Hayri Kozanoğlu
Financial Stability Reports are published twice a year in May and November by the TCMB. Although they have a tone that ends up defending Mehmet Şimşek’s austerity programme they also contain important information and data for those of us interested in the subject. Looking at the November 2025 report from this angle 10 key points emerge following its structure of “household developments, real sector developments, financial sector”.
HOUSEHOLD DEVELOPMENTS
1) The analysis in the report covers up to September 2025. As of the end of September 2025 consumer price inflation was 33.29 percent. In contrast household debt, in other words our debts as individuals rose by 46.9 percent. The rise in their financial assets reached 44.5 percent. So debtors’ debts and savers’ investments increased in real terms. Our debtors became more indebted and our asset holders became richer.
2) Because a monthly 2 percent cap was introduced for personal loans people turned to individual credit cards and the share of this item within financial debt has approached 50 percent. It is stated that “the upward trend in per capita credit card debt that started in 2022 continues”. Because before the 2023 elections interest rates were forcibly cut and not spending through borrowing began to seem almost foolish. People who became dependent on debt during that period could not free themselves from this habit. The attempt to cover the gap caused by the fall in real incomes also drove card spending.
3) Within financial assets KKM fell from 1,114 billion TL in September 2024 to 274 billion TL in September 2025. Leaving aside the share portfolio which rose by 28.4 percent all other asset items jumped by 50 percent or more. The most striking development is that investment funds increased by 2.6 trillion TL in one year becoming the second savings vehicle after TL deposits. The total of foreign currency deposits and gold-weighted precious metal assets stands at 68 + 59 = 127 billion dollars. Foreign currency funds also rose from 47 billion dollars at the end of 2024 to 75 billion dollars. So individuals effectively hold more than 200 billion dollars in foreign-currency assets roughly half of which is gold.
REAL SECTOR
4) While TL loans rose by 34.5 percent in line with inflation the TL equivalent of foreign loans rose by 49 percent. Domestic foreign-currency loans grew from 144.7 billion dollars to 177.3 billion dollars and foreign loans increased from 97.4 billion dollars to 113.2 billion dollars. Thus thanks to the economic programme that kept the lira’s loss against foreign currencies below inflation big companies met their funding needs in foreign currency and pushed their foreign-currency debt 48.4 billion dollars higher.
5) In contrast real-sector companies chose to keep their assets in TL deposits attracted by high interest and TL commercial deposits rose by 2 trillion TL or 64.3 percent. The rise in foreign-currency deposits was limited to 13.6 billion dollars or 47.4 percent in TL terms. Again under the influence of high interest the real sector revived a 1990s-style reflex of making money from money and a surge of 152.4 percent was seen in government bonds and 90.6 percent in fund accounts.
6) An examination of the financial statements of firms listed on Borsa İstanbul shows that high interest rates have negatively affected profitability. The ratio of EBITDA to assets was around 11.5 percent in the long run but fell to 8.7 percent in the first quarter of 2025 and recovered to 10.6 percent in the second. The ratio of EBITDA to net sales which followed a long-term trend of 11.9 percent fell to 10 percent and 11 percent in the first two quarters. Net profit saw a steeper drop. The ratio of net profit to assets whose long-term average is 5.2 percent was 1 percent and 1.5 percent in the first two quarters.
FINANCIAL SECTOR
7) Bank loans are rising mainly on the back of personal loans and credit cards. Loan expansion in public banks is faster than in private banks. Excluding credit cards total loan growth fell to 25 percent in the third quarter. Commercial loan growth has stabilised at around 12 percent. In contrast personal loans and credit cards reached growth rates of 43 percent and 53 percent. Limiting instalments on overdraft accounts to three months for spending except education and health drives people towards personal loans. In commercial loans raising the SME definition from 500 million TL to 1 million TL and exempting these loans from the monthly growth cap leads to an acceleration that diverges from large-firm loan use.
8) “Large-scale firms are positively differentiated due to strong liquidity and strong profit margins linked to their pricing power and the NPL ratio stands at 1.2 percent.” This shows that large firms can easily raise prices in an inflationary environment and that business is running smoothly for them. In contrast the NPL ratio in SMEs has risen to 3 percent. In personal loans NPL ratios have reached 4.9 percent in personal loans and 4.2 percent in credit cards. If a broad restructuring operation had not taken place for credit cards in July these ratios would have climbed even higher. Numerically the NPL balance in the third quarter rose to 294 billion TL for commercial loans and 107 billion TL for personal loans.
9) Bank profitability continues to increase. As of the third quarter of 2024 return on assets stood at 23.2 percent and 2 percent and in the third quarter of 2025 these rose to 27.6 percent and 2.3 percent. While net interest income remained stable at 3.9 points banks have raised net fees commissions and service income from around 1 point to 2.4 points in the medium term. Credit-card-related transactions lead here followed by remittances and insurance credit fees commissions and tax fees commissions. Again various charges and commissions taken from individuals make a significant contribution to bank profitability.
GENERAL ASSESSMENT
10) In short the banking sector is doing well. While profitability rises risks remain manageable. Big firms also have no difficulty paying their debts as they can raise prices easily in an inflationary environment and because the economic programme keeps the TL cost of foreign-currency borrowing low. Problems are emerging among SMEs which are negatively affected by high TL interest and cannot raise prices like big firms due to intense competition in their sectors. In personal loans and credit cards where banks apply the highest interest and earn the most income problems of non-payment are growing as people have to apply more because their wages fall short.
Note: This article is translated from the original article titled Bankalarda kâr kaynağı bireyler, published in BirGün newspaper on December 2, 2025.
