Nurol Investment YKB Akkurt: It does not seem possible for the commercial loan rate to approach the policy rate.


– Following the complaints of the real sector, the interest rate cut by the Central Bank and some measures taken, the commercial loan interest rates on the signboard decreased. Is this decline permanent or is the deterioration in pricing behavior in the banking sector continuing?

These interest rates are, in a sense, a loan interest rate currently applied for certain group loans. It was an interest rate environment that was formed as a result of the compulsions brought about by the decisions taken, but if we consider the current inflation, even the 50s-60s figures that were complained about before were actually an interest rate below the inflation rate. Here, of course, the most important problem is that the entrepreneur and the business owner cannot reach a loan. These interest rates we are talking about are investments, which is of course accepted, given to companies related to investments plus exports… But apart from this, companies are having difficulties in reaching the financial resources necessary for working capital or financing the imports they make. So is this what you wanted?

That was a little. The Central Bank is trying to slow down the contraction, which is not created in financial policies, with such decisions in the economy and to prevent faster growth. Because what they’re thinking is, if there’s too much credit, it goes both ways. Sometimes malicious people increase their foreign exchange stocks by buying foreign currency, or by turning to this import, they create a deficit that reaches large amounts in the current account balance, especially in foreign trade.

– Well, the Central Bank explained the reason for the interest rate cut as supporting the economy.

I can interpret this as gray, not white-black. We can say that it is a policy of relaxing in narrow areas or providing loans with lower interest rates, because it does not open the limits of the loan, but only gives a lower price to the loans to be used in the area it has determined. interest policy for its implementation. It’s not constricting, it’s already narrowed, so is it expander, no it doesn’t expand. He’s just trying to provide comfort in that narrow hallway. I can interpret it as trying to finance investors and exporters with a low interest policy and trying to support them.


He also gave the message that the loan interest rate and the policy rate will converge. However, when we look at it since last year, we see that loan rates have not decreased as much as the policy rate. Do you expect a convergence?

The interest rates were tried to be reduced a little with the implemented policies, but if you allocate collateral for the loans, if you say that you must buy bonds with a maturity of 5 or 10 years in return for every loan given… As a result, the banks also have a risk factor for the loans, which means that every loan you give increases the capital. It provides a certain amount of reduction. When you increase their if coefficients, your costs increase. If you add the problem credit ratio on top of this, it is called price adjustment according to risk, in short, in the banking sector, we should look at these factors rather than the low policy rate. These are determined together by the Central Bank and the BRSA. Therefore, according to my mathematical knowledge, it does not seem very possible for loan rates to approach the policy rate within the framework of the policy they have determined. But can they approach it in other ways, maybe.

– What other methods could it be?

Banks can try to reduce the interest rates around these rates or with the exceptions they will create with certain loans, but apart from that, naturally, it is not possible mathematically due to the reasons I have mentioned.

– Then shouldn’t we expect an acceleration in commercial loans from now on?

We should not wait, but in fact, recently, the rate of increase has been mentioned because it is very high, not as a nominal figure, but as a nominal figure. They tried to take precautions because the rate of increase caused uneasiness. In fact, when we look at it, especially TL loans, because these risk loans are very limited. Only those who can export or export a certain amount can use foreign currency loans or, I guess, they can use them in loans with incentive certificates with the newly added things. Apart from that, if we look at the increase figures and nominal figures, especially in TL loans, there is already a 32 percent increase since the beginning of the year. This is already below inflation. When this is the case, we cannot talk about any growth in these banking sector loans, foreign currency loans are increasing due to the exchange rate. If we put the increase in the exchange rate in negative, it means that foreign currency loans are getting smaller. It has increased by 22 percent since the beginning of the year. I do not think that the credits are increasing so drastically. If there is an increase above inflation, maybe then we can talk about real growth, a real increase. All numbers below that actually point to a nominal contraction.

– What are your expectations in terms of consumer loans?

Although it is still low compared to America or Europe, there has been an increase in consumer loans in Turkey recently. If we collect consumer loans along with credit cards, it came to a good figure. However, this should be seen as the figures arising from the encouragement of consumption in 2020 and 2021. ‘In 2022, inflation is coming. It will be more expensive tomorrow, so let’s buy what we’re going to get now,’ it should be seen as a demand that has been pulled forward. In my opinion, the consumer loan to be taken from now on is either for cash flow or for correction. Or, it is the management of closing another debt with another debt. Therefore, we cannot expect much increase in consumer loans.

Looks like profit on paper

– Net profit of banks increased 5 times in the first 7 months compared to last year. The effect of banks’ CPI-indexed bond revenues and low-cost funding from the policy rate is said to have a great impact on the increase in profits. How will the recent decision to issue securities affect profitability?

Part of the effect of inflation and partly the CPI, which I think next year will probably write negative CPI-indexed prices. Because of the low rate of inflation or the returns will be low. On the other hand, the fixed coupon interest rates, which they have been obliged to take, have been reduced by necessity within the framework of the measures taken at the moment. But if you try to sell it, I don’t think there will be many people who will buy it. Therefore, a profit appears on paper due to accounting rules, first of all, inflation accounting should be used to improve this. However, due to political expectations, inflation accounting has been postponed until the end of 2023 for now. When inflation accounting is passed, there will be a decrease in the profitability of not only banks but also companies. Since this will reduce the tax revenues in the budget, I am of the opinion that it is not preferred at the moment. Therefore, these numbers should not deceive or mislead us. I believe that these are of an accounting nature in the current conjuncture. Why? Return on capital is important. If the return on capital is around 40-50 percent while the inflation is hovering around 80 percent, we cannot talk about success, growth or real profitability here. This means this. Since banks actually make losses on capital basis, it means that there will be a decrease in their capacity to lend half the day after. Because when we look at the basis of foreign currency, 100 billion dollars used to be. dollar We’re talking about a meltdown, a bank with a collapsed $50 billion bank today. In that respect, it would be useful to see these figures as inflated figures inflated by inflation. For now, if this policy rate is maintained in this way, banks will continue to write profits from the 22-23% fixed coupons they previously bought. However, since the interest they will receive from now on is in the 11s, 12s, and there is no question of profiting from there in the future, certain banks will not be able to make a profit in this way in 2023. I have been in the banking sector for 40 years, I have never seen such a period. Before that, I don’t know.

It is not necessary to prevent the use of credit

– Is there a limitation on consumer loans?

I do not think. The limits have already been drawn enough, plus I think that it is not necessary to prevent the people from using credit for such an environment and regulations, in other words, for the welfare of the people, that is, the cash flow. Restrictions to be imposed on that side may cause further problems, especially in the future. At that time, maybe the number of follow-ups can increase in real terms, or it means that the wheels in the economy slow down. Currently, the consumer loans side is not in a position to increase the current account balance, foreign trade deficit or balance or create a negative image there. What was thought to be the real problem was in commercial loans. I don’t know if you remember this same situation, we saw it in the 2010-2011 period. At that time, limits were tried to be imposed on credit increases within the framework of macroprudential measures. I also remember the figure, so that it would not increase by more than 15 percent nominally, but we saw that such restrictions did not help much in the course of the economy. Here, too, we may see a decrease in growth rate. Then, perhaps, a reconsideration of these existing practices and restrictions will come to the fore.

Year-end increase in deposits may be 60-70%

– How do you evaluate the performance of currency protected deposits?

By describing the dollarization in the economy with a different name, such as currency-protected deposits, we parked the demand in that currency as Turkish lira foreign currency indexed deposits. If there is an improvement in our current account balance as a result of a contraction in the world, if we can increase our reserves, if we can become a society that consumes a little less than excessive consumption, then this currency protected deposit will achieve its purpose. But it is not easy because you have not been able to achieve the changes I have mentioned so far due to the reasons I have just mentioned, especially if you have such a fragile sensitive geography and a fragile economy. That’s why it’s perfectly normal. In order for this to improve a little, the policies implemented by the ruling party in Turkey need to be revised, and it will be necessary to wait for the developments abroad to recover. The deposit side also increased by 40 percent in the first 7 months, what are your year-end expectations? It may be around 60-70 at least, because people can only come up with figures parallel to inflation, since we are already a country with a savings gap. But, as I said, since all of them will be figures below inflation, we can say that in a sense, neither deposits nor loans have increased in this context.

The aim is to remove foreign currency from being an investment tool.

– Do you think an unnamed capital control is being implemented and what other measures can be taken? Can it be aggravated?

I can’t say capital control, I don’t want to say it, frankly. But the aim is to stop seeing foreign currency as an investment tool. Maybe we can sum it up like this. So, if there are more precautions, I can’t think of anything right now, but if the deterioration continues or if we encounter a worse situation in the future. I don’t think we will meet much. Because energy prices have come to the ground in the future. It is the biggest item that disrupts our current account balance and the balance in foreign trade. Since I do not think that there will be a further deterioration than that, I do not believe that more drastic measures will come to reduce the demand for foreign currency. Maybe I wonder how to Turkey foreign currency How can we encourage it, steps can be taken in that direction. We will see it in time, but as we introduce too many restrictive measures, doubts arise, people and investors tend to take different paths with the worry of whether things are getting worse. Now, we can carry out the work a little more comfortably by recognizing certain freedoms and putting certain controls, but if you start to say that I will narrow it down, then escape routes or other different applications may come from investors. You have to be very careful there too.