bne IntelliNews – Istanbul listed guaranteed problem loans reach 22% ratio at the end of 2020

Turkish Bank Garanti (GARAN) problematic loan burden grew to 70 billion Turkish Liras (TRY) (9.6 billion TRY), or 22% of the 315 billion TRY of loans in the lender’s books , compared to TRY 59 billion, or 19%, at the end of September, the Bank noted January 28 in a presentation of its Q4 financial results.

Guaranteed wrote down TRY 4 billion in non-performing loans (NPL) in the fourth quarter, with its NPL falling to a total of TRY 14.4 billion at the end of 2020, from TRY 18.7 billion at the end of September. The NPL ratio fell from 6% to 4.6%.

When the TRY 4 billion depreciation is included, the NPL would rise to TRY 18.4 billion at the end of last year, or 5.8% of loans.

Guaranteed also noted that the “regulatory tolerance” measures had a 40bp positive impact on the NPL ratio, suggesting an actual ratio of 6.2% and a problem loan ratio of 24%.

The bank delayed (restructured) repayments of TRY 40.1 billion in loans and recorded 57% of the delayed loans as Phase 2 problem loans.

When TRY 17 billion of unrecorded deferred loans are included, the problem loan ratio reaches 29%.

Profit up 1%

Despite all abstention, Garanti reported only a 1% year-over-year increase in profit to TRY 6.24 billion against official inflation of 15% in 2020 while, on a USD basis, its profit net fell 19% year-on-year to $ 845 million.

The bank’s ROAE (return on average equity) ratio fell to 11% at the end of 2020 against 12% at the end of 2019.

If Garanti’s Spanish parent company BBVA pulled out its equity and deposited its money with rival Akbank, it would enjoy much better and risk-free returns.

The situation is the same for all local banks and lenders have not been allowed to distribute dividends on their 2018 and 2019 profits.

On January 29, the banking association TBB noted that the BDDK banking watchdog allowed local banks to distribute 10% of their 2020 profits.

This news will be sold as ultra-positive because Bloomberg has reported since November that the BDDK was in discussions on the dividend ban.

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