Turkey has sound banking sector: Watchdog head

By Murat Birinci

ISTANBUL (AA) - The Turkish banking sector is durable and able to manage credit that reached a 2.2 trillion liras level (nearly $540 billion), the head of Turkey's banking watchdog said on Friday.

"Turkey's banking sector's credit growth is sturdy with its strong liquidity structure," Mehmet Ali Akben, president of the Banking Regulation and Supervision Agency (BDDK), told Anadolu Agency.

He said that the sector abides by international regulations and legal boundaries and its capital adequacy ratio -- a vital gauge of the health of a country’s banking sector -- is over the legal limit and targets 16.7 percent.

Even under bad conditions, potential negative influences can be managed in this credit size by the sector, according to results of a stress test, scenario analysis, and other studies organized by the BDDK, he underlined.

Akben said that while liquidity ratios continue at a very good level, the leverage ratio is very low.

He added that the impact of the banking sector's strong foreign relations could raise the renewal rate in syndicated loans to 110 percent.

"By the end of March, the total loan growth rate -- adjusted for exchange rate and parity effects -- was 19.3 percent and the growth was mainly based on commercial loans," he stated.

He said the growth of commercial loans is 21.3 percent, whereas individual loans are growing 13.6 percent.

-Deposits and turnover

"On the deposits side, the growth rate is 17.1 percent, adjusted for exchange rate and parity effects," he said.

The turnover rate, which is one of the most basic indicators of the sector’s asset quality, shows a historically low level of 2.89 percent.

He highlighted the conversion rate in the residential lending was only 0.41 percent.

The banking sector's net profit was 3.85 billion Turkish liras ($1.02 billion) in February, 8.38 billion Turkish liras ($2.22 billion) in the first two months of 2018, and 49.1 billion Turkish liras ($13 billion) -- an all-time high -- last year, according to BDDK data.

The sector's total assets and deposits were 3.3 trillion Turkish liras ($871.55 billion) and 1.75 trillion Turkish liras ($459 billion) as of February, the BDDK said.

The Turkish lira/U.S. dollar average exchange rate was 3.65 in 2017 and 3.78 in the first two months of 2018.

In Turkey, nearly 50 state/private/foreign lenders, including deposit, participation, development and investment banks, had over 11,500 domestic and overseas branches with more than 208,000 employees as of February.

*Gokhan Ergocun and Jeyhun Aliyev contributed to this story from Ankara