and economic activity, particularly in services defied recession expectations. The likelihood of a recession in U.S. has been revised downwards by various institutions. Following March and April, financial stability concerns have become more muted and the prospects for advanced economy policy upgrades have readjusted towards the type for longer phenomena as was the case in February.
During -- when turning back to the domestic economy, the adverse impact of the earthquake on production and spending proved temporary, while the COVID costs will continue to shape fiscal balances, economic growth and inflation in the medium-term. Given the recently introduced fiscal consolidation measures with the broad-based increase in taxes and the tightening in quantitative loan policies, we believe the economy will be steered towards a rebalancing path regarding the pace and composition of aggregate demand. We contemplate a soft landing scenario for the second half of the year and project the GDP growth to be around 4% for the full year.
The policy actions towards rebalancing along with the considerable adjustment in exchange rates are expected to facilitate an improvement in the current account balance, which will help mitigate the external financing needs for the rest of the year. Nevertheless, inflation pressures remain for the rest of the year as well, with the recent developments on exchange rates and adjustments in taxes and administrative prices and the wage increases. Therefore, annual inflation most probably troughed at 38% in June. We project annual consumer inflation to be at the high 50s by year-end.
With the elections behind, there has been a policy shift towards normalization in Central Bank policy rate as well as the existing regulatory environment. The easing of the TL deposit ratio and the very recent adjustments in loan rate caps multipliers is expected to support margins, which were eroded in the second quarter of the year.
Despite these challenges, banks remain healthy and resilient with sold capital buffers and liquidity. Moving on to Akbank strategic and agile balance sheet achievements. We continue to have a superior capital buffers with our newly issued July Q2 actually, our capital adequacy ratio would even be higher at 17.8%. While growing key focus remains on keeping our balance sheet intact by a voting maturity mismatch and keeping long duration fixed-rate bulk purchases at minimum levels.
Our strategy resulted in a total size of fixed rate bulk purchases for CBRT pledge to be limited at only 2% of our total assets, which has been the lowest among peers. With regards to the regulations, Basel implemented different strategies, making short-term cost evolution and growth trend comparisons very difficult. With the latest normalization steps of this CBRT, going forward, we believe, comparably will also be simplified.
Due to rise in time deposit costs, avoiding fixed rate bond purchases had some negative impact on our NIM, which is obviously temporary. We made a choice for long-term versus short-term profitability and put into our capital for future profitable growth. I am very happy to share that we have already started to see improvement in our marginal NIM. We will continue to leverage our strong capital and invest, innovate and grow. And while growing, we continue to acquire prudent risk management and build provisions.
Thanks to our solid risk approach, our Stage 2 plus Stage 3 loans in total is limited to only 8.7% and both have strong coverages actually at all-time high. As for liquidity, we feel very comfortable on both TL and foreign currency. Our low LDRs on both sides gives us a lot of moment ammunition for growth more than ever. Retail banking remains a strategic focus area for growth. I am happy to share that we added a solid 1.3 million net active customers year-to-date. And this is on top of the net 2.3 million acquired last year, taking up active customer base to 12 million, up by 45% in the last 1.5 years.
Looks like we may have to revise up our additional 5 million target that we had shared with you earlier this year for 2025. This customer acquisition has resulted in record high market share gains across the board in consumer loans, broad-based deposit base and demand deposits. Over the last 1.5 years, while acquiring customers will also increase our cross-sell. All these achievements have shown itself in fee income evolution, which continue to enhance on a quarter-on-quarter basis, resulting in our fee income market share among private banks to storage by 240 basis points just during the first 5 months of the year.
This is the latest data available by BRSA monthly data. The importance of especially investing to the cycles has been a key driver in this performance. We ended the quarter with a record TRY 20.307 billion net income, up by an eye-catching 90% quarter-on-quarter, resulting in a solid 5.8% ROA and 50.3% ROE. This takes our first half net income to a robust TRY 31 billion, up by 47% year-on-year with an ROA of 4.7% and ROE of 39%, which is well ahead of our full year guidance.
Buffers remain for both ROA and ROE as we use 40% for our CPI linker valuation. Our strong momentum in customer acquisition has enhanced our quarterly fee income up by quarter-on-quarter 34%, supporting our core revenue generation. Another strong look of the bank has been our treasury management, which have always demonstrated capability in generating high returns. This quarter is no exception. With the agility and balance sheet management, timely hedges and strong customer-related business, we leveraged our exquisite treasury management to further boost our net income. Our customer-centric organization, sound balance sheet management and significant excess capital puts us in a position of strength.
And now moving on to key drivers of our solid first half performance in more detail. Our TL loans were up by 23% year-to-date, where our focus remained on maturity mismatch and lucrative small tickets. Main contributor was consumer loans, up by 50% year-to-date as the [ back ] motivation and high-yielding small tickets continues at full pace. This motivation has resulted in a record high and broad-based 270 basis point market share gain among private banks in consumer loans. And this is on top of the 90 basis points gained last year.
We also gained an eye-catching 90 basis points market share in customer credit card year-to-date, driven by our strong customer acquisition. In business banking, however, we temporarily faint to grow due to regulatory pricing caps. Latest normalization steps make us more comfortable to grow going forward. This is showing itself in the latest market share gains. Thanks to our investment analytics and excellence in AI-based loan decision systems, the probity of default of the retail loan portfolio remained at low levels, while we have been growing. Our 360 degree customer-oriented holistic organization structure as well as competitive products and advanced digital solutions will continue to be supportive factors for our growth.
On the FX loan side, demand remained muted in the first half of the year, in line with our guidance. Our net FX loans were down by 1.6% to $10.5 billion as of second quarter.
Moving on to the security Slide. Interest rate risk management remains in focus for our [indiscernible] positioning as well. Our total securities were up by 25% year-to-date, mainly led by the high-yielding TL corporate bond primary issuances, which amounted to TRY 21 billion and have an average maturity of less than 1 year. Almost half of our total securities portfolio consists of floating rates, which includes CPI incurs.
As for TL Securities alone, more than 70% is floating. TL Fixed Rate Securities, excluding these corporate bond issuances classified under fair value through other comprehensive income or in other words, available for sale is limited to only 5% of 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 120 billion, which equates to 71% of our equity or 8% of our total assets. As showed earlier, buffer remains with the 40% valuation that we are using for the CPI linkers and our October-to-October inflation expectation for now is actually over 50%.
Every 1% CPI has TRY 650 million net income, 7 bps NIP and 40 basis points ROE contribution on a full year basis. As shared in several occasions, our foreign currency securities, which make up around 40% of the total or [indiscernible] hedged like mainly 2 years ago against Fed rate hikes. Having met the 60% TL deposits in total as of February we have been able to manage the regulatory fixed-rate securities portfolio around only 2% of our total assets, which has actually been well below our peers. Similar to the first quarter, we continued with high yielding, averaging around 33% corporate bonds at primary issuances and more over granted mainly TL ref-indexed loans with significant positive spreads.
As a result, we maintain our leading position in these high-yielding corporate bonds, which stand at TRY 21 billion and around 1.5% of our total assets and this strategy mitigates some of the negative impact of the lower-yielding regulatory fixed rate bonds. Also for optimization purposes, switch transactions have been executed by selling bonds with higher market prices to CBRT and replacing them with higher-yielding securities, mainly to treasury options. As for our clean trading line, which boosted our bottom line, many factors contributed, namely broad-based customer business through all channels in both FX trading and rates due to widened spreads, proactive positioning our balance sheet hedges and as well as the trading team's ability to leverage any arbitrage opportunities in the market.
As we have demonstrated in the past quarters over and over again, we have confidence in delivering solid performance in the trading line going forward. And thanks to the strong listing of the bank, we were able to mitigate the pressure on profitability due to regulatory limitations suppressing NIM.
On the funding side, we maintain our focus on well-diversified and disciplined funding mix. Deposits continue to be our main source of funding with 66% share in total liabilities. Our total TL deposits were up by 39% year-to-date, while our sticky low-cost TL time deposits surged by 54% in the same period with the share in TL time deposit standing a solid 65%. Our 0 cost TL demand deposits were also up by an outstanding 36% year-to-date, respectively. Thanks to our sound customer franchise and our success in customer acquisition, our market share in widespread consumer-only TL deposits among private banks has increased significantly over the last 1.5 years. Especially worth to underline, our 170 basis worth market share gain in TL time deposits, which support our small ticket deposit base.
Our market share in demand deposits among private plants also increased by 90 basis points -- while our commercial demand deposit market share increased by 220 basis points in the same period. On the regulatory side, as I shared earlier, the TL share in total deposits is about 60% since February. ESG remains as a key priority in wholesale funding reaching 57% of the outstanding, including our recent Tier 2 issuance. Our $500 million social syndicated loan in April, which is the first in Turkey, will be used to support the trade finance transactions of our customers affected by the earthquake. Also, we just completed a $300 million Sustainable & Gender Tier 2 issues this week. Thanks to the joint efforts of 3 IFIs based on different geographies from Asia to U.S., this marks the issuance of the first Gender Tier 2 in the world and also supports a green SME and commercial clients through our sustainability strategy and recently enhanced sustainable finance framework.
Lastly, our foreign currency LCR was adjusted for our strategic 3-months swaps positioning actually, which were not included in this calculation, would be above 400%, similar to our first quarter LCR. Moving on to the NIM. We ended the first half of the year with 4.3% NIM in line with our guidance shared at the beginning of the year. During the first half, regulation supporting the realization 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 on TL core spreads. Our management focus remains on maintaining low maturity mismatch.
Therefore, we proactively comply with the regulations in order to keep the regulatory fixed rate bond purchases at low levels. Our balance sheet is strategically designed for a quick recovery in core space. We have a sizable TL ref-indexed loan portfolio with high spreads as well as overdraft loans, which has already started to reprice after CBRT's rate hikes. Thanks to this positioning, around 80% of our total TL loans will either reprice or mature until year-end, bulk of which within the next 3 months.
Also, our treasury has timely locked in 3-month swaps ahead of the rate hike cycle, which will be supportive for NIM evolution going forward. I can comfortably share that modular NIM bottomed out in the beginning of the third quarter. And as I shared earlier, there are still buffers remaining because of CPI linker valuation.
Going forward, thanks to agile ALM and prudent and proactive maturity mismatch management as well as our sole customer deposit franchise, we remain confident in our full year NIM guidance. I mentioned earlier, but just to share a few more numbers, our momentum in customer acquisition continues at full pace.
Our active customer base reached 12 million, up 45% in the last 1.5 years, similar to first quarter, 60% of our new-to-bank customers were acquired via digital on-boarding, underlying the strength of our digital capabilities. We have further penetrated into demand deposits and the daily cash flows of our customers by almost doubling salary and pension customers over the last 1.5 years. We continue to leverage the digital on-boarding and [ hope to see ] revamping our value propositions also for our young customers. Our active product portfolio, which is a function of active customer base and average cross-sell per customer has actually increased by 32% year-on-year, reaching all times high.
This solidifies our customer base revenue generation for the coming periods. Our digital strategy, which is based on our customers' journey continues to show in the numbers. We have reached 10 million customers, up by over 51% over the last 1.5 years. Our digital customer enters our mobile app 31 times a month, so more than once a day, supporting sustainable fee income. On the commercial revenue side, we further extended our outstanding performance across the board. Our net fees and commission income was up by an eye-catching 154% year-on-year and 34% quarter-on-quarter. This is well ahead of our full year guidance of around 60%, indicating a significant upside for the year.
All business lines continued to contribute positively, underlying the sustainability of our fee income generation going forward. And as I shared earlier, more importantly, there is worth to underline that we have gained 240 basis point market share among private banks according to latest BRSA multi-data as of May.
On to the OpEx side. So challenges remain on the OpEx. Our OpEx was up -- was actually down on a quarterly basis by 2%, but was up on a yearly basis when adjusted for the one-offs of the earthquake to about 115%. However, our low OpEx space does provide leverage and gives us significant competitive advantage and obviously a lot more flexibility during an inflationary environment. And obviously, cost discipline will also continue. And as proved, you can see here that our cost-to-income ratio improved to 32% despite the inflationary environment.
Now moving on to asset quality. Our loan portfolio continues to perform well with continuation of strong repayment performance and almost no net inflow into Stage 2 when excluded for currency impact and provisions, as you know, for the currency side are fully hedged. As for Stage 3, collection performance remained robust and broad-based, surpassing new NPL inflows, resulting in negative net new NPL evolution in the second quarter of the year. Hence, we completed the quarter with a further 30 basis point improvement in NPL ratio to 2.1%, which is in line with our full year guidance of below 3%.
Share of the Stage 2 and Stage 3 in our gross loans, which would be deemed potentially problematic continue to be limited at 8.7% with strong coverage. Meanwhile, all leading indicators regarding asset quality evolution remain intact, thanks to our prudent risk management and healthy loan portfolio composition. Our cost of credit evolution underlines a practive provisioning as well as our healthy loan portfolio composition. We ended the first half of the year at 114 basis points net cost of credit, excluding currency impact including 20 bps of proactive earthquake related provisioning. Excluding our cautious provisioning for the earthquake, our net cost of credit, excluding currency, would be at 94 bps, just in line with our full year guidance around 100 bps.
Despite our solid loan growth, our coverage ratios have further increased significantly year-to-date and an additional loan loss provision build of TRY 5.4 billion. For Stage 1, our coverage ratio is at 8.8%, up from 0.7%. For Stage 2 or Stage 3 loans, our coverage ratios increased more than 200 basis points year-to-date to 18. 5% and 17.1%, respectively. As for Stage 2 our [indiscernible] coverage, there's a slight year-to-date decrease given the increased level of Stage 2 loans mostly related to the currency increase.
We believe our robust provision build and solid collateral values will limit the need for unforeseen additional provisions. Our total capital, Tier 1 and core equity Tier 1 ratios without forbearances remain quite robust at 17.1% and 14.9%, respectively, despite the negative impacts that have been driving from credit growth, for example, which was 181 bps but 121 bps of that is actually due to currency. And the Tier 2 call, which we actually did as well, which had around 81 bps impact, negative impact. While our strong profitability also effected on to our capital position as our internal capital generation added a solid 186 bps to our total capital quarter-on-quarter and reaching almost 300 bps year-to-date.
Worth to note that adjusted for the $300 million worth of Tier 2 issuance that we just completed this week actually or yesterday, our capital ratio would be at 17.8%. Also, please note that adjusted for the temporary risk weight increase applied by BRSA, our capital would even be 140 bps higher at an outstanding 19.2%. To give some sensitivity, 10% depreciation in TL results around 45 basis point decrease on our capital ratios will impact initiatives for a higher amount of changes. And 100 bps increase in TL interest rates results in 7 bps decline in our solvency ratios, again with a diminishing impact.
Our sound capital buffers will continue to serve the shield against any unprecedented challenges and volatility, but also create significant ammunition for sustainable profitable growth. On this slide, we'll find a summary of our solid first half performance. Though there are challenges on the OpEx side, the revenue generation capabilities of the bank includes a significant upside potential in fees create upside potential for our full year ROE guidance.
Now moving on to the field actually slides on the ESG slide, and then we will open the lines for Q&A. In first -- it's actually in the second quarter, we remained committed to our long-term ambition in supporting the sustainable transformation of our economy. We have provided TRY 47 billion of sustainable finance year-to-date, totaling the support to TRY 135 billion since the beginning of 2021, almost 70% of our 2030 targets, which obviously shows that there could be revisions coming forward.
On the ecosystem side, we also continue to contribute to the system for a more inclusive innovative economy. We are proud to introduce our entrepreneurship banking solutions with a dedication team -- with a dedicated team actually in our SME banking division. We have designed solutions that meet both the financial and nonfinancial needs of the entrepreneurs with various partnerships. And for more details, please do check the annex of the presentation as well as our ESG presentations on our website. This concludes our presentation, and we'll now go into the Q&A session. So please do raise your hand if you have any questions or type in the Q&A box. And for those of you who are joining us through telephone, do send your questions to us by e-mail at investor.relations@akbank.com.
And the first question comes from Waleed Mohsin.
Few questions, please. First of all, starting with your comments on margin, which you mentioned has [ troughed ] during the quarter. If you could kindly talk about the TL deposit and TL loan spreads that you're seeing? We've been hearing that deposit costs have been coming down -- so wanted to get -- I wanted to get a sense of where you are pricing your new time deposits? So that would be the first question.
Secondly, you briefly touched upon it Ebru, but if you could still perhaps elaborate a little bit more on how are you adjusting your balance sheet to some of the recent regulatory changes? And then linked to this, my third question, which is what are your expectations around further regulatory changes?
And what part of the current regulatory setup is the most challenging for the bank? And my fourth and final question, the comment, please, on the tax rate expectation for second half of this year and into 2024.
Maybe I can start and then maybe also Sebnem may also contribute. With regard to the latest margins on the TL side, yes, as you have also mentioned after end of second quarter with some simplification steps on the regulatory side, deposit costs have come down from mid-30% up to 40% levels currently to mid-20% levels lately. And on the loan side, as you know, because of the rate hike, and it's reflection to the interest rate cap for the landing side.
Currently, we are pricing our commercial loss at around 25% levels, consumer loans are priced up to 40% level. So blended dropped at 30% levels. So we can say new business or new marginal core spread is generated at a 5% spread, excluding demand deposit impact. And also, last -- a few days ago, there were some additional announcements made by Central Bank. It will also create additional room for further repricings and additional repricing potential on the TL loan side. On the regulatory changes side, what we may expect -- as we are also hearing from the economic team, there may be additional normalization steps coming from the special Central Bank.
Actually, they have already started to simplify on the rate cap side and also increase on the credit card interest rates, et cetera, and also simplification of the conversion requirements from FX deposits, TL deposits. I think it's -- this will continue going forward. And maybe one question was, what was -- what is the most challenging regulation that we are having right now? I would say it is the existing -- the latest conversion requirements from FX deposits to TL. Every month, we have to convert at 10% from FX to TL. On the tax rate impact side, this 5% corporate tax rate increased will be reflected into third quarter figures and also going forward, we will apply it.
What I can say is actually for full year ROE, this additional 5% corporate tax will have roughly 2% ROE debt for full year. So that's actually -- what I can say actually with regard to your questions, I may also -- Sebnem add some additional details.
Maybe just a quick remark. Hi Waleed. You had a question on the rebalancing side of the balance sheet as well. On the rebalancing side, actually, the regulation is still quite strict because there is a 3% cap on the loan growth of lots of the products and that cap has been decreased to 2.5% actually very recently. So it's quite difficult to rebalance the portfolio as far as the loan portfolio is concerned. However, we still have room for improvement in the optimization side. And we believe that there might be some more changes in the regulation moving forward for the rest of the year. which might enable us to rebalance the portfolio. But currently, we are still tied to the regulations.
One follow-up, please. On the tax side, so it will not be applicable retroactively, right? So first, second quarter doesn't get impacted. It's only third quarter onwards?
No, Waleed -- it will be a retrospective as well, but we will reflect this 5% additional impact of the first half into our third quarter figures. So that actually, the tax charge in third quarter will include first half as well.
Okay. Thank you for clarifying. Thank you.
Okay. So until we see some of our hands within, there actually are some questions online I would like to ask -- so I see here, could you please share your views on your expectations regarding the credit developments for the next half of the year? There's a lot of asset quality questions coming up, both on growth and asset policy.
Yes. On the growth side, actually, as also as Sebnem has mentioned, we have to see this 3 months -- 3% monthly growth ratio with 2.5% growth limitation on a monthly basis, which there are some surely exemptions. But nevertheless, even though we have it actually, we believe we can meet our full year guidance of 40%. With regard to asset quality evolution, as every has also shared also second quarter figure evolution was quite intact. So net inflow into Stage 2 and Stage 3 was close to 0, actually, except for the currency impact.
And as a result of which actually our Stage 2 and Stage 3 ratios are -- have improved in the second quarter. Going forward, when we look at the latest trends, we don't expect a major change in this trend. So we don't expect a significant deterioration in the asset quality, maybe which they believe into a high inflation or higher interest rates. But nevertheless, as you know, we are continuing to book additional provisions and we will not deviate from this strategy going forward. But all in all, we are currently confident with our guidance and with our provisioning trend.
Okay. Next question comes in from Konstantin.
Thank you very much. I had two quick questions that I wanted to ask. The first one, could you please comment -- so there has been a discussion that Turkish Lira deposit rates have started to come down quite notably. And this, in part, related to some easing in the deteroriation regulations from the Central Bank. So could you please comment what are the major steps? What specific measures has been changed which constitute this softening of the regulation?
I believe there was a discussion of that some conversion or targets from FX in to Lira have been tweaked or changed. What exactly contributed from the regulatory standpoint to this material drop in the deposit rates? And the second question, going forward from now on into the year end, what's your take? Are the credit conditions going to tighten to soften from the current levels? What -- because credit growth is quite constrained as of now. So should we expect some acceleration of -- so how should we think about this going forward?
Konstantin, maybe I can start with your question regarding TL deposits. First of all, as you know, we had to meet 60% TL, total deposit ratio requirements until end of June. Now it is down to 57%. So it is giving us some room in this respect. And secondly, the conversion ratios were from affectable to TL deposits were much tighter in the past, and we had to meet the converged ratios separately for consumer deposits and commercial deposits. Now we are able to meet the 10% conversion ratio in total.
So actually, you can again, [ minor ] between commercial and consumer loss and rollover from existing FX protected deposits scheme is also taken into concentration -- to partially take into consideration in this conversion ratio calculation. And this is also taking -- so giving us some room in bringing down our deposit costs. With regard to credit conditions going forward, yes, now we have -- we currently have this 2.5% monthly growth cap on the commercial loss except for investment loss or export type of loss.
Going forward, whether there may be -- there may be some release in this ratio. Next year, in the first quarter, there would be [indiscernible] elections and maybe ahead of the elections, Central Bank may revise these limitations in the coming months. So we'll wait and see.
Understood. Just a quick factual confirmation. This 10% conversion target to the target per month, right, from FX into TL. And so the level -- this level was unchanged. Right? So 10%, it was in the past, and it remains at 10%. But if we see supplementary...
There were 2 ratios -- it was actually there was a 10% ratio and additional 5% -- actually in simple term, it was 15%. And we have to meet it separately for consumer and commercial down to 10%. And rollovers are also taken into consideration and that we actually, it is a bit easier than in the past to meet this commerce. And actually, in the past, we had to -- the denominator was fixed to end of March. Now we are using always the last months figure as a denominator.
And the next question comes from Pinar Uguroglu.
I have two questions, really. One, you have posted some TRY 25 billion in trading gains and losses, and bank of it -- all of it comes from derivatives -- derivative transactions rather than FX. So I would like to understand the nature of these transactions and whether this sort of phenomenal number can be repeated if the currency rate doesn't move much, meaning that if the Turkish lira, dollar parity stays where it is, is it repeatable the derivative gains -- and on -- I might have missed my second question. Where do you stand on the Turkish lira deposit rates ratio on repurchase and corporates?
What is the current rate right now for you? I assume you're above 57%, but what's the ratio right now.
Hi Pinar, I'll take the questions. The second one is quite straightforward. We are higher than 57%, quite comfortable on that. On the trading income side, actually, the result was not a surprise. If you look at our past performance, quarter-on-quarter over the years, over the past 5 years, actually, we have been delivering out-performance relative to our peers.
This quarter was very volatile market environment actually. And when you look at the trading income, there are a variety of factors in the breakdown of the profitability. [ TRY 2 billion ] was coming from the fixed income trading actually. So the main portion was coming from FX trading of sales. When you look at the FX trading of sales, it was coming from the client business, very well spread around all kinds of customers, corporate customers, commercial customers, retail customers and all the channels, actually, both mobile and the branches and the treasury sales department as well. It was very well diversified. And what was very lucrative is that spreads we had because of the currency volatility.
On top of the FX trading profits, we had balance sheet positioning, both on the TL and the FX side. And our trading desk has been a talented team looking for arbitrage opportunities, and they try to make the most of these opportunities at all times. Looking forward -- moving forward, I'm pretty confident that we will again deliver strong results. And I think the past performance shows that we can deliver that.
Thank you very much. On the sort of income statement breakdown, it looks like the FX trading was actually at a loss for you, but you have posted a lot of derivatives in our solution and [indiscernible] that are derivative saving gains. That's why I asked. I thought it was a fixed rating, but it spoke as derivatives. Is it any more like your forwards or...
Sorry. Maybe the team can turn to the next page to show the clean trading because we are -- as open are, we try to make sure that we classified in accordance to the analysts because it's very difficult for you to look at the overall footnotes and understand the clean, let's say, trading income. So if you look at the annex of the, let's say, of our presentations on [indiscernible], you can see here basically the details regarding the overall clean trading? And maybe [indiscernible] just if you want to comment on...
Actually, Pinar, this is Turker. In the BRSA promote actually, these lines to trade FX income and derivative income and loss lines. They are actually mixing to each other. So off balance sheet. So FX part of the swap is going to the FX income loss line therefore, actually, as Ebru has mentioned, we should refer to the presentation -- investor relations presentation.
You're welcome. And there are a few, let's say, written questions that have come through. On of them is regarding the first half results indicating inflation adjusted ROE?
Yes, we are currently finding, I think, our first half inflation adjusted financials. But what I can see is actually, based on draft calculations, our inflation adjusted ROE for first half is at plus/minus 10% levels.
Another waiting question regarding the swap cost, there seems to be a gain. Can you please specify what has happened there?
And in our swap book, there are also some IRS transactions where we have a net refuel position, and this net refuel position has strengthened because of the market conditions, especially in the second quarter, there are actually, this time, it's not a swap gain and not swap cost. And we made this -- we made also in -- for this transaction to make clarification for the first quarter. Therefore, actually, first quarter figure has also turned in just small, positive figure compared to our first quarter presentation.
There was just a reclassification between trading income line and the swap of line.
Another question is regarding your full year NIM guidance is between 4% to 5%. Do you expect any fluctuations? Or do you expect a stable trend for NIM for the remaining parts of the year, and hence, your ROE guidance for the remaining of the year?
Yes. Actually, now in the -- we are starting third quarter from lower net interest margin. As you know, we added second quarter at -- so second quarter only was 3.8%. But I think all in all, also with potential adjustment to our CPI linker estimation. I think quarterly NIM will again evolve at similar levels. So we will stick to our 4% to 5% full year guidance. With regard to ROE, our latest forecast for full year, showing that our profitable trends is at similar levels to the first half of the year. But we have to keep in mind that we will have to adjust -- we will have to reflect this additional corporate income tax for the second quarter -- into the third quarter.
And also, it will also include a first half tax impact as well. But what I can say is actually, all in all, our ROE for full year is expected to be at mid-30% levels.
Okay. Simon -- next question comes from Simon.
Quick one from me. Sorry if I missed this, but can you tell us how much of your TL deposits are FX-protected deposits? And I'd just be interested in your thoughts about how you think the authorities might unwind that scheme and when that could happen? Or if you think it might happen -- when?
I can maybe answer the first part. So around 55% of our TL time deposits are FX protected -- so lately, maybe, Sebnem?
Yes. Simon, the FX protected deposit size has become very high, actually, it's TRY 3 trillion. Tomorrow, we're going to have Central Bank's press conference actually. That's going to be the first time we're going to see the governor talking to the press and taking questions. That meeting will probably -- we're hoping that the market is expecting that we'll have a guidance for the next -- for the rest of the year, how the monetary policy is going to evolve and how the regulations are going to evolve moving forward. Maybe because to have a sense from that meeting. My personal belief is we will have this FX protected this deposit until the end of this year. And then we will probably have an exit plan moving forward to the next year.
And what kind of rate environment do you think is needed to exit from that smoothly? Because I guess...
Well, everything is going to drill down to inflation levels. So probably, we might be seeing some more rate hikes -- gradual rate hikes. That's the guidance you're getting from the Central Bank. But I think tomorrow, we'll have more insight on these forecasts.
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