He believes that non-performing loans could rebound in the coming months, but the economic recovery will operate in the opposite direction
MADRID, 8 Mar. (EUROPA PRESS) –
The Bank of Spain considers that the risks for the financial sector in Turkey remain contained and that, in general, it remained healthy during 2020, according to the Economic Note ‘Macro-financial situation in Turkey’ prepared by the agency.
Turkey is identified as a “systemic and materially significant” country from the point of view of financial stability since 2016 due to the proportion in the international exposure of the Spanish banking system.
This relevance comes from the participation that the BBVA group has in the Turkish bank Garanti, which amounts to 49.85% of its capital. It is the second largest Turkish private bank and the fifth largest bank in the country if the public ones are also included.
During 2020, Garanti’s assets accounted for 8.1% of the total assets of the BBVA group, and its contribution to net profit, of 563 million euros, represents 14.3% of the profit obtained by all the areas group business, excluding the corporate center.
In this latest installment of its Informative Note on the situation of the sector in Turkey, the Bank of Spain explains that credit to households and non-financial companies accelerated notably in 2020, supported both by the sharp cut in interest rates and by measures and temporary regulations of the banking supervision and regulation agency, which have already been largely reversed.
However, it points out that, although the credit granted by both public and private banks grew notably, that of the former did so to a much greater extent, largely through concessional loans or at low interest rates.
In relation to doubtful loans, their evolution has been contained, thanks to measures such as the restructuring of loans, the postponement of the payment of installments in 2020 and the extension of the classification periods. In any case, it states that the overall quality of the assets has deteriorated due to the increase in their risk.
The Bank of Spain considers that the expiration of the temporary measures introduced in 2020 – some have been extended until mid-2021 – could lead to a certain rebound in non-performing loans in the coming months, although it trusts that the reactivation of the economy will operate in the opposite direction.
On the other hand, the tightening of financing conditions that began at the end of 2020 has begun to have a moderating effect on credit growth, which is expected to continue throughout 2021.
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