May 11 A Turkish government fund guaranteeing
loans to smaller businesses has proven a windfall for the
country's banks, helping them to the strongest first-quarter
loan growth in six years and sharply higher quarterly profits.
Turkey has been trying to shore up an economy battered by
slowing growth and rising inflation after last year's failed
coup. President Tayyip Erdogan, who has declared himself an
"enemy" of interests rates, wants cheap credit to spur lending
In March the government increased the size of its Credit
Guarantee Fund, which guarantees loans to small and medium-sized
enterprises that could not otherwise get credit, by more than
ten fold to 250 billion lira ($70 billion).
Loan growth surged 21 percent to 1.83 trillion lira ($510.37
billion) in March, regulatory data showed. In January-March,
loan growth rose by 7 percent, marking the strongest
first-quarter in six years.
As a result, profits at major listed lenders Isbank
, Garanti, Akbank, Halkbank
, and Yapi Kredi jumped 55 percent on
Bank shares have risen 25 percent so far this year.
They are at their highest in more than two years and some
analysts think they may have more room to run.
"Turkish banks' earnings growth momentum has been overlooked
by the market," Credit Suisse said in a note last month, adding
that banks' price-to-earnings ratio were coming off 2009 lows
and appeared to be at attractive valuations. (reut.rs/2q2zJ8C)
The Credit Guarantee Fund appears to be supporting earnings,
Credit Suisse said.
Net profit at all Turkish banks rose 65 percent in the first
quarter to 13.5 billion lira, data from Turkey's banking
regulator BDDK showed.
($1 = 3.5856 liras)
(Reporting by Muhammed Bakir Dursun and Ezgi Erkoyun in Gdynia,
Writing by Thyagaraju Adinarayan; Editing by David Dolan)