Turkey: Brokerage Industry Trends

Turkey’s brokerages faced sharp trading falls in a tough climate last year of which 30% reported losses during the first half. That said, we had seen some downsizing-related layoffs as well as some international investment banks simply quitting the business. While this was partly due to some earnings recession felt in the industry, the underlying reason was that it was overcrowded so that more analysts rate Turkey’s bank than cover Wall-Street based banks.

After having a bad year, Turkey’s brokerage firms appear to showing early signs of a turnaround as ROE sector-wide hit double-digit figures again, also taking the 12-month trailing ROE above 10%. As of Q1 the industry returned 11.5% on total equity (excluding FX companies).

Below is the evolution of the profitability metric across the industry.

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Turkey - Brokerage Industry Trends 2

Despite the bottom-line improvement, there still seems to be issues related to the trading volume which would weigh on revenues. However, derivatives including FX, index futures and newly introduced warrants continue to help.

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See the following report released by Turkey Capital Markets Association for the industry explained in broad strokes.

Turkish Capital Markets: At A Glance