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. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Turkish NPLs set to soar as macro woes mount

Autumn bank refinancing round under scrutiny; analysts warn of US sanctions tail risk.


Non-performing loan ratios in Turkey are tipped to rise sharply as the effects of currency depreciation and rising interest rates feed through to the real economy.

According to official figures, bad debts accounted for just 3% of outstanding loans in the Turkish banking sector at the end of August, but analysts say the real number could already be much higher.

“The solvency of Turkish banks will be weaker than reported figures,” Moody’s said in a ratings note published on August 28. “Banks are reporting problem loans and performing loans with severe deterioration since origination in an inconsistent manner.”

Turkey’s lenders have been encouraged by the local banking regulator to under-report bad debts in the tourism sector for more than a year and were also asked not to rank the $4.75 billion owed by Turk Telekom shareholder Otas as problematic during the continuing restructuring process. 

Following the lira’s collapse in early August, the Banking Regulation and Supervision Agency (BDDK) also relaxed the criteria for loan restructuring and fixed exchange rates for provisioning – and capital – calculations at levels not seen since the end of June.

Asset quality is expected to deteriorate further as Turkish corporates struggle to service foreign currency debt and smaller businesses feel the effect of surging inflation. 

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.


Unlimited access to and

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


Unlimited access to and, 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


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