THE EFFECTS OF COVID-19 PANDEMIC OVER TURKISH BANKING SECTOR

Abstract

The Covid-19 epidemic that started firstly in Wuhan, China, shortly spread to the World and influenced negatively all the life and economic sectors. The World countries survived their economies generally by attempting to decrease negative effects of the pandemic by liquidity to the market, low interest loans and renewing loans policies. The government even in Turkey used the banking sector as an effective tool as well as cash aids and unrequited transfers. Especially by public banks, it is submitted some financial products with low interest and grace period. The reflections of all these developments to the banking sector balance sheet and ratios is important because banks are systemically important institutions that both influence macro economy and influenced from macro economy. In these study, it is analysed COVID-19 pandemic effects’ to the banking sector balance sheets and ratios between 2019-2020 by tables and graphs. The deposits in the sector increased rapidly after 2020 first term. It is an indicator of the trust to the banks in the crisis. Especially after June 2020, deposits in foreign money increased more than TL. However, it is seen that the rate of credits and deposits decreased and going on decline trend because of current crisis atmosphere. It is seen still that the credit usage increased in 2020 because of allocated and renewed loans under the support measures. The rising trend in credits over TL went on until the end of 2020 despite of decline of the acceleration of rising. It can be said that the public banks played important role in these credit rising. It is seen that the rising trend in credits in foreign money decreased after October 2020 and so it results to decrease the trend of total credits. Hence, the percentage of loans in assets decreased in 2020 especially in the half of 2020. However, while it is seen nonperforming loans are not increasing during 2020, it is remarkable for the rapid rising in the loan loss provisions. In fact, the nonperforming loans increased when the economy declined. That reverse effect can be explained by having postponed the loan instalment or renewing the nonperforming loans under the support measures. Moreover, the nonperforming loans have a tendency to increase after October 2020. Finally, it is indicated that though the capital adequacy ratio in Turkish banking is high, the leverage ratio is increasing as well. As a result, it seen that the return on assets of Turkish banking sector decreased especially in the last 3 mounts in 2020 in comparison to 2019.