Turkish banks should cut interest rates, top business group says
A leading Turkish business group called on banks to cut interest rates on loans after the central bank slashed borrowing costs.
State-run lenders have already reduced their loan rates and non-government banks should now follow suit, said Rifat Hisarcıklıoğlu, head of the Union of Chambers and Commodity Exchanges of Turkey (TOBB), Dünya newspaper reported.
“It’s the turn of the banks. We expect them to reduce interest rates,” he said on Thursday.
Turkish banks are reporting lower profits after an economic downturn led to an increase in non-performing loans and requests from businesses and consumers to restructure their debts. The firms are also facing higher interest rates on domestic and international markets, meaning they are cutting back on their borrowing leaving less capital available to lend to the economy. The government is also encouraging them to buy more Treasury bonds to help fund spending.
Hisarcıklıoğlu praised state-owned lenders for reducing the cost of borrowing for businesses, part of an economic plan devised by the government.
"I am certain that we will see the net effect in production and in economic growth numbers,” he said.
A decision by government lenders to reduce interest rates on mortgages to 0.99 percent monthly from 1.49 percent will help the construction sector and have a positive impact on linked industries as well, Hisarcıklıoğlu said.