Feb 8, 2023
Turkey’s Banking Watchdog Warns Lenders on Dividend Payments
Turkey’s financial watchdog is warning banks about using their record-breaking profits to reward shareholders with big payouts.
BDDK, the country’s banking regulator, has told banks it would “not be beneficial” to pay dividends this year, according to a letter seen by Bloomberg and confirmed by government officials. The document cited “global economic uncertainties and expectations of stagnation” for why banks should be cautious.
However, the watchdog said it would consider individual requests from banks on payouts, depending on their capital adequacy ratio, according to the letter.
The warning comes after Turkish banks recorded record earnings last year and isn’t believed to be related to the earthquake. Industry profits jumped more than fourfold to 433.5 billion liras ($23 billion), according to official data, making it the most-profitable year since the BDDK was founded in 2002.
However, it’s been widely expected that banking profits would drop this year because of lower inflation and more regulatory pressure. The combined earnings for the country’s six largest-listed lenders such as Akbank and Garanti may fall as much as 30%, according to an estimate made last month by Bloomberg Intelligence.
(Updates with details in third paragraph.)
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