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Turkish banking industry's loan growth slightly decelerates.

February 11, 2014

Turkish banks' loan growth decelerated to 34.8% y/y to TRY 1,095bn (EUR 363bn) in the week to January 31 from a 35.4% y/y in the week to January 24, data of the baking industry regulator BDDK showed on Monday.

Loans rose by 0.14% w/w and increased by 2.83% since the end of the 2013 as of January 31, according to BDDK data.

Consumer loan growth slightly decelerated to 26.8% y/y to TRY 250.6bn (up 1.04% ytd) while growth in housing loans also eased to 27% y/y to TRY 111.7bn (up 1.39% ytd) and the growth in auto loans segment slightly accelerated to 6.7% y/y to TRY 8.47bn as of January 31.

Banks' deposits declined 1.2% w/w to TRY 1,023bn as of January 31, representing a 25.6% y/y increase, BDDK data also showed.

Earlier this week, daily Sabah reported that the government was planning to use TRY 70bn worth of funds from the Unemployment Fund as low cost loans to be extended to SMEs through state-owned banks. With this move the government is aiming to limit the adverse effects of central bank's rate hike on small businesses but the daily did not provide other details.

Turkish banking sector's net profit rose 5.1% y/y to TRY 24.73bn in 2013, the BDDK said last week. Total assets of the banking industry reached TRY 1.73tn, representing a 26.4% y/y increase. Net interest income of banks increased 9.8% y/y to TRY 57.4bn while loans grew 31.8% y/y to TRY 1.05tn last year. Consumer loans rose 27.8% y/y to TRY 248bn while commercial loans increased 34.9% y/y to TRY 444bn. Loans to SMEs increased 35.9% y/y to TRY 271.4bn. Deposits collected by local banks recorded a 22.5% y/y rise, reaching TRY 945.8bn. The capital adequacy ratio in the sector was 15.3% at the end of 2013, down from 17.9% a year earlier. Non-performing loans grew 26.4% y/y to TRY 29.6bn, corresponding to a NPL/total loan ratio of 2.7% at the end of 2013. There are 49 banks in Turkey, operating through a network of total 11,986 branches and 214,263 staff.

Moody's said last week that it expected the Central Bank's interest rate hike to result in higher domestic funding costs, a slowdown in economic growth which will affect banks' profitability and asset quality this year. Thus, the monetary tightening is credit negative for banks, the rating agency added.

At the end of last year, BDDK announced several new legislations on credit cards and loans to curb excessive credit cards use and loan growth. According to new regulations, credit card installments for electronics, jewellery, telecommunications, and car rental will be limited to six months while it will not be possible to buy food and oil products by installments. Card installments for white goods and furniture will also be limited to 12 months. Maturities of consumer loans (excluding mortgages) and car loans will be limited to 36 months and 48 months, respectively.

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Source: IntelliNews - Weekly Reports

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