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Banking sector loans continue to growth.

February 4, 2014

Turkish banks' loan growth accelerated to 35.4% y/y, the highest y/y figure recorded since November 2011 , to TRY 1,093bn ( EUR 356bn ) in the week to January 24 from a 33.6% y/y loan growth in the week to January 17 , data of the baking industry regulator BDDK showed on Monday. Loans rose by 1.84% w/w and increased by 2.69% since the end of the 2013 as of January 24 , according to BDDK data. Consumer loan growth decelerated to 26.9% y/y to TRY 249.3bn (up 0.54% ytd) while growth in housing loans also eased to 27.2% y/y to TRY 111.2bn (up 0.91% ytd) and the growth in auto loans segment decelerated to 6.6% y/y to TRY 8.49bn as of January 24 . Banks' deposits reached TRY 1,036.1bn as of January 24 , representing a 26.3% y/y and 2.1% w/w increases, BDDK data also showed. Moody's said also on Monday that it expected the Turkish 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. Moody's expects downside risks to Turkey's economic growth from the sharp monetary tightening to harm the credit quality of existing loans and limit opportunities for lending growth. Last month, the Central Bank said that the cautious monetary policy stance, the announced macroprudential measures, and weak capital flows lead to a gradual slowdown in loan growth. The head of Turkish Enterprise and Business Confederation (TURKONFED), Suleyman Onatca, complained last month that banks were not willing to roll over loans and they also had started to ask for more collateral from TURKONFED's members. TURKONFED represents 11,000 businessmen, employing more than 1mn people and generating export revenue of more than USD 65bn . 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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