Turkish asset management companies see NPL sales in 2021

The bad debt problem has been simmering for nearly two years


ISTANBUL- The Turkish banking sector is expected to sell around 11-12 billion lira ($2.78 billion) worth of its non-performing loan (NPL) portfolio this year, Turkish Asset Management Companies Association head Sezin Unludogan said on Tuesday.

The bad debt problem has been simmering for nearly two years and efforts to resolve the issue, including plans to set up a fund or an asset management company, have not come to fruition.

Last year, Turkey's BDDK bank regulator extended the grace period for reclassifying troubled loans as non-performing to ease the economic impact of the coronavirus outbreak. The NPL ratio fell to 3.79% in March from 4.96% a year earlier.

"NPL portfolio sales, which were around 13 billion lira in 2019, fell to 990 million lira last year. They started to accelerate in Q1...We expect them to rise to the 11-12 billion lira level at the end of 2021," Unludogan said.

At a conference, the association's deputy head Selcuk Tunali said banks currently hold more than 500 billion lira in NPLs and watchlist loans, and the government's reforms on the problem loans are expected to be completed at the end of 2021.

According to a report by PWC and the asset management companies association, the banking sector will sell some 73 billion lira worth of loans in three years. ($1 = 8.2828 liras)

(Reporting by Ebru Tuncay Writing by Ezgi Erkoyun Editing by Daren Butler) ((ezgi.erkoyun@thomsonreuters.com; +90-212-350 7051; Reuters Messaging: ezgi.erkoyun.thomsonreuters.com@reuters.net;))

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