Islamic banking share to reach 20 percent in Turkey, says association head

ISTANBUL - Reuters

Islamic banking’s share in the Turkish banking sector is expected to increase from 5.3 percent to around 20 percent with the three new Islamic banks planned to be opened by state-run lenders, the head of the Banks Association of Turkey (TBB) and state-run Ziraat Bank General Manager Hüseyin Aydın has said.

Ziraat Bank plans to make its Islamic bank unit, known as a “participation bank” in Turkey, operational in May and to open 20 branches by the end of this year, Aydın said on Jan. 21.

Turkey’s share in global Islamic banking is only around 3 percent and its participation banks need to grow their assets by 30 percent just to maintain this share, he added.

“Our participation banks are growing at around 20 percent annually right now. They need to grow faster and new players also need to become operational soon,” Aydın said.

“One of the new players will be Ziraat Bank. We plan to launch the Islamic banking unit of the bank in May and reach around 20 branches this year,” he said.

Four Islamic lenders are currently operational in Turkey, including Albaraka Türk, Bank Asya, Kuveyt Türk and Türkiye Finans.

The country’s banking watchdog, the BDDK, recently gave permission to another state-run lender, Halkbank, to launch an Islamic unit with an initial capital base of 1 billion liras. Another state-run bank, Vakıfbank, also plans to launch an Islamic bank with an initial capital base of $300 million.