Bad Loans Surge 85% as Turkish Banks Break Record in Debt Sales

Turkey’s banking sector is experiencing a historic surge in non-performing loans (NPLs) as tight monetary conditions, high interest rates, and weakened consumer purchasing power strain repayment capacity across the economy. In response, banks have accelerated bad loan sales to asset management firms, marking the largest quarterly volume on record.

According to Ekonomim’s analysis of Public Disclosure Platform (KAP) and Banking Regulation and Supervision Agency (BDDK) data, the total stock of non-performing loans reached ₺489.35 billion by the end of September — an 85.55% increase compared to last year.

Third Quarter Sees All-Time Record in NPL Sales

The third quarter alone witnessed ₺18 billion worth of bad debt sales, the highest quarterly level ever recorded in Turkey’s banking history. This sharp increase reflects lenders’ efforts to clean up balance sheets and manage rising credit risks amid deteriorating repayment conditions in both the corporate and household segments.

Nine-Month Total Exceeds All of 2024

Between January and September 2025, Turkish banks sold nearly ₺43.72 billion worth of delinquent loan portfolios — already surpassing the ₺40.7 billion total for the entire year of 2024.

However, despite these record-breaking sales, the pace of bad loan growth outstripped the pace of sales, meaning the share of sold loans within the total NPL stock has actually declined. This suggests that while banks are offloading bad debts aggressively, new defaults are rising even faster.

Rising Defaults Across Households and Corporates

Economists attribute the spike in defaults to the combination of high borrowing costs and falling real incomes, which have squeezed both households and small businesses. Corporate clients — particularly in retail, textiles, and construction — are finding it increasingly difficult to meet debt obligations as domestic demand slows and financing costs remain prohibitive.

Household NPLs, meanwhile, are growing due to credit card debt and consumer loans, as inflation continues to erode disposable income.

Asset Managers Take the Lead in Debt Recovery

Sezin Ünlüdoğan, General Manager of Gelecek Varlık Yönetimi, one of Turkey’s largest asset management companies, said total bad loan portfolio sales could reach ₺55–60 billion by year-end.

“Banks have adopted more proactive sales strategies, reflecting a long-term shift toward balance sheet discipline,” Ünlüdoğan said. “To date, our company alone has helped nearly 980,000 customers regain financial stability.”

Ünlüdoğan’s remarks underscore the growing importance of asset management firms in managing financial system stress, as banks seek faster and more efficient debt recovery mechanisms.

A System Under Strain but Adapting

The surge in NPLs signals that the impact of Turkey’s tight monetary policy — aimed at curbing inflation — is now being felt acutely in the real sector. While higher interest rates have slowed lending and stabilized the lira, they have also weakened repayment capacity across the board, pushing more loans into delinquency.

Banking analysts caution that while the sector remains well-capitalized, continued NPL growth could pressure profitability and limit new credit expansion, especially if macroeconomic conditions fail to improve in the coming quarters.

Still, the aggressive pace of debt portfolio sales shows that banks are actively managing risk, even as the volume of troubled assets climbs to unprecedented levels.