While the Turkish banking sector recorded a record annual profit of ₺92.1 billion in 2021, it also had the highest monthly profit in history with ₺16.8 billion in December.
According to the information compiled from the Banking Regulation and Supervision Agency (BDDK) data, the Turkish banking sector reached a net profit of ₺92 billion 83 million last year. The profit of the sector in 2020 was ₺58 billion 503 million.
Compared to 2020, the increase in profits was 57.4%. Thus, the banking sector, which achieved the highest annual profit of all time, experienced a decrease in its profit on a monthly basis in the first two months of last year, due to the ongoing effect of the new type of coronavirus (Covid-19) epidemic. The banking sector, which managed to increase its profits in the following months, made a serious leap especially in the last quarter.
The banking sector, which made a profit of ₺35.1 billion in the last quarter of last year, reached the highest quarterly profit of all time. The profit of ₺16.8 billion in December last year was also recorded as the highest monthly profit in history.
According to BRSA data, the average return on equity of the sector, which was 11.4% in 2020, rose to 15.3% in 2021.
INTEREST INCOME OF BANKS IS ₺641.5 BILLION
The total interest income obtained by banks last year increased by 51.5% compared to 2020. The total interest income of the banks, which was ₺641.5 billion as of the end of last year, was at the level of ₺423.5 billion in 2020.
Banks provided ₺443.1 billion in interest income from loans in the 12-month period. ₺96.9 billion of the said income consisted of consumer loans, ₺21.7 billion from credit cards, ₺46.6 billion from commercial loans with installments and interest from other loans of ₺277.9 billion.
INTEREST EXPENSES OF BANKS IS ₺376 BILLION
The total interest expense of the sector increased by 80.2% in 12 months compared to 2020 and reached approximately ₺376 billion. In 2020, the total interest expense of banks was ₺208.7 billion.
Last year, the interest paid by banks to deposits increased by 89.7% to ₺233.4 billion. 62.1% of the total interest expenses consisted of deposits and 8.5% of interest given to banks.
As of the end of December last year, the net interest income of banks increased by 23.6% compared to the same period of 2020 and reached ₺265.6 billion.
“EVERY INTEREST REDUCTION POSITIVELY AFFECTS THE PROFITABILITY OF BANKS”
Econs Founding Partner and economist Ferhat Yukselturk, who made evaluations to the AA correspondent on the subject, said that the biggest function of banks is to distribute excess funds to those in need. Stating that banks should have a certain equity for this, Yukselturk said, “The first way to increase this equity is profitability. As long as profitability does not increase, banks cannot provide credit flow from those who have surplus funds to those who have a shortfall in funds. We experienced this in the 2001 crisis. The USA and Europe experienced this during the 2008 global financial crisis. It is very important for banks to make a profit and strengthen their own resources, to ensure economic growth and to increase the volume of credit. Although it is said that ‘the banks made a high profit’, if the banks do not make a profit, consumers and the real sector cannot reach the loans they want.”
Yukselturk pointed out that it would be healthier to look at the equity profitability of banks in the analyzes and evaluations made.
Yukselturk said that the banking sector achieved a return on equity below the deposit interest rate, which is seen as a risk-free return.
“In the international literature, the return on equity is obtained by dividing the net profit for the period by the average equity. The return on equity of the sector over 15% is below both the deposit return and annual inflation. Recently, the return on equity of industrial companies has been higher. This is also seen in the banking index of Borsa Istanbul. While the industrial index has increased almost 5 times since the beginning of 2013, the return of the banking index in the same period is even below 10% in TL terms.
While loans are given with an average maturity of 12 to 36 months in Turkey, the average maturity of deposits is 40-50 days. There is a maturity mismatch here. In fact, every interest rate cut positively affects the profitability of banks. Because each interest rate cut is felt quickly on the funding side, deposit rates decrease, but are priced later on the yield side. Thus, the banking sector writes more profits in an environment where interest rates decrease.”
Source: Sabah / Translated by Irem Yildiz