Turkey’s Bank Asya hurt by large loss after row with government

ISTANBUL – Reuters

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Turkey’s Bank Asya reported a net loss in the third quarter partly due to a rise in bad loans, but said it was hopeful of a turnaround following the political turmoil that has surrounded it this year.

The Islamic bank made a 301 million Turkish Lira ($133 million) net loss after a 60 million lira profit a year earlier.

Assets of 16.5 billion lira at the end of the third quarter were down 40 percent from the end of 2013, while deposits almost halved to 10.07 billion over the same period. Net non-performing loans more than tripled year-on-year to 1.4 billion lira by the end of the third quarter.

Bank Asya, with more than one million deposit-holders and around 280 branches, has been caught in a row between President Recep Tayyip Erdogan and Fethullah Gülen, an Islamic cleric with alleged links to the bank.

Chief Executive Ahmet Beyaz said a capital adequacy ratio of 18.32 percent, one of the highest in the industry and above the sector average of around 16 percent, and its 2.2 billion lira equity capital meant its operations were healthy.

“We can say the worst is now over,” he told an investor call on Nov. 11.

Erdoğan has accused Gülen, now based in the United States, of seeking to overthrow him by staging a corruption scandal and has pledged to purge institutions such as the police and judiciary of his supporters.

Gülen, via his official websites, denied any involvement.

Seeking to show loyalty to Erdoğan, depositors including state-owned firms and institutions this year withdrew 4 billion lira ($1.75 billion), or some 20 percent of Bank Asya’s total deposits, according to media reports.

The bank has declined to comment on those figures.

Loyal clients have been battling to shore up the bank against what they say is a government-orchestrated bid to scuttle it, selling everything from their sofas to their wedding rings.

“We hope 2015 will be a fresh start with a clean balance sheet leaving the asset quality issues behind,” Executive Vice President Feyzullah Eğriboyun said, forecasting lower non-performing loans next quarter.