Growth rate in bank loans fall in Turkey as lira declines and interest rates climb
Due to the rapid depreciation of the Turkish lira and the rise in interest rates, the growth rate of loans provided by private banks has fallen below 1 percent. Turkey’s economy has received a bad signal from the banking sector, as well. It is reported that credit growth rates plummeted with the depreciation of TL and the rise in interest rates.
The growth rate of private banks’ exchange rate-adjusted loans has fallen below 1 percent in which ended August 10. This ratio, which was 0.81 per cent (annualized 13-week moving average) as of week ending August 10, was only 13 percent three months ago. The credit growth rate rose to 32 percent in May 2017. In the week ending August 10, TL commercial credit interest rates rose to 23.76 percent (four week moving average). The interest rate was only 17.41 percent three months ago. In May 2017, the growth rate of public banks’ loans had increased to 49 percent.
The total credit growth rate was 8.37 percent in the week of August 10, while this rate was reached thanks to public banks. Public banks’ growth rate in the same week was 20.91 percent, far above private banks. This rate is lower than the 30 percent level three months ago, but it is well above private banks.
The total credit growth rate rose during the period in which the Credit Guarantee Fund was introduced last year, up to 37 percent in May 2017. However, growth pf 7.4 percent that came with the rapid credit growth caused rapid warming in Turkey’s economy. For this reason, many companies are applying to banks for loan structuring these days, while the rate of risky loans in the banking sector is increasing rapidly.
According to data from the Banking Regulation and Supervision Agency, the sector’s loan volume reached TL 2 trillion 687 billion 873 million in week ending with August 10.
