Financial Confidence Drops in Banking, Rises in Insurance

In July 2025, the Financial Services Confidence Index (FHGE) fell sharply by 9.2 points, landing at 162.0, according to the Central Bank of the Republic of Turkey (CBRT). The index, based on responses from 147 financial institutions, highlights a decline in sector confidence, primarily driven by weakening perceptions of business conditions and demand for services in the past three months.

Despite the downturn, there was a slight uptick in expectations for future service demand, suggesting some cautious optimism ahead.

Employment Outlook Strengthens, Profit Expectations Weaken

The data paints a mixed picture for employment. While fewer firms reported recent hiring growth, expectations for employment increases in the coming quarter improved. On the profitability front, both current and future profit expectations have weakened compared to the previous month. This signals a more cautious stance among companies regarding financial sustainability.

Diverging Trends in Financial Sub-Sectors

A closer look at FHGE sub-indices, categorized by the NACE Rev.2 sector classification, reveals contrasting trends across financial services:

• The “64 – Financial Services (excluding insurance and pension funds)” category saw a steep decline of 10.2 points.

• In contrast, “65 – Insurance, Reinsurance, and Pension Funds” reported a modest rise of 1.0 point.

• The “66 – Auxiliary Activities for Financial and Insurance Services” segment showed the strongest increase, up 12.5 points.

This divergence reflects how banking and core financial services are currently under pressure, while insurance and support sectors show resilience.