Banks prepare to loosen credit standards

According to the "Bank Loans Tendency Survey" published by the Central Bank of the Republic of Turkey (CBRT), the tightening trend in standards applied by banks to loans extended to businesses in general ended in the last quarter of 2023, while banks' expectations for the first quarter of 2024 are that these standards will begin to loosen. Here are some key points from the survey:

When the sub-breakdowns of the last quarter of last year are examined, it was observed that the tightening trend in standards applied to loans given to large enterprises and loans opened in foreign currency continued to weaken, while the tightening in standards applied to other business loans came to an end.

For the first quarter of 2024, while it is expected that the tightening in housing loan standards will weaken further and other individual loan standards will tighten slightly, banks' expectations for the first quarter of the year are that the tightening in standards applied to auto loans will continue at a low level.

The upward trend in demand for loans given to businesses in general continued to weaken in the last quarter of 2023. In the first quarter of 2024, while the increase in demand for loans given to businesses in general is expected to continue quite weakly, the downward trend in housing and other individual loan demand continued to weaken, while the decrease in auto loan demand was replaced by an increase.

For the first quarter of this year, banks' expectation is that the downward trend in housing loan demand will weaken further, while the downward trend in other individual loan demand will strengthen. A significant decrease in auto loan demand is also expected during this period.

When the development of banks' funding opportunities is examined, it was seen that while the tightening trend in domestic funding conditions continued in the last quarter of 2023, the loosening in foreign funding conditions strengthened. For the first quarter of 2024, it is expected that the tightening in domestic funding conditions and the loosening in foreign funding conditions will continue.

News Source: 12punto