TSKB’s 2025 Paradox: Why Turkey’s Oldest Investment Bank is Hiding 1.1 Billion TL From Its Own Auditors

1. Introduction: The 75-Year-Old Modern Giant

Founded by presidential decree in 1950, Türkiye Sınai Kalkınma Bankası (TSKB) occupies a singular space in the Republic’s financial architecture. As Turkey’s first private investment and development bank, it has spent three-quarters of a century navigating volatile cycles, yet the central question for 2025 is one of modern agility: How does a massive institution remain profitable while constrained by a “no-deposit” model? Unlike retail giants, TSKB has no authority to accept deposits (Mevduat Kabul Etme yetkisi bulunmamaktadır), forcing it to survive on high-margin development lending and sophisticated market operations.

While the bank’s consolidated assets have swelled to 334.3 billion TL (334,293,518 thousand TL), the real narrative is buried in the auditor’s “fine print.” To the casual observer, the numbers suggest a standard success story; to the strategic analyst, however, the 2025 financials reveal a management team engaged in a high-stakes balancing act between regulatory transparency and a conservative “rainy day” philosophy.

2. The “Rainy Day” Buffer: Why 1.1 Billion TL Triggered a Qualified Audit Opinion

In its independent audit report dated February 3, 2026, PwC issued a Sınırlı Olumlu Görüş (Limited Qualified Opinion). This was not a warning of insolvency, but an interrogation of TSKB’s management philosophy. The bank has chosen to maintain a massive financial cushion known as serbest karşılık (free provisions)—funds set aside voluntarily that sit outside the standard requirements of the Banking Regulation and Supervision Agency (BDDK).

As of December 31, 2025, TSKB maintained 1.1 billion TL (1,100,000 thousand TL) in these provisions. Strategically, the bank “unlocked” 950 million TL of previously held reserves during the year to bolster the 2025 bottom line, yet it stubbornly retained the remaining 1.1 billion TL despite auditor objections. From a reporting standpoint, this is a deviation from TFRS, as it obscures the precise loss-mapping required by law. However, for an analyst, it signals a masterclass in smoothing volatility. Per the PwC report:

“If the aforementioned free provision had not been set aside, as of December 31, 2025, other provisions would have been 1,100,000 thousand TL less, while net profit and equity would have been 950,000 thousand TL less and 1,100,000 thousand TL more, respectively.”

3. The 239 Billion TL Question: Managing Risk in an Unpredictable World

TSKB’s survival depends on its ability to manage a massive 239.3 billion TL (239,299,385 thousand TL) loan book, which accounts for nearly 72% of its total assets. In a high-interest-rate environment, the bank’s reliance on its mission—development lending—requires a sophisticated application of itfa edilmiş maliyet (amortized cost) and rigorous credit loss modeling.

Under the complex TFRS 9 standard, TSKB must account for “forward-looking macroeconomic expectations,” modeling potential losses across base, bad, and very bad scenarios before they manifest. To maintain this 10.7 billion TL (10,684,298 thousand TL) credit loss provision, the bank categorizes risk into three critical stages:

• Aşama 1 (Stage 1): Assets with no significant increase in credit risk; 12-month expected credit losses are recorded.
• Aşama 2 (Stage 2): Assets with a significant increase in credit risk since initial recognition; lifetime expected credit losses are recorded.
• Aşama 3 (Stage 3): Assets with objective evidence of impairment (default); lifetime expected credit losses are recorded with a 100% probability of default.

4. The Pension Fund Limbo: A Transition in the Hands of the Presidency

A persistent “latent risk” in TSKB’s portfolio is the TSKB A.Ş. Memur ve Müstahdemleri Yardım ve Emekli Vakfı Sandığı. By law, this private pension fund is slated for transfer to the Social Security Institution (SGK), but the timing is entirely dependent on a decree from the President (Cumhurbaşkanı).

Valuing this fund requires immense technical expertise and actuarial assumptions regarding discount rates and salary increases. While the actuary report dated January 23, 2026, confirms there is currently no technical deficit, the bank’s valuation of these liabilities remains a sensitive estimate. For investors, this represents a unique legal and financial limbo: a future liability with an unknown “trigger date” that requires constant actuarial vigilance.

5. Profits Amidst Pivot: The 11.4 Billion TL Bottom Line

The core of TSKB’s institutional stability is its relationship with the İş Bankası Group. While T. İş Bankası A.Ş. directly holds a 47.68% stake, the group’s total controlling interest is 51.37%, providing a bedrock of stability that allows the bank to navigate high inflation.

Financially, the bank reported a net period profit of 11.4 billion TL, but a senior analyst must look closer. Because the BDDK decided that Inflation Accounting (TMS 29) would not be applied in 2025, the 10.4% profit growth is nominal, not real. Furthermore, personnel expenses surged from 1.9 billion TL to 3.1 billion TL—a clear reflection of the “cost of talent” in a high-inflation economy.

Comparative Financial Summary (in thousands of TL)

Despite not having a deposit base, TSKB generated a staggering 37.1 billion TL in interest income, primarily driven by interest from loans (22.7 billion TL) and securities (10.5 billion TL). This highlights a successful pivot toward riskten korunma muhasebesi (hedge accounting) to mitigate the effects of fluctuating rates on its fixed-rate Eurobonds.

6. Conclusion: A Forward-Looking Look at 2026

TSKB enters 2026 with a robust equity base of 46.5 billion TL, but its nominal growth must be viewed through the lens of the missing TMS 29 adjustments. The bank’s resilience is undeniable, yet its balance sheet remains a study in contradictions.

As TSKB moves into its 76th year, one must ask: Is management’s insistence on maintaining an extra 1.1 billion TL “free provision” against the auditors’ advice a sign of excessive caution, or is it a strategic masterclass in long-term survival for an industrial giant that knows exactly how volatile the Turkish market can be? Regardless of the answer, TSKB has proven that even without a single lira in customer deposits, it remains an indispensable pillar of the nation’s industrial development.

Briefing Document: Consolidated Financial Performance and Audit Analysis of TSKB (Year-End 2025)

Executive Summary

This briefing document synthesizes the consolidated financial position and independent audit results of Türkiye Sınai Kalkınma Bankası A.Ş. (TSKB) and its financial subsidiaries for the fiscal year ending December 31, 2025.

The primary takeaway is that while the Group maintains a robust financial standing with total assets exceeding 334 billion TL and a net profit of approximately 11.3 billion TL, the independent auditor, PwC, has issued a Limited Qualified Opinion. This qualification is due to the Group’s maintenance of a “free provision” (serbest karşılık) that deviates from standard accounting regulations. Additionally, the report highlights critical areas of management judgment, specifically regarding Expected Credit Loss (ECL) provisions and the valuation of Pension Fund obligations.

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1. Audit Opinion and Basis for Qualification

PwC conducted the audit in accordance with Banking Regulation and Supervision Agency (BDDK) and Turkish Financial Reporting Standards (TFRS).

1.1 The Limited Qualified Opinion

The auditor concluded that, except for the impact of a specific “free provision,” the financial statements fairly represent the Group’s financial position.

1.2 Basis for Qualification

The Group maintains a total of 1,100,000 thousand TL as a free provision under “Other Provisions.”

• Current Year Impact: In 2025, the Group reversed (canceled) 950,000 thousand TL of previously set-aside provisions.
• Accounting Deviation: If this free provision had not been recognized:
  • Other Provisions would be 1,100,000 thousand TL lower.
  • Net Profit for the year would be 950,000 thousand TL lower.
  • Total Equity would be 1,100,000 thousand TL higher.

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2. Key Audit Matters (KAM)

The audit identified two primary areas requiring significant professional judgment and technical expertise.

2.1 Expected Credit Loss (ECL) Provisions

As of December 31, 2025, the Group held 239,299,385 thousand TL in loans and receivables, with a total ECL provision of 10,684,298 thousand TL.

• Complexity: Calculating ECL under TFRS 9 involves complex financial models, including “Probability of Default,” “Loss Given Default,” and “Exposure at Default.”
• Judgment Areas: Management must make assumptions regarding macroeconomic forecasts and the classification of loans into “Stages” (Stage 1, 2, and 3) based on credit risk increases.
• Audit Response: PwC evaluated the methodology, tested internal controls, and involved financial risk specialists to verify the reasonableness of macroeconomic expectations and individual loan classifications.

2.2 Pension Fund Obligations (Sandık)

The Group manages obligations for the “TSKB A.Ş. Memur ve Müstahdemleri Yardım ve Emekli Vakfı.”

• Regulatory Context: These liabilities are slated for eventual transfer to the Social Security Institution (SGK), though the specific date remains at the discretion of the President of Turkey.
• Valuation Risks: The valuation requires complex actuarial assumptions, including discount rates, salary increases, and demographic expectations.
• Status: As of the report date, an independent actuary found no technical or actual deficit requiring additional provisions beyond those already managed by the Fund’s assets.

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3. Financial Position and Performance Highlights

3.1 Consolidated Balance Sheet Summary

The following table summarizes the Group’s financial standing (figures in ‘000 TL):

3.2 Income Statement Highlights

• Net Interest Income: 17,860,647 thousand TL (up from 15.86 billion TL in 2024).
• Net Fees and Commissions: 832,651 thousand TL.
• Personnel Expenses: 3,106,961 thousand TL.
• Net Profit (Group Share): 11,323,717 thousand TL.
• Earnings Per Share: 4.044 TL.

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4. Organizational and Governance Structure

4.1 Ownership and Capital

The Group’s paid-in capital is 2,800,000 thousand TL.

• Main Shareholder: Türkiye İş Bankası A.Ş. Group holds 51.37% (including Milli Reasürans, Anadolu Sigorta, and Anadolu Hayat Emeklilik).
• Other Shareholders: T. Vakıflar Bankası T.A.O. holds 8.38%, and 40.25% is held by other entities and individuals (with a 41.20% free float on Borsa İstanbul).

4.2 Management

• Chairman: Hakan Aran.
• General Manager (CEO): Ozan Uyar (succeeded Murat Bilgiç in July 2025).
• Consolidated Subsidiaries: Includes Yatırım Finansman Menkul Değerler A.Ş. and TSKB Gayrimenkul Yatırım Ortaklığı A.Ş.

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5. Regulatory and Accounting Policy Notes

• Non-Application of Inflation Accounting (TMS 29): Per BDDK decisions (dated 5 Dec 2024 and 18 Dec 2025), the Group did not apply inflation accounting for the 2025 fiscal period.
• Taxation:
  • The corporate tax rate for banks was set at 30% in 2025.
  • A new Domestic Minimum Corporate Tax (Yurtiçi Asgari Kurumlar Vergisi) was introduced to be applied from the 2025 accounting period, ensuring tax paid is not less than 10% of earnings before certain deductions.
• Operational Scope: TSKB continues to operate as a “Development and Investment Bank” without the authority to accept deposits. Its primary focus is sustainable development-oriented credit and project financing.