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Banking Sector and Foreign Banks in Turkey Ekrem Keskin December 2008

Banking Sector and Foreign Banks in Turkey Ekrem Keskin December 2008. Content. Change in economic environment and impact on the banking sector Selected figures; comparison of sector and foreign-owned banks Recent issues. Change in economic environment.

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Banking Sector and Foreign Banks in Turkey Ekrem Keskin December 2008

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  1. Banking Sector and Foreign Banks in Turkey Ekrem Keskin December 2008

  2. Content Change in economic environment and impact on the banking sector Selected figures; comparison of sector and foreign-owned banks Recent issues Banking sector and foreign banks in Turkey, December 08

  3. Change in economic environment Banking sector and foreign banks in Turkey, December 08

  4. Savings gap widened, mainly due to the private sector as the public sector improved its balance Banking sector and foreign banks in Turkey, December 08

  5. In private sector, savings rate declined rapidly as fixed investment rate accelerated due to investments in new technology and expanding capacity Banking sector and foreign banks in Turkey, December 08

  6. The share of external borrowing in fixed capital investment Banking sector and foreign banks in Turkey, December 08

  7. Jump in net capital inflow from an annual averege of USD 3 billion in the 90’s to USD 50 billion in 2008 September Banking sector and foreign banks in Turkey, December 08

  8. Private sector increased its borrowing from external markets Banking sector and foreign banks in Turkey, December 08

  9. High growth performance: Stable and strong growth, over the long term average of 4.3% between 2002 and 2007 before a steady slowdown in 2008. Banking sector and foreign banks in Turkey, December 08

  10. Rapid disinflation:Inflation has declined tothe historically lowest level during the free market economy, although it’s decending trendhalted recently and has reversed slightly. Banking sector and foreign banks in Turkey, December 08

  11. Substantial fiscal adjustment:One of the main reasons behind the positive outcomes was the tight fiscal policy which led to a substantial decline in PSBR and budget deficit Banking sector and foreign banks in Turkey, December 08

  12. Reduced public sector debt... Banking sector and foreign banks in Turkey, December 08

  13. As the public sector borrowed less, loans to private sector soared Banking sector and foreign banks in Turkey, December 08

  14. Stronger shareholders’ capital and free capital enabled the banking sector to change its risk structure... Banking sector and foreign banks in Turkey, December 08

  15. ...from the public to private sector risks Banking sector and foreign banks in Turkey, December 08

  16. Capital adequacy ratio remained rather above the level of BRSA’s regulation Banking sector and foreign banks in Turkey, December 08

  17. Well-diversified loan portfolio Banking sector and foreign banks in Turkey, December 08

  18. Higher ROE but is sufficient enough? Banking sector and foreign banks in Turkey, December 08

  19. Higher risks, lower ROE Banking sector and foreign banks in Turkey, December 08

  20. Selected figures; comparison of the sector and foreign-owned banks

  21. Banking sector and foreign banks in Turkey, December 08

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  27. Main issues in economy: • Uncertainties in international environment • Reliance on external borrowing • Difficulties of financing of balance of payments • Pressures on fx liquidity • Contraction in economic activity • Rising costs of financing of private sector • High degree of currency substitutions • Ownership changes in banks in Europe Banking sector and foreign banks in Turkey, December 08

  28. Maturity structure of balance sheet • up to 3 mths up to 6 mths • Loans 29% 55% • Deposits 90% 94% • Lack of information of recent position of clients • Slowdown in loans • Rising capital or limiting risks? • Prospective level of capital adequacy • NPLs • Interest rate risks • Earning pressures to feed capital Banking sector and foreign banks in Turkey, December 08

  29. Thank you. Banking sector and foreign banks in Turkey, December 08

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