Page 41 - TURKRptJul19

Africa, are said to have helped the Turkish government strengthen the lira ahead of the Istanbul revote.
The South African rand and Turkish lira are negatively correlated, while both governments do their damndest in hurting their countries’ economic outlook long term. Lately, there has been talk that the South African government has managed to spook investors into opening a long lira position against the rand.
Turkey reportedly to double forex sales tax on individuals. Turkey plans to hike its bank and insurance transaction tax rates to 0.2% from 0.1% for individuals’ foreign exchange purchases, in a move meant to curb a trend of Turks snapping up dollars and euros, people familiar with the plan told Reuters. In May, to help boost the beleaguered lira, Turkey increased the same tax to 0.1% from zero for forex sales. The plan to raise it again will not include lenders’ forex purchases, said one of the sources. The proposals by the Treasury and Finance ministry, which is run by Erdogan’s son-in-law Berat Albayrak, were expected to be presented to parliament in a few weeks. Apparently, with this move the government aims to reserve the dollarization trend that has been going on for months. In the face of high inflation, weak economic performance as well as geopolitical tensions and troubles with the US, locals have been hoarding foreign currencies, particularly the dollar, seen as a safe haven. The lira has lost nearly 40% of its value against the greenback over the past year. “The plan is to give the President the mandate to hike the tax further. This mandate may grant him the right to hike by 10 fold,” one of the sources said, adding that the final decision had not yet been made. The banking and insurance transactions tax on all forex transactions was set at 0.1% under a cabinet decision published in 1998. It was reduced to zero in 2008 and remained there until the decision in May. Last month, credit rating agency Fitch warned that the high level of deposit dollarization in Turkish banks could put pressure on the lenders’ foreign exchange liquidity in the event of a forex deposit outflow.
8.0 Financial & capital markets 8.1 Bank sector overview
Turkish banking industry
Jan
Feb
Mar
Apr
May
As of June 26
Assets (TRY tn)
3.86
3.94
4.14
4.29
4.27
Loans (TRY tn)
2.38
2.42
2.52
2.56
2.55
2.54
Gross NPL (TRY bn)
100
104
106
109
111
116
Gross NPL / Total Loans (%)
4.03
4.11
4.04
4.05
4.18
4.55
Deposits (TRY tn)
2.05
2.10
2.21
2.27
2.27
2.30
Equity (TRY bn)
426
433
433
440
439
Net profit (TRY bn)
3.20
6.48
12.4
16.2
19.7
Net Interest Income (TRY bn)
10.0
20.5
34.6
48.1
61.1
ROA (%)
0.08
0.17
0.31
0.40
0.48
ROE (%)
0.77
1.53
2.92
3.82
4.67
Bank Capital to Assets (%)
11.0
11.0
10.5
10.3
10.3
CAR (core) (%)
14
14
13
13
13
41 TURKEY Country Report July 2019 www.intellinews.com