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, 2003-2020: 5.2%)
  • 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 the most preferred sector for FDI between 2003 and 2020, attracting 33% 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: 17%) and asset size growth (CAGR: 19%) between 2002-2020 period while keeping capital ratios in line with regulatory limits.
  • Capital and liquidity levels maintained their importance in 2020. Turkish banking system’s capital adequacy ratio realized as 18% by the end of 2020, way above the limits. Adding to that, Turkish banks maintains their strong capital structure with a high capital adequacy ratio in the first half of 2021. (17% as of June 2021).
  • 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 June 2021, liquidity coverage ratio of the sector stands at 148%.
  • 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.
      • Loans/GDP and Deposit/GDP ratios stand at 68% (vs. 104% in Euro Zone*) and 66% (vs. 116% in Euro Zone), respectively.
      • Percentage of adults without a bank account is 31% in Turkey** (vs. 5% in Euro Zone), 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 55 banks in Turkey (34 deposit banks - 2 of them under the control of SDIF, 15 development and investment banks, and 6 participation banks). Out of the 55 banks, 28 are classified as foreign banks.

*ECB, 2020
** World Global Findex Database

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