The 63rd General Assembly Meeting of the Banks Association of Turkey (TBB) was held with the participation of Minister of Treasury and Finance Berat Albayrak.
At the beginning of his speech at the meeting, Albayrak reminded the flood disaster in Bursa Kestel and expressed his condolences to those who lost their lives and his wishes to get well soon to those affected by the flood.
Albayrak wished a speedy recovery to Çankırı, which was afraid of an earthquake this morning, and pointed out that the timing of the TBB’s general assembly was important.
Minister Albayrak stated that Turkey is one of the countries that entered the normalization period most prepared and least economically affected, thanks to the measures taken in the fight against the Covid-19 epidemic that affected the whole world, and said:
“We continue to work intensively with all our stakeholders and all our institutions to ensure the post-Covid-19 recovery period in both our economy and the markets in the fastest and healthiest way. Pre-Covid-19 indicators indicate that growth will exceed the current 4.5 percent level in the first quarter of the year and It indicated that this trend would continue strongly in the following period.Despite the negative economic outlook in the second quarter of the year due to the coronavirus, the leading figures for June began to give significant positive signs of recovery in the economy and improvement in economic confidence.
The fact that our economic infrastructure and health system are strong, that strong measures have been taken to prevent the effects of the epidemic, that there is no general quarantine in Turkey, that companies have continued their production and exports even if not at full capacity, and that steps have been taken towards the normalization process since May are effective in this development. has happened.”
“Interest rates decreased and credit growth continued its strong course”
Providing information about the leading indicators in his speech, Albayrak reminded that the Seasonally Adjusted Capacity Utilization Rate was 61 in April and 62.7 in May.
Albayrak stated that the Consumer Confidence Index, which was at 54.9 in April, gradually increased and reached 59.5 in May and 62.6 in June, and said:
“The real confidence index increased from 62.3 in April to 73.5 in May. The Economy Confidence Index increased from 51.3 in April to 61.7 in May. Purchasing Managers Index (PMI) increased from 33.4 in April to 73.5 in May. It rose to 40.9 in. In addition to the Central Bank’s monetary policy and strong interest rate reduction decisions, interest rates decreased and loan growth continued its strong course, especially as our public banks continued to meet the credit needs of the real sector with loans given at low interest rates.
We are starting to see this trend strongly, especially in the last few months, with the participation of our private banks and the recovery in economic activity. “The annual growth of total loans, excluding exchange rate effects, which gained momentum in the first quarter of 2020, remained strong in May and reached 27.3 percent.”
“The improvement in domestic demand and expectations has already begun to be clearly observed in a positive direction.”
Stating that the annual growth of commercial loans, adjusted for exchange rate effects, has increased since the beginning of the year and reached 27.4 percent as of May, Berat Albayrak said, “When we look at both loan expenditures, credit card expenditures and consumption expenditures in economic activity in May and June, compared to March and April, “We see that this trend continues to increase in May and June.” he said.
Albayrak continued his speech as follows, noting that he has clearly observed that there has already been an improvement in domestic demand and expectations in a positive direction:
“As the normalization process accelerated at the beginning of this month, the impact of the measures already taken in the Economic Shield Package, in addition to the campaigns launched by our public banks at the beginning of this month, for housing, motor vehicles and various sectors, as well as the new employment package we are working on, will support the recovery process in the economy in the coming period. The lowest cost housing loan in history, which we launched within the scope of the normalization process, has exceeded 133 thousand applications to date.
So far, approximately 25 billion TL has been allocated to more than 101 thousand citizens. “To date, the amount of the Economic Stability Shield package, which we have announced to protect employment and strengthen our production with all the stakeholders we continue to support, such as companies and households, has exceeded 280 billion TL, excluding postponed loans and interest.”
“We are taking firm steps towards a rapid normalization process”
Minister Albayrak reminded that the market and demand contractions seen in Turkey’s important export countries, especially the EU countries, and the quarantine measures at the borders negatively affected Turkey’s exports due to the epidemic.
With this,
Albayrak stated that despite the lack of working days in May, exports increased by 10.8 percent compared to April, and said:
“Finally, according to daily TİM export data, exports increased by 24.6 percent in the first 21-day period of June compared to the same period of the previous year. This shows that the trend continues stronger in June compared to May, considering last year’s base effect and holiday effect .
EU PMI figures announced in the morning reveal that the recovery in June continues strongly in our trade partners. These developments show that the recovery in exports has begun and that we are taking firm steps towards a rapid normalization process. “We expect Turkey to emerge from this process with a ‘V-shaped’ recovery and converge to its potential growth in a short time, with the postponed demand coming into play, the improvement in expectations, the measures taken and the packages we announced.”
“We are faced with a picture that will present an opportunity to close the gaps of the normalization period and the pandemic period.”
Albayrak said, “Undoubtedly, when we look at this growth direction and trend, we will continue to take firm steps towards implementing a model based on exports, employment and high value-added production. At this point, I would like to call on all our banks. Especially during the pandemic period, we will continue to implement a model based on exports, employment and high value-added production. “We observed together, together with all stakeholders, that Turkey really passed a very good test compared to its examples in the world.” made his assessment.
Stating that we are faced with a picture that will provide an opportunity to close the gaps of the pandemic period along with the normalization period, Albayrak said:
“The banking sector has a very healthy outlook with its strong capital structure, high asset quality and profitability rates. As of April 2020, the annualized return on equity of the sector is around 11 percent. In the same period, the capital adequacy ratio was 18.6 percent, with the legal minimum of 8 percent well over the limit.
There is no exchange rate risk due to foreign currency open position. “The sector’s overdue receivables rate decreased by 32 basis points as of April, reaching 4.6 percent, in line with the measures taken by the BRSA in March to classify the loans taken as non-performing loans.”
“The work carried out by BRSA preserved the strong structure of the banking sector”
Minister Albayrak said that the studies carried out by BRSA show that the banking sector maintains its healthy and strong structure and that the current capital structure is at a level that can easily manage the risks arising from asset quality.
Stating that Turkey is going through a process of economic change and transformation, Albayrak said, “I have always expressed this in many meetings with the real sector, the banking sector and one-on-one meetings. We are in a new period. We have two main goals in this process. The first is to strengthen our financial stability and security. Turkey “To strengthen the financial and economic infrastructure, stability and security of the Republic. The second is to build a strong economy on solid macroeconomic foundations by increasing exports and employment through high value-added production and strengthening the current account balance. These two philosophies are the main philosophies,” he said.
Albayrak stated that they expect sector representatives to conduct banking that is more compatible with the country’s development goals and said, “As a matter of fact, the steps taken by Turkey in this change process in the last 2 years, compared to similar examples in the world, actually show us the positive effects of this change. “In this process of change, as banks and as the state, we are changing some things, we have to change. If we have to get used to the new normal, I think that you, in the banking sector, should get rid of some old habits and change shells. We expect you to do banking that is more compatible with the development goals of our country.” he said.
“We expect you to act with national consciousness”
Minister Albayrak emphasized that the banking sector is a very special and very strategic sector.
Stating that bankers have a very important duty at this point, Albayrak said:
“In this sense, you are performing a very strategic function such as collecting the resources of our country and transferring these resources to the economy. The decisions you make while fulfilling this function affect our social welfare in a negative or positive way. Being aware of this, we expect you to act with a national consciousness Above politics, above institutions, within the framework of the country’s interest… We need to direct all these resources you have collected to financing imports and luxury consumption, or to financing domestic production and exports and employment-generating areas, rather than different banking and treasury activities that do not create real value. Ambition for short term profitability
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