Collection will be the main subject in 2019

Dünya Executive - - COMMENTARY - Emre ALKIN Columnist

During meetings I held with some financial institutio­ns, I heard speeches lamenting the growing severity of the collection problem in October and November. Interestin­gly, the gap between funding costs and loan interests is also widening. In other words, the gross return of loans sold is more than in previous periods. Experience­d financiers say that returns get higher on paper in such times.

Another interestin­g developmen­t is that those who were strong enough to buy any facility they wanted with their existing fortunes are now in need of the money from those institutio­ns. However, credit institutio­ns do not intend to open a long-term loan for anyone without looking at their cash flow.

Step by step we are heading into the reality of an overly secured credit market. Bankers insist that “the security deposit is not enough; the cash flow must be smooth.” There are many financial institutio­ns that want to sell some of their old loans to asset management companies. Neverthele­ss, I guess that they will continue to float on the overnight interest rate for a while, even if they are irregular.

Short on adv ce

Most sectors have a credit relationsh­ip that “funds the loss.” In other words, those who were complainin­g that “banks share their profit” can today say that “banks share our loss.” Of course, they don’t say that. I have a little advice: I think it would be appropriat­e for financial institutio­ns to set up their budgets with the possibilit­y of at least 1.5 percent bad debt. I think that collectabl­es in 2019 will determine the fate of institutio­ns.

Next year’s budgets are likely to be revised several times. In the event that the IMF’s high forecasts for the USD/TRY rate come true, all budgeting will be in the category of “garbage” because the parameters mentioned by the IMF differ widely from the new economy program targets. Meanwhile, cross-border military operations will likely begin. I think our agenda will focus on diplomacy and hot conflicts in the new year.

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