Sectoral Conditions and Expectations

The Turkish banking sector’s total size of assets increased by 55.7% between 2021 and 2022, reaching 14.3 trillion TL. At the beginning of 2022, it was observed that the pandemic’s effects had subsided, and the banking sector’s risks had returned to normal in many respects.

The strength of the Turkish banking sector’s operational and capital structure counters the risks in global markets. Thus, the sector managed to maintain its strong course with its capital growth and adequacy ratio.

Total assets of the Turkish banking sector increased by 55.7% in 2022 compared to 2021 and reached 14.3 trillion TL. Loans, which constitute the largest share of the sector’s assets, reached 7.6 trillion TL, representing an increase of 54.7%.

The Turkish banking sector maintained its positive performance in 2022, increasing its net year-on-year profit by 366% to 433.5 billion TL due to growth in assets and loans. The sector’s capital adequacy standard ratio increased year-on-year by 1.1% to 19.5% in 2022, significantly above the legal requirement.

In the banking sector’s balance sheet, loans represented 52.8% of total assets in December 2022. Securities, another important component of assets, accounted for a 16.5% share in December 2022.

In terms of total liabilities, the share of deposits stood at 61.8% in December 2022. Analyzed in terms of Turkish Lira and foreign currency, the share of foreign currency loans in total loans was 33% in December 2022, while the share of foreign currency deposits in total deposits was 46%.

Selected Balance Sheet Items in the Banking Sector

Source: BDDK

In 2022, loans comprised 59.1% of Development and Investment Bank of Türkiye’s total assets. During the same period, 66% of all loans were made in foreign currency. On the liabilities side, deposits contributed the most to the year-over-year increase. In 2022, deposits increased by 67.1% from the previous year to reach 8.8 billion TL.

Specifically, the increase in TL deposits was the driving force behind this increase. Due to the impact of Foreign Exchange Protected Deposit accounts and the CBRT’s measures to support TL deposits, the annual growth rate of TL deposits increased to 154.1% in 2022. In the previous year, this rate of growth was observed to be 21.6%.

The Loans/Deposits ratio of the banking sector, which was 95.9% in December 2021, was set at 87.9% in December 2022. This change is attributable to the increase in deposits caused by the exchange rate effect and the deceleration in the growth of loans. Due to the substantial increase in deposits, the ratio decreased from 127% in 2017 to 110% in 2019 compared to previous years.

The wholesale and retail trade sector accounted for 13% of all loans in the banking industry. The construction sector ranked second with a 7.2% share, followed by the energy sector with a 6.5% share. In the case of development and investment banks, 12.5% of all loans are allocated to the energy sector.

In 2022, the sector’s return on assets was 3.7%, while the return on assets of domestic private banks and foreign banks exceeded the sector average at 5.5% and 4.4%, respectively. In December 2022, the return on equity for the banking sector was 49.9%, with both domestic private banks and foreign banks having above-average returns of 66% and 60%, respectively. In other words, the return on equity increased in all groups compared to the same month of the previous year.

By December 2022, a total of 54 banks were operating in the banking sector, and the total number of employees in the sector reached approximately 206,200. During this time period, there were 11,000 bank branches across the sector, with state-owned banks increasing their branch count while domestic private and foreign banks decreased their branch count.

Selected Ratios from Türkiye’s Banking Sector (%)