Turkey Financial Services

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-...

With Turkish equities outperforming all of the major national exchanges and a strong rise in corporate debt issuances, local capital markets enjoyed a banner year in 2012. The strong performance lent support to a government drive to deepen and broaden capital markets while modernising trading systems and better integrating them internationally...

The Islamic finance sector in Turkey received a powerful boost in 2012 as the government entered the market with its debut issues of sukuks, the Islamic equivalent of bonds. The successful debuts – one in the domestic market and another in the international Eurobond market...