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As a result of the ongoing tight monetary stance, credit growth trend turned into a deceleration from a moderate path. Higher level of real interest rates result in more restrictive financial conditions. Expected rate cuts in coming months and potential ease in regulatory growth caps might reverse this outlook a little bit.

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.

Profitability and NIMs of the sector have started to improve in 4Q24, which will continue with the rate-cutting cycle of the CBRT. The monetary stance remains to be supported with the macro-prudential measures. We expect the ROE of deposit banks to barely improve to 30% by end 2025 from 28.4% at the end of 2024.

Since Dec 6th was the day for finalizing credit growth monthly caps, the weekly growth of FX-adjusted credits decelerated from 0.9% to 0.3%. The deceleration was due to consumer credits in the sector.

Since Oct 11th was the day for finalizing credit growth monthly caps, the weekly growth of FX-adjusted credits decelerated further to 0.2% from 0.4% mainly on top of commercial credits in the overall sector, which brought down the trend rate of total credit growth as well.

The weekly growth of FX-adjusted credits decelerated in the third week of September from 0.6% to 0.3% due to strong contraction in consumer credits in the overall sector.

The slowdown in credit growth started to become more pronounced towards the end of 2Q24 with tight monetary policy and more restrictive macroprudential measures. TL and FC credit growth levels came below the regulatory thresholds.

After two weeks of strong acceleration, the weekly growth of FX-adjusted credits decelerated sharply on the 2nd week of August from almost 1% increase to 0.1%.