Turkish banks well-prepared to face COVID-19: KPMG

The Turkish banking sector was prepared when the economic crisis driven by the novel coronavirus struck, according to global audit and consultancy firm KPMG on May 6.

KPMG in Turkey analyzed the sectoral impact of the pandemic that shook the world.

"In this unexpected period that caused the global crisis, banks showed that they were both financially and technically equipped," Kerem Vardar, the head of KPMG's financial services department, said in a statement.

He added that both the Central Bank and the government had introduced successive support packages to limit the fallout caused by the virus, saying: "Top institutions in the financial sector such as the Banks Association of Turkey and BRSA [Banking Regulation and Supervision Agency] also support this process with their strong recommendations."

As part of the backing for the real sector and individual customers -- especially public banks -- cost-effective loans and grace period applications continue as well, he noted.

"After the virus is completely under control, the recovery on banks' balance sheets will be rapid," he added, underlining that the industry would be carefully watching how and when the crisis would end.

Stressing that the outbreak hit the global economy much harder than expected, he said the virus almost completely disrupted global economic activity.

This will have strong repercussions on the banks' side as well, Vardar warned.

Credit growth

The first impact in the banking sector is expected in the credit growth wing, said Vardar.

"The rapid deterioration of the economic outlook and the complete change of risk perception had a negative impact on both banks' lending appetite and demand for credit," he noted.

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