The Turkish banking industry is poised to recover from the economic slowdown as its capital adequacy ration is significantly higher from the legal and targeted limit.
The Turkish banking system, which was once considered the weak link in the country’s economic growth, took a dramatic turn after the 2000-01 financial crises, and has become the main pillar of the economy, as reported by
RGEMONITOR. In fact, it is poised to recover from the ongoing economic slowdown.
The Turkish banks are one of the best capitalized across the globe, placing them in a strong state to deal with asset quality deterioration and putting less pressure on them to curb lending as compared to their counterparts in Central and Eastern Europe (CEE). The best thing to analyze banks’ ability to bear future losses is the capital adequacy which also boosts confidence of the banking system as a whole.
The Turkish banking industry’s capital adequacy ratio (CAR), the ratio of banks’ capital to risk weighted asset – stood at 18% in 2008 and further improved to 18.5% at the end of March 2009. It was significantly higher from the legal limit of 8% and even much above of target ratio 12%.
After the statements by the FED, risk appetite of the industry renewed, and the extension of low interest period gave fillip to the banking assets in Turkey.
According to “Turkey Banking Sector Forecast to 2012”,
a research report by RNCOS, while all the major economies of the world bleeding white under pressure of financial crisis, the Turkish banking sector continued treading on growth track in 2008 along with increase in foreign participation.
Turkey’s banking sector has a strong financial background to bear the pressure of mild and short downturn owing to the process of consolidation after bank failures in 2000-01. Further, the industry is expected to carry on uptrend despite the global economic downturn and banks will continue to embark on expansion plans in coming years, said the report.
A Senior Research Analyst at RNCOS said, “Government’s reforms after the 2001 crisis to resuscitate the banking system have given a good shape to the industry. However, the growth in credit volume will depend on the developments take place in international markets in coming months. Once the global economy starts to recover, the Turkish banking system will benefit most.”
Related Market Research Reports:
