The 100 Billion Lira Milestone: 5 Surprising Realities from İş Leasing’s 2025 Performance

1. The Hidden Giant of Turkish Finance

In the high-velocity environment of the Turkish financial markets, İş Finansal Kiralama A.Ş. (İş Leasing) has long served as a vital, if understated, conduit of liquidity for the real economy. However, its 2025 consolidated financial results provide a masterclass in navigating volatility. By nearly doubling its net profit and crossing the 100 billion TL asset threshold, the Group has signaled a transformative shift from a sector player to a diversified financial powerhouse. For observers wondering how a company scales so aggressively amidst economic headwinds, the answer lies in a strategic pivot toward factoring and a robust reliance on its parent’s deep pockets.

2. The Inflation Paradox: Why 2025 Records Stand Without “Inflation Accounting”

For much of the Turkish corporate sector, 2025 was defined by the transition to “High Inflation Accounting” (TMS 29). Yet, in a counter-intuitive regulatory twist, İş Leasing’s record-breaking figures remain unadjusted. Per Note 2.1, the Banking Regulation and Supervision Agency (BDDK) opted to shield financial institutions from these adjustments for the 2025 cycle.

“The BDDK decided that banks and financial leasing, factoring, financing, and savings finance companies would not apply inflation accounting for their 2023 financial statements… and on December 5, 2024, the Board decided that these companies would also not apply inflation accounting in 2025.”

For the sophisticated investor, this is a critical distinction. The 101.2 billion TL asset milestone is reported in nominal terms. While the growth is undeniably impressive, it is measured with a yardstick that does not account for the erosion of purchasing power. In an economy where three-year cumulative inflation has breached 100%, these “nominal” records require a layer of strategic skepticism to discern real-term value.

3. The 88% Profit Surge: The Factoring Engine

The headline-grabbing figure of the 2025 report is a Net Period Profit of 3,630,137 thousand TL, representing a staggering 88% increase over 2024’s 1.92 billion TL. However, the true story is not found in the bottom line, but in the composition of its income.

While “Core Operating Income” (Esas Faaliyet Gelirleri) reached 16.8 billion TL, the primary driver was not leasing, but Factoring Income, which contributed 11.2 billion TL—nearly double the 5.6 billion TL generated by leasing operations. This suggests that İş Leasing is increasingly evolving into an “İş Factoring” powerhouse, leveraging shorter-term, high-velocity factoring transactions to outpace rising interest expenses.

4. The “Key Audit Matter”: The High-Stakes Game of Credit Risk

When PwC audited the 2025 statements, they identified the “Expected Credit Loss” (TFRS 9) models as the primary area of risk. The stakes are massive: the Group manages a gross receivable portfolio of 88.7 billion TL, with the risk split between 50.4 billion TL in leasing and 36.4 billion TL in factoring. Against this, they hold 1.83 billion TL in provisions.

“TFRS 9 is a complex accounting standard that requires a significant degree of judgment and interpretation in practice. These judgments and interpretations are of key importance in developing the financial models used to measure expected credit losses.”

PwC’s focus highlights the difficulty of predicting defaults in an uncertain macro-economic climate. For a strategic analyst, the slim provision-to-receivable ratio suggests a management team confident in its collateral but leaves the Group sensitive to sudden shifts in “default probabilities.”

5. The Trillion-Lira Iceberg: Understanding “Nazım Hesaplar”

While the balance sheet reports 101 billion TL in assets, the true scale of İş Leasing’s operations resembles an iceberg, with the vast majority of its exposure sitting “below the waterline” in off-balance sheet accounts (Nazım Hesaplar).

Total off-balance sheet items reached a monumental 942.5 billion TL in 2025. This includes 840.8 billion TL in “Guarantees Received,” effectively creating a nearly 1-trillion-lira safety net. By holding multiple liras of collateral for every single lira of asset on the balance sheet, the Group employs an extreme level of risk mitigation that few other financial entities can match.

6. The Foreign Exchange Tilt: A Heavy Euro Exposure

A granular look at the leasing portfolio (Note 9) reveals a significant tilt toward hard currency. Of the 50.4 billion TL in net leasing receivables, 43 billion TL is denominated in foreign currency (YP).

Crucially, this exposure is not diversified; it is dominated by the Euro, which accounts for 36 billion TL (equivalent) of that total. While this acts as a natural hedge against the depreciation of the Lira, it tethers the Group’s asset growth to the Euro/TL exchange rate. In an environment of currency volatility, the expansion of the balance sheet is as much a function of FX movements as it is of new business volume.

7. Conclusion: Sustainability and the Parent’s Shadow

İş Leasing has successfully navigated the climb from a 69.7 billion TL entity in 2024 to a 101.2 billion TL giant in 2025. However, this growth has a clear architect: Türkiye İş Bankası. According to Note 10, 25.8 billion TL of the Group’s 65 billion TL in total loans is sourced directly from the parent company.

Their trajectory is effectively fueled by the parent’s deep pockets, with roughly 40% of their funding coming from within the group. As we look ahead, the sustainability of this model remains the central question. Can İş Leasing continue to manage a 65 billion TL debt load and 13.9 billion TL in annual interest expenses if the factoring engine slows or if the parent company tightens its credit tap? For now, the Group stands as a nominal record-breaker, but the “real” test of its 100-billion-lira status will be its ability to maintain these margins in a post-inflation-accounting world.

Briefing Document: Consolidated Financial Performance and Audit Analysis of İş Finansal Kiralama A.Ş. (2025)

Executive Summary

This briefing document provides a comprehensive analysis of the consolidated financial position and performance of İş Finansal Kiralama A.Ş. and its subsidiary (the “Group”) for the fiscal year ending December 31, 2025.

Based on the independent audit conducted by PwC, the Group’s financial statements present a fair and accurate view of its financial position in accordance with the accounting standards of the Banking Regulation and Supervision Agency (BDDK). The Group experienced substantial growth in 2025, with total assets increasing from 69.7 billion TL to 101.2 billion TL. This growth was primarily driven by a significant expansion in the leasing portfolio. Net profit for the period also saw a sharp rise, reaching 3.63 billion TL, up from 1.93 billion TL in the previous year.

Key areas of focus include the management of credit risk under TFRS 9, the strategic importance of the leasing and factoring segments, and the impact of the regulatory environment, specifically the non-application of inflation accounting (TMS 29) for the 2025 period.

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1. Audit Framework and Independent Opinion

1.1 Unqualified Audit Opinion

The independent auditor, PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş., issued an unqualified opinion on January 28, 2026. The auditor concluded that the consolidated financial statements fairly represent the Group’s financial performance and cash flows for the year ending December 31, 2025, in compliance with “BDDK Accounting and Financial Reporting Legislation.”

1.2 Key Audit Matter: Expected Credit Loss (ECL) Provisions

A central focus of the audit was the measurement of expected credit loss provisions for leasing and factoring receivables, which constitute a significant portion of the Group’s assets.

Why it was a priority:

• The implementation of TFRS 9 requires complex financial models and significant management judgment.
• Estimates involve historical loss experience, current conditions, and forward-looking macro-economic scenarios.
• The auditor’s procedures included evaluating the design and effectiveness of internal controls, testing the accuracy of the “three-stage” classification system, and independent verification of macro-economic expectations.

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2. Consolidated Financial Position

The Group’s balance sheet expanded by approximately 45% during the 2025 fiscal year.

2.1 Asset Composition

The Group’s assets are dominated by financial receivables, specifically within the leasing and factoring sectors.

• Total Assets: 101,221,396 Bin TL (up from 69,747,305 Bin TL in 2024).
• Leasing Operations (Net): 50,316,196 Bin TL (representing a massive increase from 26,660,467 Bin TL in 2024).
• Factoring Receivables (Net): 36,455,462 Bin TL.
• Cash and Cash Equivalents: 2,844,664 Bin TL.
• Financial Assets at Fair Value (Other Comprehensive Income): 2,941,277 Bin TL (primarily reflecting holdings in İş Yatırım Menkul Değerler A.Ş.).

2.2 Liabilities and Equity

The Group maintains a high level of external financing to fund its operations.

• Loans Received: 65,055,592 Bin TL.
• Issued Securities (Net): 18,348,162 Bin TL (significant increase from 4,816,406 Bin TL in 2024).
• Total Equity: 13,453,550 Bin TL (up from 9,842,182 Bin TL in 2024).
• Paid-in Capital: 695,303 Bin TL.

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3. Financial Performance and Profitability

The Group achieved record profitability in 2025, nearly doubling its net income compared to 2024.

3.1 Key Income Statement Metrics (Jan 1 – Dec 31, 2025)

3.2 Notable Operating Trends

• Factoring vs. Leasing Revenue: Factoring remains the larger revenue generator (66% of main operating income), but the leasing portfolio showed more aggressive balance sheet growth.
• Foreign Exchange Impact: The Group recorded a net gain from exchange rate transactions of 2,797,910 Bin TL, a reversal from the previous year’s performance.
• Operating Expenses: Personnel expenses rose to 894,268 Bin TL, reflecting an increase in staff from 260 to 276.

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4. Credit Risk Management (TFRS 9)

The Group manages credit risk by classifying receivables into three stages based on their credit quality.

4.1 Leasing Portfolio Quality (31 Dec 2025)

• Stage 1 (Standard): 48,666,816 Bin TL (Provision: 242,035).
• Stage 2 (Significant Increase in Risk): 1,649,380 Bin TL (Provision: 290,461).
• Stage 3 (Impaired/Non-performing): 1,403,891 Bin TL (Provision: 749,984).

4.2 Factoring Portfolio Quality (31 Dec 2025)

• Stage 1: 36,319,947 Bin TL (Provision: 106,922).
• Stage 2: 135,515 Bin TL (Provision: 10,597).
• Stage 3: 527,328 Bin TL (Provision: 438,412).

4.3 Aging of Overdue Receivables

The Group monitors “Non-performing Receivables” (Stage 3). For leasing, 384,459 Bin TL of the portfolio has been overdue for more than 360 days. For factoring, 399,688 Bin TL is overdue beyond 360 days.

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5. Organizational and Regulatory Context

5.1 Ownership Structure

İş Finansal Kiralama A.Ş. is a member of the Türkiye İş Bankası A.Ş. Group. Its primary shareholders are:

• Türkiye İş Bankası A.Ş.: 30.52%
• Türkiye Sınai Kalkınma Bankası A.Ş. (TSKB): 29.46%
• Publicly Traded (Borsa İstanbul): 39.09%

The Group’s primary subsidiary is İş Faktoring A.Ş., in which the company holds a 78.23% stake.

5.2 Non-Application of Inflation Accounting (TMS 29)

The document emphasizes that, following decisions by the BDDK (dated December 5, 2025, and December 18, 2025), financial leasing, factoring, and financing companies did not apply inflation accounting for the 2025 fiscal year. Consequently, the financial statements were not adjusted for the purchasing power of the Turkish Lira as of the reporting date.

5.3 Related Party Transactions

The Group maintains significant financial ties with its parent, Türkiye İş Bankası A.Ş.

• Deposits with Parent: 1,626,299 Bin TL (FX) and 519,878 Bin TL (TL).
• Loans from Related Parties: A total of 25,866,343 Bin TL was sourced from Türkiye İş Bankası A.Ş. in various currencies (USD, EUR, GBP) as of year-end.

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6. Significant Accounting Policies and Estimates

• Revenue Recognition: Interest income from leasing is recognized over the term of the lease using a fixed interest rate. Factoring income consists of interest and commissions on client payments.
• Amortization: Tangible assets are amortized linearly over 3 to 5 years. Computer software and licenses (intangible assets) are also amortized over 5 years.
• Going Concern: Management has assessed and confirmed the Group’s ability to continue as a going concern, with no plans for liquidation or termination of commercial activities.
• Dividends: As of December 31, 2025, there are no dividends payable. The 2025 profit distribution will be finalized during the Ordinary General Assembly meeting.