The Turkish economy’s losses bill… Banks on the verge of bankruptcy

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Official data revealed huge losses incurred by public banks in Turkey, amounting to 1.1 billion liras in just two months.

This came according to the data of the Turkish Banking Regulatory and Supervisory Authority, and included the period from the beginning of April to the end of last May, according to the website of the Turkish opposition newspaper, Sozcu, on Wednesday.

The data revealed that the net loss of public banks rose to 644 million pounds in May 2021, compared to 432 million pounds in the previous month, which may expose some of them to bankruptcy.

Turkish banks provided many loans at low interest rates, ranging between 7 and 8 percent last year, despite the collapse of economic indicators and the decline in foreign investment.

The real estate sector’s loans came to the fore for 10 years with low interest, and according to economic analysts, this was the most important factor in the banks’ loss.

Analysts, according to the newspaper, referred to treasury bonds as the second factor in the transition to loss, explaining that banks bought large treasury bonds last year, but the value of these bonds decreased with the rise in interest rates, and this situation was effective in their loss.

During the first five months of this year, the net profits of banks in general decreased by 92.6 percent to 709 million pounds, compared to the same period last year, in which the net profits amounted to 9 billion and 579 million pounds.

According to the same data, the total net profit of all public banks, other than the deposited banks, was “zero” in May 2021. This figure was 4.1 billion pounds in May of last year.

The total net profit of public banks, which amounted to 12 billion Turkish liras in the period from January to May of 2020, also decreased by 65.2 percent to 4.2 billion liras in the same period in 2021.

The net profit of local private banks, which amounted to 2.2 billion liras in May 2020, also declined to 2 billion liras in the same month of 2021.

Meanwhile, the net profit of local private banks increased by 22% during the period from January to May last to reach 10 billion pounds, compared to 8.2 billion during the same period last year.





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