Economic Developments and The Banking Sector. Hüseyin Aydın Chairman of the Board

Transcription

1 Economic Developments and The Banking Sector Hüseyin Aydın Chairman of the Board

2 Global growth forecast, % 3.5% 1.4% -0.3% World Developed C. EU countries Developing C. Source: IMF, World Economic Outlook, April

3 Public debt stock to gdp forecast, 2012 Source IMF, World Economic Outlook, April

4 Risks for the developing countries Slowdown in the global economic activity Decline in the foreign trade volume Fluctuations in the energy prices Sudden changes in the capital flows 4

5 Managing macro risks wisely Strong macro balance High international competitiveness Better environment for production and investment Stable and predictibly national currency Functional financial sector Proactive policy approach 5

6 Developments in economic activity and banking sector following the restructuring programs in the early 2000s 6

7 Last ten years of the economy Public sector borrowing requirement to gdp declined from 10.6 percent to 1 percent. Public sector debt stock to gdp decreased from 69 percent to 40 percent. Domestic debt stock to balance sheet of the bank fell by 40 points to 30 percent. Gdp per capita tripled to more than 10 thousand US dollars. 7

8 Last ten years of the economy Inflation rate came from 30 percent to 10 percent. Portfolio and FDI capital inflows jumped from 346 million US dollars up 35 billion US dollars. Concerning savings deposit, currency substitution decreased from 64 percent to 32 percent. The ratio of loans issued by the resident banks of Turkey to non financial sector increased from 46 percent to 77 percent of total loans of the non financial sector. 8

9 The restructured banking sector perceived the reforms for improving the business environment in a short period of time and supported the growth. 9

10 Total Assets increased by almost six times during the last 10 years Asset to gdp increased by 33 points 1, Source BRSA Turkstat, BAT 10

11 The fast pace of change in the ownership structure (Non-residents share, excluding the shares traded in ISE) Source: BAT 11

12 Share of TL increased 64% 57% 69% 50% Total assets Total Liabilities Source: BRSA, BAT 12

13 The structure of the assets changed Source: BRSA, BAT 13

14 Total loans and TL loans to gdp 53% 38% 15% 6% Total loans TL loans Source: BRSA, Turkstat, BAT 14

15 Loans portfolio well diversified Source: BRSA, BAT 15

16 Loan shares of the rest of the largest three provinces increased Source: BAT 16

17 Loans and asset quality improved 21.3% 11% 5% 2.8% NPL/loans Fixed assets / total assets Source: BRSA, BAT 17

18 Main source of funding is deposit; albeit funding sources diversified Source: BRSA, BAT 18

19 All of the deposits to loans Less dependency on interest income 21% 12% Source: BRSA, BAT Non interest income to total income 19

20 In terms of PPI, real ROE turned to be positive after the year of 2005 Source: BRSA, Turkstat, BAT 20

21 Equity increased by 4,7 times; supported the capital adequacy Source: BRSA 21

22 While the world and developing countries has seen a declining bank assets to gdp ratio, Turkey witnessed an increase 91% 61% Source IMF, Global Financial Stability Report, April Turkey 22

23 Turkey and G-20 countries Capital adequacy ratio (percent) ROE (average, percent) NPL / Loans (percent) 1. Brasil Argentina Canada Turkey Canada Argentina Australia Kore S.Africa Australia Turkey Mexico Indonesia Turkey 2.7 Source: IMF, Financial Soundness Indicators, May

24 Impacts of recent measures on banks Cost of funding and intermediation increased Loan growth slowed down Capital profitability and adequacy declined Equity growth decelerated 24

25 Loan growth Total loans (As fixed rates of 2010 December, y-o-y % chg) Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Total TL FX *Total loans growth forecast is calculated by BAT Source: BRSA, Turkstat, BAT 25

26 A slow increase in NPLs recently Source: BRSA 26

27 Decline in ROE.. and CAR Source: BRSA, BAT 27

28 Strong Equity for; Deal with global risks Maintain financial stability Boost economic growth Support to reach at the Government s 2023 targets 28

29 Banking sector in 2023 Assets to gdp ratio (%) Loans to gdp ratio (%) *2023 forecasts calculated by BAT. Source: BRSA, Turkstat, BAT 29

30 Loans to assets ratio (%) Banking sector in 2023 Equity (billion TL) *2023 forecasts calculated by BAT. Source: BRSA, BAT 30

31 Sector demand Strong macro balance Price stability Increase in the domestic savings Longer maturity funding sources Improvement in the investment environment Struggling on the shadow economy Deepening of the capital markets Lightening the burden of the sector Regulations should deepen the financial sector and increase the competition. 31

32 Expectations from our customers To manage the risks wisely, information required to measure the credit worthiness and ability to pay should be shared with the banks, Borrowers equity should be strengthen. 32

33 Issues solved (to be solved in the near future) Unfair competition in real estate mortgage against foreign banks has been resolved. Tax regulations on the derivative products have been clarified. Attracting gold savings into financial sector. Developing Capital Market Solutions for the Mortgage Market in Turkey. Risk Center. Fictitious transactions in credit cards. 33

34 Important issues on the agenda Basel II Turkish code of obligations Turkish code of commerce Bankruptcy deferral Corporate management principles Code of Capital Markets Board 34

35 Strengthening sector perceptions Informing customers on the services and fees truly and effectively Solutions to the customer complaints Financial education Cooperation with universities and real sector Cooperation with regional countries 35

36 Our social responsibility project; In 9 years, among 66 provinces, to 132 hospitals, 965 equipments Ministry of Health: The mortality rates of newborn decreased by 64 percent to 10 per thousand in 8 years. 36

37 Competency in quality management 37

38 Our mission Will continue to represent the rights and interests of the banking sector and to work for the growth and healthy functioning of the banking system, and strengthening of competition power and preventing unfair competition in the market, and to develop the banking profession in Turkey and to make Istanbul an international financial center. 38

39 Thank you. 39