Page 61 - TURKRptSept19

grow to 6% by the end of this year.
“We think the risk of a banking crisis is still high—the balance of payments risks are elevated and we are concerned about the NPLs, but I think we are looking at a lower probability compared to what we were discussing in August and September last year,” Reuters quoted Rybnikov as saying.
Rybnikov added that the combined level of problem loans, including both NPLs and restructured loans, was expected to rise to about 20% for the system as a whole.
He also downplayed the likelihood of capital controls in Turkey, saying they were “very far” from S&P’s baseline expectation and would only be used as a last resort by the government.
S&P on August 2 kept Turkey's long-term foreign currency credit rating at B+ and preserved the country’s long-term local currency credit rating at BB-.
“Despite the absence of a coordinated and proactive policy response, the Turkish economy and banking system will navigate existing challenges over the next year, helped by the U.S. Federal Reserve's looser monetary policy,” the rating agency said, explaining its action in a statement.
Rybnikov’s rather optimistic comments regarding the local banking industry came less than a month after Moody's Investors Service downgraded 18 of Turkey’s banks, cutting their local currency long-term deposit ratings, and their local and foreign currency senior unsecured and issuer ratings (where applicable) by one notch and maintaining the outlooks as negative.
This rating action followed Moody's surprise downgrade, on June 14, of Turkey's sovereign bond rating to B1 from Ba3, with a negative outlook, which also resulted in the lowering of the ceiling for foreign currency deposits to B3 from B2.
8.5 Fixed income
Non-residents' holdings of equity and government domestic debt securities ($ mn) (Market Value)
2017
2018
Jan
Feb
Mar
Apr
May
Jun
Jul
As of Aug 23
So far 2019
STOCK
Equity
51,984
29,563
35,260
34,684
29,339
27,995
26,382
28,832
31,345
29,010
31,828
GDDS
30,942
18,325
19,246
18,095
14,514
13,269
12,811
14,622
15,881
15,137
15,315
Repo
2,403
314
340
330
309
297
322
351
392
440
404
Private
959
612
591
501
543
489
473
492
465
442
453
NET TRANSACTIONS (Adjusted for Foreign Exchange and Market Price Effects)
Equity
3,191
-904
1,335
59
-517
-21
-196
192
-5
-372
475
GDDS
7,278
-906
-329
-377
-868
-489
-540
131
235
62
-2,176
Repo
271
-1,391
15
-4
15
5
24
-8
23
60
130
Private
42
-343
-21
-90
42
-53
-16
19
-26
-24
-170
source: tcmb
61 TURKEY Country Report September 2019 www.intellinews.com