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ACTIVITIES
İŞBANK
ANNUAL REPORT 2014
19
The banking sector continued to
diversify its funding sources.
Deposits continued to be the main funding
source of the banking sector in 2014. In
addition to deposits, the banking sector
met its financing needs through funds
provided from foreign sources and from
repo transactions. Banks also continued
to support their balance sheets through
security issuances in 2014. In fact, the
stock of securities issued by the sector
increased by 47.4% on a yearly basis, to TL
89.3 billion in December 2014, up from TL
60.6 billion as of year-end 2013. The sector
did not experience problems in raising
funds from abroad, despite the volatility in
international markets.
Sector indicators remain strong.
The capital adequacy of the banking sector
tended to gain strength in 2014. The
sector’s capital adequacy ratio increased to
16.4%
(*)
in December 2014 up from 15.3%
(*)
by end-2013. Despite the slowdown in
growth, the sector’s NPL ratio has remained
flat, showing a moderate increase of about
5 basis points from the level of 2.7%
(*)
at
the end of 2013.
Future Outlook
Growth led by domestic consumption
and investment spending
In 2015, the Turkish economy’s growth
outlook is expected to differ from 2014;
once again, domestic consumption and
investment expenditures are expected to
be the main growth drivers. Net exports’
contribution to growth is expected to
continue to slow down, though remain
at a positive level. The reflections of the
geopolitical problems in Turkey’s nearby
geography on economic activity are
expected to be limited in 2015. On the other
hand, the fluctuations that may occur in
the course of international capital flows in
accordance with the actions of the Fed are
of great importance to emerging markets.
Developments inmain export markets
Developments in Turkey’s main export
markets, especially in EU countries, will be
the determining factor of economic activity
in the period ahead. In addition to weak EU
economies, the ongoing problems in the
Iraqi and Russian markets are expected to
pressure export performance. On the other
hand, the external balance is likely to be
positively affected by the current low level
of rapidly declining oil prices.
A prudent monetary policy
In 2015, the most important factor in
terms of price stability will be the volatility
in exchange rates that may originate
from developments regarding the Fed’s
monetary policy. However, the CBRT’s
prudent monetary policy stance and the
low level of oil prices are expected to have a
favorable impact on the inflation outlook.
Banking sector will continue to grow.
The banking sector, expanding relatively
more prudently and moderately since 2012
in line with macroeconomic policies, is
expected to maintain this growth strategy
in 2015. In this framework, loan growth is
expected to continue to follow a moderate
course in 2015. In line with the measures
taken by the BRSA and the CBRT, loan
volume growth is likely to be driven by
commercial loans rather than consumer
loans and credit cards.
Turkey’s investment grade rating by
two international credit rating agencies
indicates that the sector will not face
difficulties in raising funds from abroad.
In the meantime, banks are expected to
continue to use alternative funding sources
in the coming years. As a result, the banking
sector is expected to continue to support
the growth of Turkish economy as it had
done in previous years.
(*)
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.