“Home loans total exceeds credit cards first time ever”
Posted by meb at March 11th, 2007
Banking Regulation and Supervision Agency (BDDK) President Tevfik Bilgin said: “The total amount of the house loans for the first time has exceeded that of the credit cards. As of February 16, 2007, there exists house loans with 21.6 billion YTLs value, whereas the value of the house loans is 22.5 billion YTLs.”
Asserting that Turkish banking system will in the future be led by two instruments, “One of these is the institutional credits and the other one is the house loans. But, the institutional loans will be dominant.” said Bilgin.
Bilgin lectured about the ‘Lateset Developments in the Turkish Finance Sector’ at the Blacksea Technical University (KTÜ) Faculty of Economic and Adminstrative Sciences Mehmet Yazıcı Auditorium. Giving information about the Turkish banking sector, Bilgin maintained that Turkish banks provided loans to the treasury in 1990’s and that they currenty have lost such opportunuity as the interest rates went down.
Bilgin argued that the banks are now have to grant credits and said: “The credits are transcations that are widely talked. As of the end of 2006, total credit amount in the system stands at 210 billion YTL’s. However, we face criticisms such as ‘The banks just grant indivşdual credits ad doesn’t finance institutions’. We can divide the credits in two parts: institutional and indivşdual credits. 142 billion Ytl of the current credit amount is institutional and the remaining part is consumer. Consumer credits have a saturation point. From hnow on, the value of the institutional credits will increase further. Our banks definetely have to grant consumer credits; otherwise, they come out with excess supply. In the future, two instruments will lead the banking system: institutional and consumer credits. But, the institutional ones will be dominant.”
Maintaining that they do not face any problems concerning the back payment of the credits granted, Bilgin said: “We do not face any pay-back problems by means of the tight and enhanced regulation and prosecuting procedures in the banking legislation. We only have exceptional problems concening the credit cards. However, such pay-back problem doesn’t exist for other kinds of credits.”
Pointing out that house loans are gaining popularity, “The value of the house loans for the first time has exceeded that of the credit cards. As of February 16, 2007, there exists house loans with 21.6 billion YTLs value, whereas the value of the house loans is 22.5 billion YTLs. Stagnation especially in vehicle and house loans have been experienced due to the fluctuations in May and June. However, the same situation is as well valid for the credit cards.” said Bilgin.
‘Banks are uneasy about short deposit terms‘
BDDK President Bilgin said that 1990’s were favorable years for the banking system, and added: “Because, the state had a high borrowing requirement. However, the situation has changed. The total deposit value as of the end of 2006 is 297 billion YTL’s. This is such a technical state of affairs. Unfortunately, the deposit maturity average doesn’t ecxceed 3 months. And as the maturity is law, the banks can not act comfortably. Banking is a tough issue within this context, and also within liquidty aspects. The banks seeking solutions for this problem switch to external borrowing. The main reason behind the external borrowing is this maturity distortion. The external debt amount of our banks has increased in large extend. The given value is currently around 22 billion dollars. Our banks take these loans, exchange it into YTL’s and striving to supply this value through granting long term maturity loans such as house loans to the consumers.” Stating that the public doesn2t make enough savings, Bilgin argued that the banks get obliged to make external borrowing in order to meet this deficit.
‘An illogical increase is observed in credit card usage in the last 2-3 years’
Stating that they have been criticized regarding credit cards, Bilgin argued that an illogical increase is observed in credit card usage in the last 2-3 years and that this is due to the wrong marketing strategies of banks. Bilgin added that banks are trying to increase their volume, thus credit cards seem like an attractive revenue source to them.
‘Global capital ratio in Turkish banking 20.9 percent’
Expressing that the global capital ratio in Turkish banking stood at 3 percent 2 years ago and the current figure rose to 20.9 percent today, Bilgin said “This is a fast trend. The banking sector of our country has everything. The banks in Turkey are disposed. There are other countries in the world that draws the attention of global capital. Foreign banks bring money, credit culture and risk culture to thre country. They bring in the informational background of their own countries.
These are the advantages. The disadvantage is that in case of fluctuations in the country, global capital chooses not to lend. Global capital is sensitive. When the Treasury requires borrowing, they may push interest rates higher than the domestic banks. They go to good clients. Firms with lower ratings are left to the domestic firms, but we make very detailed examinations when such applications are made. In these examinations, we try to undertake the realities of the country.”
source: The New Anatolian
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