Türkiye | Monthly Banking Monitor, August 2025

Summary

With the start of the easing from the CBRT since mid-June, banks’ interest margins improve; while credit growth trend stays closer to inflation. Cumulative RoE of deposit banks remained almost the same at 24% as of June, compared to 2024 end.

Key points

• Key points:
• The credit growth keeps its overall trend rate closer to inflation since the regulatory growth caps continue. The extension of the time horizon to 8 weeks (vs. 4 weeks before) for credit growth caps give the banks somewhat a flexibility to better manage their pricing.
• The growth momentum in TL credits continue to hover around the same levels in both public and private banks. However, public banks rather grow on TL commercial credits, whereas private banks on consumer credits.
• The attractiveness of TL rates continues to boost investment in TL assets for residents; on the other hand, FC demand also remains yet modestly on top of mainly FC funds.
• In 2Q25, banks continued to operate under high TL funding costs with ongoing NIM pressure. The expected continuing fall in funding costs with the CBRT rate cuts will help improve the NIMs of banks in the second half of the year.
• Although at a slower pace, the increase in NPL ratios continues. The share of the sum of Stage 2 and NPLs in total loans increased further to 12% in 2Q25 for peer deposit banks.

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