Türkiye | Monthly Banking Report. April 2025

Summary

The tightening steps of the CBRT in the aftermath of the March shock were followed by much tighter financial conditions and additional macro-prudential measures throughout April and early May. Deposit rates rose to their highest level since Dec24. Credit growth maintains its limited growth.

Key points

• Key points:
• TL commercial credit growth continues to be determined by the regulatory monthly caps, with banks also focusing on non-capped items. FC credits growth in parity-adjusted terms are in the negative area. Retail lending is dominated by GPL and credit deposit accounts, credit card spending in real terms continues to remain moderate.
• The rise in residents FC deposits decelerated to $2.3bn in April after its $8.6bn increase in March if price effects are excluded. The CBRT raised FC RRRs by 200bps further across all maturities to disincentivize dollarization in early May. The FC demand seems to be mitigated with high TL rates, seen in inflows into TL funds and deposits.
• For the coming months, we expect the negative impact of the recent additional FC RR costs to be offset by the higher remuneration rates; and also NIM to be partially supported by higher lending rates. However, the possibility of longer than expected monetary tightening continues to weigh on the 2025 profitability of the sector.
• Consumer NPLs continue to be the key driver of the rise in overall NPL ratio. However, banks have increased their provision levels amid NPL inflows. We continue to expect the currency adjusted CoR in deposit banks to be 150-200 bps in 2025.
• The sector experienced some decline in CET-1 ratios in 1Q25 due to dividend payments, update on the yearly operational risk and an increase in the RWA. However, sector’s capital buffers stay solid.

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