An injection of extra capital will assist Ziraat Bank to spearhead President Recep Tayyip Erdoğan’s drive to spice up financial development and deal with persistent present account deficits this 12 months, the top of Türkiye’s largest lender stated.
Chief Executive Alpaslan Çakar, who can be chairperson of the Turkish Banks Association (TBB), stated state banks like Ziraat had been the driving drive within the financial system in recent times and would keep it up at the same time as they search to pay dividends in 2023.
He downplayed issues raised by private-sector counterparts over dangers posed by an array of bond-holding rules, and he stated the credit score would proceed to spice up sectors like manufacturing and agriculture.
Erdoğan launched a “new economic model” in 2021 that prioritizes development, funding and exports and is geared toward flipping Türkiye’s persistent commerce deficits, a significant element of the present account. The mannequin depends on focused loans and low rates of interest and likewise goals at ultimately serving to cut back inflation.
“We will give significant support to Türkiye’s economic model. For that reason, we want to be strong in capital terms,” Çakar advised Reuters in an interview carried out late final month.
In December, Reuters reported, citing sources, that state-owned banks had been in talks with the Treasury and the sovereign wealth fund to safe extra capital, permitting them to spice up lending forward of presidential and parliamentary elections this 12 months.
“There is no clear figure yet for the capital increase of state banks. We are consulting with the relevant institutions on this issue,” Çakar stated at Ziraat’s Istanbul headquarters.
The financial system is anticipated to have expanded by 5% in 2022 however development was set to chill towards the top of the 12 months. The authorities nonetheless foresees a 5% development in 2023 as nicely.
To increase development and again the federal government’s financial imaginative and prescient, the central financial institution has slashed its key rate of interest to 9% from 19% since September 2021.
State banks have supported the financial system with low-cost financing for the previous few years, rising their dominance within the monetary sector and their capital wants. State banks’ share of loans has reached a document degree close to 50%.
Dividends, loans
Asked about document sector earnings in 2022, Çakar confirmed a Reuters report in late December that Turkish banks wished to make dividend payouts to shareholders. The Banking Regulation and Supervision Agency (BDDK) – which makes suggestions every year concerning banks’ revenue distribution – was evaluating the request, he stated.
Çakar, nevertheless, stated earnings had been set to fall in 2023 as inflation cools.
The annual inflation in Türkiye in December decelerated at its steepest tempo in additional than 1 / 4 century.
Annual client worth inflation fell sharply to 64.27% in December from the 84.39% reported in November. The decline was pushed primarily by the so-called favorable base impact and marked a second straight fall after inflation hit a 24-year excessive of 85.5% in October.
In the January-October interval, the banking sector’s internet earnings leaped 417% from a 12 months earlier to TL 389 billion ($20.72 billion), boosted by inflation-indexed bond yields.
Authorities have sought to discourage overseas trade use following the steep depreciation within the lira in 2021.
The lira misplaced some 44% of its worth towards the greenback in 2021. It declined one other 30% in 2022 however held principally secure within the final quarter.
Authorities imposed almost 100 new rules on banks, together with a mandate to carry extra treasury bonds, which drew complaints from private-sector executives.
But Çakar stated these holdings wouldn’t pose dangers. “The weight of fixed coupon bonds held in the balance sheet due to regulations will not reach a level that will disrupt the balance sheet,” he stated.
He additionally stated that Ziraat’s selective loans coverage would proceed in 2023, with the priorities being manufacturing, agriculture and small- and medium-sized enterprises (SMEs).
“We have become one of the banks that gave the biggest support to the Turkish economy model,” he stated, noting its money mortgage measurement rose 61% to TL 1.2 trillion in 2022.
Ziraat’s non-performing loans ratio was low at 1.1% final 12 months, in contrast with 2.2% sector-wide, he stated.
He additionally stated the financial institution could be energetic in worldwide funding this 12 months, aiming for a 100% syndication renewal in February, and in search of to extend worldwide funding, together with by way of Eurobonds.
