Good news from the EBRD for Turkish banks: We will continue our investments

European Bank for Reconstruction and Development (EBRD) Managing Director for Financial Institutions Francis Malige stated that the Turkish banking sector maintains a strong capital structure, noting that while there are fluctuations in bank profitability, he is not concerned about this issue.

In his assessment of the Turkish banking sector, Malige expressed that the EBRD's cooperation with Turkish banks is long-standing and that the number of financing agreements they have signed with Turkish banks has increased recently.

"As of this time of the year, our investments in the Turkish banking and financial sector are at the level of 600 million Euros, but the year is not over yet and we will continue until the end of the year," said Malige, sharing the information that last year, the financial sector accounted for 1.2 billion Euros of their total 2.5 billion Euro investment in Turkey.

Francis Malige emphasized that the Turkish economy has begun to emerge from a period of high inflation and is on the path to recovery, noting that the Turkish banking sector has demonstrated strong performance during this process.

'WE ARE VERY PLEASED WITH OUR RELATIONS WITH TURKISH BANKS'

Stating that he has been closely following the Turkish banking sector for nearly 20 years, Malige continued his remarks as follows:

"The Turkish banking sector has strong capital and liquidity buffers. This does not mean there are no challenges. Currently, the biggest challenge in the sector is the instability created by the high-interest rate environment, but since there is now a more stable macroeconomic policy, banks are moving out of this uncertainty. On the other hand, profitability in the sector is somewhat volatile, but we still see that healthy levels of profitability continue. For this reason, I am not worried about the profitability of the banks. Turkish banks have strong capital, and we are very pleased with our relations with the banks."

Reminding that orthodox macroeconomic policies have been implemented in Turkey for more than the last 12 months, Malige said, "It is very important to maintain orthodox economic policies. I think everyone, especially foreign investors and credit rating agencies, welcomes this return in Turkey's economic policies and trusts the fact that these policies are present and permanent."

Evaluating the green and digital transformation in the Turkish economy, Malige explained that they encourage small and medium-sized enterprises in Turkey to invest in digitalization and green transformation through financial institutions.

750 MILLION EURO GREEN ECONOMY PROGRAM

Stating that they have launched a 750 million Euro green economy program within this scope, Francis Malige said that the green transformation of companies is important, especially due to practices such as the European Union (EU) Carbon Border Adjustment Mechanism.

Stating that companies will have to pay taxes if they do not produce the products they export to the EU, their largest export market, with clean energy, Malige said, "That is why we want to ensure that we are implementing what is necessary to minimize the impact of this mechanism by working with banks, regulators, and our clients."

Malige also provided information regarding the EBRD's investments in the earthquake zone, stating that they activated 600 million Euros in financing following the earthquake and that financing was provided to businesses in the region through banks.

Noting that almost all of this financing was provided to businesses, Malige added that they continue to work with Turkish banks to understand how to respond to the needs of businesses in the next phase and to determine the next steps.