Türkiye | Banking Sector Monthly Outlook: January 2025

Summary

Profitability and NIMs of the sector have started to improve in 4Q24, which will continue with the rate-cutting cycle of the CBRT. The monetary stance remains to be supported with the macro-prudential measures. We expect the ROE of deposit banks to barely improve to 30% by end 2025 from 28.4% at the end of 2024.

Key points

• Key points:
• Credit growth rates in January have been rather determined by the regulatory monthly caps which are revised further between TL SME and non-SME lending. Monthly growth limits have been also revised for FC lending. TL SME lending is growing whereas TL non-SME lending has slowed down.
• Regarding consumer loans, the same limits are in place. Demand for retail loans remains resistant on top of credit cards and credit deposit accounts, led by public banks.
• FX-protected scheme amount declined to $28bn by end Jan25 (vs $82bn in Jan24) and is expected to come to an end soon. The dollarization ratio of residents seems to have stabilized at around 35%.
• The accelerating NPL trend continues for retail loans, mainly due to consumer credit cards. We expect cost of risk (CoR) of deposit banks to rise by around 100bps to 160-180bps by end 2025.
• The sector’s capital buffers continue to be solid. The BRSA decreased 200% risk weight on commercial loans to 100% which improved the CAR ratio of the sector by around 100bps.

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