According to the latest weekly bulletin from the Banking Regulation and Supervision Agency (BDDK), the balance of foreign exchange-protected deposit accounts (KKM) decreased by 36.4 billion TL in the week ending November 1, bringing the total to 1.34 trillion TL. This reduction marked a 2.6% decline, and KKM now accounts for 7.43% of total deposits.
In the banking sector overall, the total credit volume increased by 90.6 billion TL, reaching 15.13 trillion TL as of November 1. Meanwhile, total deposits, including interbank deposits, rose by 7.25 billion TL to 18.03 trillion TL.
Consumer and Commercial Loan Growth
Consumer loans also saw a significant increase, with a 14.18 billion TL rise, bringing the total amount to 1.88 trillion TL. Of this, 481.5 billion TL was allocated to housing loans, 75.6 billion TL to vehicle loans, and 1.33 trillion TL to personal loans. Commercial loans, including installment-based business loans, also grew by 9.53 billion TL to 1.98 trillion TL.
Credit card balances rose by 2.7%, amounting to 1.68 trillion TL, with a significant portion, 1.1 trillion TL, in non-installment (lump sum) debt.
Regulatory Capital and Non-Performing Loans
The banking system’s regulatory capital increased by 3.02 billion TL, totaling 3.29 trillion TL. On the other hand, non-performing loans grew by 6.83 billion TL to 274.6 billion TL, with over 73% of them covered by provisions.
Foreign Exchange Protected Deposit System’s Decline
The reduction in KKM balances aligns with a broader trend in the financial sector. With KKM now under 1.35 trillion TL, it is clear that there has been a significant shift in deposit preferences, as the system has also dipped below 40 billion USD for the first time since its inception in December 2021.
Personal Commentary: The decline in KKM balances reflects changing trends in Turkish investors’ confidence in the foreign exchange-protected deposit system, especially with the decreasing interest rates and volatile foreign exchange markets. While the banking sector’s total loans and deposits continue to show robust growth, the drop in KKM balances might signal a shift towards more conventional savings methods or different investment strategies, especially as inflation pressures persist.
