Financial Services Confidence Index Drops in July Amid Weakening Demand

The Financial Services Confidence Index (FHGE) recorded a notable decline in July 2025, falling 9.2 points from the previous month to 162.0, according to data released by the Central Bank of the Republic of Turkey (CBRT).

The central bank attributed the drop to deteriorating perceptions of business conditions and service demand over the past three months. While expectations for future demand showed mild improvement, they were not strong enough to counteract the prevailing downward trend.

According to the CBRT’s statement:

“Assessments of the business environment and service demand indicate a weakening in positive sentiment compared to the previous month. Optimism regarding improved conditions and rising demand in the past three months has diminished. However, expectations for increased service demand over the next quarter have strengthened slightly.”

In terms of employment, the outlook was mixed. While the number of firms reporting an increase in employment over the past three months decreased, expectations of hiring in the upcoming quarter have become more optimistic.

The evaluation of profitability showed a similar pattern. Fewer firms reported improved profitability in the past quarter, and expectations of higher profits in the next quarter also declined compared to the previous period.

On a sectoral basis, using NACE Rev.2 classification, the index highlighted varying trends:

• “64 – Financial Service Activities” (excluding insurance and pension funds) saw a drop of 10.2 points

• “65 – Insurance, Reinsurance, and Pension Funds” (excluding mandatory social security) rose 1.0 point

• “66 – Auxiliary Activities for Financial and Insurance Services” surged by 12.5 points

This divergence underscores shifting confidence levels across financial subsectors, with support services showing resilience, while core financial service activities face increased uncertainty.