EM CEEMEA CREDIT: TURKEY: “Margin press on Turkish Banks resume in Q225” - S&P

Turkiye (TURKEY:B1pos/BB-/BB-)

“Margin pressure on Turkish Banks will resume in Q225” - S&P

• We think the key driver for credit spreads is overall stability> This is what CBRT is trying to achieve by raising rates by 350bps last week. S&P’s argument of short-term margin erosion is debatable as we think higher NIM, loan growth and F&C income will benefit from a more stable environment.
• As we have previously noted commercial lending rates have already started to increase (see link: https://mni.marketnews.com/3Gm5enG).  S&P sees further potential tightening by the CBRT in the short term and possible easing during the summer.  Since the CBRT’s decision to raise rates by 350bps TURKEY curve is tighter 5-20bps, see below.