Moody’s, the international credit rating agency, made evaluations about the effects of the policies implemented in the last period on the Turkish economy in a report it shared yesterday, and stated that the outlook of the Turkish banking sector was upgraded from negative to stable.
In the statement made by Moody’s, it was noted that the steps taken by the government to implement orthodox policies after the elections in May were supportive of the operating environment of Turkish banks.
In the statement, it was stated that the operating environment for Turkish banks was challenging due to the expected slowdown in economic growth. evaluation was made.
In the statement, it was stated that high inflation and the depreciation of the Turkish lira affected the spending power of consumers and the capacity of debtors to pay their debts.
In Moody’s statement, it was stated that banks’ external funding positions and dollarization levels have improved, and foreign currency liquidity is expected to remain at an adequate level.
Noting that the Turkish economy is expected to grow by 4.2 percent this year, while inflation is expected to be 51 percent, the statement said, “Despite the economic slowdown in the first half of this year due to the outlook in the European market, Turkey’s strong exports and tourism sectors will continue to support growth.” statement was included.
“Despite the economic volatility, the funding and liquidity positions of Turkish banks have improved markedly, especially in foreign currency,” the statement said. evaluation was made.
“Moody’s is an institution that is generally on the negative side and moves ahead of others in rating”
Piri Reis University Vice Rector Prof. Dr. Erhan Aslanoğlu, in his statement on the subject, said that although there is no problem in the foreign exchange position of the banking sector, the most important factor in Moody’s’ aforementioned step is the relaxation of the banks with the latest developments.
Stating that the Moody’s statement basically emphasizes the orientation towards more orthodox policies, Aslanoğlu said, “Especially with the simplification of the regulations regarding the banking sector and the tightening steps of the monetary policy, the increase in interest rates and the gradual implementation of this is perceived and seems to be positive.” used the phrases.
Aslanoğlu pointed out that steps were taken to reduce the credit and interest risk, which are two important risks for the banking sector, and evaluated that these steps were an important reason for the correction in the outlook.
Stating that if the profitability of the banking sector or its activities are adversely affected in a country, it will reflect on the economy as a whole, Aslanoğlu continued his speech as follows:
“Because banks have a duty to fund and provide financing to the real sector. When banks see these risks as excessive, they begin to reduce this contribution to the economy. That’s why the more positive direction of banks means that the real sector can have more financing and funding resources in the coming period. income.”
Noting that similar steps may come from other organizations, Aslanoğlu said, “Moody’s is an institution that is generally on the negative side in this sense and acts before the others in the rating. I think this step of his will probably affect other institutions as well.” made its assessment.
Noting that the outlook movement may also bring a change related to the rating to the agenda, Aslanoğlu said that if the economy manages the interest rate risk well without creating too much credit risk, an environment where the inflation decreases, a rating increase may also come, but it is more likely that the outlook will turn positive first.
Stating that the revision of the outlook indicates that there are more positive expectations for the coming period in general, Aslanoğlu said, “When we look at the text, it is seen that these steps are expected to accelerate and tighten until the results are obtained.” used the phrases.
“A positive start in terms of turning the medium-term perspective to positive”
PhillipCapital Domestic Markets Group President Üzeyir Doğan said, “The reversal of the ongoing downward trend in the credit rating and outlook will be positive for foreign investors to notice the change in the story here.” made its assessment.
Reminding that the credit rating agencies have been constantly updating the ratings of Turkey and therefore Turkish companies for many years, Doğan said that with the changes made in the economic management and economic policies after the elections, the perspective towards Turkey began to change when it started to become familiar to foreigners and the results could be predicted. reported it started.
Noting that the first effects of this were seen in Turkey’s credit risk premium (CDS), Doğan said, “Although its impact on daily pricing is limited, we think it is a positive start in terms of turning the medium-term perspective of foreigners into a positive one.” used the phrases.
Other credit rating agencies may take similar steps.
Pariterium Consulting Founder Dr. İsmet Demirkol also stated that various factors, especially the appointments in the economy management after the election, and the selective and quantitative tightening of credits, led Moody’s to revise its rating outlook.
Demirkol stated that with the strong export figures for the January-June period, at least in the current process, there will be no problems in financing the current account deficit and that it plays an important role in this regard, adding, “There is no problem in banks’ foreign exchange liabilities and foreign debt risk, and as a result, Turkey’s credit risk premium ( CDS) regression to 400 basis points was also effective in this step. used the phrases.
Demirkol noted that he thinks that other credit rating agencies will also make a positive revision of expectations in parallel with Moody’s. “On the other hand, developments such as an increase in foreign direct investment inflows and a further reduction in the risk of credit and foreign exchange shocks in Turkey can be counted among the necessary points for Turkey to enter the rating upgrade process permanently.”
