Vakifbank, Yapi Kredi and Halkbank are set to be the Turkish financial institutions to benefit most from the Central Bank’s decision to boost the interest rate paid on required reserves, Credit Suisse analyst Ates Buldur said.
The central bank on Saturday published the detail of policy changes it started to unveil earlier this month to help protect the country against rising interest rates in the U.S. Of the new measures, the increase in interest rates will have the greatest impact on bank balance sheets, Buldur said in a report to clients on Monday, potentially lifting 2016 earnings across the industry by an annualized 0.8 percent.
“Vakifbank, Yapi Kredi and Halkbank should see above average positive impact while Garanti, Akbank and Isbank should see below average positive impact from this,” Buldur said. “This move should cut the banks’ effective funding costs from lira deposits by around 15 basis points as of December.”
The changes mark the first major step in the implementation of Central Bank Governor Erdem Basci’s road map for insulating Turkey from volatility once the Fed starts increasing interest rates, which the majority of the 75 economists surveyed by Bloomberg expect to take place this year.
In addition to increasing the remuneration rate on lira required reserves by 50 basis points at the beginning of October, November and December, the central bank announced two other adjustments. One alters reserve requirement ratios, and the other increases the transaction limit in central bank foreign exchange markets.