Turkey’s banking sector: Facts & Figures
Updated September 2018 – For earlier editions of Facts & Figures click here
Despite the increase in external shocks stemming from global financial markets and geopolitical risks, Turkey’s economy grew rapidly in 2017. The banking sector supported growth and increase in employment by financing economic activity through enlarged loan supply.
Compliance with international standards in banking regulations was further continued in 2017. The EU Council announced that Turkey was fully compliant with Basel regulations. During the transitional period to IFRS 9, following the completion of regulations, test work was carried out throughout the year.
As of 2017, 52 banks operated in the banking sector, of which 34 were deposit banks, and 13 were development and investment banks. Three of the deposit banks were state-owned banks, and nine were private banks. In addition, there were five participation (islamic) banks.
As of the end of 2017, banks employed 208,000 people, while the number of bank employees decreased by 2,631 compared to the previous year. The number of branches declined by 158 to 11,582; the decline in number of branches resulted from deposit banks. The population per branch was 6,977.
The sector share of the largest five banks in total assests was 56%. The share of the first ten banks in total assets remained unchanged with 85%.
The share of assets of deposit banks in the banking sector was 90%, while the shares of development and investment banks and participation banks were 5% each.
Total assets increased by 19% to TL 3.3 trillion. Total assets increased by 11% to $864 billion on a dollar basis. The ratio of total assets to GDP was 105%.
Banking sector loans and liquid assets represented 65% and 15% of assets, respectively. The share of securities was 12%. The share of subsidiaries and fixed assets was 2%.
Deposits and non-deposit funds accounted for 53% and 28% of liabilities, respectively. The share of shareholders’ equity in total liabilities was at 11% level.
Loans increased by 21% in nominal terms, and by 19% in fixed exchange rates, amounting to TL 2,112 billion ($560 billion). The ratio of loans to GDP increased by 1 percentage point to 68% compared to the previous year. Loans to be provided with the Treasury-backed Credit Guarantee Fund (CGF) guarantees were a key factor in loan growth. The effective rate of guarantee by CGF backed loans was about 6%.
Some 51% of total loans was extended to large scale companies and project financing, 24% to SMEs and 25% to consumers.
The share of housing loans in retail loans was 36%, the share of consumer loans 39%, credit cards 23%, and that of automobile loans 2%.
The ratio of non-performing loans to total loans was 3%. This rate was around 2.8% in corporate loans and 3.5% in retail loans. Provisions set aside represented 79% of non-performing loans.
Total deposits grew by 18% in nominal terms and 11% in fixed exchange rates to TL 1.711 billon ($454 billion). The ratio of deposits to GDP was 56%. The loan-to-deposit ratio increased by 3 percentage points compared to the previous year to 123%.
Non-deposit funds amounting to 28% of total liabilities increased by 21% in nominal terms and 12% in fixed exchange rates to TL 903 billion ($239 billion).
Due to the inclusion of almost all net profit to shareholders’ equity, shareholders’ equity increased to TL 359 billion ($95 billion). Shareholders’ equity financed 11% of total assets. As a result of shareholders’ equity growth and regulatory framework compliant with international standards, capital adequacy increased by 100 basis points and reached 16.6%. Core capital adequacy ratio kept its high level with 13.9%, increasing by 70 basis points.
Profit volume increased by 31% to TL 49.1 billion ($13 billion) due to the rapid increase in loan volume. Return on average equity increased by 160 basis points to 14.9%. As of December 2017, average return on average assets with around 1.6% remained almost the same compared to the previous year.
Despite the market value of the banking sector’s stocks, traded on Borsa İstanbul, increasing from TL 175 billion to TL 233 billion, the ratio of market value of the banking sector’s stocks to total market value decreased to 27%. The ratio of market value to book value declined from 0.88 to 0.84.
As of December 2017, the number of active customers using digital banking transactions reached 35 million. Some 95% of the customers were individual, and 5% were corporate. In the last three quarters of 2017, the value of digital banking transactions was TL 2,960 billion, 121% of GDP in the same period.
Contributor: Emre Inan email@example.com