International credit ratings agency Fitch Ratings, in its report published on its website, sees Turkish Banks' asset quality weakening in 2021.
The agency summarised its report as follows:
“Growing Pressure on Asset Quality Fitch Ratings has negative outlooks on most Turkish banks’ asset quality scores, signalling that banking sector asset quality is likely to weaken in 2021. We expect the operating environment for the sector to remain challenging in the aftermath of the coronavirus pandemic, despite the economic recovery. Borrowers’ debt-servicing capacity will be pressured by the withdrawal of government stimulus packages, maturing loan deferrals and higher lira interest rates. At the same time, underlying asset quality deterioration will become increasingly visible in reported metrics as regulatory forbearance is reduced. The uncertain path of the pandemic and sensitivity to potential further lira depreciation are additional risks for banks' asset quality.”