BofA’s Turkish Bank Pivot: From Buy to Neutral Amid Inflationary Lag

Bank of America’s recalibration of its Turkish banking outlook signals a cautious shift amid stubborn inflation and delayed rate cuts.

Inflation’s Sticky Grip Tightens the Reassessment

Bank of America (BofA) downgraded its stance on Turkish private banks from Buy to Neutral after noting that the anticipated easing of inflation has stalled and the pace of rate cuts has lagged.

New Targets: A Quantitative Slide

■Akbank (AKBNK): Target price dropped from ₺89.143 to ₺84.

■Garanti BBVA (GARAN): Target price adjusted from ₺171.086 to ₺159.

■The downgrade reflects a broader view that the return on equity will remain below inflation for a longer period.

Market Repercussions: How Investors Might React

■Stock prices may see a short‑term decline as the market digests the neutral outlook.

■The change underscores the sensitivity of Turkish banks to macro‑policy signals.

■Investors may seek exposure to banks with stronger capital buffers or those positioned for a quicker recovery.

BofA’s move underscores the importance of monitoring inflationary dynamics and central bank policy timelines when assessing the resilience of Turkish banking equities. A cautious approach may be warranted until the inflationary drag eases and policy signals become clearer.