Fitch upgrades four Turkish banks
Investing.com -- Fitch Ratings has upgraded the Long-Term Foreign-Currency Issuer Default Ratings of three Turkish banks to ’BB-’ from ’B+’ with Stable Outlooks.
The upgraded banks include Turkiye Cumhuriyeti Ziraat Bankasi Anonim Sirketi (Ziraat), Turkiye Vakiflar Bankasi T.A.O. (Vakifbank), and Turkiye Sinai Kalkinma Bankasi A.S. (TSKB). Their Viability Ratings were also raised to ’bb-’ from ’b+’, while their Long-Term Local-Currency IDRs remained affirmed at ’BB-’.
Additionally, Fitch upgraded Arap Turk Bankasi A.S. (ATB) to ’B+’ from ’B’, with its Viability Rating improved to ’b+’ from ’b’ and National Long-Term Rating to ’A(tur)’ from ’A-(tur)’. All ratings carry Stable Outlooks.
The rating actions reflect Fitch’s improved assessment of Turkey’s operating environment, which was recently revised to ’bb-’/stable from ’b+’/positive. The upgrades also take into account the banks’ stable business and financial profiles amid improved operating conditions.
For state-owned Ziraat and Vakifbank, along with privately-owned development bank TSKB, Fitch upgraded their Government Support Ratings to ’bb-’ from ’b+’. This change stems from Turkish authorities’ enhanced ability to support the banking sector in foreign currency following improvements in the country’s foreign exchange reserves.
Ziraat Katilim Bankasi A.S. also saw its support-driven Long-Term Foreign-Currency IDR upgraded to ’BB-’ from ’B+’ with a Stable Outlook, following the upgrade of its parent bank Ziraat.
The rating agency noted that the improved Turkish operating environment reflects normalized and stronger monetary policy, which has reduced refinancing risks and improved external market access, policy credibility, and exchange-rate stability. However, banks still face challenges from high inflation (though declining), slowing economic growth, domestic political volatility, and various macroprudential regulations.
Ziraat and Vakifbank’s ratings reflect their strong domestic franchises and diversified business profiles, though they maintain below-sector-average core capitalization and higher risk profiles. TSKB’s standalone credit profile aligns with Turkish operating environment risks, given its niche policy role, consistent performance, and adequate capitalization, balanced by a highly dollarized balance sheet.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
