Turkish state-run banks yesterday started lowering interest rates on loans, a trend that is expected to be followed by other banks in the period ahead, a week after the central bank cut its key interest rate.

State lender Ziraat Bank was first to announce it had lowered its interest rates on housing, consumer and corporate loans as of yesterday. It said it was lowering the housing loan rates to a monthly 0.99% for loans worth up to TL 500,000 with maturities up to 180 months. It lowered the consumer loan rates for maturities of up to 60 months to between 1.49% and 1.59%.

Commenting on the move by the banks, Treasury and Finance Minister Berat Albayrak said the positive effects of the rebalancing period continue to reflect on markets. "Our public banks have initiated lowering processes in interest rates," Albayrak said over his social media account yesterday.

In a statement, Ziraat Bank, Turkey's largest lender by asset size said the annual interest rate on corporate loans, including restructured loans or loans with more than 24-month maturity, will be between 17% and 19% as of yesterday.

In what can be called a coordinated move, another stat-run lender, Vakıfbank, also announced it is reducing the cost of home loans to 0.99% a month for loans of up to TL 500,000 and extending mortgage maturities to 15 years as of today. It previously charged 1.49% per month. Like Ziraat Bank, Vakıfbank also lowered interest rates on consumer loans to as low as 1.49%.

On the other hand, Türk Eximbank also announced it was lowering the interest rate on loans in Turkish liras for small and medium-sized enterprises (SMEs) and exporters producing high technology products to 11.84, down from 15.19%.

In a statement, the banks said the change in question corresponded to a 22% reduction and that an approximately 6-point reduction in Turkish lira loans was made in the last two months, adding that the cuts in the loan rates would continue parallel to the downward trend in interest rates. The moves come a week after the Central Bank of the Republic of Turkey (CBRT) initiated an expected policy easing cycle with a significant 425-point decrease in its key interest rate last Thursday.

In a first in over four years, the bank at its Monetary Policy Committee (MPC) meeting cut its benchmark policy rate, the one-week repo rate, by 425 basis points from 24% to 19.75%. The decision marked the highest rate cut since 2002.

Before its meeting last week, the CBRT had not made a change in its interest rates since it made an aggressive rate hike last September following speculative fluctuations that erupted last August. In a meeting with reporters on Tuesday, Albayrak praised the development, saying that he views any improvement and easing in the interest rates positively due to the cost cuts of the real sector.

Albayrak had said the interest rate cut will probably be followed by a decline in loan rates, led especially by state-run lenders. Separately, during a presentation of the bank's quarterly inflation report on Wednesday, the CBRT's new governor Murat Uysal suggested that their actual analysis and estimates showed that the bank has "considerable" room to maneuver in monetary policy in coming months, signaling possible further cuts in the coming period.