Why Turkish Banking System?
- Turkey’s economic growth is increasingly in need of financial products and services as the country’s strong track record of growth and potential suggests. (Average annual GDP growth, 2002-2023: 5.5%)
- Turkish banking system plays a major role in country’s endeavors with its functioning institutional settings and a strong legal framework.
- Turkish banking system is healthy and resilient against external shocks thanks to regulatory and structural reforms that were implemented after early 2000’s.
- Thanks to confidence built upon these successful reforms, Turkish banking system became one of the most preferred sector for FDI between 2002 and 2023 attracting 19% of the foreign investment.
- Successful risk management also pave the way for more stable and efficient banking sector with solid financial indicators, strong capital structure and high liquidity levels.
- Banking sector sustained double digit profitability (CAGR: 29%) and asset size growth (CAGR: 25%) between 2002-2023 period while keeping capital ratios in line with regulatory limits.
- Capital and liquidity levels maintains their importance and strong stance. Turkish banking system’s capital adequacy ratio realized as 19% as of December 2023 above regulatory limits.
- In addition to strong capital structure, high and comfortable liquidity levels is another key strength of the Turkish banking sector. In fact, the liquidity levels are well above the regulatory limits. As of December 2023, liquidity coverage ratio of the sector stands at 160%.
- Turkish banking system still carries a significant amount of potential for further growth, improvement and investment despite a solid track record of growth in recent years.
- It is still underpenetrated and lags behind in financial inclusion compared to peer countries.
- As of 2023, Loans/GDP and Deposit/GDP ratios stand at 44% and 57%, respectively.
- As of 2021, percentage of adults without a bank account is 26% in Turkey** (vs. 1% in Eurozone), leaving room for further growth in banking sector.
- Turkish banking sector has been heavily investing in technology and fintech ecosystem especially in the last years and will continue to do so, in order to answer changing needs of the consumers and the effect of technology.
- There are 60 banks in Turkey (34 deposit banks - 1 of them under the control of SDIF, 20 development and investment banks, and 6 participation banks). Out of the 60 banks, 21 are classified as foreign banks.
** World Global Findex Database