Citizens' preference remains foreign currency

With the recent increase in demand for foreign currency from citizens and companies, foreign currency deposits have risen by 5 billion dollars in 3 weeks, reaching 172.4 billion dollars.

In the week of August 23, when the rate of decline in Protected Deposit Accounts (KKM) slowed, it was observed that the increase in foreign currency deposits of domestic residents also gained momentum.

According to data from the Central Bank of the Republic of Turkey (TCMB), domestic residents' foreign currency deposits increased by 2.02 billion dollars in the week of August 16-23, when adjusted for parity effects.

During the same period, the decrease in KKM (FX-protected deposit accounts) was recorded at 1.6 billion dollars (40.5 billion TL). According to the CBRT report, foreign currency deposits of domestic residents rose to 172.4 billion dollars last week.

Foreign currency deposits of individuals increased by 547 million dollars, while foreign currency deposits of legal entities increased by 1.5 billion dollars.

This increase in foreign currency deposits indicates that citizens are turning to foreign currency against the depreciation of the Turkish Lira. An increase of 200 million dollars was recorded in foreign currency accounts on August 16, and 2.84 billion dollars on August 9.

Thus, in the first three weeks of August, there was a total increase of 5.06 billion dollars (approximately 166 billion lira) in foreign currency accounts.

According to a report by Mehtap Özcan from Sözcü, the total foreign currency accounts of domestic residents in banks, which stood at 165.4 billion dollars on August 2, jumped to 172.4 billion dollars as of August 23.

According to the Weekly Banking Sector data from the Banking Regulation and Supervision Agency (BDDK), outflows from KKM (Currency-Protected Deposit accounts) totaled 40.5 billion TL in the same week.

Thus, the total KKM balance decreased from 1 trillion 659 billion to 1 trillion 619 billion. This week, the exit from KKM occurred at the lowest level of the last 7 weeks.

As of August 23, the share of Turkish Lira deposits in the total fell by 0.3 percentage points to 52.4 percent, while the share of FX-protected deposits (KKM) also declined by 0.3 percentage points to 9.3 percent. Foreign currency deposits, meanwhile, increased their share by 0.6 percentage points to 38.4 percent.

The BRSA has also released the Monthly Banking Sector Data for the July 2024 period. The banking sector's total net profit, which was 293.4 billion liras in the January-July period of 2023, rose to 348.7 billion liras in the first seven months of this year.

However, the sector's net profit fell by 15.1 percent year-on-year in July to 34.7 billion liras. In the July 2024 period, loans, which are the largest asset item of banks, amounted to 14.1 trillion TL, and securities amounted to 4.6 trillion TL.

Deposits, which constitute the largest source of funding among banks' resources, reached 16.9 trillion TL, an increase of 14.1 percent compared to the end of 2023.