Turkish Markets Daily on Nostr: Banking Sector 4Q23 Expectations We estimate that banks in our coverage will post a ...
Banking Sector 4Q23 Expectations
We estimate that banks in our coverage will post a 22% qoq decline in net income for 4Q23. Declining quarterly CPI-linked bond revenues and shrinking swap-adjusted net interest margin are the main factors dragging down profitability. TL loan growth is close to the previous quarter's level at 8%, but the deposit costs, which accelerated especially in the last months of the year, put pressure on banks' net interest margins. Banks' use of swaps increased during the period, while swap expenses almost doubled compared to the previous quarter. Fee and commission income continues to be supported by rising credit card interest rates. On the operating expense side, we expect a quarterly seasonal increase in the last quarter of the year. We expect loan loss provisions to increase due to some specific loan files. Another factor supporting banks' profitability this quarter was low tax rates. Banks' provisioning policies and revaluation gains lead to low tax rates for the banks.
We estimate that banks in our coverage will post a 22% qoq decline in net income for 4Q23. Declining quarterly CPI-linked bond revenues and shrinking swap-adjusted net interest margin are the main factors dragging down profitability. TL loan growth is close to the previous quarter's level at 8%, but the deposit costs, which accelerated especially in the last months of the year, put pressure on banks' net interest margins. Banks' use of swaps increased during the period, while swap expenses almost doubled compared to the previous quarter. Fee and commission income continues to be supported by rising credit card interest rates. On the operating expense side, we expect a quarterly seasonal increase in the last quarter of the year. We expect loan loss provisions to increase due to some specific loan files. Another factor supporting banks' profitability this quarter was low tax rates. Banks' provisioning policies and revaluation gains lead to low tax rates for the banks.