Turkish bank stocks are poised to edge up further after their recent rally, according to a report on Monday citing analysts at U.S. banking and investment giant Goldman Sachs, who expect weaker inflation and falling interest rates to boost the sector in 2027.
"For 2026, we believe the risk-reward is fairly balanced, with much of the upside from the recent rally already priced in. However, for 2027, we see the risk-reward as skewed to the upside," Bloomberg News quoted analysts as saying in the report.
Goldman economists expect disinflation to continue, supported by the Turkish central bank’s cautious approach to interest-rate cuts and favorable comparisons to prior time periods. The central bank expects annual price gains to slow to between 15% and 21% at the end of the year.
“This environment should facilitate a downward rate trajectory, highly favorable for liability-sensitive Turkish banks, driving significant net interest margin expansion through 2026 and into 2027,” Goldman analysts said.
Turkish bank stocks have rallied this year, benefiting from broad positive sentiment, especially among foreign investors. The sector is up 22% year-to-date.
The Goldman analysts said that a critical inflection point could be reached in 2026 if Turkish banks' return on equity surpasses inflation for the first time in almost a decade, according to Bloomberg. That would enable banks to grow profits and book value in dollar terms, they added.
Turkish banks have seen strong profits throughout the past year, but easing in financing conditions would support them further.
Goldman also increased its earnings per share estimates by about 18% on average for the Turkish bank stocks it covers over 2026-2028. The firm maintained its buy recommendation on Yapı Kredi and Akbank, while upgrading its stance on Işbank to buy from neutral.
Turkish stocks in general have enjoyed a positive momentum since the start of the year.
The benchmark stock index opened Monday at 14,092.16 points, increasing by 1.13% or 158.11 points.
On Friday, the BIST 100 was up by 0.94% to 13,934.06 points at Friday's close, with a daily transaction volume of TL 171 billion ($3.9 billion).
The Banks Index rose as much as 2.4% on Monday before pulling back slightly to trade up 2.2% at 11:57 a.m. in Istanbul.
