The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Turkey’s banks sweat the small stuff

SME banking has been a top priority for Turkish lenders since the country’s regulator called time on the consumer boom in late 2013. Can the segment keep its cool in the face of rising local economic and political pressures?

Turkey lira-R-600

At the start of the decade, the sweet spot for Turkey’s banks was unquestionably retail lending. Margins were high, growth was stellar and consumer appetite seemingly insatiable. Then in 2013, alarmed by rising household leverage, the Turkish government clamped down hard on the segment, bringing the party to an end and leaving banks searching frantically for a new source of growth and profits.

With limited opportunities in the highly competitive corporate segment, attention turned to small and medium-sized enterprises, a large and under-banked sector. In 2012, SMEs made up 99% of all corporate entities in Turkey, employed three quarters of the country’s workforce and produced 55% of total revenues. Nearly 40%, however, had no bank debt of any kind, an enticing prospect for lenders with ample access to liquidity.

Lending to smaller companies also offered much more attractive returns than were available from their larger counterparts, as well as the opportunity to grow other lucrative business lines. “Underlying spreads on SME loans are at least 200 basis points to 300bp higher than those on commercial and corporate loans,” says Bulent Sengonul, head of research at Turkish investment bank Is Yatirim.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree