Speaking at the “Digital Anatolian Meetings” organized by QNB Finansbank, EKONOMİ daily and Bloomberg HT took place in Gaziantep in the weekend, QNB Finansbank General Manager Omur Tan said, “In 2024, loan growth in the Turkish banking sector will be 35-40 percent in line with inflation expectations.”
Omur Tan, General Manager of QNB Finansbank, evaluated the national and global economy, explained the developments in the sector and gave information about the practices of his bank. Here are the highlights of Tan’s speech:
- After the pandemic period, the main factor determining economic policies, especially monetary policy, in the global economy was the outlook for inflation. For this reason, central banks, especially those of developed countries, began the process of raising interest rates. Subsequently, rising funding costs suppressed demand. While this improved the outlook for inflation, it also created a risk of recession in the global economy. However, we see that the interest rate hike processes have been largely completed.
- Increasing geopolitical risks are another noteworthy issue. For this reason, energy and commodity prices are on the rise.
- Global economic growth will slow next year. We expect global growth to be in the 2-3 percent range in 2024. Global risk appetite will also recover with improving conditions. This will allow us to see the real normalization and increase in the growth trend in 2025.
- 2023 was a very eventful year for our country. At the beginning of the year, we experienced the earthquake disaster, followed by a long election process. The change in economic management was the most significant development of the year. Within the framework of the economic outlook, actions were quickly taken, we entered the process of raising interest rates, macroprudential measures were announced and simplification steps were taken. There is now a predictable economic outlook.
- In 2022, the issue that left its mark on the banking sector was regulation. This year, regulations were simplified and interest rates were gradually increased. Although the tightening steps may hurt banks’ income statements due to the increase in funding costs in the short term, we find them positive in the medium and long term.
- Our expectations for 2024 are that inflation will enter a permanent decline phase as domestic demand decreases with the tightening steps taken, dollarization will decrease as TRY-denominated instruments are seen as investment instruments within the country, and the current account deficit will decrease with the encouragement of efficient economic growth and exports. In 2024, we may see an increase in confidence in the economy with improving economic indicators and the start of capital flows depending on global conditions.
- In 2024, we may see loan growth in the Turkish banking sector in line with inflation expectations, as long as the current monetary policy is implemented and the actions taken continue. In line with inflation expectations, we can expect loan growth to be between 35-40 percent next year.
- With rising interest rates, demand for TRY deposits is higher. I think that this trend will continue in the coming year and that the liraization strategy will be more rewarded in line with the economic management’s target. The important condition here will be the continuation of the current monetary policy. In this framework, we can foresee that TL deposits will grow by around 40 percent.
- TRY deposit interest rates are around 50 percent for maturities between 1-3 months.
- It is possible to say that there has been some acceleration in commercial loans in the last few months. As of December 1, seasonally and exchange rate adjusted 13-week annualized growth in commercial loans exceeded 20 percent. We also see that banks’ appetite for lending has increased.
- Our Bank performed successfully in 2023 as well. As of the end of the third quarter, our total assets increased by 43 percent compared to the beginning of the year to TRY 862 billion, our net loans increased by 46 percent to TRY 502 billion, and our customer deposits increased by 41 percent to TRY 542 billion.
- In the first 9 months, our net profit was TRY 24.6 billion, while our return on average equity was above 61 percent. Our NPL ratio dropped to 1.6 percent, below the average of private banks.