Turkish banks' loan growth accelerated to 32.9% y/y, the highest y/y figure recorded since December 2011 , to TRY 1,065bn ( EUR 359bn ) in the week to January 3 from a 32.1% y/y loan growth in the week to December 27 , data of the baking industry regulator BDDK showed on Monday. Loans rose by a 0.03% w/w as of December 27 , according to BDDK data. Consumer loans increased 27.7% y/y and 0.23% w/w to TRY 248.6bn while housing loans grew 28.2% y/y and 0.32% w/w to TRY 110.6bn and the growth in auto loans segment was 7.1% y/y to TRY 8.61bn as of January 3 . Banks' deposits declined 1% w/w to TRY 1004.3bn as of January 3 , but they rose by 24.3% y/y, BDDK data also showed. Last month, Turkish Central Bank said in the minutes of the latest monetary policy committee meeting that the cautious monetary policy stance, macroprudential measures, and weak capital flows had led to a notable tightening in financial conditions which was expected to bring down the loan growth rates to more reasonable levels in the forthcoming period. In December again, the Central Bank governor Erdem Basci said that the central bank targeted to decrease volatility in short-term interest rates and to reduce the consumer loans while increasing the weight of commercial loans in total loan volume. Turkish banks might face pressure in 2014 from rising interest rates, slowing economic growth and a weakened Turkish lira, Fitch said in a non-rating action commentary in December. These trends would contribute to a modest fall in margins and rise in loan impairment charges, but strong capitalization, healthy funding structures and liquid balance sheets would help minimize the impact on credit quality, leading to a stable rating outlook for the sector, Fitch noted. Potential interest and currency rate shocks are the greatest risks to the Turkish banking sector as they would feed through to borrowers and weaken loan quality, the rating agency warned, but adding that barring negative macro developments it expects any increase in impaired loans to be limited to 1-2%. Turkish banks' net income rose 6.8% y/y to TRY 23.27bn in January-November, the banking watchdog BDDK said last week. Assets of the banking industry grew at 23.8% y/y and 20.6% since end-2012 to TRY 1,654bn while loans rose 30.4% y/y to TRY 1,010bn. Non-performing loans (gross) recorded a 21.5% y/y rise and they increased 23.3% since end-2012 but NPL/total ratio was still a low of 2.9% as of end-November. The capital adequacy ratio of the sector fell to 15.6% from 17.4% in November 2012 and 17.9% in December 2012, BDDK data also showed. In November, BDDK announced several new legislations on credit cards and loans to curb excessive credit cards use and loan growth. Maturities of consumer loans (excluding mortgages) and car loans were limited to 36 months and 48 months, respectively.
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