The slowdown in credit growth started to become more pronounced towards the end of 2Q24 with tight monetary policy and more restrictive macroprudential measures. TL and FC credit growth levels came below the regulatory thresholds.
Macroprudential measures for retail loans and the increase in maximum credit card interest rates led to a clearer deceleration in consumer loans in 2Q24. The pick-up in FC lending in the first quarter of the year reversed with the introduction of the monthly growth limit and the implementation of reserve requirements if the limit is exceeded. However, both supply and demand conditions are still there due to competitive FC rates.
➢ The decline in FC protected accounts (KKM) continued accompanied by the decrease in FC deposit accounts in 2Q24. The share of TL deposits increased significantly. Yet, the latest August data shows an upward trend in FC deposits, signaling most likely the end of further de-dollarization.
➢ There is an accelerating NPL trend for retail loans. However, cost of risk (CoR) remains low given the ongoing collections and high amount of provisions.
➢ The credit risk indicator, the share of Stage 2 and NPLs in gross loans, rose limitedly to 10% in 2Q24 from 9.8% for peer deposit banks, according to our calculations. New NPL formations picked up, too.
➢ The sector’s capital and liquidity buffers are solid in spite of the ongoing profitability pressures due to loan growth caps and high TL funding costs. Return on equity maintains a downward trend. Fees and commission income continues to support profitability in both public and private banks.
With more restrictive monetary tightening showing its impact in 2Q24, credit growth started to decelerate more clearly in both public and private banks.
Deceleration is more pronounced in public banks when compared to previous years’ averages.
The monthly growth limit introduced for FC loans in May24 (2% cap has been revised to 1.5% as of July 22nd) stopped the strong revival in FC credits.
Private banks recently tend to grow in TL non-SME lending, while public banks grow in mostly FC lending to SMEs.
Retailer lending being stronger than commercial lending also decelerates, card spending comes below monthly inflation.
Following the regulations, the share of general purpose loans (GPL) concentrated on up to 1 year maturity continues to increase.
According to the CBRT Lending Survey, tightening in credit standards will soften in 3Q24 together with increasing demand in housing and GPL loans.
Tightening in credit supply for commercial credits is expected to continue in 3Q24 however demand is expect to gain some revival.
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