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Central Bank of Turkey data shows that loan growth in the banking sector was running at 30.35% y/y.
Turkey’s main state-owned lenders, namely Halkbank, Ziraat and Vakifbank, have provided more than 70% of domestic commercial loans since the beginning of the year, said a lawyer cited by the report.
The weighted average interest rate of Turkish lira-denominated commercial loans (excluding corporate overdraft account and corporate credit cards) has fallen to 9.61%, compared to 23.81% in July 2019, according to further data from the central bank.
Meanwhile, for dollar-denominated commercial loans, the average rate has dropped to 3.49% from 7.42%.
With the heavy involvement of state-owned banks in the latest wave of financial distress, there remains little incentive to put in place an effective restructuring framework that allows haircuts, as opposed to amend-and-extend solutions, according to market observers spoken to by Debtwire.
8.1.4​ NIMs & CARs
On July 30, Global Capital ​questioned​ the Turkish banking industry’s robustness in a story entitled “Lira dip raises spectre of currency crisis for Turkey with banks in crosshairs”.
It should not be forgotten that Global Capital is a leading sectoral publication for the global finance industry wont to distribute praise to financial institutions rather than question their financial robustness.
“Falls in the Turkish lira have reignited concerns about a currency crisis this week, with the Central Bank of the Republic of Turkey’s (CBRT) unorthodox exchange rate policy raising questions from investors about the robustness of the country’s respected banking sector,” the title reported.
“The [Turkish banking watchdog BDDK] has said that rules on minimum capital requirements and classification of problem or deteriorated loans would be relaxed until the end of the year... A flexible approach in enforcing the rules has been adopted by other regulators worldwide, such as the European Central Bank. Unlike other countries however, ​regulatory forbearance was already applied in Turkey before the pandemic, reducing the transparency and comparability of accounts​,” Moody’s Investors Service said on July 28 in its July 2020 Emerging Markets Insight report.
On July 30, @Supheci_Kimse, a prominent Twitter account that provides in-depth analysis on Borsa Istanbul-listed companies, wrote on Twitter that foreign investors asked both ​Garanti BBVA and Akbank, Borsa Istanbul’s top two popular lenders​, during teleconferences for Q2 financials: “​How much of your FX liquidity buffer stays in swaps with the central bank?​”
Akbank​ replied that it ​holds TRY26bn ($3.7bn) of its overall $9.7bn of FX liquidity in central bank swaps​. ​Garanti​ said it ​held $4.5bn of an overall $9.3bn in central bank swaps as of end-Q2​ but that the figures ​changed upwards to $6.5bn of $11bn​ due to decisions taken following the reported period.
“Since May, the CBRT has managed to keep its currency stable, mostly trading in a TL6.84-TL6.86 range against the dollar. The CBRT has defied foreign investor scepticism during that time, using unorthodox methods such as recycling state banks’ FX deposits to defend the lira’s exchange rate,” Global Capital also wrote on July 30.
42​ TURKEY Country Report​ September 2020 ​ ​www.intellinews.com