37
Activities
İşbank’s balance sheet is managed with a proactive strategy
that effectively adapts to market developments.
TREASURY MANAGEMENT
The increased risk perception for
developing countries and a slowdown
in capital flows
Expectations for a possible Fed-induced
interest rate hike, regarding when to
begin and at what pace, in 2015 had a
significant impact on the global market.
While the Fed’s tightening policies were
monitored closely, the European Central
Bank (ECB) announced that it would
continue to implement an expansionary
monetary policy. Although monetary
policies adopted by the central banks of
developed countries differed to a great
extent, they were a determining factor in
capital flows to developing countries such
as Turkey. This was another factor leading
to higher risk perceptions with regard to
emerging markets. The perception that low
growth rates regarding the year 2015 in
China would– directly or indirectly – impact
the global economy negatively became
stronger. Therefore, markets closely
followed this development as well. While
the fall in commodity prices, oil prices in
particular, was the main source of concern
for global demand and expansion rates, this
development created significant pressure
on financial markets.
In parallel with increasing risk premiums,
2015 was a year in which foreign exchange
rates and interest rates fluctuated in a wide
range.
The tight monetary policy of the
Turkish Central Bank (CBRT),
fluctuations in the market and
sustaining financial stability
Concerning upward movement and
deterioration in FX and interest rate levels
with a rising volatility in local markets,
Central Bank of the Republic of Turkey
(CBRT) adhered to the tight monetary
stance in 2015 dynamically using reserve
requirements for both price and financial
stability. As of beginning of the year, CBRT
gradually increased reserve requirement
ratios to encourage maturity extensions
of non-core liabilities. Additionally, CBRT
implemented technical adjustments in
reserve option tranches and coefficients
to strengthen the automatic stabilizing
feature of the Reserve Option Mechanism
(ROM) and compensate for the FX
liquidity withdrawal. Furthermore, due
to the weakening of capital flows and
the fluctuations in global markets, CBRT
increased the transaction limits of the
banks in the CBRT Foreign Exchange and
Banknotes Markets and made gradual
improvements in Foreign Exchange deposit
rates to support foreign exchange liquidity
in the banking sector.
Balance sheet composition in the
banking industry
With the impact of global developments
and an election environment in Turkey,
economic activity was moderate in 2015.
Balance sheet growth of the sector in
terms of TL in 2015 increased 2.9 points
year-on-year to 18.4%. As of end-2015, the
sector’s asset size totaled TL 2,237 billion,
up 9.2%when adjusted for the change in
the currency.
The total loan volume increased 0.7
percentage points compared to the
previous year and the yearly increase
realized at 20.1%. The total loans, that
increased by 20.1% in 2015, amounted to
TL 1,413
(*)
billion as of year’s end. The share
of loans in total assets moved parallel to the
trend in 2014 and realized at 63.2%
(*)
. The
political uncertainty created by domestic
elections and an increase in funding
expenditure were the two main negative
dynamics affecting growth and the loan
volume in 2015.
In the same period, the sector’s total
securities portfolio increased 4.2
percentage points at year-end. However,
coupled with this dynamic and combined
with the fact that asset growth in 2015
was achieved through the loans channel,
its share in the asset size decreased 1.2
percentage points to 14.4%
(*)
year-on-year.
The banking sector’s total deposits
(excluding banking deposits), which had
increased 11.6% in 2014, were up by
18.6%
(*)
in 2015. The actual growth rate, on
the other hand, was 8.5%
(*)
when adjusted
for the change in the currency. TL deposits
rose 8.4%
(*)
in 2015, while FX deposits in
terms of USD went up by 8.8%
(*)
. In the
same period, the share of deposits in total
liabilities was 52.4%
(*)
, similar to the trend
in 2014.
The weight of deposits in total liabilities
remained important both in terms of costs
and size. In parallel, İşbank made use of
non-deposit resources in 2015 in order to
diminish the impact of maturity mismatch,
increase funding diversification and
decrease total costs.
(*)
Calculated using monthly sector data published by the Banking Regulation and Supervision Agency. Interest accruals and rediscounts are not taken into
account. Participation banks are excluded from sector numbers.
