bne IntelliNews – BEYOND BOSPORUS: An Under-the-Cover Look at Turkey’s Dark Lending Burden Problem

Troubled lending by Turkish banks registered as closely watched reached 360 billion Turkish liras (TRY) ($45.9 billion) at the end of September, according to data from the quarterly Financial Stability Report from the central bank on 27 November.

Turkish authorities do not provide actual data on the problem loans in question, known as Stage 2 loans, but observers follow the chart in the Financial Stability Report.

The full report is not yet available in English and, yes, despite the hype about how Turkey’s new central bank governor and finance minister are supposedly ‘orthodox’ and how the Erdogan administration has gone into “market-friendly” mode.

Who will believe those who continue to dissolve Turkey by saying that what its officials are really after are short-term hedge funds that do not dig into the information provided while profiting from the rise in bank stocks?

Yakin Izleme: Under Close Watch, TGA Bakiye: PNP

Turkish banks also had about TRY 150 billion in non-performing loans (NPLs) grouped into 3-4-5 stage according to Turkish regulations as of the end of September.

The NPL ratio fell to 4.1% at the end of September from 5.4% at the end of 2019 thanks to a regulation introduced by banking watchdog BDDK which extended the time required for banks to register a loan under tight supervision as NPL, the central bank is noted.

Even the central bank points to the fact that Turkish banking sector ratios and financials are synthetically misaligned thanks to “regulatory forbearance”. Meanwhile, mainstream media and market maker news services, as well as the financial industry, continue to report that Turkish banks are making huge profits.

Bad debts and loans under close watch totaled TRY 510 billion, or 14.3% of the overall loan portfolio of TRY 3.56 trillion, at the end of September.

The banking sector’s overall equity stood at TRY 569 billion at the end of September, according to the BDDK.

This figure does not include loans granted under the State Credit Guarantee Fund (KGF) or restructured loans since they are classified as performing loans or Stage 1 loans under the regulations. Turkish.

The Financial Stability Report also showed that outstanding loans under the KGF stood at TRY 342.7 billion at the end of September.

According to the report, some TRY 35.4 billion of loans under the KGF are expected to be repaid in the fourth quarter and TRY 128.5 billion in 2021.

Turkish authorities also do not share information on restructured loans.

According to the quarterly business survey on bank loans conducted by the central bank, Turkish companies in the third quarter mainly tended to take out loans to restructure their outstandings (chart below).

CORPORATE LOANS – FACTORS AFFECTING DEMAND FOR LOANS AND LINES OF CREDIT, Sabit Yatirim: fixed investment, Stok Artirimi ve Isletme Sermayesi: inventories and working capital, Birlesmeler/Satin Almalar: mergers and acquisitions, Borcun Yeniden Yapilandirilmasi: restructuring of the debt

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