Turkish state banks' net profits drop 22% in 2021

Turkiye Vakiflar Bankasi TAO

16/02/2022 12:59

By Ebru Tuncay
    ISTANBUL, Feb 16 (Reuters) - The net profit of the three
Turkish state banks fell 22% in 2021, mainly due to trade losses
and loans with low interest rates, their balance sheets show,
while private banks' profits surged.
    State banks' profits were pressured by the reduction in net
interest income due to low interest loans provided in the first
months of the COVID-19 pandemic in 2020.
    The state banks' total profit dropped 22% to 12 billion lira
($881 million) in 2021, with Halkbank  HALKB.IS  recording the
largest drop of 42% to 1.5 billion lira.
    Vakifbank  VAKBN.IS  profits fell 17% to 4.2 billion lira
and Ziraat Bank's  TCZIR.UL  fell 20% to 6.3 billion lira.
    In contrast, profits of domestic private banks, which did
not lower interest rates on loans, surged 90% to 38.15 billion
lira. Foreign private banks' net profits doubled.
    Ziraat Bank's balance sheet shows its loans expanded nearly
30% in 2021 to 778 billion lira. Vakifbank's loans rose by 35%
and Halkbank's by 20%.
    Interest rates on loans began to climb after the central
bank began cutting its policy rate in September last year,
leading to a weaker lira and higher market rates.
    Ziraat's net interest income rose 15% in 2021 and Halkbank's
34%, while Vakifbank's dropped 1.7%.
    Trading losses led the pressure on state banks' profits,
with Ziraat recording a loss of 11 billion lira, mainly due to
derivative financial transactions.
    Halkbank's loss widened to 12.7 billion lira, mainly due to
forex transactions, from 5.3 billion a year earlier. Vakifbank's
losses rose to 4.75 billion lira from 2.55 billion.
    The lira's sharp fall to historical lows also hit banks'
capital adequacy ratios (CAR) last year. The BDDK banking
watchdog adjusted regulations in December to support banks.
    Halkbank's CAR dropped to 14.47% last year from 15.23%,
while Vakifbank's stood at 14.85% and Ziraat's at 16.52%.
    The Turkey Wealth Fund (TWF) is expected to provide some 51
billion lira of support to state banks, which is expected to
support their CARs.
    The capital of Turkey's Ziraat Bank will be raised to 34.9
billion lira ($2.57 billion) according to the bank's annual
report, with the amount to be paid by the TWF.
    Earlier this month, Halkbank and Vakifbank said they will
carry out capital increases by private placement, with combined
total sales proceeds of 26.8 billion lira and the shares issued
to be sold to the TWF.
    ($1 = 13.6222 liras)

 (Writing by Ali Kucukgocmen
Editing by Daren Butler)
 ((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen;
+905319306206; Reuters Messaging: Reuters Messaging:
ali.kucukgocmen.thomsonreuters.com@reuters.net))