Turkey’s banking sector: Facts & Figures

Updated December 2021 – For earlier editions of Facts & Figures click here

Domestic economic activity registered a strong recovery starting from the third quarter of 2020. Domestic economic activity remained robust in the third quarter of 2021 due mainly to the external demand recovery in services sectors. In 2020, the ratio of current deficit to GDP was 5.1%. Current account balance improved significantly thanks to tourism income and the decline in gold imports in 2021. Turkish economy grew by 1.8% in 2020. Consumer prices (CPI) increased by 14.6% and producer prices (PPI) increased by 25.1%, respectively. The ratio of budget deficit to GDP was 3.4%.

Number of banks operating in the banking sector was 53 as of December 2020. Of these 34 of them were deposit banks, and 13 were development and investment banks. Of the deposit banks, three were state-owned banks, and eight were private banks. There were six participation banks in Turkey.

The asset share of deposit banks in the banking sector was 87%, while the shares of development and investment banks and participation banks were 6% and 7%, respectively.

The number of employees decreased slightly and realized as 203,000 people compared to the previous year in 2020. The number of branches declined by 184 to 11,194. In 2020, the number of employees per 100,000 people decreased by four to 242, while the number of branches decreased by 0.2 to 13.4.

As of December 2020, the sector share of the largest five banks in total assets was 59%. According to deposit volume, the share of the five largest banks in total increased by 4 percentage points, while their share in loans increased by 2 percentage points.

Total assets reached USD 823 billion as of 2020. The ratio of total assets to GDP increased by 17 points to 121%. Banking sector loans and liquid assets represented 59% and 15% of assets, respectively. The share of securities was 17%. The share of subsidiaries and fixed assets was 3%.

Loan volume of the banking sector reached USD 482 billion and the ratio of loans to GDP was 74%. A 52% of total loans was extended to large scale companies and project financing, 24% to SMEs, and 24% to consumers.

Loan-to-deposit ratio remained the same at 104% level. This ratio was 152% in TL loans and deposits, and 64% in FX loans and deposits as of December 2020.

The ratio of non-performing loans before specific provisions to total loans was at 4.1%. This ratio was 4.7% in corporate loans, and 2.1% in consumer loans.

Deposits and non-deposit funds accounted for 57% and 24% of the liabilities, respectively. The shares of shareholders’ equity and other liabilities were 10% and 9%, respectively.

Total deposits grew by 35% in nominal terms and 20% in fixed exchange rates to USD 466 billion. The ratio of deposits to GDP was 68%. The share of TL deposits in total deposits decreased by 4 percentage points to 45%.

Shareholders’ equity was USD 81 billion as of December 2020. Capital adequacy was at a high level in both core and legal capital. Capital adequacy ratio was 18.8%. Core capital adequacy ratio (Tier-1) remained at a high level and was 14.5%.

In addition to the rapid increase in loans, interest income increased by 1% and interest expenses decreased by 19% due to the decrease in interest rates. Thus, net interest income increased by 32%.

The ratio of interest margin to average assets increased and realized as 3.2% in 2020.

Net profit decreased by 6 percent to USD 8 billion. In 2020, average return on equity was 10,7%. As of December 2020, average return on assets decreased by 100 basis points to 1.1% level compared to the previous year.

As of December 2020, debit card and credit card transaction volume was USD 336 billion, and its ratio to GDP was 44%.

As of December 2020, the number of active customers using digital banking transactions reached 66 million; 97% of the customers were individual, and 3% were corporate. The decrease in social mobility due to the pandemic played an important role in the increase in mobile banking transaction volume.

Contributor: Ümit Ünsal umit.unsal@tbb.org.tr