Goldman Sachs Report: Decline in Profitability of Turkish Banks
In the Turkish banking sector, where net profit decreased by 38 percent in July compared to June, average return on equity declined to 19.5 percent.
According to a report prepared by Goldman Sachs analysts, based on BRSA and CBRT data, the net profit of the Turkish banking sector dropped by 38 percent in July compared to the previous month, and return on equity fell to 19.5 percent.
July Profitability Decline
The report prepared by Goldman Sachs analysts, based on BRSA and CBRT data, stated that the banking sector's net profit decreased by 38 percent in July compared to the previous month.
Change in Return on Equity
The sector's average return on equity, which stood at 31.3 percent in June, pulled back significantly to 19.5 percent in July.
Factors Affecting Profitability
The decline in profitability across the sector was driven by a drop in non-interest other income, increasing operating expenses, and a rise in taxes and other obligations.
Private and Public Banks
According to ownership structure, return on equity in private banks dropped from 30.2 percent in June to 10.3 percent, while in public banks this ratio fell from 25.4 percent to 14.5 percent.
Loan and Deposit Dynamics
In August, Turkish lira commercial loan interest rates increased by 0.1 percentage points on a monthly basis, and consumer loan interest rates rose by 0.4 percentage points; during the same period, TL deposit costs declined by 0.4 percentage points.
Central Bank Steps
The CBRT's resumption of repo auctions in August, pulling the effective funding rate to 37 percent, lowered banks' funding costs and supported the recovery of the Net Interest Margin.
Bank Recommendations
Within the scope of bank recommendations in the Goldman Sachs report, Garanti BBVA and İşbank were rated as 'Buy', while Yapı Kredi and Akbank were evaluated as 'Neutral'.