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Dec 19 2018

Turkish banks have passed stress test, top banker says

Turkey’s banks successfully passed their most important stress test in August and September of this year, said Melikşah Utku, head of Islamic bank Albaraka Türk.

“The system has now left its worst days behind and has strengthened as a result following a liquidity test during this period,” Utku said, according to local media including Dünya newspaper.

It wasn’t immediately clear what stress test Utku was referring to. Turkey’s lira has slumped against a basket of foreign currencies this year but has gained in value since hitting a record low in August, when concern had grown for a full-blown financial crisis in the country. The government has pledged to carry out a stress test of the industry, but results have yet to be announced.

Utku said he expected credit growth to slow in 2019 as firms avoid borrowing at high rates of interest. Net interest income and commission earnings of banks will rise at a slower pace as a result, he said. Utku also stated that non-performing loans would rise due to the weak cash flows of non-financial companies, Dünya reported.