Consumer and commercial loan growth rates, which accelerated in the first week of the new year, started to show signs of slowdown at the end of the month. In particular, consumer loans shrunk by 15 percent in state-owned banks, while commercial loans in public banks grew by single digits for the first time in 2 years.
Loan growth rates in banks are losing momentum from the pace of the first week of the year. At the end of January, total loan growth in the banking sector was 23.71 percent on a 13-week annualized exchange rate-adjusted basis, down to 10.02 percent in public banks and 38.14 percent in private banks. While the contraction in consumer loans in public banks reached 15 percent again, private banks continued to grow at 45.5 percent in consumer loans.
Commercial loan growth slowed sharply in both private and public banks. While the commercial loan growth rate in public banks fell to 7.97 percent, the lowest level since November 2021, it declined to 19.94 percent in private banks. Commercial loan growth in the total sector also fell to 13.23 percent.
While the Central Bank is implementing selective credit and quantitative tightening measures as part of its fight against inflation, it wants to see a slowdown especially in consumer loans and credit cards. The Central Bank’s texts and reports have emphasized that the process of credit expansion is being carefully monitored and that sufficient tightening in commercial loan rates has been achieved. Through selective lending and quantitative tightening, the Central Bank is trying to ensure that the growth in commercial loans is concentrated in export, investment, agriculture and tradesmen loans.
Total loan growth of 23.72 percent
Calculations made from Central Bank data reveal that the acceleration in 13-week exchange rate-adjusted loan growth in the first weeks of the year has given way to a slowdown. According to the data, in the first week of the year, the 13-week annualized exchange rate-adjusted total loan growth reached 26.3 percent, the fastest growth since the end of July 2023. Total loan growth, which was 25 percent in the second and third weeks of the year, declined to 23.72 percent in the last week of January. While the sector’s 13-week annualized unadjusted growth in consumer loans was 20.32 percent, the 13-week annualized unadjusted growth in commercial loans decreased to 13.23 percent. In the first weeks of the year, consumer loan growth was above 21 percent and commercial loan growth was above 15 percent.
Single-digit growth in public banks
The biggest reason for the loss of momentum in loan growth is public banks. With the start of the Central Bank’s policy rate hikes, public banks first stepped on the brakes on consumer loans above 70 percent. The 13-week annualized growth in consumer loans, not adjusted for the exchange rate effect, turned negative at the end of September, and the biggest contraction was 15.55 percent in the second week of December. In early January, public banks also reduced the shrinkage in consumer loans, but the contraction was 14.72 percent in the last week. In commercial loans, the 13-week annualized FX-adjusted loan growth of state-owned banks dropped from 63 percent at the end of May to below 20 percent at the beginning of August, and although it accelerated again, it fell to single digits with the new year. As of January 26, the 13-week annualized exchange rate.
Commercial loan growth in private banks below 20 percent
Private banks, on the other hand, continue to grow consumer loans despite high consumer loan interest rates. According to calculations made from Central Bank data, the 13-week annualized loan growth, which is not adjusted for the exchange rate effect, is 45.54 percent. Again, there was a decline in consumer loans in private banks from the 47.05 percent level at the beginning of January. In commercial loans, the 13-week annualized exchange rate-adjusted growth in private banks came below 20 percent with 19.95 percent. The commercial loan growth of private banks had reached 24 percent in early January. Thus, total loan growth in private banks fell to 38.14 percent in 13-week annualized terms, which was 41 percent at the beginning of January.
Commercial loan rates continue to rise
The Central Bank’s weekly loan rates current data indicate that consumer loan interest rates eased slightly and commercial loans continued to rise. According to Central Bank data, consumer loan interest rates were 60.73 percent in the week ending January 26. Thus, general purpose loan interest rates have been declining for three weeks from 63.4 percent at the beginning of January. The decline exceeded 2.5 points compared to the beginning of January. Vehicle loan interest rates, which were 50.27 percent in the second week of January, decreased to 44.08 percent in the week ending January 26. There was a decrease of almost 6.2 points. Housing loan interest rates, which were 42.1 percent in the first week of January, dropped to 41.21 percent as of January 26. Commercial loan rates, on the other hand, remained at historic highs and continued to increase. Commercial loan rates, which were 53.45 percent at the beginning of January, rose to 54.15 percent at the end of January 26. Commercial loan rates also increased by 0.7 percentage points.
TRY deposit loan rates remain flat
The Central Bank has a policy of encouraging TRY savings. However, excess liquidity in the market is delaying the desired level of TRY deposit interest rates in the banking sector. The excess liquidity, which hovered at very high levels throughout January, rose to TRY 740.8 billion as of January 31. With the Central Bank’s moves, this figure declined to TRY 103.8 billion as of February 5. However, banking sector sources emphasized that net funding should be at the level of TRY 300-400 billion in a positive rather than negative direction, so that the impact of monetary policy would be felt much more clearly. In this case, sector sources believe that TRY deposit interest rates will also rise. According to the Central Bank’s weekly data, TRY deposit interest rates with a maturity of up to 3 months, which hovered above 51 percent at the beginning of January, which reached 53 percent in December 2023, declined to 49.61 percent as of January 26. Average TRY deposit rates are also at 46.36 percent.