Turkey’s banks will ‘comfortably’ renew funding: Association chair

ISTANBUL

Turkey’s banks will not have problems renewing non-deposit funding, the head of the country’s banks association said on Aug. 8, as an ongoing sell-off in the Turkish Lira has raised concern about the outlook for banks.

In an interview with private broadcaster NTV, Hüseyin Aydın said banks would also not lose appetite for extending loans.

“The share of our non-deposit funds is around 30 percent. I should also say that very positive developments are happening on the deposit side in Turkey. As long as there is deposit, Turkey’s banks do not see any problem in extending new loans,” he said.

He noted that Turkey’s lenders have robust balance sheets.

“Some 64 percent of our balance sheets are composed of corporate and individual loans. The share of corporate loans in total loans is around 80 percent,” he said, adding that the loan growth would be 15-16 percent by the yearend.

Aydın said the problem loans’ share in total is around 3 percent, adding that this was the result of banks managing their assets well.

As much as 15 percent of the Turkish banking sector’s “closely watched” loans could become problem loans, he said.

“The ratio of such closely watched loans is at around 7-7.5 percent in the sector,” he added.

Regarding a recent loan structuring move by many companies, Aydın said such steps were taken anywhere in the world.

“In line with commercial reasoning, banks have done what is needed in terms of loan restructuring recently. They will continue to do this. The concerned companies [which have recently asked for loan restructuring] are good companies of the country. Of course, bargaining is the case between banks and these companies,” he said.