Project-based loans surge in Turkey

By Tuba Sahin

ISTANBUL (AA) - Turkish banks' risk balance of project finance -- deposit, development and investment banks -- reached $77 billion in 2016, according to an official report.

The risk balance rose by eight percent in December last year compared to the same period of 2015, according to the Project Finance Statistic December 2016 report from the Risk Center of the Turkey Bank Association, released on Monday.

"The banking sector’s foreign exchange denominated loans [year-on-year] surged 5.5 percent for the same period, which is less than the increase in the risk balance," Ferhat Yukselturk, managing director of Turkey Macro View Consulting said.

"Thus, Turkish banks’ ability to finance longer-term projects is a sign of their strong capital structure and their access to long-term wholesale funding," Yukselturk added.

Among all sectors, energy came first with a share of 49 percent of loans provided for the purpose of project financing. It was followed by the infrastructure and real estate sectors on 16 percent and 12 percent respectively.

The risk balance of the infrastructure sector rose the most with a 50 percent increase to $13 billion from $8 billion year-on-year while the risk balance of real estate and energy sectors surged 12 percent and one percent respectively.

Meanwhile, the amount of commitment increased to $106 billion from $103 billion during the same period.