Turkish banks’ loan growth accelerated to 25.05% y/y to TRY 922.8bn (EUR 367.7bn) as of June 21, data of the Banking Regulation Supervision Agency showed (BDDK) on Monday. Loans increased 1.52% w/w, up from the 0.25% w/w rise in the previous week. Banking sector’s loans grew 14.53% compared with end-2012. We should underline that the 25.05% increase as of June 21 is the highest y/y rise recorded this year.

The government wants to keep loan growth at 15% this year due to fears over the widening current account (CA) deficit. Recently, the Central Bank warned that credit growth rates still hover above the reference rate (15% y/y) both in consumer and business loans. The Bank also said amid the increased uncertainty regarding global monetary policies, capital inflows have recently slowed down. Turkey’s CA deficit jumped 79.7% y/y to USD 8.17bn in April. In the first four months of the year the country’s CA increased to USD 24.3bn from USD 20.8bn a year ago.

Outflows from Turkey’s markets since the beginning of May amounted to USD 7.9-8bn, Central Bank governor Erdem Basci said on June 12. Two third of the outflows were due to external factors and one third due to domestic factors, Basci explained. Turkey has seen USD 1.35bn of outflow from its equity markets since May 26 due to deteriorating global conditions and recent unrest, Deputy Prime Minister Ali Babacan also said on June 18.

It is also interesting to note that people continued to get loans from banks in June despite the anti-government protests that started on May 31. Consumer loans increased 24.5% y/y to TRY 221.7bn as of June 21, data of the BDDK showed. Housing loans rose 27.2% y/y to TRY 99.3bn, auto loans, however, declined 0.2% w/w to TRY 8.17bn. The annual increase in auto loans was 9.5%. Recently, the representatives of the Turkish automotive industry complained that the anti-government protests hit consumer sentiment and said that auto sales were expected to decline by 20% m/m to 65,000-70,000 units in June.

The consumer confidence index, compiled by the statistics institute, fell 1.6% m/m to 76.2 in June, the first decline in three months. Households’ final consumption, which accounts for roughly 70% of GDP, increased 3% y/y in the first quarter of 2013, after declining 0.8% in Q4/2012.