High rates boost net interest income at Turkish banks

Net interest income at leading Turkish banks rose in 2020 on the back of the hawkish policies of former central bank governor Naci Agbal.

Mr Agbal, who was in post between November 7, 2020 and March 20, 2021, presided over a series of rate rises to support the economy in the face of a slump in the value of the Turkish lira.

After he raised the policy rate to 19% in March, Turkish president Recep Tayyip Erdogan dismissed him and installed Sahap Kavcioglu as central bank governor. Mr Kavcioglu has opted to keep rates on hold for the past five months.

The country’s largest bank, TC Ziraat Bankasi, saw net interest income (NII) rise 9% year-on-year to $5.1bn in 2020, while rival Turkiye Halk Bankasi saw a 36% rise to $2.6bn.

Turkiye Vakiflar Bankasi, meanwhile, saw NII rise 20% to $2.7bn last year, while Turkiye Is Bankasi saw a 3% rise to $3.9bn, according to The Banker Database.

In a conference call earlier this month, Mr Kavcioglu hinted that an interest rate cut may be on the cards at the next policy meeting on September 23.

Trends identified using The Banker Database, an online database providing comprehensive financial data and insight for 4,000 of the world's leading banks in 190 countries. Contact us.