Moody’s report on Turkish banks ‘ill-intentioned’

ANKARA - Anadolu Agency

There is no sign of deterioration in the Turkish banking sector’s nonperforming loans or assets quality, which could disturb the system, the head of the Turkish Banking Regulation and Supervision Agency said on Jan. 9, describing a recent Moody’s report as “ill-intentioned.”

Mehmet Ali Akben told state-run Anadolu Agency that the regulatory and supervisory framework of the Turkish banking sector was “equivalent to EU legislation.”

“The Turkish banking sector closed 2016 very well in terms of profitability. There is no significant deterioration in either the banks’ assets quality or in their nonperforming loans,” Akben said.

His comments came after international credit rating agency Moody’s on Jan. 9 forecast that Turkish banking sector profits would be significantly hit in 2017 by rising non-performing loans. Moody’s also said asset quality was likely to face challenges created by the current slowdown in the country’s economy.

“We expect asset quality trends to worsen in this year, driven by the combination of high inflation, lira depreciation and the general worsening of the investment climate because of security issues and geopolitical tensions,” Moody’s stated.

However, Akben was critical of what he described as an “ill-intentioned” report. 

“Turkey has a solid risk management framework in the banking sector. We cannot talk about a fall in the banks’ capital adequacy ratio. In this sense, we see Moody’s recent release as ill-intentioned,” he said. 

“There is not a very large volume behind these [fluctuations in foreign exchange rates]. But some centers abroad are speculating over foreign exchange,” Akben added.

The banking watchdog head also said capital controls were “out of the question,” echoing earlier statements from Deputy Prime Ministers Mehmet Şimşek and Nurettin Canikli.