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Non-Performing Loans Rise Faster Than Credit Growth in Türkiye, Says Economist Şenol Babuşcu

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Türkiye is facing a concerning surge in non-performing loans (NPLs) across both consumer and commercial credit segments, outpacing overall credit growth in the first five months of 2025, according to Professor Şenol Babuşcu.

Evaluating the latest Banking Regulation and Supervision Agency (BDDK) data, Babuşcu warned that the credit default trend is accelerating, posing risks for financial stability and household indebtedness.

“The amount of overdue loans is rising faster than total credit growth. That’s why the default ratio continues to climb,” Babuşcu stated on social media.

Consumer Credit Defaults See Sharp Increases

From January to May 9, individual credit card debt rose by 15.2%, reaching ₺2.07 trillion. However, delinquent card debt skyrocketed by 56.5%, totaling ₺84 billion. This pushed the credit card NPL ratio to 4.07%, the highest in recent years.

Personal loans (ihtiyaç kredileri) also saw troubling signs:

  • Outstanding balance: +14.4%

  • Non-performing personal loans: +44.9%, reaching ₺81 billion

  • Default rate: 4.98%

Broader Consumer Lending Follows Similar Pattern

When including mortgage and auto loans, the overall consumer loan portfolio grew by 12.3%, while delinquent loans surged by 44.3%, hitting ₺82 billion. This brought the sector’s overall default ratio to 3.64%.

Commercial Loans Also Under Pressure

Commercial lending grew 16.5%, but non-performing commercial credit jumped 28.5%, reaching ₺227 billion. The default rate in this segment now stands at 1.61%.

System-Wide Risk Growing

As of early May 2025:

  • Total loan volume: ₺16.5 trillion, +15.8% year-to-date

  • Total delinquent credit: ₺394 billion, up 36.9%

“The rise in defaulting credit exceeds overall loan expansion. This divergence is deepening risk in the banking sector,” Babuşcu concluded.

His remarks come amid rising inflation, tighter monetary policy, and increasing household debt stress, suggesting that financial institutions may need to tighten risk controls as the year progresses.

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