Turkish Daily News

July 2010

The resilience of Turkey’s financial sector was once again certified by a recent report that said the sector as a whole was much less affected from the global crisis compared to its global peers.

The report highlighted asset quality, capital adequacy, risk management and internal controls as leading factors in the sector’s relative success.

In a report released on Thursday, Deloitte Turkey forecast a 2010 growth for the economy of 3.7 percent, a modest estimate compared to others, such as Credit Agricole Chevreux’s 6.1 percent.

“Many big banks in developed countries closed 2009 with losses reaching into the billions of dollars, but the Turkish banking system did not enter the orbit of the global crisis,” said Ayse Epikman, a Deloitte Turkey partner. The report noted that Moody’s, Fitch and Standard & Poor’s all upped Turkey’s long-term credit rating in the period.

Much room for growth

Nearly 80 percent of Turkey’s finance sector is represented by banks, 3 percent by insurance companies, 1 percent by private pension and life companies, 11 percent by Central Bank assets and 6 percent by other sectors, such as leasing, factoring and real estate investment trusts.

The sector’s asset size rose to just above 1.006 trillion Turkish Liras in the third quarter last year. The figure represents a 7.6 percent increase compared to the end of 2008.

In the first three quarters of 2009, Turkish banks posted record profits. Total assets of Turkish banking were at 834 billion liras by the end of the year, representing a 14 percent increase compared to end-2008.

The rising profitability of Turkish banks owed much to the increase in net interest income. This year, as profit margins decline, active profitability is expected to decrease, Deloitte said. The report said one area where the global crisis was felt was in the ratio of non-performing loans, or NPLs. The ratio, which stood at 3.7 percent in December 2008, rose to 5.3 percent in December 2009. The highest NPL ratios were seen in credits to small- and medium-sized enterprises, with 7.6 percent.

The increase in the number of branches, meanwhile, slowed down from 15 percent in end-2008 to 3 percent last year. In contrast, the number of active Internet banking users rose to 5.69 million in September 2009, compared to 3.17 million in 2005.