Time to extend loan terms as interest rates slashed in Turkey, leading banker signals
Sefer Levent - ISTANBULTurks will likely witness an extension of loan terms after a series of interest rate cuts by almost all banks, according to a leading banker, who noted that lenders would continue to support the economy.
“As long as there is stability, we will make more money. As representatives from Ziraat Bank, we have also been working to push interest rates down,” said the CEO of top state-run lender Ziraat Bank, Hüseyin Aydın, in a meeting with a group of economy journalists.
Aydın, who is also the head of the Banking Association of Turkey (TBB), also signaled it is now time to extend loan terms as almost all lenders recently slashed their interest rates.
“The interest rate is a price. Loan term extensions may be the case in the near future. We will keep supporting the economy,” he added.
Turkey’s leading lenders announced rate cuts in loans one-by-one, with the government calling on banks to “boost economic activity,” ahead of a key meeting between Prime Minister Binali Yıldırım and top bank representatives late on Nov. 1.
The meeting, which lasted 4.5 hours, focused on rate cuts and accompanying issues, according to sources close to the matter.
Asked whether banks faced any pressure from the government regarding rates and banks’ profits, Aydın said there was always an exchange of views between authorities and companies for the sake of the healthy functioning of the economy.
“For instance, we said loan rates could not be cut as long as deposit rates remain high ... We are always in dialogue with the authorities. There may be some points on which they have persuaded us and vice versa,” he said.
Noting that Ziraat Bank had begun a partnership in Turkmenistan, Aydın said they had made an offer to their counterparts to acquire the whole company.
“In Azerbaijan, we have a lender, 100 percent of which is owned by us, and another, some 50 percent of which is owned by us. We plan to end our partnership and sell our share in the latter to Azerbaijan’s Finance Ministry. The transaction will likely be completed in the near future,” he added.
Aydın also said their aim was to participate in the financing of a number of giant projects in Turkey, including the planned Canal Istanbul project and the Gallipoli Bridge.
“Even we want to lead these processes. The Turkish banking sector has the power to finance such projects,” he added.