Turkish banking sector ends year better than expected

The Turkish banking sector will end 2019 better than expected, with a recovery in macroeconomic indicators such as growth, inflation, and unemployment, said the heads of both state and private banks.

Bank managers expect the sector to continue to support the economy in 2020.

Abdi Serdar Üstünsalih, the CEO of state lender Vakıfbank, stressed that next year will be a "transformative year" for the Turkish economy.

Saying that uncertainties in global markets create risks in the short term, Üstünsalih said developments in the medium- and long-term will favor developing countries, especially Turkey.

"Capital flows to those countries will accelerate and borrowing costs will fall," benefiting the Turkish banking sector, he predicted.

Unstunsalih stressed that after the rebalancing process, Turkey is entering a year set for growth amid soaring expectations. 

'Ending year on positive note'

Inflation should be in the 11%-12% range in the first half of 2020 due to seasonal effects and changes in service prices due to wage hikes, said Recep Baştuğ, the CEO of Garanti BBVA.

But barring any serious shocks, inflation could fall below 9% by the end of 2020, he added.

"Banks will continue to back the economy in 2020, with a rise in domestic demand, regulations encouraging credit growth, and continuation of the low-interest environment," he noted.

He also said that Turkey is ending the year with a more positive picture than expectations for the economy at large, including the banking sector.

Anticipating that inflation will fall to single digits by the end of next year, Temel Guzeloglu, the CEO of QNB Finansbank, said Turkey's Central Bank would continue to cut interest rates in parallel...