Page 75 - TURKRptMay19

Turkey's Yapi Kredi hikes commercial loan rates, analysts point to continued pressure from sinking lira. Yapi Kredi hikes commercial loan rates, analysts point to continued pressure from sinking lira. Yapi Kredi on April 29 pushed up rates on commercial loans by around 4 percentage points. Higher costs from the Turkish lira—which lost 30% of its valued against the USD last year, and has lost another 12% so far this year—may mean banks are are finding themselves no longer in a position to keep a ceiling on borrowing costs, despite substantial pressure from government officials. Yapi Kredi is Turkey’s fifth largest bank by assets. It stated on its website that the rate on commercial loans had been moved up to a maximum 33.95%. Reuters said the lender declined to comment on the decision to raise the rate. A week ago the rate was 29.5%, a banker told the news agency. The squeeze on lending could help stabilise the lira, but could hold back companies looking to hire or expand as Turkey’s economy claws its way out of a recession.
“We might see more banks increasing their interest rates on loans this week, ” a banking analyst told Reuters. Rates on cash deposits had also risen, he was also cited as saying. The weighted average deposit rate was 21% on April 19, up one percentage point from a week earlier, the central bank said. In the immediate wake of last summer’s currency crisis, interest rates on commercial loans leapt to around 40% as banks scrambled to cover a spike in funding costs. The gradual easing in rates since then is widely seen as having occurred at the behest of the government’s banking regulator.
As of April 19, the Turkish banking sector’s weighted average interest rates on commercial loans stood at 26.55% , according to central bank data, having steadily climbed since mid-March.
8.1.3 Deposits
The central bank’s regular weekly banking bulletin showed on April 11 that residents’ FX deposits declined by $800mn to $181.3bn as of April 5 . It was the first w/w decline since October 5.
75 TURKEY Country Report May 2019 www.intellinews.com