New regulations may risk banks’ growth rates

ISTANBUL - Reuters

High representatives from Turkish banks called for more balanced regulations for the sake of sustainable growth during a meeting. Company photo

High representatives from Turkish banks called for more balanced regulations for the sake of sustainable growth during a meeting organized by Deloitte Turkey yesterday.

Turkey’s banking sector has been growing in a healthy manner, but the loan-to-deposit ratio is exceeding 100 percent, so Turkish banks now need more foreign funds, the bankers warned.

“Our interest margins, most importantly our capital requirements are decreasing. New banking regulations are of great importance here,” said Yapı Kredi Bank CEO Faik Açıkalın, adding the negative effects of these regulations on banking profitability to continue in the coming period.

He underlined the sector has posted very good figures since the beginning of the year.

“There is no problem in general figures, but we all should be careful in maintaining sustainable growth,” he noted.

The government has made it a top priority to increase domestic savings to fight with the country’s fairly high current account deficit, adopting tight regulations, which aim to reduce using credit cards and consumption loans. Deputy PM Ali Babacan last week said tighter measures might be on the road.

“The banking sector needs a minimum of 15 percent of returns on equity to improve and to have higher competitiveness. Otherwise, we could not say some bright future lies ahead of the sector, which played a great role in enabling Turkey to be affected less from the latest economic crises, as many officials have agreed,” Ateş noted.