Fitch: Turkish banks ready for gradual rate hike

Fitch Ratings said that Turkish banks are prepared for a gradual increase in interest rates, but that rapid interest rate hikes may have negative consequences.

In the Fitch assessment, which stated that the potential rate of increase in interest rates is important for Turkish banks, it was stated that “banks will be able to reprice their loans if the restrictions on loan pricing are also relaxed”.

Fitch’s assessment stated, “This may offset the low yield impact that may occur in CPI-indexed bonds as a result of the decline in inflation.”

Stating that the gradual increase in interest rates has enough buffer for the banks to erode the asset quality, Fitch stated that a rapid increase in interest rates, which could lead to a potential credit crisis, recessionist pressures and high unemployment, could have a serious negative impact on the banks.