Turkey’s banks are strong and well-capitalised, the industry watchdog said on Tuesday, warning Turkish citizens to ignore misleading news on the industry. “Our industry is in a very solid position in terms of capital adequacy, exchange rate and asset quality,” Mehmet Ali Akben, head of the Banking Regulation and Supervision Agency (BDDK), said in an interview with the state-run Anadolu news agency on Tuesday. Certain institutions and people who have no access to sector data have been making “subjectively abrasive comments”, he said. Turkey’s government has looked to the country’s banks to help boost economic growth during the COVID-19 pandemic. Stimulus measures last year sparked a borrowing boom led by state-run banks. On Monday, the three largest state lenders slashed interest rates on loans to consumers and businesses following a rate cut by the central bank last week. Despite strong capital adequacy ratios, the financial health of Turkish banks has been the subject of hot debate among analysts due to an increase in unpaid borrowing by corporates and after the government relaxed rules governing the definition of a bad loan. Losses for the lira – the currency hit a record low of 9.85 per dollar on Monday – are also pressuring their finances. It traded at 9.48 per dollar on Wednesday. Last week, Fitch Ratings said operational risks for Turkish banks have been heightened by macro and political volatility, currency weakness, inflationary pressures and exposure to investor sentiment, particularly in the backdrop of high foreign debt and deposit dollarisation. “Asset quality faces pressure due to operating environment volatility, significant foreign-currency (FC) lending, high lira interest rates and exposures to high-risk sectors, such as construction and real estate, energy and tourism,” Fitch said in a report.
Ahval