Türkiye's second-largest private bank by assets does not expect the credit limits imposed on the sector to support tight monetary policy to be lifted throughout next year, according to its chief executive, who sees them as necessary to bring inflation down.
Although annual inflation has cooled to 31% as of November, the lowest in four years, Garanti Bank CEO Mahmut Akten does not anticipate the authorities will dramatically reduce broader inflation-fighting policies and regulations next year.
"If we are serious about bringing inflation down, I don't expect these limits to be lowered, or rather, I don't expect them to be lifted," Akten told an interview with Reuters, published on Monday. "Minor concessions might be made," he said. "That would be the right thing to do."
Since mid-2023, tight monetary policy has squeezed lenders' net interest margins, while credit restrictions have raised funding costs and weighed on returns and asset quality, despite banks' strong capital and liquidity positions. Measures include a 2% monthly cap on consumer and vehicle loans, along with limits on small- and medium-sized enterprise (SME) and commercial lending.
Central bank 'listening' to lenders
Turkish lenders' credit growth has trailed inflation in recent years, including at Garanti, which is 86% owned by Spain's BBVA and has some TL 4.2 trillion ($100 billion) in assets.
That trend reversed in 2025, "somewhat reduc(ing) pressure on us," Akten said, helped by the absence of limits on overdrafts, housing loans and credit cards.
BBVA applies inflation accounting to Garanti's results, which reduces capital by the level of inflation. As a result, Garanti contributes about 7% to 8% to BBVA's earnings, compared with roughly 25% to 30% once normal reporting methods resume, Akten said.
Policymakers sharply raised interest rates in 2023 to tame inflation, which had peaked at about 75% in May 2025, before they began gradual cuts a year ago, bringing the policy rate to 38% earlier this month.
Loan and deposit rates have yet to reflect the policy easing due to rules encouraging Turkish lira deposits, Akten said. The Central Bank of the Republic of Türkiye (CBRT) holds regular meetings with lenders and "they are listening to us," he said, describing rules as "less burdensome" now.
Akten expects inflation to fall to about 25% by the end of 2026, with the policy rate hitting 32%.
Analysts expect the central bank to continue easing next year.
The CBRT's interim end-2025 inflation target stands at 24%, with a forecast range of 31%-33%.
The bank expects inflation to fall to its 16% interim target by the end of 2026, in line with the government's medium-term program. For next year, the bank projects inflation between 13% and 19%.