Page 12 - TURKRptNov19

criminal case against Halkbank is a huge matter for Erdogan “as it alleges wrongdoing right to the top of his administration”, analysts have said.
Moody’s Rating Services released on October 24 a Halkbank ‘Update following review for downgrade’ in which it highlights a “weak operating environment, lack of market access, and historic governance issues at senior management level”.
Halkbank’s net profit declined by 72% y/y to TRY310mn ($54mn) in Q2. Trade losses jumped to a record TRY1.41bn in the quarter from TRY30mn a year ago, mainly due to a 24% q/q rise in swap losses to TRY1bn.
The market consensus forecast for the Q2 net profit was TRY316mn. A TRY385mn cut in provisions limited loss of profitability in the quarter.
Loans grew by 18% year-to-date to TRY287bn while the non-performing loans (NPLs) ratio rose to 4% due to a TRY1.5bn energy sector loan. Total assets amounted to TRY429bn and deposits stood at TRY267bn at end-June. Net profit declined by 68% y/y to TRY615mn in H1.
Meanwhile, Halkbank, along with state-run peers Ziraat and Vakifbank, have been launching consecutive packages to boost loan growth as part of the government’s plans to open the credit taps to reboot Turkey’s humbled and ailed economy in the wake of the 2018 balance of payments crisis.
At a press conference on October 21, held to announce the latest loan package, Hasan Tuncay, a deputy general manager of Halkbank, and Muhammet Lutfu Celebi, a deputy general manager of Vakifbank, said they have put profitability aside this year to support the economic recovery.
In response to the latest Halkbank indictment, the Borsa Istanbul temporarily prohibited short selling in banking shares within the BIST-30 Index,​ effective from October 16, within the scope of a decision taken by its chief executive. It said the shares affected were those of Halkbank, Akbank, Garanti Bank, Halkbank, Is Bank TSKB, Vakifbank and Yapi Kredi Bank.
The stock exchange also introduced a depositary restriction​. The move restricted investors to only selling their holdings in the seven banks in question on receiving the shares two days after their purchase. It also introduced a requirement that shares in the banks only be sold via the brokerage houses holding the shares.
On October 21, the Borsa Istanbul administration removed the depositary and brokerage restrictions but the short-sales ban remained effective as of November 4.
Major Developments in Halkbank case
2010-2011
Obama toughens sanctions on Iran
2012-2013
Booming gold trade in Turkey's foreign trade accounts catch growing attention
Mar/2013
Zarrab receives plaquet from Emine Erdogan for his donations to an association
Dec/2013
Corruption Scandal in Turkey: Gulenist prosecutor abruptly one morning orders the detention of dozens of people, including then Halkbank general manager Suleyman Aslan and Zarrab, along with the sons of some ministers in the cabinet of then PM Erdogan
Dec/2013
Erdogan takes the investigation as a direct threat to himself and his family after tapes of his phone calls with some family members were leaked day by day in something of a soap opera
Dec/2013
Erdogan manages to repel the investigation
2014-2017
Erdogan declares public war against his ally Gulen and he wins, particularly by using the failed so-called Gulenist coup attempt in July 2016 as leverage
12​ TURKEY Country Report​ November 2019 ​ ​www.intellinews.com