Page 21 - Turkey Outlook 2025

Rate-cutting fest in 2025
As a result, Turkish banks felt the negative impacts of the tightening in 2024 and they are currently getting ready to enjoy a rate-cutting cycle in 2025.
In its Turkish Banks Outlook 2025 report, Fitch Ratings kept its neutral view.
The neutral outlook is driven by Turkey’s continued commitment to monetary tightening, which has boosted investor confidence and exchange rate stability, improving operating conditions and prospects for banks and easing external financing, financial stability and macroeconomic risks.
Nonetheless, the resultant high interest rates and regulatory intervention, including credit growth caps for banks, still high inflation, de-dollarisation efforts and slower economic growth will continue to weigh on banks’ asset quality and earnings performance in the near term.
Fitch upgraded Turkey to three notches below investment grade in September on its improved FX reserves position, reduced dollarisation, and increased capital inflows and access to external borrowing.
Better debt rollover conditions
In addition to deposits, banks also obtain loans from their peers and they also sell debt papers on the financial markets.
Thanks to the shift to orthodoxy in the Erdogan regime’s monetary policy, 2024 was a perfect year for Turkish banks when it came to debt rollovers.
Billions of dollars worth of loan agreements were signed with development banks in addition to the record number of eurobond auctions held.
See Section 6 below for loan rollovers and 8.3 for eurobond sales. Forbearance to remain in place
Macroprudential measures and non-capital controls are still in effect. After the “orthodox” management took control of Turkey’s economy, the finance industry media massively headlined that Turkey was normalising its monetary policy.
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