Isbank, Turkey’s largest listed lender by assets, expects net interest margins in the banking sector to fall towards 4.0 percent in 2011 in what will be a tough year for banks.
Isbank Deputy Chief Executive Aykut Demiray told Reuters in an interview Isbank would try to compensate for the fall in margins from a current level of 5.5 percent with faster growth, noting the banking sector still had potential, including pursuing expansion opportunities abroad.
"Next year the banking sector is expected to grow 14 percent in assets.
Isbank will outperform the sector… we are still working on targets, but growth will be around that figure in other components, too," Demiray said.
In the January to September period of 2010 banking sector assets grew 11.2 percent compared to the previous year.
Last year, banks in Turkey posted record profits by keeping rates on loans high while cutting rates on deposits in tandem with massive interest rate cuts by the central bank.
The central bank has now held rates since late 2009 and is not expected to raise rates until the second half of 2011. At the same time its gradual exit from financial crisis-induced measures to boost liquidity has also affected banks’ margins.
The central bank has halted three-month repo auctions and raised the reserve ratio.
