The combined net income of Turkey's banks increased by 25% y/y to reach TRY33.3bn (€7.9bn) across January-August, banking sector watchdog BDDK reported on October 3.

The lenders' total lending increased by 23% y/y to TRY1.95tn by the end of August.

This year's growth in the profits of Turkish banks is expected to be between 15% and 20%, Huseyin Aydin, head of The Banks Association of Turkey (TBB) predicted two months ago.

The banking industry’s combined net income was TRY37.5bn last year, up 44% from 2015.

Meanwhile, political pressure on Turkish lenders has been building. Last month, Economy Minister Nihat Zeybekci urged the country's banks to lower interest rates to support economic activity.

“Turkey needs lower interest rates to sustain the rapid growth it posted in the first half of the year,” Zeybekci told Bloomberg on September 13.

The Turkish economy expanded at 5.1% y/y in the second quarter after growing 5.2% y/y in the previous quarter.

The minister said that the government would sit down with commercial lenders, the banking regulator and the central bank to explore why the gap between inflation and interest on commercial loans is so big.

“There are resource constraints, okay. But the government also needs to see if banks are seeing the market demand as an opportunity and using it for profit maximisation.” Zeybekci said.

According to the minister, economic growth likely accelerated to about 7.5% during the current quarter from 5.1% in Q2.

“Full-year growth will top 6% this year and 5.5% in 2018,” Zeybekci said.

President Recep Tayyip Erdogan, meanwhile, has been strongly reiterating his call to the banks to open the credit taps.

“We will pressure the banks, especially state banks. We will pave the way for investors to access credit easily,” Reuters quoted Erdogan as saying on September 12.

“Prime Minister Binali Yildirim and I will speak with the relevant banks and tell them to pull their interest rates down”, he said.