Akbank TAS (AKBNK), part owned by Citigroup Inc. (C), is seeking to boost lending to small and medium-sized enterprises by 50 percent this year as Turkish banks pin their hopes on small businesses as the economy cools.
Turkey’s second-largest by market value is starting a credit card aimed mostly at businesses worth less than a million liras ($460,000) which offers access to preferential interest rates, Bulent Oguz, vice president of SME lending, said in an interview. The lender is seeking to attract 50,000 new business customers to replicate last year’s 50 percent growth, he said.
Akbank joins lenders including Turkiye Is Bankasi (ISCTR), Turkiye Vakiflar Bankasi TAO (VAKBN) and Turkiye Garanti Bankasi AS (GARAN) in prioritizing growth in SME lending. There may be 3 million such businesses in Turkey, according to data from the Union of Chambers and Commodity Exchanges.
“While competition will be high, there must be enough SMEs for everyone to tap, given the low penetration levels,” Cagdas Dogan, an analyst at BGC Partners Inc. in Istanbul, said by e-mail today. “As long as a bank does its risk studies well and manages asset quality, this probably is the most profitable segment to grow in.”
In 2013 Turkey’s bank regulator said it would decrease provisioning ratios on lending to SMEs by 50 basis points to 0.5 percent. Ratios on consumer lending were simultaneously increased by 300 basis points to 4 percent, making it more expensive to lend to retail customers.
Nafiz Karadere, Garanti Bank’s executive vice president of SME lending, told Dunya Newspaper today that regulatory changes make SMEs an attractive proposition.
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