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The EBRD is preparing to deploy supply chain finance for both large companies and SMEs. To date, the lender has invested €12.4bn in Turkey.
6.0 Public Sector
On November 24, the Treasury held a 10-year domestic bond auction for the first time since July 2018.
The market has been demanding 10-year papers but the previous top economic management officials rejected such issuance assuming costs were too high as things stood and that they would decline in the period ahead.
This approach fuelled FX borrowing and the FX share in the central government’s debt stock eventually reached 58.3% at end-October with the FX share in domestic debt stock reaching 36.3%. Alarm bells are also ringing here.
Turkey’s Savings Deposit Insurance Fund (TMSF) has decided to offer for sale five companies seized because of alleged links to the Gulen movement. Three reported individual appraised values are plastic products manufacturer Naksan Plastic/TRY1.13bn, another plastic producer Nakpilsa/TRY315mn and carpet yarn maker BCF1/TRY87.5mn. The carpet firms Royal and Atlas have a combined value of 353mn lira.
7.0 Financial & capital markets 7.1 Bank sector overview
7.1.1 Earnings
The combined net profit of Turkish banks rose 29% y/y in the first nine months to reach Turkish lira (TRY) 46.3bn (€4.75bn), data from banking authority BDDK showed.
However, analysts digesting the data will note that regulatory forbearance in place until end-2020 is providing an uplift to the banks’ reported asset quality, capital and performance metrics over the short term, according to Fitch Ratings. Asset quality-related forbearance measures may delay the recognition of problematic exposures, the ratings agency has also observed lately.
Total assets of the Turkish banking industry rose 40% in January-September from a year ago and were up by 33.7% compared with the end of 2019 to stand at TRY6trn. Loans extended by lenders grew by 40% y/y to reach TRY3.6trn.
BDDK reported that the non-performing loans/total loan ratio across the industry was 4.06% as of end-September, down from 4.96% a year earlier.
Deposits collected by lenders increased by 46% y/y and they grew 34.2% from end-2019 to amount to TRY3.44trn.
The banking sector's regulatory capital adequacy ratio improved to 19.42% as end of September, versus 18.44% in the same period of the previous year.
Moody’s Investors Service said on July 28 in its July 2020 Emerging Markets Insight report: “The [Turkish banking watchdog BDDK] has said that rules on minimum capital requirements and classification of problem or deteriorated
34 TURKEY Country Report December 2020 www.intellinews.com
