Moody's Investors Service maintaining its negative outlook on Turkey's banking system

Moody's Investors Service maintaining its negative outlook on Turkey's banking system
  • Clock-gray 09:57
  • calendar-gray 03 May 2017

Moody's Investors Service is maintaining its negative outlook on Turkey's banking system, reflecting the rating agency's expectation of weakening financials for the country's banks amid a challenging operating environment.

 

Although Turkish banks' financials remained resilient in 2016 and early 2017, Moody's expects a combination of factors, including domestic political and geopolitical tensions, potential currency depreciation, and weakening investor confidence, to take a toll on these going forward.

 

As noted in April 2017, Moody's expects economic growth in Turkey to slow to an average of 2.8% in 2016-2018, significantly below the 7.4% average over the previous six years, against a backdrop of lower domestic confidence, potential further lira depreciation and high inflation.

 

Although asset quality has so far proved resilient, aided by non-performing loan sales and regulatory forbearance, the rating agency expects the challenging macro environment to drive problem loans to above 4% over the next 12-18 months from 3.2% at end-2016.

 

 

 

 

Other news