Fitch announced the expected increase in the profitability of Turkish banks.

Important Announcements at Fitch Turkey Event

Fitch Ratings shared positive forecasts regarding the profitability of Turkish banks at the Fitch Turkey Event held in Istanbul. At the event, senior analysts came together to provide updated assessments of the financial markets in Turkey.

Banking Operating Environment Score Increased

Fitch Ratings Banks Director Ahmet Emre Kılınç announced that they have raised the operating environment score for Turkish banks from one notch below the country rating to the same level as the country rating. Kılınç stated that this change is based on the effectiveness of the policies implemented by the banks.

Capital Adequacy and Asset Quality

Kılınç emphasized that the capital adequacy of banks in Turkey is at levels of 14-14.5%, and stated that this ratio is sufficient. Additionally, he mentioned that the increase in the non-performing loan ratio is an expected scenario.

Profitability Forecasts for 2024

Kılınç highlighted that interest rate cuts will support the profitability of Turkish banks. He indicated that they expect the banks' profitability to be better next year compared to this year.

Improvement in Access to Foreign Markets

Kılınç expressed that an important development has occurred in the access of Turkish banks to foreign markets. He noted that many banks have issued securities, which has reduced refinancing risks. However, he pointed out that foreign currency deposits remain high.

2026 Expectations and the Impact of Interest Rates

Kılınç stated that reductions in the policy interest rate will positively affect banks’ net interest margins and that the effects of high interest rates will reflect on asset quality. He added that falling interest rates could provide some relief in asset quality as well.