Fitch: 10%-20% loan growth of Turkish banks poses no short-term risk

Published 24.08.2019 00:02

The U.S.-based credit rating agency Fitch Ratings said Friday a credit expansion of 10% to 20% by Turkish banks does not constitute a short-term risk.

The Fitch Ratings statement read: "The annual Turkish lira-denominated credit growth of 10% to 20% by Turkish banks is not likely to cause a significant rise in the risks related to the banking sector's debt collection capability. We expect that the targeted credit expansion will halt the credit growth of public lenders and support moderate expansion at some of the private banks."

The statement by Fitch Ratings came following the central bank announcement regarding loan growth rate criteria for deciding reserve requirement ratios and remuneration rates on Monday.

"For banks whose loan growth is between 10% and 20% [reference values], the reserve requirement ratios for Turkish lira liabilities in all maturity brackets excluding deposits and participation funds with one year or longer maturity [excluding deposits or participation funds obtained from banks abroad] and other liabilities with longer than three-year maturity [including deposits and participation funds obtained from banks abroad] will be set at 2%," the Central Bank of the Republic of Turkey said Monday.

The current remuneration rate of 13% applied to Turkish lira-denominated required reserves is now set at 15% for banks with loan growth between the reference values, and at 5% for others.

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