Turkish Isbank expects interest rate cuts in Nov.

Turkey’s largest private bank, Isbank foresees continued challenges in the banking sector until 2025 in the wake of the ongoing economic recovery. CEO Hakan Aran anticipates a decrease in interest rates by the central bank starting in November.

Isbank has outlined ambitious plans to expand its footprint in payment system infrastructure, digital platforms, and service banking. The bank aims to forge new partnerships and acquisitions abroad.

While Isbank marks its 100th anniversary, the Turkish government is prioritising tackling high inflation with tight monetary policies, impacting financial sector balance sheets.

“I think difficulties will also continue throughout 2025. We all will continue to pay the price for the sake of ensuring price stability and lowering inflation,” Aran said in the interview at Isbank’s Istanbul headquarters.

Despite these challenges, Aran expressed optimism about the future of the banking sector. He predicted a gradual reduction in interest rates, starting with a 250 basis-point cut in November. By the end of 2025, he foresees the policy rate decreasing to 25 per cent.

Aran also shared his outlook on inflation, predicting a decline to around 42 per cent by the end of 2024 and 20 per cent the following year. He emphasised the importance of household price expectations converging with the central bank’s lower targets in 2025.

The CEO highlighted the central bank’s commitment to maintaining a tight monetary policy stance unless extraordinary risks or a resurgence of dollarisation emerge. He anticipated the Turkish Lira to weaken to 38 against the dollar by the end of 2024.

Aran concluded by emphasising the bank’s strategic shift towards a more diversified revenue stream, with a goal of increasing the contribution of new platforms to 50 per cent within the next five years.

Attribution: Reuters

Subediting: Y.Yasser