Citigroup has said rising bad debt at Turkish banks will erode second-half profit, as a slowing economy prompts more consumers to default on loan payments.
"Provisions against bad debt in the banking sector will be revised up in the coming period," Luis Costa, an emerging markets strategist at Citigroup in London said yesterday.
"We expect some sort of detrimental effect on the bottom line of banks' balance sheets."
The number of Turkish consumers who didn't repay credit- card loans rose to 343,428 in the first half, 10 per cent more than the figure for all of 2011, according to the central bank.
Non-performing consumer loans rose by 13.9 per cent at the end of June from end 2011, while total consumer loans in the period rose 6.3 per cent to 179 billion liras (€80.6 billion).
Turkey, which grew faster than every major emerging market except China last year, is forecast to expand 2.3 per cent this year, down from 8.5 per cent in 2011, the International Monetary Fund said in April.
It had its first quarterly contraction in three years in the first quarter.
The central bank and regulators may need to act should bad loans in the nation's financial system worsen, Suleyman Aslan, chief executive officer of Turkiye Halk Bankasi AS, Turkey's biggest listed state-run bank, said earlier this month.
Banks' total loans rose by 8 per cent to 748.2 billion liras in the first six months of 2012 from end-2011. Banks' non- performing loans rose by 6.1 per cent to 20.1 billion liras in the same period, according to banking regulator data.
Bloomberg
