Turkey has sound banking sector: Watchdog chairman

ISTANBUL - Anadolu Agency

The Turkish banking sector “is durable and is able to manage the credit” level that has reached 2.2 trillion Turkish liras (nearly $540 billion), Turkey’s banking watchdog head has said.

“Turkey’s banking sector’s credit growth is sturdy with its strong liquidity structure,” Banking Regulation and Supervision Agency (BDDK) President Mehmet Ali Akben told Anadolu Agency on April 13.

Akben said the sector abides by international regulations and legal boundaries and that its capital adequacy ratio—a vital gauge of the health of a country’s banking sector—is over the legal limit and aims for 16.7 percent.

Even under bad conditions, potential negative influences can be managed by sector for this credit size, according to results of a stress test, scenario analysis, and other studies organized by the BDDK, he said.

Akben said while liquidity ratios continue at a very good level, the leverage ratio is very low.

He added that the impact of the banking sector’s strong foreign relations could raise the renewal rate in syndicated loans to 110 percent.

“By the end of March, the total loan growth rate—adjusted for exchange rate and parity effects—was 19.3 percent and the growth was mainly based on commercial loans,” he said.

The president also said the growth of commercial loans is 21.3 percent, whereas individual loans are growing 13.6 percent.

Deposits and turnover

“On the deposits side, the growth rate is 17.1 percent, adjusted for exchange rate and parity effects,” he said.

The turnover rate, which is one of the most basic indicators of the sector’s asset quality, shows a historically low of 2.89 percent.

He highlighted that the conversion rate in the residential lending was only 0.41 percent.

The banking sector’s net profit was 3.85 billion liras ($1.02 billion) in February, 8.38 billion liras ($2.22 billion) in the first two months of 2018, and 49.1 billion liras ($13 billion)—an all-time high—last year, according to BDDK data.

The sector’s total assets and deposits were 3.3 trillion liras ($871.55 billion) and 1.75 trillion liras ($459 billion) as of February, the BDDK said.

The lira/U.S. dollar average exchange rate was 3.65 in 2017 and 3.78 in the first two months of 2018.

In Turkey, nearly 50 state/private/foreign lenders, including deposit, participation, development, and investment banks had over 11,500 domestic and overseas branches with more than 208,000 employees as of February.