Turkish state banks curb consumer loan growth, rates rise sharply -bankers

Turkiye Vakiflar Bankasi TAO

07/07/2022 11:52

By Ebru Tuncay and Nevzat Devranoglu
    ANKARA, July 6 (Reuters) - Turkish state banks are acting to
limit consumer loan growth, notably mortgages, while loan and
deposit rates have begun to rise sharply due to rising demand
for cheap loans and the cost-boosting effect of steps taken by
authorities, bankers said.
    Under its liraization policy, Turkey's central bank has
taken steps to ensure banks hold lira fixed-coupon bonds against
forex deposits and also acted to increase the lira weight in its
collateral system.  urn:newsml:reuters.com:*:nI7N2XP02L  urn:newsml:reuters.com:*:nI7N2X502O  urn:newsml:reuters.com:*:nL8N2Y13EB
    Also the BDDK banking watchdog has taken the step to
restrict access to lira loans for companies with substantial
forex cash assets.  urn:newsml:reuters.com:*:nL8N2YB4QG
    Those measures were taken after the lira  TRYTOM=D3  slumped
44% in value last year following a series of interest rate cuts
sought by President Tayyip Erdogan, before weakening another 23%
this year.  urn:newsml:reuters.com:*:nL8N2YN19N
    Annual inflation has since surged to nearly 80% in June.
    Banking sources said some state banks cut the upper limit
for housing loans to 150,000 lira ($8,700), excluding some new
projects.
    Deposit and loan interest rates have risen further in the
private sector in response to the measures taken by the
government concerning loans.
    Reflecting rising costs, lira deposit rates are heading
towards 25% while the interest rate on dollar deposits has risen
to over 6.5% from 5% in recent months. Individual and commercial
loan rates continue to rise in the sector.
    Bankers said the growth rate for consumer loans reached 60%
by end-June from 30% at end-April, when adjusted for exchange
rates. In the same period, the growth rate in commercial loans
decreased from 55% to 40%.
    Under the government's economic policy, corporate loans
oriented towards employment and exports are encouraged in order
to reduce the current account deficit. However, individuals who
cannot maintain the value of their lira due to the low interest
policy prefer to use loans that stimulate domestic consumption.
    State banks are now seeking to slow down the excessive speed
of individual loans while private banks generally do not favour
the long-term corporate loans sought by the government.
    A senior banker familiar with the issue said: "The upper
limit for some state banks' housing loans is 150,000 lira and
one has reduced it to 500,000 lira."
    "There is also a liquidity shortage in banks. Banks'
increase in their government bonds portfolio after the latest
measures caused a lira liquidity shortage," the banker said.
    "Due to inflation, individuals turned to credit-based
domestic consumption," said another banker.
    The second banker said interest rates were on a gradual
increase, but there was an explosion in demand in the last three
months, with inflation nearing 80% and the loan interest rate at
30%.
($1 = 17.2420 liras)

 (Reporting by Ebru Tuncay, Nevzat Devranoglu;
Writing by Daren Butler;
Editing by)
 ((daren.butler@tr.com; +90-212-350 7053; Reuters Messaging:
daren.butler.thomsonreuters.com@reuters.net))