Fitch Ratings on Thursday said Turkey’s three major state-owned banks are less equipped to deal with a potential deterioration in asset quality than their privately owned peers, with Halkbank the weakest according to all stress scenarios.
The global credit agency conducted six separate stress tests on the eight largest Turkish banks’ capital ratios. The banks’ asset quality was stressed for a sharp rise in non-performing loans (NPLs), weaker profitability and lira depreciation.
“We find that material asset quality deterioration would impact state banks’ (Halk, Ziraat, Vakifbank) pre-impairment operating profit (PIP) more than those of private banks (Garanti, Akbank, YKB, İşbank and QNB Finansbank),” Fitch said.
“Our analysis shows that loss-absorption capacity is solid at Akbank and Garanti, moderate at YKB, QNB Finansbank and İşbank and generally more modest at Ziraat and Vakifbank. Halk’s stressed metrics are the weakest and fall below minimum requirements in all stress scenarios.”