The slowdown in commercial loan growth in the last week of August was noteworthy. The main source of the slowdown is the halving of the commercial loan growth rate in private banks. Banking sector sources emphasized that there was no slowdown as indicated by the data, but this result may have emerged if loan closures took place in large corporate customers.
The tight monetary policy implemented to fight inflation also aims to slow down commercial and consumer loans. While the Central Bank imposed a 2 percent monthly growth limit on TRY commercial loans, the sharp slowdown in the growth rate of commercial loans in the banking sector in the last week of August stands out. The 13-week annualized exchange rate-adjusted growth in commercial loans slowed to 20.3 percent on August 29, down from 26.5 percent just two weeks ago. The source of this slowdown in commercial loans is private banks. In fact, the growth rate of commercial loans in private banks, which was 30.23 percent in the week of August 16, fell to half of this rate, i.e. 15.72 percent in the week of August 29.
In fact, it is not a situation that the Central Bank does not really want, namely a slowdown in the rate of credit growth. However, the real sector does not agree with the Central Bank on this issue. Especially in recent weeks, high interest rates and the problem of access to credit have been voiced more frequently by the real sector. In the banking sector, on the other hand, problems regarding the suppression of net interest margin and the decline in return on equity stand out. In an environment of high deposit rates, both credit constraints and low loan demand cause the net interest margin to be negative.
Banking sector sources were cautious about this sharp slowdown. Although the data points to a rapid deceleration, private bank sources are of the opinion that there is no such decline. Two separate banking sources pointed out that some private banks have been pursuing a more aggressive lending policy in this period and that there have even been incidents of customer transfers from other banks with refinancing proposals. The banking sector source also emphasized that the decline in these two weeks may have been due to the loan closures of large corporate customers in some private banks.
It may be a prep before the contraction
Although banking sector sources stated that it would not be correct to make a general comment based on two weeks of data, they said that the issue of stagflation, low growth and high inflation, has been discussed a lot in the last three weeks and this may have had an impact. The same source emphasized that leading indicators pointed to a contraction in the last two quarters and that economic activity had cooled down, and therefore the banking sector may have turned down the credit taps. The source said that if there is going to be a contraction in the last two quarters, there is no place for exuberant lending, adding that the slowdown in the economy may increase NPL ratios and the banking sector does not want this situation. Meanwhile, lack of access to credit and other difficulties have increased both concordat rates and company closures.
