January 30, 2020 / 1:07 PM / in a month

UPDATE 1-Turkish banking sector NPL ratio at 5.33% at end-2019 -watchdog

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ISTANBUL, Jan 30 (Reuters) - Non-performing loans (NPLs) in Turkey’s banking sector jumped to 5.33% at the end of 2019, the BDDK banking watchdog said on Thursday, from 3.87% a year earlier, despite a regulation that helped write off some loans.

Turkish lira lost some 30% of its value after a currency crisis in 2018 leaving many companies unable to service foreign-currency debt that weighed on lenders’ balance sheets.

In November, the banking watchdog changed loan classification regulations and instructed banks to write off some loans to clean up bad debt following the currency crisis.

Turkish banks recorded a net profit of 49.75 billion lira ($8.40 billion) last year, down 8.1% year on year, the BDDK data also showed.

The government encouraged banks to lend more to spur economic activity as domestic demand started to pick up with interest rates and inflation falling last year but some banks have hesitated to lend and focused on restructuring their portfolio.

Turkey’s economy contracted for three straight quarters from late 2018 but returned to a modest growth in the third quarter of last year.

The banking sector increased its loan portfolio by 11% last year, reaching 2.66 trillion lira, according to BDDK data.

$1 = 5.9208 liras Reporting by Can Sezer and Ceyda Caglayan; Writing by Ezgi Erkoyun; Editing by Ece Toksabay

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