Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Turkey Banks Pin Growth to Business Lending as Economy Cools

Akbank TAS, part owned by Citigroup Inc., is seeking to boost lending to small and medium-sized enterprises by 50 percent this year as Turkish banks pin their growth hopes on small businesses.

Turkey’s second-largest bank 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 credit terms, Bulent Oguz, vice president of SME lending, said in an interview. There may be 3 million such businesses in Turkey, according to data from the Union of Chambers and Commodity Exchanges. 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, Turkiye Vakiflar Bankasi TAO and Turkiye Garanti Bankasi AS in prioritizing growth in SME lending. The strategy comes as the banks’ own cost of funding passes 10 percent for the first time since June 2012, and economists from Goldman Sachs Group Inc. to JPMorgan Chase & Co. cut their estimates for Turkey’s growth this year to 2 percent or less, the slowest pace since 2009.

“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.”

Lending Incentives

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 comparatively more expensive to lend to retail customers than to businesses.

Those measures created windfalls for some lenders, including state-owned Vakifbank, which freed up 78 million liras as a result of provisioning changes in the second half of last year, according to senior vice president Mustafa Turan, speaking on the bank’s 2013 earnings call. “Credit card loan growth momentum is losing steam,” he said.

Knocking Doors

Nafiz Karadere, Garanti’s executive vice president of SME lending, said regulatory changes make SME lending attractive, according to a report in Dunya newspaper today. The bank will actively pursue SMEs, he said.

Lending to Turkey’s small businesses may be risky as economic growth slows, said Ercan Uysal, an analyst at the Integras research firm in Istanbul.

“SME loans have been growing at a rapid clip in the past few years as Turkish banks rushed in to take advantage of this high-margin business,” Uysal said by e-mail yesterday. “This segment is usually very susceptible to economic downturns.”

When Turkey’s economy contracted 4.8 percent in 2009, the gross ratio of non-performing loans in SME lending rose to 8.2 percent from 5 percent in 2008, he said.

The Borsa Istanbul 100 Index has declined the most among major world equity indexes this year, dropping 10 percent in dollar terms. Credit rating company Standard & Poor’s downgraded the outlook on six Turkish banks on Feb. 11, shortly after downgrading the outlook on the sovereign. It cited low savings, a reduction of U.S. monetary stimulus and domestic political tension as weaknesses in its report.

The risk of poor asset quality gives an edge to the banks that are established in lending to small busineses, said BGC’s Dogan. “This is where relationships are quite important and why banks like Halkbank and Isbank typically work with lower cost-of-risk levels” he said.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.