EUR 8.54 For Business Accounts Only

TURKISH BANKS - Weekly banking review

In the week of 5 April, we observed slight 0.3% w-w drop in loans, while the 0.8% drop in deposits was mainly due to the1.5% w-w retreat in TRY deposits. After an USD11b expansion in FX deposits in past 4 weeks, FX deposits remained subdued last week. In y-y terms, TRY loan growth stood at 1.7%; state banks’ TRY loan growth reached 17.6% vs. 7.4% contraction for private banks. Sector LDR stood flat at 114% (TRY: 146%, FX: 87%).

We expect further acceleration in loan growth led by CGF loan distributions. Most banks were active in extending CGF loans in 1Q, especially state banks. CGF had provided a TRY50b loan package beginning of the year. On top of that, CGF will provide TRY3b loan through COSME programme of the EU. Accordingly, each SME may receive up to TRY1m with one-year grace period and 5-year maturity. This is first of a kind funding scheme where an international organisation backs CGF to fund SMEs. Although the amount is insignificant, such loan facilities may continue going forward and support loan growth.

After last week’s 7.0% gain, the XBANK sold off 5.0% this week. XBANK has gained 0.6% YTD, but it continues to underperform EM (7.2%) & European banks (10.4%).