Moody's Investors Service revised the outlook for Turkey's banking sector to stable, but operating conditions are still “volatile”, weighed down by an anticipated slowdown in the country’s economy and high inflation.
The operating environment for banks in Turkey remains challenging but recent government steps to move away from unconventional policymaking could ease headwinds for lenders in the country, the rating agency said in a report on Tuesday
“Following the elections in May 2023, the government’s initial steps towards orthodoxy are supportive of operating conditions and we expect the unorthodox measures introduced in the period building up to the elections will be gradually unwound during our outlook horizon,” Moody’s analysts said.
“Although banks should benefit from a return to orthodox policy, we believe the potential for sequencing missteps in the process of unwinding macroprudential measures presents risks to baseline expectations for the operating environment, particularly GDP [gross domestic product] growth and exchange rate depreciation.”
The outlook revision by Moody's boosted shares of the nation’s lenders to all-time highs.
The Borsa Istanbul Banking Sector Index, a gauge that tracks shares of Turkey’s listed banks, reversed losses and rose as much as 4.1 per cent to the highest level on a closing basis on Tuesday.
Investors Service raised the Turkish banking system’s outlook to stable from negative, boosting the nation’s lenders to all-time highs.
Despite headwinds, the country’s B3 stable rating and Turkey’s strong exports and tourism sectors will continue to support growth despite the moderate slowdown in the first half of 2023, the rating agency said.
Moody’s expects Turkey’s economic growth to slow down, with real GDP expanding at 4.2 per cent in 2023, down from 5.6 per cent growth in 2022.
It expects inflation to stay high at 51 per cent in 2023, although down from 72 per cent recorded in 2022.
In July, Turkey’s new central bank governor Hafize Gaye Erkan pledged to stick with a “gradual” cycle of monetary tightening despite more than doubling the forecast for consumer price inflation to 58 per cent.
Her remit is to restore the credibility of the central bank in the eyes of the markets after years of unconventional measures championed by President Recep Tayyip Erdogan.
Last month, Turkey increased its policy rate by 250 basis points to 17.5 per cent, continuing to reverse Mr Erdogan's low-rates policy as it promised more tightening.
For the banking sector, however, asset quality risks will remain elevated, driven by lower consumer spending and weakened repayment capacity of borrowers amid high inflation, Moody’s said.
Banks’ profitability measured by return on average assets has cooled to 3 per cent in the first half of 2023, down from 3.7 per cent for the same period in 2022, as pressure on the sector’s core margin continues to build. However, overall profitability of banks is still strong.
“The cooling off is driven by the unwinding of the previous macroprudential measures and lower income from inflation-linked securities,” Moody’s analysts said.
The funding profile of Turkish lenders has also improved amid strong liquidity, however, downside risks remain.
“Despite economic volatility, Turkish banks' funding and liquidity positions improved markedly, particularly in foreign currency,” Moody’s said.
The loan-to-deposit ratio improved to 93 per cent in December 2022 from 97 per cent a year earlier, building on a trend running since 2018.
“Banks have also reduced their reliance on short-term wholesale foreign funding to $56 billion in February 2023 from $75 billion in December 2018 while maintaining foreign currency liquid assets at around $100 billion.”
'My Son'
Director: Christian Carion
Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis
Rating: 2/5
UAE currency: the story behind the money in your pockets
Company%C2%A0profile
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COMPANY%20PROFILE
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Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
How it works
A $10 hand-powered LED light and battery bank
Device is operated by hand cranking it at any time during the day or night
The charge is stored inside a battery
The ratio is that for every minute you crank, it provides 10 minutes light on the brightest mode
A full hand wound charge is of 16.5minutes
This gives 1.1 hours of light on high mode or 2.5 hours of light on low mode
When more light is needed, it can be recharged by winding again
The larger version costs between $18-20 and generates more than 15 hours of light with a 45-minute charge
No limit on how many times you can charge
Diriyah%20project%20at%20a%20glance
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How%20I%20connect%20with%20my%20kids%20when%20working%20or%20travelling
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UAE currency: the story behind the money in your pockets
MO
%3Cp%3E%3Cstrong%3ECreators%3A%20%3C%2Fstrong%3EMohammed%20Amer%2C%20Ramy%20Youssef%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EMohammed%20Amer%2C%20Teresa%20Ruiz%2C%20Omar%20Elba%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
No Shame
Lily Allen
(Parlophone)
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
Players Selected for La Liga Trials
U18 Age Group
Name: Ahmed Salam (Malaga)
Position: Right Wing
Nationality: Jordanian
Name: Yahia Iraqi (Malaga)
Position: Left Wing
Nationality: Morocco
Name: Mohammed Bouherrafa (Almeria)
Position: Centre-Midfield
Nationality: French
Name: Mohammed Rajeh (Cadiz)
Position: Striker
Nationality: Jordanian
U16 Age Group
Name: Mehdi Elkhamlichi (Malaga)
Position: Lead Striker
Nationality: Morocco
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Terminal High Altitude Area Defense (THAAD)
What is THAAD?
It is considered to be the US' most superior missile defence system.
Production:
It was first created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out projectiles, namely ballistic missiles, as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles both inside and outside of the Earth's atmosphere, at an altitude of 93 miles above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then deployed them in 2016, becoming the first Gulf country to do so.
SOUTH%20KOREA%20SQUAD
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COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3ESmartCrowd%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%0D%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3ESiddiq%20Farid%20and%20Musfique%20Ahmed%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%20%2F%20PropTech%0D%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3E%24650%2C000%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2035%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESeries%20A%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EVarious%20institutional%20investors%20and%20notable%20angel%20investors%20(500%20MENA%2C%20Shurooq%2C%20Mada%2C%20Seedstar%2C%20Tricap)%3C%2Fp%3E%0A
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
COMPANY PROFILE
Name: Akeed
Based: Muscat
Launch year: 2018
Number of employees: 40
Sector: Online food delivery
Funding: Raised $3.2m since inception
