An Update About Banking Sector in Turkey and Mortgage Loans
The banking sector in Turkey has been facing a fierce competition in home loans segment for quite a while.
The challenge faced in this area causes the banks to end up with very marginal profits as far as this product is concerned.
Some banks have preferred to be more cautious this year by not going public until a second decision as bank stock prices have been way below for a while. The fourt quarter of 2011 does not seem to be very promising in this regard either.
However it is expected that the sector is going to display a better performance in 2012.
As profits shrink in an environment where loan growth has been limited to 25 percent, banks which prefer to emphasize on retail banking manage to keep their profits over a favorable target.
Speed and flexibility are other positive factors that contribute to optimum profitability in the banking sector.
In fact, banks which have managed to achieve a 70 percent consumer and 30 percent commercial ratio for the credits they have extended have been under less pressure to arise from the measures imposed and implemented by the authority, i.e. The Central Bank of Turkey.
In parallel to above mentioned view financial establishments which have not failed to pay attention to SMEs (Small & Medium Sized Enterprises) have been able to spread their risks and achieve relatively higher margins instead of taking bigger risks at relatively lower margins with big sized customers.
Last but not least, the Turkish banking sector has always had the nightmare of having to face challenge in global environment where multinational giants would be active. Today is the day and many global competitors are operating in this part of the world. Thus, Turkish giants like Isbank are obviously and naturally disturbed by this strong presence and the tough competition practiced by newcomers.
Therefore it could be said that future is expected to bring about many major surprises in this sector.
23 July 2011
Editor
BUSINESS TURKEY TODAY
