Private pensions showed significant growth in Turkey over the course of 2013 and 2014, following implementation of a new law that introduced government matching of contributions for private pension. With the new law, designed as an incentive scheme to encourage more contributions into the system, as of January 1, 2013 the government matches 25% of individual contributions to...
Turkey’s stock exchange, the Borsa Istanbul (BIST), had a bumper year in 2014. It was ranked as the fifth most profitable exchange globally, with the BIST 100 index rising by 26% and closing at a record year-end high. While the early months of 2015 were more muted for the BIST, the appeal of the exchange and many of its listed stocks to investors is still strong.
International ratings agencies keep a close eye on Turkey’s banking sector, given its size and importance, and the penetration of major foreign investors. Ratings movements can affect the borrowing costs of Turkish financial institutions and, at a time when Turkish banks have taken on substantial foreign debt, can be a gauge of the borrowing costs they are likely to bear.
The foreign presence in the Turkish banking market is currently undergoing a shake up, with new entrants arriving looking to expand their presence in a large and dynamic emerging market, while others are looking to pull out due to external pressures.
Turkey’s banking sector has proved resilient to both the global economic crisis and more recent fluctuations in the country’s economy. Loan growth remains fairly high by developed-market standards but has trimmed in recent years, reflecting the market’s increasing maturity as well as regulatory moves to contain credit expansion with an eye on risk profiles.
As the IMF and others have noted, the Turkish banking system’s non-performing loan (NPL) ratio is relatively low, despite the recent economic slowdown and foreign exchange risk. The ratio varies across the sector, however, with some banks more susceptible than others. While NPLs are not high by regional standards – and even by those of some eurozone members – and are well-...
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