Turkish Banks: A Deceleration in Earnings
We have been closely monitoring the banking sector in Turkey as the industry is usually at the focal point for investors looking at the country. Previously we analyzed the declining earnings in the industry and our finding suggested that the monetary policy framework causing higher uncertainties around FX and interest rates was the main culprit.
Turkish banks’ ROAE dipped in mid-2015 when the profitability metric was slightly higher than 10% across the board. That also marked the end of the downtrend...
Do Turkish Banks Add Economic Value?
Time and time again I have been directing sharp criticism for the relatively poor financial performance, and more importantly, for the industry’s lack of focus on low profitability. In September, return on equity, or ROE, for the whole industry, came down to a level that made it even lower yielding than the riskless Treasury bonds (September RoAA was at 10.41% versus average 10Y bond yield at 10.44%). The situation is even more severe once the other elements of...