Attention those in debt! Regulatory signal for credit cards

Alpaslan Çakar, Chairman of the Board of Directors of the Banks Association of Turkey (TBB), made evaluations about the banking sector and the economy.

Çakar stated that it may include tools such as reducing the number of credit card installments, limit control or interest.

Stating that last year, loans were shaped as 11.6 trillion liras, and looking at the 12-month change, the growth in loans was 54 percent at the end of 2023, Çakar said, “The growth rate in loans in June 2023 was 59 percent. There is a slowdown in loans in the second half of the year. “This is especially clearly seen in TL loans,” he said.

CREDIT CARD EXPENDITURES CONTINUE TO INCREASE

Pointing out that the only item that differentiates is credit cards, Çakar said, “The increase in expenditures made through credit cards is striking. I believe that there may be a regulation here to manage the inflation effect on credit cards. There are several methods for this; “The issue of interest rate, installment limitation or the amount a person can spend… I believe that action will be taken on this issue,” he said.

Noting that the measures to be taken may be steps such as limit control or installment limits, Çakar said, “Frankly, I do not expect the interest rate for long. CBRT determines the overdraft and credit card interest rates according to its own formulation. “However, I expect a regulation within the scope of other parameters,” he said.

CREDIT GROWTH IS EXPECTED TO BE 40 PERCENT THIS YEAR

Stating that they expect total loan growth in the banking sector to be around 40 percent this year, Çakar said that they foresee a slight increase in non-performing loans due to monetary tightening, but that this will be at manageable levels.

Stating that they expect the return on equity in the banking sector to be around 30% in 2024, Çakar stated that the profitability in the sector will partially decrease. Stating that they expect a decrease in profitability, especially in the first half, due to inflation-indexed papers this year, Çakar said, “While interest expenses are increasing, loan incomes are not increasing at the same rate. This is the first half that will put pressure on profitability. “Nominally, we may be able to achieve last year’s profits, but there will be a partial decrease in profitability,” he said.

Stating that the capital adequacy ratios of banks are around 18 percent, Çakar also added that when inflation accounting is applied, it will have a positive contribution of 100 basis points to the capital adequacy ratios.