Güney said in a statement as part of the “bank talks” that 2023 is a year in which inflationary pressures continue to be felt in the global economy and that they have had a year in which financial conditions have tightened due to contractionary monetary policy. developed countries and economic activity continued, albeit at a slower pace.
Güney emphasized that rising geopolitical risks and deepening crises, commodity price volatility and the repercussions of the climate crisis stand out as other important pressure factors on the global economy, and said that despite these factors, he sees improvements in global and supply chain conditions continuing, and that while supply-side inflationary pressures continue to ease, tight pressures continue. He noted that the effects of monetary policy on demand are beginning to be felt more clearly.
Güney said they have seen advanced central banks take a cautious stance this year, but the expectation that advanced central banks will start cutting interest rates in 2024 has come to the fore, stressing that “At the moment, ongoing geopolitical tensions and China’s real estate crises remain important as elements of uncertainty.” “I see benefits. With that in mind, I think the environment of inflationary pressures and concerns about weak growth in the global economy will remain on the agenda in 2024,” he said.
Güney said that the Turkish economy found direction in the first half of 2023 under the influence of the earthquake and general elections, as well as the slowdown in global economic activity, and that despite these factors, economic activity in Turkey continued on its strong course. supporting domestic demand, due to the comparative base of the inflation rate in the first half of this year, he said that it started to fall.
“We will continue to support our exporters to be as least affected by cyclical negatives.”
Ali Güney emphasized that since June, monetary tightening and selective credit and quantitative tightening measures carried out in a supportive direction have come to the fore, and said that while commercial credit has seen growth following the easing steps taken by the economic leadership in macroprudential policies, the composition of commercial credit has began to improve with an increase in the share of export and investment credits.
Güney stated that the slowdown in domestic demand as a result of monetary policy tightening also caused a loss of momentum in the growth of individual loans, and made the following assessment:
“The fact that the economic leadership has taken steps to support healthy credit flow development has been welcomed by the sector. In addition, the MTP (2024-2026) and the 12th Development Plan (2024-2028) which aim to ensure sustained improvement in growth and current account balance through increasing of exports, are being prepared. ) in accordance with the general framework, financing costs for rediscount loans were reduced and limits for small and medium enterprises and daily use were increased. Macroeconomic policies implemented after the elections started with the disinflation process and the positive environment created by the decrease in the current account deficit with selective lending practices that will favor exports and manufacturing, reached the level of 750 before the election. Turkish CDS premium fell below 300 points.
We expect inflationary pressures to continue to decline in advanced economies in 2024 and to begin tapering monetary policy interest rates as inflation continues to decline. In addition, we forecast that as long as this tough stance continues, economic activity in developed countries, which are our major export partners, will be sluggish, and this situation has the potential to negatively impact our exports in terms of demand. “In the coming period, we will continue to be the most important supporter of our exporters in ensuring that they are as least affected by cyclical negatives, which is a requirement of our essential role and mission in our country’s growth strategy through increasing exports.”
“Export and investment credits seem to be coming to the fore”
Turk Eximbank CEO Güney said the new economic management can be seen to be decisively fighting inflation thanks to the strong monetary tightening policy it launched in June, noting that the impact of the steps taken under the inflation targets is reflected in the slowdown. in the growth of individual loans.
Güney continued as follows:
“Thanks to the gradual increase in the base interest rate and the simplification measures, the market mechanism became more efficient. Thus began the process of normalization in the flow of commercial loans. The negative spread between interest rates on deposits and loans turned positive again.” In addition, with regulation under the policy of high added value and export-oriented growth, export and It can be seen that investment loans are coming to the fore. of protected and foreign currency deposits. In addition to financial stability, these steps also strengthen currency transmission.
In light of these developments, the gradual rate hike is expected to end in the first quarter of 2024 as inflation expectations come under control, and the process of disinflation will begin in the second half of 2024 with the cumulative effects of monetary tightening. . “With the decline in inflation expectations following the start of the disinflation process, it is expected that the CBRT may lower the key interest rate later in the year.”
“The priority is to promote a policy of growth with high added value oriented towards exports”
Ali Güney emphasized that the banking sector maintains its strong outlook in terms of capital adequacy, adding that the sector’s capital adequacy was 18.4 percent in October, and this rate is above the legal minimum rate of 8 percent set under the Basel criteria and the target rate in Turkey in the amount of 12 percent.
Güney noted that as part of the simplification process, the non-KKM TL deposit rate increased with the relaxation of banks’ reserve requirements and securities establishment obligations, which would increase TL deposits, and that the simplification measures were also effective in increasing the credit appetite of the banking sector and that the problem with access to finance will increase exports, especially in the following period, will disappear in selected areas, according to him.
Güney said: “In this context, it has been a priority to pursue an export-oriented high value-added growth policy. The CBRT has also increased the daily limit on rediscounting loans from 1.5 billion lira to 3 billion lira to encourage selective disbursement of loans.” and exporters’ access to finance.” he said.
“To date, our bank has provided 35.4 billion lira loans guaranteed by Export Development Inc.”
Güney said that as Türk Eximbank, it continues to serve exporters with 23 branches and 12 liaison offices:
“Thus, we are continuing our physical activities in the cities where 94 percent of Turkish exports are realized. In 2022, we provided cash loans worth $19.6 billion to our exporters and by covering $25.3 billion in term claims under insurance, we created an environment where our exporters can sell safely. The first 11 of 2023 In 2023, we provided a total of $38 billion in support and we expect to reach $41 billion in support by the end of 2023. a total of 15,440 exporters in 2022, of which 81 percent are SMEs , in 2023, the number of exporters we support will increase to 16,800, and the share of small and medium-sized enterprises will increase to 16 percent, rising to 84.
To date, our bank has provided 35.4 billion liras of loans with the guarantee of Export Development Inc., which was established in cooperation with the Turkish Exporters Assembly and Turkish Eximbank under the coordination of the Ministry of Trade to facilitate the access of our exporters. finance and contribute to the solution of collateral problems. In addition, our bank, which raised $2.2 billion worth of funds from foreign capital markets and financial institutions in 2022, has provided additional $4.2 billion resources by the end of November 2023 and made them available to our exporters. On the other hand, we have put sustainability at the center of our strategy to prepare exporters for the introduction of a carbon tax at the border and have provided approximately $3.7 billion in financing from foreign financial institutions over the past 3 years. and syndicated loans related to sustainability. We are rapidly continuing our efforts to diversify products and sources to prepare exporters for the carbon border tax to be introduced in 2026 in line with the EU Green Deal, which is to be used in this area. “As Turkey’s official export promotion organization, we will continue our activities in accordance with our country’s export goals and the needs of our exporters.”
“We will support exporters to increase their market share with a greener production structure.”
Ali Güney stated that they will introduce new financing programs in 2024 to support exporters’ investments regarding their green transformation and said: “With the implementation of the border carbon regulation mechanism, our country’s exporters will not be negatively affected by this regulation, but instead will increase their market shares in greener production structure.” “We will be with them. the transformation of our exporters by ensuring that a significant amount of resources are coming into our country from abroad.” he said.
Güney stated that 2024 will be the year in which they will increase the support they provide to service exporters, especially the software sector, as well as high-tech and high-value-added exporters, and said that they will support the increase in the exports of these exporters with their new practices, both from in terms of warranty, financing costs, and service quality.
Güney stated that exporters have taken steps to increase customer satisfaction by significantly improving credit and insurance processes as part of Türk Eximbank’s strategic transformation program, “I believe that 2024 will be the year in which these improvements will be felt more clearly. by our exporters. An important part of these improvements is the renewed “With our digital branch, we will introduce a more user-friendly design and much richer transaction sets to our exporters in 2024. I believe that in this way our inclusivity will increase, especially for our SME scale exporters operating in regions far from our branches.” he said.
Referring to developments regarding the resolution of the collateral issue, Güney said:
“This is a topic that has been on the agenda of our exporters, including us, for many years. For this reason, one of the topics that we addressed as a top priority within the Türk Eximbank Strategic Transformation Program was to facilitate our exporters’ access to finance through diversification of the collateral structure. This of course requires credit, especially competence in risk measurement and monitoring. It was necessary to ensure that our processes were in line with industry best practices. during detailed studies in this area, we made significant progress in effectively managing the credit risk of companies through monitoring and early warning systems supported by artificial intelligence that we have created and we have recently implemented important changes that we have made in our collateral, therefore we have started accepting alternative types of collateral that are generally accepted in the banking sector, such as securities pledges, guarantees of guarantee institutions such as Kredi Garanti Vakfı and İhracatı Gelişim AŞ, mortgages and guarantees of real and legal persons.”