Turkish banks maintain high profits despite crisis
Posted by meb at May 27th, 2009
Although the global economic crisis is causing great troubles for financial institutions virtually everywhere else in the world, including the age-old giant banks, Turkish banks are maintaining high profit rates, despite a small ebb, when compared to their performance in the previous years.
The crisis caused banks, in especially the US and Europe, to post losses in 2008 and the first quarter of this year. Many banks were confiscated, applied for bankruptcy or received huge bailouts from their governments in order to stay afloat. None of these nightmares have been witnessed by Turkish banks, which have all managed to make a profit. For example, all of the 17 banks whose shares are being traded in the İstanbul Stock Exchange (İMKB) were able to announce profits in the first quarter this year at a time when the global financial meltdown was most heavily felt across the global markets.
According to figures released by the Turkish Banks Association (TBB), the total net profits of these 17 banks increased 23 percent in the first three months of 2009 when compared to the same period last year and rose from TL 2.94 billion to TL 3.61 billion. Of these banks, 13 were able to record an increase in their quarterly profits while Akbank, Şekerbank, Türkiye Kalkınma Bankası and Yapı Kredi Bankası witnessed a retreat in their profits compared to the same period a year ago.
The bank that scored the highest net profit in the first quarter was Garanti, which enjoyed a 43 percent increase in profits with TL 650.76 million, an increase over the same period in 2008. Akbank followed Garanti with TL 618.17 million, a decrease in profits when compared to the same period last year. İş Bankası ranked third with TL 605.83 million in the first three months while Yapı Kredi was occupied the fourth position with TL 493.45 million.
Assessing the figures, the TBB general secretary, Ekrem Keskin, draws attentions to the fact that the return on equities was 16.1 percent in March. “We should compare this number to the interest rates of Treasury bills and bonds, which are accepted as the investment instrument with the least risk. The annual return on the Treasury bill with 1-year-term was 14 percent on average as of March. That means the banks earned profits two points above the Treasury bills,” he said. However, this situation was not the same for all banks, he added, and went on to give details about the profit figures of the banking industry on the annual base. According to Keskin, the state-owned banks scored 18.7 percent in net profits while private commercial banks posted 12.4 percent net profits on average. The profits of the foreign banks operating in Turkey, however, were 9.3 percent. Considering these numbers, the margin between the profit rates of banks and the rate of return of the Treasury bills is positive only for a single group — the public banks. It is negative for the private banks and the foreign banks in Turkey, he said.
Keskin also underlined that the major factor determining the increase in the bank profits was the falling interest rates. “[This is] because the average term of the deposits in the banks is close to three months while the average term of loans by banks is one year. If the interest rates were higher, the profits of the banks would most probably be lower,” he said. Denizbank Financial Services Group President Hakan Ateş evaluated the continuing profits in the midst of a severe crisis as a result of correct strategies and years of prudential policies by Turkish banks. He said the Turkish banks steadily increased their support to non-financial sectors while simultaneously hedging their risks; avoided foreign exchange risks although foreign currency deposits constituted a considerable part of the total funds; and controlled costs at the same time as the balance sheet figures were continuously expanded. Ateş went on to say: “We kept our capital strength at high levels and so were able to manage the adversities of the global crisis and attain better results than the banks in other countries that received huge amounts of bailout money from the public authorities.” He further claimed that the high profitability of the banks will only be permanent if the quality of loans does not go beyond the manageable levels.
Deloitte Turkey auditing partner and the leader of Deloitte’s financial services industry, Sibel Türker, on the other hand noted that the Turkish banks were so strong when the world entered the economic crisis thanks to the lessons learned after the 2001 financial crisis in Turkey.
source:Today’s Zaman
Related posts: