Top Turkish bankers paint rosy outlook for next year

Turkey’s most senior bankers said the outlook for the finance industry in 2020 is a positive one, thanks in part to projected foreign capital flows to emerging markets, state-run Anadolu news agency reported at the weekend.

The finances of the banking industry improved at a faster pace than expected in 2019 and that trend is expected to continue in 2020, Anadolu said.

Next year will be transformative for the Turkish economy, said Abdi Serdar Üstünsalih, chief executive officer of state-run lender Vakıfbank. Despite short-term global uncertainties, capital flows to emerging markets are set to accelerate and borrowing costs will fall in the medium to long term, he said.

The outlook for the sector is also improving with the expectation that inflation will slow during 2020, Anadolu said.

Annual consumer price inflation is expected at between 11 percent and 12 percent in the first half of the year and may slow to less than 9 percent by the end of the year, according to Recep Bastuğ, CEO of Garanti BBVA, one of the country’s biggest non-government banks.

"Banks will continue to back the economy in 2020, with a rise in domestic demand, regulations encouraging credit growth, and continuation of the low-interest environment," Bastuğ said.

Inflation accelerated to 10.6 percent in November from 8.6 percent the previous month. The central bank has slashed interest rates by 1,200 basis points, or 12 percentage points, to 12 percent since July after President Recep Tayyip Erdoğan sacked and replaced its governor for failing to adequately support the government’s pro-economic growth policies.

Temel Güzeloğlu, CEO of QNB Finansbank, also saw inflation easing to single digits by the end of 2020 and said the central bank is expected to cut interest rates in parallel.

The decline in interest rates and a resurgence in economic growth is expected to lead to a decrease in banks’ non-performing loans, said Melikşah Utku, CEO of Islamic bank Albaraka Türk.