S&P says Turkish banks to be less profitable – report

Credit ratings agency Standard & Poors said the profitability of Turkish banks will decline this year, Dünya newspaper reported.

The main weaknesses of the industry going forward will be funding and asset quality, S&P said in a report, according to Dünya, which specializes in business and markets news.

S&P said banks’ problems could be exacerbated by declines in the lira and political risks.

Profitability will be affected by narrowing interest margins, deposit costs and an increase in corporation tax to 22 percent from 20 percent, the ratings agency said, according to Dünya.

About one-third of bank loans are in foreign currency, meaning debtors could have problems with repayment should the lira extend declines experienced in 2017 into this year, S&P said.