Turkey’s Credit Boom Seen at Risk of Backfiring Into Bad Loans
- Lender sees non-performing loans as the elephant-in-the room
- Turkey’s monetary policy is still too loose, economist says
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Bad debts could become more of a headache for Turkish banks when credit expansion slows, which threatens to reverse a decline in the ratio of souring loans, according to European Bank for Reconstruction and Development.
“The NPL issue is an elephant-in-the-room,” Roger Kelly, EBRD’s Istanbul-based lead regional economist, said in an interview. A boom in credit extension increases the risk of taking on riskier customers, and means many of the loans are still relatively young, he said.