Turkish commercial loans grow at fastest pace in 20 months

Commercial loans in Turkey are growing at the fastest pace in almost two years.

Central bank data showed that commercial loans expanded by an annual 28.7 percent in the week of March 11, adjusted for exchange rate fluctuations over the past 13 weeks, the Dünya newspaper reported on Monday.

Turkey’s government is seeking to grow the economy by lending more to businesses, particularly to manufacturers and exporters who can help reduce the nation’s current account deficit. The central bank has helped stimulate lending by lowering its benchmark interest rate to 14 percent from 19 percent in the last four months of 2021 despite a sharp uptick in inflation.

Commercial loan volume has been increasing uninterruptedly since the end of October and the pace has accelerated this year, Dünya said, citing figures published by the nation’s banking watchdog.

Turkish companies are obtaining loans at an average annual interest rate of 20.3 percent, according to central bank figures. That compared with a rate of 21.6 percent at the start of September and 25.8 percent at the beginning of this year. Inflation in Turkey accelerated to 54.4 percent in February, the highest level in two decades.

While 45 percent of commercial loan volume belongs to the three largest state-run banks, other lenders have been growing their loans at a much faster pace, Dünya said. Commercial loan volume at foreign-owned banks in Turkey rose by 15.2 percent since the start of the year and by 12.5 percent at other private deposit banks. Volume at state-run lenders expanded by 8.2 percent, it said.

The increase in commercial loans coincides with the government approving an increase in borrowing available via its Credit Guarantee Fund (KGF). On Feb. 12, the government announced an extra 60 billion liras ($4.04 billion) of guarantees under the fund, which banks can use as a basis to lend more to companies at lower rates of interest.

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