Turkish Banks: Differentiating Rapidly
At a time when some argue that Turkey is on a path to being more state-sponsored economy owing to the Treasury guaranteeing large scale projects, the performance comparison of public and private banks gains importance. Thus, we aim to compare both groups in terms of lending growth, funding capacity, capital adequacy, and liquidity position in order provide some insights.
Loan GrowthPublic commercial banks have been outperforming the private peers in lending growth since May 2013...
Turkish Banks: What Went Wrong?
Turkish banks which have spent years with high profits generated in the past, only managed a ROE of 10.6% (10-year average was 16.1%), well below the business’ cost of capital of at least 15% and the returns which investors aspire. Unlike their peers around the world, financial institutions in Turkey are not in a regulatory cycle either. We have mentioned recurrently the rising risks of earning recession in Turkish banks. Not surprisingly, today only two of the six...
Turkish Banks: Funding Challenges Ahead
Time and time again, we concerned ourselves with volume growth trends in Turkish banking spectrum. As is the case with any emerging market, credit growth in Turkey has been phenomenal since interest rates cut to near zero in developed economies. That being said, deposit growth has been weak mostly due to the fact that interest rates on savings have remained subdued. Turkish central bank has failed to keep the equilibrium real interest rate at a level that would...