The outlook is bleak for Turkey’s banks, impacted by a combination of spiralling inflation, a plummeting currency, a sharp fall in economic growth and the knock-on effects from the war in Ukraine on the other side of the Black Sea.
It was no surprise when Fitch recently downgraded the credit ratings of 20 Turkish banks from B+ to B. At the same time, it announced that the banks’ credit ratings were largely on a negative outlook. This followed Fitch’s earlier downgrading of Turkey’s sovereign credit rating, which was a reflection, it said, of increased “vulnerabilities in terms of high inflation, low external liquidity and weak policy credibility”.
