Aydın discussed the latest developments in the global and domestic finance markets with reporters on Monday in the southeastern province of Gaziantep.
Turkish Banks Association (TBB) Chairman Hüseyin Aydın has said the association supports a recently announced government medium-term economic program (OVP), noting that bankers anticipate about 10 percent growth in their assets next year, over 2011.
Aydın discussed the latest developments in the global and domestic finance markets with reporters on Monday in the southeastern province of Gaziantep. The OVP envisions achieving a lower public debt-to-gross domestic product (GDP) ratio, along with a lower budget and current account deficit (CAD), while keeping the country’s economic growth at a sustainable 5 percent after 2012.
Recalling that there was a decline in the banks’ profits in the July-September period of this year, Aydın said they anticipate a 15 to 20 percent decline in profits for 2011 over the preceding year. “Indices for the ninth month show that this year’s decline in profitability will be no less than 15 percent.
We know people’s savings in Turkey are weak, but Turkish banks have done well in receiving their debts and can control their balance of payments; this is good for us,” he explained. Underlining that Turkish banks are happy with the government’s plan for economic growth, Aydın said the banks’ loan growth parallels the growth in non-financial markets.
‘EU will open loan taps again once debt crisis is dealt with’
Asked whether the ongoing problems in global money markets are making it difficult for Turkish banks to find enough foreign loans, Aydın said banks in Turkey took the necessary measures to prepare for this ahead of time. “Problems such as not being able to receive as much in loans as you used to from foreign sources can occur in times of crisis.
Europe is one of these troubled markets; but our banks were well-prepared for this crisis and have received some syndicated loans from international financial institutions before things got even worse,” he noted. Aydın also said that some Turkish banks which signed loan agreements with EU banks prior to the current debt crisis had renewed their contracts. As the crisis spreads, and with it the risk of borrower default across multiple lenders, syndicated loans are seen as life vests that help banks stay afloat in times of financial turbulence.
Aydın said Turkish banks could still find ways to receive “affordable” loans from EU sources, adding that the Central Bank of Turkey has done its best to provide liquidity to finance markets. “We have faith that the EU’s financial institutions will open the loan taps to Turkish borrowers, once they clear up the uncertainties in their own markets and weather some external risks,” he highlighted.
“Look, we have never used the term ‘crisis’ to describe the Turkish banking industry, while some of world’s leading finance institutions have been victims of the global financial turmoil of the past three years. Today you see credit ratings being downgraded at most banks in developed economies.
The average capital adequacy ratio of most Turkish banks is at 16 percent, while return on equity is around 15 percent, far better figures than those of most Western banks,” he explained. According to Aydın, Turkish banks will maintain their successful performance through 2012 as well. The TBB head said loans extended by Turkish banks in the first nine months of 2011 totaled $363.3 billion (TL 668 billion), some 60 percent of total assets. “This is a clear indicator of our banks’ commitment to provide as many loans as they can to Turkish companies.”
Mentioning the current devaluation of the Turkish lira against foreign currencies, Aydın said the TBB expects to see stability in the markets in the medium-term, and attributed the current fluctuations to external shocks. “We are monitoring the measures taken by the government and the central bank to maintain stability closely. The TBB is also doing its part to help these efforts yield fruit,” he said. He also touted “proactive steps” by the Banking Regulation and Supervision Agency (BDDK) in this regard.
Early this year, the government announced that it had set a target of increasing bank loans by as much as 20-25 percent for 2011, as part of a set of measures designed to avoid a further overheating of the economy. Following this decision, in June the BDDK raised its provisioning and risk-weight requirements for unsecured consumer loans in an attempt to tame loan growth. The pressure this placed on banks received criticism, until Deputy Prime Minister Ali Babacan announced last month that the government would “keep off the banks’ backs” regarding loan growth this year.
24 October 2011 Monday