Banks to switch to inflation accounting from 2025

ISTANBUL

Türkiye’s banks and other financial institutions will start applying inflation-adjusted accounting next year, the Banking Regulation and Supervision Agency (BDDK) has announced.

“It has been decided that banks, financial leasing, factoring, financing, savings financing and asset management companies will switch to inflation accounting as of Jan. 1, 2025,” the regulator said in a statement on Jan. 15.

Non-financial companies apply inflation accounting from end-2023 to 2026.

Inflation accounting shields companies from higher taxes. It is a practice which incorporates high inflation into the financial statements of businesses.

Meanwhile, the interest rate the local lenders offer for 3-month deposits has been on the decline, falling from 52 percent in December to 51.29 percent in the week ending Jan. 5.

The average interest on personal loans, on the other hand, climbed to 63.42 percent.

In the first week of 2023, the interest rate on those type of loans averaged 24.24 percent.

The interest rates on loans started to increase after the Central Bank began lifting its policy rate, the one-week repo auction rate.

From June to December, the bank raised the policy rate by a cumulative 3,400 basis points from 8.5 percent to 42.5 percent.

Interest rate on car loans started to pick up again, show the data from the Central Bank.

In mid-November, interest rate on those loans stood at 46 percent but dropped to 33.3 percent in the first week of December. Those rates, however, moved upwards, climbing to 36.1 percent as of Jan. 5.