RAM Ratings has assigned a stable outlook on the Turkish banking sector. The sturdy capital buffers of Turkish banks act as strong defences against the pressures on credit quality arising from weaker domestic demand, uncertain external conditions and a fluid political landscape following its recent electoral results. The Turkish banking sector's total capital ratio stood at a robust 16% as at end-2014; internal capital generation will be supported by sound profitability indicators.
RAM's views also incorporate the Turkish banking regulator's tighter vigilance. "The Banking Regulation and Supervision Agency (BRSA) has been credited with lifting the industry's supervision standards since 2001. We commend the BRSA's pre-emptive approach to managing banking risks, particularly in Turkey's volatile operating environment," explains Wong Yin Ching, Co-Head of Financial Institution Ratings. Since 2011, the regulator has announced a string of prudential measures to tame credit growth and address a potential build-up of risks.
In contrast to the Malaysian banking sector, however, Turkish banks' reliance on wholesale funding is a key structural weakness. The industry's loans-to-deposits ratio surged from 86% as at end-2010 to 120% as at end-2014, as banks had sought wholesale funding to support asset growth. While they enjoy reasonable access to international debt capital markets, they are vulnerable to a sudden and prolonged disruption in foreign funding.
RAM's Banking Sector Assessment (BSA) series comprises publications on selected banking sectors. It aims to provide investors with an insight on the likely changes in the industry risk of a particular country's banking sector over the intermediate term.
Subscribers can retrieve the full BSA report for Turkey through this link. Non-subscribers may purchase the BSA at RM530 (inclusive of GST) per copy. For enquiries, please contact Ms Ain at (603) 76281108 or Mr Faiez at (603) 76281104, or fax (603) 27111701/76208250, or e-mail ain@ram.com.my or faiez@ram.com.my.
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Media contact
Chan Yin Huei
(603) 7628 1180
yinhuei@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings' credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
Copyright 2015 by RAM Rating Services Berhad
© Press Release 2015
