Fitch: Turkish banks should cope with tough year ahead

Slowing economies and higher interest rates will drag banks in emerging markets, says ratings agency.

Fitch: Turkish banks should cope with tough year ahead

World Bulletin / News Desk

Credit rating agency Fitch Ratings has warned that banking sectors in emerging economies face a tough year - but Turkish banks should be able to weather the difficulties.

In its Emerging Market Banking System Datawatch Report released on Thursday, Fitch said: “Most major emerging market banking sectors will perform more weakly in 2014 than in recent years due to slower economies, higher rates, seasoning loan books and, in some cases, greater political uncertainty.”

But the agency added that "resilience" in the banking sector would allow it to deal with problems.

“Bank credit metrics and ratings should be largely resilient, given mostly solid buffers and only moderate economic downturns,” the report said.

Stressing that downwards risks would increase more acutely in Turkey and Russia, the agency said the banking sectors in both economies could cope.

The agency said it expected most Turkish banks to absorb moderate stress and any downward pressure on their ratings should be limited, despite “a weaker currency, a slower economy and political uncertainty”.

Geopolitical uncertainty and reduced business confidence would suppress economic growth in Russia, the report said, but it did not foresee a significant deterioration.

“Bank refinancing risks are manageable, recession is not our base case and banks' credit metrics should not deteriorate markedly. Downgrade risk is focused on sovereign-linked bank ratings, which currently have negative outlooks.” the report said.

Last Mod: 17 Nisan 2014, 13:32
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