Türkiye | Monthly Banking Outlook February 2025

Summary

Credit growth accelerated throughout February beyond the growth caps. Therefore, the monthly growth limit has been reduced further for FC lending at the start of March. The CBRT aims not to allow demand conditions to contain the disinflation process, signaling new macro-prudential measures if necessary.

Key points

• Key points:
• Demand for retail loans stays resistant over uncapped items. In commercial segment, following the differentiated growth limits revised by the CBRT, the growth in TL SME lending was replaced by non-SME lending in February. On FC lending, the growth is still solid mainly due to demand conditions.
• The share of TL deposits excluding KKM has stabilized at nearly 59%. Yet, after the market turmoil of March 19th on top of the recent political developments, it will be key to see how the preference of residents will change in their savings.
• Deposit banks’ net income rose by 43% in Jan25 on y-o-y terms. We continue to expect the ROE of deposit banks to recover towards low 30% levels by end 2025 from 28.4% in 2024. Nonetheless, the renewed inflationary pressure after yesterday put a downward bias on our improvement expectations.
• NPL ratio of the sector reached almost 2% in February (vs. 1.6% in Feb24), led by the ongoing but losing pace deterioration in the retail segment. The share of the sum of Stage 2 and NPLs in total loans increased further to 11% in 4Q24 for peer deposit banks.
• The sector’s capital ratios stay solid. The fall observed in January capital ratios is the result of the seasonal impact of the increase in operational risks.

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