NPLs in SMEs increased by 65 percent

According to data from the Banking Regulation and Supervision Agency (BRSA), SME loans in the sector grew by 33 percent over the past year. However, the non-performing loan (NPL) ratio for SMEs surged by 65 percent during the same period. A particularly striking development is the doubling of the NPL ratio in public deposit banks, which provide 44 percent of SME loans.   [embed]https://www.youtube.com/watch?v=7kkcy9VFDSI&t=5s[/embed] Tight monetary policy, rising inflation, and a loss of purchasing power have contributed to an increase in non-performing loans across all loan types. As a result, the NPL balance in the banking sector rose to TL 320.24 billion, with the overall NPL ratio climbing to 1.94 percent. However, the growth in NPL ratios has been much faster in certain loan categories. According to BRSA data, the amount of non-performing SME loans in the banking sector increased by 65 percent in the past year, pushing the NPL ratio for SME loans to 2.17 percent, higher than the overall sector average. As of February 7, SME loans in the sector had increased by 33 percent compared to the same week in the previous year, reaching TL 4.33 trillion. Meanwhile, the non-performing SME loan balance rose by 65 percent to TL 94.2 billion, causing the NPL ratio for SME loans to rise to 2.17 percent, surpassing the overall NPL ratio of 1.94 percent. Public deposit banks account for 44 percent of total SME loans. The monthly growth limit for SME loans is set at 2.5 percent, higher than for other types of commercial loans. Sector data shows that SME loans have been growing at this monthly rate. While loan utilization continues to rise, the growth in non-performing loans is much faster, particularly in public deposit banks. According to BRSA data, out of the total SME loan balance of TL 4.33 trillion, TL 1.92 trillion (44 percent) was extended by public deposit banks. These banks, which have a significant share of SME loans, also report a higher level of non-performing loans compared to other banks in the sector. As of February 7, the NPL balance in public deposit banks had increased by 105 percent in the past year, reaching TL 42.7 billion, while SME loan growth in these banks was only 30.7 percent over the same period. The NPL ratio for SME loans in public deposit banks rose by 81 basis points to 2.23 percent.   [embed]https://www.youtube.com/watch?v=Dv0mKx2HT5E&t=114s[/embed] As of the week ending February 7, SME loan balances in domestic private deposit banks increased by 44.4 percent over the last year, reaching TL 968.13 billion. These banks account for 22.4 percent of the total SME loan balance. The NPL balance for SME loans in domestic private deposit banks grew by 50.7 percent, reaching TL 21.9 billion. The increase in non-performing loans exceeded the loan growth in these banks. As a result, the NPL ratio in domestic private deposit banks rose by 10 basis points to 2.20 percent. Foreign private deposit banks hold 18 percent of the total SME loan balance. Over the past year, the SME loan balance in foreign deposit banks grew by 38 percent, reaching TL 774.1 billion. The NPL balance in SME loans at these banks rose by just 19 percent to TL 19.5 billion. Foreign deposit banks were the only category of banks where the growth rate in SME loans outpaced the growth rate of non-performing loans. The NPL ratio for SME loans in foreign deposit banks improved by 39 basis points, decreasing from 2.91 percent to 2.52 percent.