turkey monthly banking monitor...mar 04, 2017 · turkey monthly banking monitor │ march 17...

TURKEY MONTHLY BANKING MONITOR │ MARCH 17

MONTHLY

BANKING

MONITOR

TURKEY

MARCH APRIL 10th


2 Source:BIS Quarterly Review March 2017, Garanti Research

Global credit conditions strengthened in 2H16 according to BIS. While Global interbank credit decreased on a

yoy basis, the pace of the decline moderated. By contrast, after a slight deceleration in 1Q16 credit to non-

banks picked up in this period.

GROWTH OF INTERNATIONAL BANK CREDIT

Levels

CROSS-BORDER BANK CREDIT TO EM

USD Millions

-20

-10

0

10

20

30

10

20

30

40

50

60

Se

p-0

5

Au

g-0

6

Ju

l-0

7

Ju

n-0

8

Ma

y-0

9

Ap

r-1

0

Ma

r-1

1

Feb

-12

Ja

n-1

3

De

c-1

3

No

v-1

4

Oct-

15

Se

p-1

6

VIX Index (lhs) Claims on banks (rhs)Claims on non-banks (rhs)

% YoY changes %

500

1500

2500

3500

4500

Jul-0

7

Jun-0

8

Ma

y-0

9

Apr-

10

Ma

r-1

1

Feb

-12

Jan-1

3

De

c-1

3

No

v-1

4

Oct-

15

Sep-1

6

EM-All Sectors EM-Banks


Global Developments

3 Source:IIF Global Debt Monitor April 2017, Garanti Research

Global debt level across all sectors have risen to a record high of 325% of global GDP. While developed

markets see rising public sector debt, EM debt continues to be driven by non-fin. corporates.

EM DEBT by SECTOR

% of GDP

DEVELOPED MARKETS DEBT by SECTOR

% of GDP

0

20

40

60

80

100

120

Households Non-fincorporates

Government FinancialCorporates

December-13 December-14 December-15 December-16

0

20

40

60

80

100

120

140

Households Non-fincorporates

Government FinancialCorporates

December-13 December-14 December-15 December-16


Turkey Financial Markets

4 Source: Garanti Research, Bloomberg

MSCI INDICES

Base 100 = Jan 2015

Thanks to equity inflows to EM, Turkish porfolio flows continued to improve in March. Risk premiums stayed

almost stable compared to other EM.

RISK PREMIUMS, 5 YEAR CDS INDICES

Levels

140

190

240

290

340

390

Ma

r-14

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-15

Jun

-15

Se

p-1

5

De

c-1

5

Ma

r-16

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-17

EM TURKEY

50

70

90

110

130

150

170

Ma

r-1

4

Ju

l-1

4

No

v-1

4

Ma

r-1

5

Ju

l-1

5

No

v-1

5

Ma

r-1

6

Ju

l-1

6

No

v-1

6

Ma

r-1

7

MSCI EM XBANK Index MSCI Turkey


Monetary Policy

5 Source: Garanti Research, Turkstat, CBT, BRSA and Bloomberg

TURKEY: INTEREST RATE CORRIDOR

%

With rising inflation, the Central Bank’s (CBRT) average funding rate increased further to 11.5% in March. The

share of funding through the LLW (Late Liquidity Window) rate of 11.75% increased to 80%.

TURKEY: CBT FUNDING COMPOSITION

Bln TRY

-10

10

30

50

70

90

110

03

/01

/201

7

08

/01

/201

7

13

/01

/201

7

18

/01

/201

7

23

/01

/201

7

28

/01

/201

7

02

/02

/201

7

07

/02

/201

7

12

/02

/201

7

17

/02

/201

7

22

/02

/201

7

27

/02

/201

7

04

/03

/201

7

09

/03

/201

7

14

/03

/201

7

19

/03

/201

7

24

/03

/201

7

29

/03

/201

7

03

/04

/201

7

LLW Total ON Lending 1-week repo

3%4%5%6%7%8%9%

10%11%12%13%14%15%

Ma

r-1

3

Ju

l-1

3

No

v-1

3

Mar-

14

Ju

l-1

4

No

v-1

4

Ma

r-1

5

Ju

l-1

5

No

v-1

5

Mar-

16

Ju

l-1

6

No

v-1

6

Ma

r-1

7

Cie

nto

s

ON Lending-Borrowing ON BorrowingCBT One-Week Repo CBT Cost of FundingCBRT LLW


Central Bank Reserves

6 Source: Garanti Research, CBRT

CBRT RESERVES

USD bn

Compared to February, net FX reserves of the CBRT increased in March by almost USD 2bn due to increase

in banks’ FX deposits held at the CBRT. Net reserves are at USD 32.4bn.

GROSS RESERVES

Total Reserves/External Debt to be paid within one year %

%65.6 64%

66%

68%

70%

72%

74%

76%

78%

80%

82%

Se

p-1

4

De

c-1

4

Mar-

15

Ju

n-1

5

Se

p-1

5

De

c-1

5

Mar-

16

Ju

n-1

6

Se

p-1

6

De

c-1

6

Ma

r-1

7

20

24

28

32

36

100

105

110

115

120

125

Ma

r-1

6

Ju

n-1

6

Se

p-1

6

De

c-1

6

Ma

r-1

7

Gross Reserves Net Reserves


Turkey Financial Sector

7 Source: CBRT; Garanti Research

FINANCIAL SERVICES CONFIDENCE INDEX-

Financial Services Confidence Index increased somewhat in March. Demand for financial services is

expected to recover in 2Q’17.

DEMAND INDEX FOR FINANCIAL SERVICES

40

45

50

55

60

65

70

75

80

85

90

20

16-0

1

20

16-0

2

20

16-0

3

20

16-0

4

20

16-0

5

20

16-0

6

20

16-0

7

20

16-0

8

20

16-0

9

20

16-1

0

20

16-1

1

20

16-1

2

20

17-0

1

20

17-0

2

20

17-0

3

last 3 months expected in 3 months

155

160

165

170

175

180

Ja

n-1

6

Feb

-16

Ma

r-1

6

Ap

r-1

6

Ma

y-1

6

Ju

n-1

6

Ju

l-1

6

Aug-1

6

Sep-1

6

Oct-

16

No

v-1

6

De

c-1

6

Ja

n-1

7

Feb

-17

Ma

r-1

7


Loan Growth

8 Source: Garanti Research , BRSA, CBT

FX ADJUSTED CREDIT GROWTH RATE

% yoy and 13 week ann. rates

YoY Credit growth accelerated in March and reached 14%. The 13 week trend rate jumped to 26%.

14% yoy

26% ann.

The trend rate

(annualized yearly

rate) shows a marked

pick-up mainly

thanks to push in

commercial credits

The yoy credit

growth almost

reaches the

threshold of the

CBRT.

14.1%

26%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jun-1

3

No

v-1

3

Ap

r-1

4

Se

p-1

4

Feb

-15

Ju

l-1

5

De

c-1

5

Ma

y-1

6

Oct-

16

Ma

r-1

7

YoY 13 week annualized CBT Threshold


Loan Growth

9 Source: Garanti Research, BRSA, CBT

COMM. AND CONSUMER LOANS GROWTH RATE

13 week ann. rates

Commercial credits’ trend rate continued to pick up in March thanks to the Government’s Credit Guarantee

Fund. Consumer credits’ momentum is still robust; and especially strong in housing credits.

CONSUMER LOANS

% 13 week ann. rates

31.1%

18%

-2%

3%

8%

13%

18%

23%

28%

33%

Ma

r-1

5

Ma

y-1

5

Ju

l-1

5

Se

p-1

5

No

v-1

5

Jan-1

6

Ma

r-1

6

Ma

y-1

6

Ju

l-1

6

Se

p-1

6

No

v-1

6

Ja

n-1

7

Ma

r-1

7

Commercial Loans (FX adjusted) Consumer Loans

23.2%

1%

14.3%

-11.7%

-25%

-15%

-5%

5%

15%

25%

Ma

r-1

5

Ju

n-1

5

Se

p-1

5

De

c-1

5

Ma

r-1

6

Ju

n-1

6

Se

p-1

6

De

c-1

6

Ma

r-1

7

Housing Automobile

Others Personal Credit Cards


Loan Growth

10 Source: CBT Bank Lending Survey 1Q`17, Garanti Research

(>0= Easing; <0= Tightening)

EXPECTED CREDIT DEMAND (in the next 3 months)

Levels

According to the CBRT Lending Survey, the banking sector expects increase in housing and auto credit

demand for 2Q’17. Although some easing in international funding conditions is forecast, domestic funding

conditions will be likely tightened further.

EXPECTED FUNDING CONDITIONS (in the next 3 months)

Levels

-60

-30

0

30

60

90

2015Q1 2015Q3 2016Q1 2016Q3 2017Q1

Commercial Housing Auto GPL

-120

-100

-80

-60

-40

-20

0

20

40

60

80

2015Q1 2016Q1 2017Q1

Domestic Funding conditions International Funding Conditions


Housing

11 Source: Garanti Research, CBT, Turkstat latest available data

HOUSE SALES & INTEREST RATE

YoY rates

House sales remained almost flat in Feb’17 on yoy terms. However, although on a decelerating rate

compared to Jan’17, mortgage sales rose by 27% (yoy) in Feb’17 with declining housing interest rates.

HOUSE SALES AND PRICES

YoY rates

-30%

-20%

-10%

00%

10%

20%

30%

40%

50%

0%

2%

4%

6%

8%

10%

12%

Jun-1

4

Oct-

14

Feb

-15

Jun-1

5

Oct-

15

Feb

-16

Jun-1

6

Oct-

16

Feb

-17

house prices house sales yoy-rhs

8%

9%

10%

11%

12%

13%

14%

15%

-60%

-40%

-20%

00%

20%

40%

60%

80%

100%

120%

Ma

r-1

4

Jul-1

4

No

v-1

4

Ma

r-1

5

Jul-1

5

No

v-1

5

Ma

r-1

6

Jul-1

6

No

v-1

6

Ma

r-1

7

house sales yoymortgage saleshousing loans interest rates-rhs


Interest Rates

12 Source: Garanti Research, BRSA, CBT

COMM. AND CONSUMER LOANS INTEREST RATES

4week mov.avg.

Interest rates on all consumer credits declined in March, mostly in housing loans. Deposit rates increased

further by 30 bps in March.

DEPOSIT INTEREST RATES

4week mov.avg.

15.4%

11.1%

15.3%

16.7%

10%

11%

12%

13%

14%

15%

16%

17%

18%

Ma

r-1

5

Ju

n-1

5

Se

p-1

5

De

c-1

5

Ma

r-1

6

Ju

n-1

6

Se

p-1

6

De

c-1

6

Ma

r-1

7

Auto HousingCommercial Loans Other Consumer

10.12%

7%

8%

9%

10%

11%

Se

p-1

3

De

c-1

3

Ma

r-14

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-15

Jun

-15

Se

p-1

5

Dec-1

5

Ma

r-16

Jun

-16

Se

p-1

6

De

c-1

6

Ma

r-17


Asset Quality & Credit Risk

13 Source: Garanti Research, BRSA (latest monthly data Feb’17)

NPL RATIO OF THE BANKING SECTOR

%

NPL ratio of the sector rose close to 3.3%. However, its growth rate continues to decline since Oct`16.

NPL RATIO BY SELECTED SUB-SEGMENTS

% & TRY bln

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Au

g-1

3

No

v-1

3

Feb

-14

Ma

y-1

4

Au

g-1

4

No

v-1

4

Feb

-15

Ma

y-1

5

Au

g-1

5

No

v-1

5

Feb

-16

Ma

y-1

6

Au

g-1

6

No

v-1

6

Feb

-17

Housing NPL Auto NPLGPL NPL Total Credit Cards NPLSME NPL NPL Commercial

3.26%

18.1%

2,0%

7,0%

12,0%

17,0%

22,0%

27,0%

32,0%

2,8%

2,9%

3,0%

3,1%

3,2%

3,3%

3,4%

3,5%

Se

p-1

4

De

c-1

4

Ma

r-1

5

Ju

n-1

5

Se

p-1

5

De

c-1

5

Ma

r-1

6

Ju

n-1

6

Se

p-1

6

De

c-1

6

NPL YoY NPL Growth (rhs)


Liquidity

14 Source: Garanti Research, BRSA, CBRT

LOAN TO DEPOSIT RATIO (LTD)

%

TL LTD (Loan to Deposit Ratio) is increasing with increasing credits whereas FX LTD is declining with

increasing FX deposits and declining FX credits.

FX LIQUID ASSETS TO BANKS’ ST EXT.DEBT TO BE PAID IN 1

YR

%

64.2%

45%

50%

55%

60%

65%

70%

75%

De

c-1

4

Fe

b-1

5

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct-

15

De

c-1

5

Fe

b-1

6

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct-

16

De

c-1

6

Fe

b-1

7

75%

85%

95%

105%

115%

125%

135%

145%

155%

165%

Se

p-1

5

No

v-1

5

Ja

n-1

6

Ma

r-1

6

Ma

y-1

6

Ju

l-1

6

Se

p-1

6

No

v-1

6

Ja

n-1

7

Mar-

17

TRY FX Total


Deposits of Residents


DEPOSIT GROWTH RATE

% YoY

Total deposits (FX adj.) of residents rose in March on the back of both TL and FX deposits.

FX Deposits & USDTRY

% YoY

15%

-2.3%

19.5%

10.3%

-11%

-6%

-1%

4%

9%

14%

19%

24%

Ju

l-1

5

Se

p-1

5

No

v-1

5

Ja

n-1

6

Ma

r-1

6

Ma

y-1

6

Ju

l-1

6

Se

p-1

6

No

v-1

6

Ja

n-1

7

Ma

r-1

7

TRY FX (in $) Total Total FX adj.

1

1,5

2

2,5

3

3,5

4

80

100

120

140

160

180

200

Ma

y-1

1

De

c-1

1

Ju

l-1

2

Feb

-13

Se

p-1

3

Ap

r-1

4

No

v-1

4

Ju

n-1

5

Ja

n-1

6

Au

g-1

6

Ma

r-1

7

FX Deposits (USD) USD/TRY-rhs


Deposit Rates


SPREAD btw TL and USD DEPOSIT RATES

annual %

With increasing TL deposit rates, spreads between TL and USD deposit rates continued to further widen in

March.

DEPOSIT INTEREST RATES IN TL& € & $

4week mov.avg

0%

2%

4%

6%

8%

10%

12%

Sep-1

4

De

c-1

4

Ma

r-1

5

Jun-1

5

Sep-1

5

De

c-1

5

Ma

r-1

6

Jun-1

6

Sep-1

6

De

c-1

6

Ma

r-1

7

TL EUR USD CBT avg.funding rate

0

2

4

6

8

10

12

14

16

Ma

r-0

6

Ma

r-0

7

Ma

r-0

8

Ma

r-0

9

Ma

r-1

0

Ma

r-1

1

Ma

r-1

2

Ma

r-1

3

Ma

r-1

4

Ma

r-1

5

Ma

r-1

6

Ma

r-1

7


Profitability

17 Source: Garanti Research, BRSA latest monthly data-Feb’17

NET PROFIT- whole sector

12 month cum., billion TL

Net profit of the sector increased in February by almost 30% compared to January with declining provisioning

expenses. Net profit of public banks increased more than private banks in monthly terms.

NET PROFIT- public & private banks

12 month cum., billion TL

22

27

32

37

42

Apr-

15

Jun-1

5

Aug-1

5

Oct-

15

De

c-1

5

Feb

-16

Apr-

16

Jun-1

6

Aug-1

6

Oct-

16

De

c-1

6

Feb

-17 2

7

12

17

22

27

Feb

-15

Apr-

15

Jun-1

5

Aug-1

5

Oct-

15

De

c-1

5

Feb

-16

Apr-

16

Jun-1

6

Aug-1

6

Oct-

16

De

c-1

6

Feb

-17

public banks private banks incl.foreign banks


Buffers

18 Source: Garanti Research, BRSA

CAPITAL ADEQUACY RATIO & CET 1 & TIER 1 RATIO

Both Capital Adequacy Ratio (CAR) and Common Equity Tier 1 increased by 70 bps (MoM) with a decline in

risk weighted assets.

EM CAR & TIER 1 Ratio

Q4’16

*Banks have to maintain additional capital conservation buffer of +0.625% CET1 for 2016; phased-in to

reach +2.5% CET1until 2019.

Besides, banks that are determined as domestically systemic important (D-Sib) are required to add a

certain additional amount of capital.

This is max.+0.5%CET1 for 2016; phased-in to reach max.+2%CET1 until 2019.

Source: Garanti Research and IMF FSI

15.91%

12% local minimum CAR

target

4.5% min.reg. CET1

13.5%

13.47%

6% min.reg.Tier1

4%

6%

8%

10%

12%

14%

16%

18%

Feb-1

5

Ju

n-1

5

Oct-

15

Feb-1

6

Ju

n-1

6

Oct-

16

Feb-1

7

CET 1* CAR Tier 1 Ratio

0%

5%

10%

15%

20%

Co

lom

bia

Arg

en

tin

a

Sin

ga

po

re

Pe

ru

Tu

rke

y

Indo

ne

sia

Ch

ina

Po

land

Mala

ysia

So

uth

Afr

ica

CAR Tier 1


Corporate Sector FX indebtness

19 Source: CBRT; Garanti Research

Corporates’ overall FX position continued to improve in Jan’17 as corporates increased FX assets (mainly FX

deposits held at domestic banks)

CORPORATES’ OVERALL FX POSITION

USD bn

CORPORATES NET SHORT TERM FX POSITION

%, USD bn

-250

-200

-150

-100

-50

0

2010

2011

2012

2013

2014

201

5-0

3

201

5-0

6

201

5-0

9

201

5-1

2

201

6-0

3

201

6-0

6

201

6-0

7

201

6-0

8

201

6-0

9

2016-1

0

201

6-1

1

201

6-1

2

201

7-0

1

-20%

-10%

0%

10%

20%

30%

40%

-15

-10

-5

0

5

10

15

Ma

r-1

0

Ma

y-1

1

Ju

l-1

2

Se

p-1

3

No

v-1

4

Ja

n-1

6

Ma

r-1

7

Corporate Net FX Position

USDTRY YoY-rhs


Corporate Sector

20 Source: IIF Global Debt Monitor April 2017; Garanti Research

Emerging Market (EM) non-financial corporate debt to GDP continued to increase in 4Q’16, however mainly

driven by local currency debt, posing less risks associated with currency mismatch.

TURKEY: NON-FINANCIAL CORPORATE DEBT to GDP -

Currency Composition

%

EM NON-FINANCIAL CORPORATE DEBT to GDP - Currency

Composition

%

0

5

10

15

20

25

30

35

40

De

c-1

5

Ma

r-1

6

Jun-1

6

Sep-1

6

De

c-1

6

TL FX

68%

-35

15

65

115

165

215

Ho

ng K

on

g

Ch

ina

Sin

gapo

re

Ch

ile

Kore

a

Hu

nga

ry

Isra

el

Turk

ey

Ma

laysia

Czech

Ru

ssia

Saud

i A

rabia

Tha

iland

Pola

nd

India

Bra

zil

South

Afr

ica

Co

lom

bia

Me

xic

o

Indon

esia

Arg

entina

FX Local Currency


Corporate Sector

21 Source: CBT; Garanti Research

*latest BoP data Jan`17

ST EXTERNAL DEBT * ROLL-OVER RATIO OF REAL SECTOR

(12m rolling)

%

LT external debt roll-over ratios for banks remain resilient despite high levels of loan repayments and

continuing high base effect. Roll-over ratios for the real sector is sound at close to 145%.

LT EXTERNAL DEBT ROLL-OVER RATIO OF BANKS

& REAL SECTOR (12m.rolling)

%

* ST External Credit Debt of the real sector refers to commercial credits.

144.4%

109.1%

50%

100%

150%

200%

250%

300%

350%

Jan-1

2

Jul-

12

Jan-1

3

Jul-

13

Jan-1

4

Jul-

14

Jan-1

5

Jul-

15

Jan-1

6

Ju

l-1

6

Jan-1

7

Banks Real Sector

96%

98%

100%

102%

104%

106%

Apr-

14

Jul-1

4

Oct-

14

Jan-1

5

Apr-

15

Jul-1

5

Oct-

15

Jan-1

6

Apr-

16

Jul-1

6

Oct-

16

Jan-1

7


MONTHLY

BANKING

MONITOR

TURKEY

MARCH APRIL 10th

Garanti – BBVA Research Deniz Ergun [email protected]

turkey monthly banking monitor...mar 04, 2017 · turkey monthly banking monitor │ march 17...

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