Akbank: Rising funding costs are main problem
Indicating that interest rates paid for deposits are currently much higher than anticipated inflation, Akbank General Manager Hakan Binbasgil says rising funding costs are the biggest problem facing today’s Turkish banking system. Binbasgil says the fact that credit expanded rapidly due to the Credit Guarantee Fund means there is currently a funding need, particularly in terms of lira, and that a possible decline in funding costs will naturally reflect on credit interest rates.
“Measures are working”
Evaluating the agenda at an award ceremony, Binbasgil underlined the positive effects of the government’s measures in the recovery of the markets. “We’ve started to see the positive effects of these measures on macroeconomic indicators. Government, the Central Bank and the Banking Regulation and Supervision Agency worked accordantly. The Credit Guarantee Fund had a significant impact on the revival of the markets,” said Binbasgil. “The special consumption tax exemption implied for sectors on durable consumer goods and furniture transformed the stagnation into recovery and sales soared. As a result of all these measures growth was pulled up to 5%. Our exports also started to increase again in comparison with previous years. And there is significant stabilization among foreign exchange rates.”
Stating that the effect of the rapid credit expansion on economic growth will be more apparent in the second half of 2017, Binbasgil underlined that they revised their economic growth predictions upwards and foresaw a growth of 5.5% for 2017. Binbasgil states there is a significant funding need, especially in Turkish lira, due to the rapid expansion of Credit Guarantee Fund loans. “There have been increases among deposit rates and therefore credit interest rates. We may experience a partial decline in deposit interest rates in the coming days considering that the Credit Guarantee Fund loans will achieve a satisfied state. In the case of a decline in funding costs, such positive developments may naturally reflect on credit interest rates,” says Binbasgil.
“Situation will improve under free market conditions”
Binbaşgil believes Turkey has passed the most troubled phase and is now in a period of growth. He says rising funding costs currently represent the most serious problem for the Turkish banking system. “The paid interest for de- posits is much higher than the anticipated inflation rate of 9.5%,” he says, and hopes the situation impairing Turkey’s economy in many ways will eventually improve under free market conditions.
High interest in Turkey among foreign investors
Finally, in reference to their support to Turkey’s steady and high economic growth rate under better circumstances, Binbasgil evaluated developments among international borrowing markets. “Since the start of the year, we’ve been in contact with foreign investors abroad in different economic hubs and we have received highly positive feedback,” he says. Binbasgil recalls that the banking system successfully managed to achieve March 2017 syndication despite the prevailing volatility in global markets.