‘Sector can withstand crisis-led dollar shocks,’ says Garanti Bank’s Ali Fuat Erbil
The head of one of Turkey’s largest commercial banks is confident that market fluctuations resulting from the US visa crisis won’t create lasting damage and the Turkish banking sector has the liquidity and capital adequacy ratio to stand firm against the shocks. “We hope the crisis will be resolved,” said Garanti Bank General Manager Ali Fuat Erbil, who added that he believes the current effects won’t be permanent or negative. “There are two issues that both we and the authorities attach importance to. One is liquidity and the other is the capital adequacy ratio. Today, the liquidity of Garanti Bank and the banking sector, especially foreign currency liquidity, is strong enough to stand up to much more serious shocks than this.”
Erbil made his evaluations about the current situation at a press conference introducing the bank’s new service model. He stated that, as of Tuesday, Garanti Bank has $12 billion of liquidity in foreign currency and said the bank’s liquidity is strong in volatile situations so he is not overly concerned about the situation. “Garanti’s solo capital adequacy ratio is around 19% and its consolidated capital adequacy ratio above 17%. The sector average is at a very high level,” Erbil said, indicating that the Turkish banking sector’s capital adequacy ratio is at its highest level in recent history.
Stating that the bank has gained market share in almost all issues and that its appetite is good, he said: “As a bank, since the start of the year, our credit growth rate is approaching 20% and we expect this ratio will reach 21-22% by the end of the year.”
In relation to the 2% increase in corporate tax recently announced in a package of tax laws to be debated in Parliament, Erbil said the increase would reduce its annual profits by approximately TL 150 million.