Central bank highlights resilient banking, healthy loan growth
In their second financial stability report for the year, Turkey's central bank said on Thursday it remained confident in banking markets based on "controlled" loan growth and a structure resilient to external shocks.

The report follows central bank Governor Erdem Başçı's remarks earlier last month that measures to pre-empt credit overheating in Turkey were now paying off. Başçı said taming fast loan growth in Turkey would also mean an economy-wide resilience against possible troubles coming from foreign markets.

The report released on Thursday said, "Analyses of the banking sector have proved that its firm asset structure keeps potential shocks at bay," adding that reasonable loan growth served to maintain financial stability. The bank also said it found that banking loan interest rates posed no threat to economic growth.

The central bank estimated the annual growth in loans extended by banks to non-financial sectors for this year at 14 percent. A favorable growth rate in loans was earlier set at 15 percent. The bank also said Turkish banks' healthy capital adequacy ratio supported their long-term stability.

As regards inflation growth in the country, the central bank said it used all possible policy tools to curb high inflation. The bank said, following the temporary impact of certain government tax hikes on inflation, consumer prices have started to ease through the final months of the year.

In the face of increasing inflation, the bank has opted to lower the overnight borrowing rate for the third consecutive month now. Turkey's annualized inflation of consumer prices slowed to 7.8 percent in October, marking the lowest level in 11 months after rising sharply in the preceding month. October's decline in consumer prices was supported by a fall in core inflation (excluding energy, unprocessed food, alcoholic beverages, tobacco and gold -- some of the major factors behind high inflation) from 6.8 percent in September to 6.1 percent.

(Cihan/Today's Zaman) CİHAN
Last Modified: 2012-11-29 20:00:01
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