Foreign holdings in Turkish banks set to reach 44.5% after BBVA’s Garanti deal

By bne IntelliNews February 23, 2017

The recent sale of a 9.95% stake in Turkish private lender Garanti to Spanish lender BBVA is expected to push up the foreign investor share in Turkey's banking industry by around one percentage point to 44.5%, Bloomberg reported on February 23.

Foreign investors controlled 21 of the 32 lenders in Turkey as of end-2016, according to the latest data from the banks' association TBB. The latest figures from TBB suggest that the operating environment has become more challenging for local lenders. Turkish banks closed branches and reduced their workforces last year.

Turkish banks registered a 44% y/y increase in their combined net income to TRY37.5bn in 2016. The strong increase in profits recorded by Turkish banks in 2016 was due to one-time revenues from the sale of Visa shares and cuts in reserve requirements by the central bank. The head of TBB said last November 21 that it would not be possible to record the same profit level in 2017.

Turkish equities house Deniz Invest has forecast an 8% y/y decline in Turkish bank profits this year due to the base effect.

Earlier this month, Fitch Ratings downgraded the Long-Term Foreign Currency Issuer Default Ratings (FC IDRs) of 18 Turkish banks and their subsidiaries. Standard & Poor’s on January 31 revised its outlook to negative from stable on Turkish financial institutions Is Bankasi, Garanti, Garanti Leasing, Yapi Kredi, and Vakifbank.

Turkish Banking Industry
  end-Nov end-2016 m/m
Loans (TRY mn) 1,704,254 1,734,342 1.77%
Deposits (TRY mn) 1,430,836 1,453,660 1.60%
Gross NPL / Total Loans 3.36% 3.35% -0.01
Bank Capital to Assets 10.89% 10.99% 0.10
Capital Adequacy Ratio 15.27 15.57 -
ROA 1.30% 1.37% 0.08
ROE 11.91% 12.50% 0.60
Assets (TRY mn) 2,702,173 2,730,942 1.06%
Gross NPL (TRY mn) 57,194 58,071 1.53%
Net profit (TRY mn) 35,045 37,532 7.10%
Net Interest Income (TRY mn) 82,623 91,343 10.55%
Total Shareholders' Equity (TRY mn) 294,338 300,172 1.98%
source: bddk
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