Moody’s upgrades Turkish banks’ credit ratings

International credit rating agency Moody’s changed the outlook for Turkish banks from negative to stable. It was stated that orthodox policies supported the banking system.

In the statement made by Moody’s, it was noted that the steps taken by the government to implement orthodox policies after the elections in May were supportive of the operating environment of Turkish banks.

In the statement, it was stated that the operating environment for Turkish banks was challenging due to the expected slowdown in economic growth, and added, “However, the first steps taken by the government to return to orthodoxy (orthodox policies) in policy making following the election in May support the operating conditions of Turkish banks.”

High inflation and the depreciation of the Turkish lira affected consumers’ spending power and debtors’ capacity to pay their debts, the statement said. It was stated that the profitability level of banks is expected to decline to more normal levels than the peak levels in 2022, but it is expected to continue to be strong despite all this change.

“The funding and liquidity positions of Turkish banks have improved significantly”

In the statement of Moody’s, it was stated that banks’ external funding positions and dollarization levels have improved, and liquidity, especially in foreign currency, is expected to remain at an adequate level.

In the statement, it was noted that the Turkish economy is expected to grow by 4.2% this year, while inflation is expected to be 51%. “Despite the economic slowdown in the first half of this year due to the outlook in the European market, Turkiye’s strong exports and tourism sectors will continue to support growth.”

“Despite the economic volatility, the funding and liquidity positions of Turkish banks have improved markedly, especially in foreign currency,” the statement said.

Source: Trthaber / Prepared by Irem Yildiz

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