State-owned banks to further cut loan rates: Albayrak
Turkey’s state-owned banks have agreed to further reduce loan rates to support economic activity, Treasury and Finance Minister Berat Albayrak has said.
“We had a talk with executives from the state-owned lenders regarding interest rates. We agreed to reduce interest rates on loans, which currently hover around at nine to 11 percent, on loans to a range of 8 percent to 10 percent,” Albayrak told a gathering with businesspeople in the southern Kahramanmaraş province.
Albayrak noted that in line with the Central Bank’s rate cuts, borrowing costs have been coming down fast.
“Interest rates on commercial loans dropped on average 14 basis points in January compared with the same month a year ago, while the rates on housing loans came down 14 basis points and interest rates on car loans fell by 15 points and the decline in the interest rates on personal loans was 16 basis points,” the minister said.
“The state-owned banks are playing a leading role in efforts to revive the economy. I hope the steps we have taken set an example for all other lenders in the banking industry,” Albayrak said.
Data from the banking sector regulator BDDK show that the total loan volume in the local banking sector grew to 2.68 trillion Turkish Liras (around $451 billion) as of Jan. 31 from 2.65 billion on Jan. 3.
Consumer loans increased from 467 billion liras on Jan. 3 to 481 billion liras, while commercial and other loans rose to 2.08 trillion liras from 2.06 trillion liras over the same period.
According to separate data from the Central Bank, the average interest rate on commercial loans eased to 11.25 percent as of Jan. 31 from 14.06 percent in mid-December while the interest rates on consumer loans dropped to 14.2 percent from 15.7 percent.
The country’s Central Bank has slashed its policy rate - one-week repo rate - by 1,275 basis points since July to 11.25 percent.
The Turkish economy has made a good start to 2020 in line with the targets and projections made for this year, Albayrak also said, adding that the fight with inflation will remain government’s priority.
The minister noted that the annual inflation rate, which stood at 25.2 percent in October 2018, declined to single digits in September and October last year thanks to the stable currency and the improvement in inflation expectations.
“The annual inflation was 11.8 percent at the end of 2019. The fight against inflation continues in line with our targets. We will meet our inflation target of 4.5 percent,” Albayrak said, adding that 2020 will be a significant year to tackle particularly the food inflation.
In its quarterly inflation report, released in January, the Central Bank kept its inflation forecasts unchanged at 8.2 percent and 5.4 percent for 2020 and 2021.
The government’s inflation target for 2022 is 4.5 percent.