Page 38 - TURKRptMay20

Apr-19
Yapi Kredi
529
16
3.08%
Gelecek, Hayat
Mar-19
Yapi Kredi
396
24
6.07%
Efes, Gelecek
The European Bank for Reconstruction and Development (EBRD) has reported​ net profit of €1.4bn in 2019, up from €340mn the previous year. In 2018, the bank’s profits fell by more than half to €340mn, with Turkey’s economic turmoil a particular cause.
Non-performing loans (NPLs) decreased slightly, falling to 4.5% of the bank’s total loans, down from 4.7% a year earlier. However, NPLs have not yet recovered to the record low of 3.9% achieved in 2017, again with the rise in 2018 largely driven by events in Turkey.
Turkey was the third-largest recipient of EBRD investment in 2019, receiving just over €1bn in financing, around one-third of which related to local currency and the development of local capital markets.
8.1.5 ​Banks specific issues
Contactless credit, debit and prepaid card payments in Turkey ​tripled​ in March​ year on year, with a total of 85.8mn transactions—people clearly often turned to the payment method to avoid physical contact and close encounters with traders amid the COVID-19 outbreak.
On April 12​, Turkey’s banking watchdog (BDDK) cut the limit for banks’ foreign-exchange swap​, forward and option transactions with foreign entities to 1% of a bank’s equity, from 10% previously.
“​The BDDK’s new move means it has eliminated the opportunity to use the London swap market​. According to our calculations, the total swap purchase is just over $10 billion. This will fall back to under $1 billion,” a forex trader of an Istanbul-based bank was quoted as saying by Reuters.
“​Problems on the liabilities side of banks’ balance sheets are most likely to occur in Turkey, where large short-term external debts will be increasingly difficult to roll over​,” Edward Glossop of Capital Economics cautioned on April 9 in a note entitled “EM banks: where do the risks lie?”.
Those EMs with more indebted private sectors that also have a large share of private sector debts in forex were more exposed, he added.
Turkey is among the top three exposed based on all risk indicators, plus it is among the EM economies hardest hit by the COVID-19 health and economic emergency due to shutdowns afflicting its large tourism and services sectors. A further rise in non-performing loans (NPLs) looks a certainty to most analysts.
“In Turkey’s case, risks are altogether greater. Banks have financed lending through large short-term external debts. And banks look weaker than they were going into the currency crisis in 2018. In a best-case scenario, a severe credit crunch will follow. And in a worst-case scenario, a wave of bank defaults is likely to ensue,” Glossop added.
8.1.6 ​Banks news
Halkbank on April 1​ e​ ntered​ a plea of not guilty to criminal charges in a federal court in Manhattan that it assisted Iran in evading US sanctions.
Garanti BBVA expects Turkish firms will have serious cash requirements starting from April​ but Turkish lenders have sufficient liquidity to overcome demand, CEO Recep Bastug said on March 31.
38​ TURKEY Country Report​ May 2020 ​ ​www.intellinews.com