Türkiye | Quarterly Report on Banking System, 4Q23. February 2024

Summary

Despite the suppression in core NIM, fees and commissions income, income from capital markets and FC transactions supported profitability of the sector in 2023. Regulatory capital ratios remain above the regulatory thresholds, though with increasing pressure in public banks due to their lower capital base.

Key points

• Key points:
• Growth in consumer credits has started to accelerate mainly in private banks with GPLs and consumer credit cards, confirming still strong consumer demand.
• Although still limited, pick up in NPL ratios have started to be observed, particularly in retailer lending.
• Regulatory capital ratios remain above the regulatory thresholds, though with increasing pressure in public banks.
• Profitability is the main element feeding into capital adequacy which will be important for public banks in 2024 due to their lower core capital levels.
• Financial institutions will start inflation accounting in 2025 when the ones with higher non monetary assets will be affected less.

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