Banks turn crisis into opportunity

The high interest rates and soaring inflation are making it increasingly difficult for citizens to repay their debts, as their incomes fail to keep pace. As a result, people are sinking deeper into a new debt crisis. Meanwhile, the financial sector continues to profit from this crisis. The era of high interest rates has led to record increases in banks’ earnings from credit and credit card interest.

Banks’ interest income from loans in January reached 382.77 billion lira, compared to 245.57 billion lira in the same period last year. This marks a 55.9% increase in loan interest revenues within a year. Of this income, 14% came from consumer loans, with interest revenue from such loans soaring from 33.1 billion lira to 52.7 billion lira in just one year—a 59% increase in earnings from public debt.

Similarly, banks’ interest revenues from credit card usage saw a dramatic rise. In January 2023, this figure was 22.69 billion lira, jumping to 36.35 billion lira by January 2024 a 60.2% increase. This sharp rise underscores the growing financial burden on millions of credit card users. At the same time, bad loans also saw a significant increase. In January 2024, banks’ interest income from non-performing loans climbed from 2.69 billion lira to 6.54 billion lira, marking a staggering 143.2% increase in just one year.

INTEREST RATE CUT EXPECTED

When Treasury and Finance Minister Mehmet Şimşek took office following the 2023 General Elections, the policy interest rate stood at 8.5%, while inflation was at 38%. With the appointment of Hafize Gaye Erkan as the Central Bank Governor, the new economic management team implemented its first interest rate hike in June 2023, raising the policy rate to 15% as part of the "return to rational policies". This tightening continued in the following months, culminating in a 500 basis point increase before the local elections, bringing the interest rate to 50%. However, in the last two Monetary Policy Committee (PPK) meetings, the Central Bank decided to cut rates.

At today’s PPK meeting, a 250 basis point interest rate cut is expected, influenced by inflation figures that came in below expectations. However, the damage caused by the prolonged high-interest policy will continue to affect citizens in the long run.

Note: This article is translated from the original Turkish version titled Bankalar krizi fırsata çevirdi  published in BirGün newspaper on March 6, 2025.