Moody's revises outlook of 14 Turkish banks to negative

Moody's Investors Service has taken rating actions on 17 Turkish banks, changing the ratings outlook from stable to negative on 14 of the lenders.

The ratings of one additional bank were also downgraded with a negative outlook, while the ratings of two other banks were affirmed with outlooks unchanged.

The outlook change was prompted by the deterioration of the outlook for Turkey's credit profile as captured by Moody's decision to change the outlook on Turkey's Ba1 government issuer rating from stable to negative on March 17, said the rating agency. 

Moody's on March 17 changed Turkey's rating outlook from stable to negative. Moody's also affirmed Turkey's government debt and issuer ratings at Ba1.

On March 20, Moody's said its decision to affirm and change the outlook from stable to negative on the long-term deposit and debt ratings of 14 banks reflects Moody's expectation that these banks' ratings would come under pressure from a combination of the weakening capacity of the government of Turkey to provide support in case of need, as implied by the negative outlook on the sovereign rating; and the increasingly adverse macroeconomic environment in Turkey. 

"Economic prospects have worsened significantly since Moody's last rating action on Turkish banks in September 2016 and the rating agency expects this will negatively affect the banks' asset quality, earnings generation and capital and may lead to heightened foreign currency refinancing risk," read the statement. 

The affected institutions include Akbank, Alternatifbank, HSBC Turkey, ING Turkey, Finansbank, Ziraat Bank, Halk Bank, Vakiflar Bank, Turk Ekonomi Bankası, Garanti Bank, Yapı Kredi Bank, İş Bank, TSKB and the GRI Export Credit Bank of Turkey.