Turkish banks expect loan growth of as much as 20 percent in 2021

Turkey’s banks expect healthy demand for lira-denominated loans this year, Dünya newspaper reported on Wednesday.

Estimates for loan growth in 2021 ranged from 14 percent to 20 percent, Dünya said citing statements by Turkey’s largest listed banks – Akbank, Garanti BBVA, İşbank and Yapı Kredi.

A borrowing boom by Turkish businesses and consumers in 2020 sparked economic instability, as a surge in demand for imports widened the current account deficit and pressured the lira, which fell to successive record lows against the dollar. The central bank intervened in the latter part of the year, more than doubling its benchmark interest rate to 17 percent from 8.25 percent in September.

Growth in foreign currency-denominated lending is expected to be flat or negative, Dünya said.

Demand for lira-denominated loans from small and medium-sized enterprises persisted in the fourth quarter of last year, Dünya said, citing a quarterly survey by the central bank. Demand for corporate loans is expected to increase in the first quarter, aside from foreign currency loans and long-term borrowing. Lending to consumers is expected to slow overall, it said.

Any increase in real loan growth rates is affected by inflation, which stands at an annual 14.6 percent in Turkey.

Non-performing loans were seen at between 6 percent and 7 percent of total loans this year, according to the four banks' predictions.