Fitch Upgrades Ratings of Major Turkish Banks Amid Stronger Operating Climate and Rising FX Reserves

In a move signaling renewed confidence in Turkey’s financial landscape, Fitch Ratings has upgraded the foreign-currency issuer default ratings (IDRs) of several central banks in Turkey. The decision follows notable improvements in the country’s operating environment, accompanied by a continued recovery in foreign exchange reserves, two factors Fitch identifies as central to the sector’s stabilization.

The international rating agency revised the long-term foreign-currency IDRs of seven banks, including leading public lenders Ziraat Bankası and VakıfBank, as well as Türkiye Sınai Kalkınma Bankası (TSKB). In addition, Fitch raised the Government Support Ratings (GSRs) of three of Turkey’s largest private banks, signaling a stronger perception of state capacity to support the financial system.

Central State Banks Receive Upgrades from B+ to BB-

Fitch announced that Ziraat Bankası, VakıfBank, and TSKB each received a one-notch upgrade, lifting their foreign-currency IDRs from “B+” to “BB-”. According to the agency, this upward revision reflects a reduction in external vulnerabilities for the Turkish economy and a more predictable macroeconomic and financial environment.

These upgrades extend beyond the most prominent institutions. Public and participation banks also benefited from Fitch’s positive assessment.
Among the upgraded are:

• Halkbank – from B+ to BB-

• Emlak Katılım Bankası – from B+ to BB-

• Vakıf Katılım Bankası – from B+ to BB-

Meanwhile, Arap Türk Bankası saw its rating rise from “B” to “B+”, reflecting an improved external funding outlook and enhanced resilience.

Fitch confirmed that all banks receiving upgrades continue to carry a “stable” outlook, indicating no immediate expectation of further rating adjustments—either upward or downward—in the near term.

Government Support Ratings See Broad-Based Improvement

In addition to IDRs, Fitch also enhanced the Government Support Ratings of several banks, which measure the likelihood of state intervention in the event of severe financial stress.

The agency upgraded the GSRs of three public institutions:

• Ziraat Bankası – from “b+” to “bb-”

• VakıfBank – from “b+” to “bb-”

• TSKB – from “b+” to “bb-”

These upgrades indicate Fitch’s view that the Turkish state’s ability and willingness to support these institutions has strengthened, particularly as the economic environment has become more predictable and fiscal dynamics more manageable.

Prominent private banks also saw their state-support indicators improve:

• Türkiye İş Bankası – from “b-” to “b”

• Akbank – from “b-” to “b”

• Yapı Kredi – from “b-” to “b”

Fitch noted that these adjustments reflect reduced external pressures, stronger foreign-exchange reserve buffers, and growing policy coherence, all of which enhance the overall resilience of the banking sector.

Why Fitch Raised the Ratings: A Clear Improvement in Key Indicators

Fitch pointed to two main drivers behind the upgrades:
1. A Better Operating Environment:
Turkey’s economic conditions have shown signs of recovery, with tighter monetary policies, improved macroeconomic coordination, and more predictable decision-making contributing to a more stable foundation for banks.

2. Rebuilding of Foreign Exchange Reserves:
The rating agency emphasized the significance of Turkey’s increasing FX reserves, which ease liquidity pressures, improve external buffers, and strengthen the overall financial safety net.

According to Fitch, these developments reduce the probability of extreme stress scenarios for banks and support a more constructive medium-term outlook for financial institutions operating in Turkey.

A Boost for Market Confidence

These upgrades come at a time when global investors have closely monitored Turkey’s policy environment and financial-market trajectory. Fitch’s decision is likely to bolster confidence across international markets, facilitating improved funding conditions, greater investor interest, and potentially lower external borrowing costs for Turkish banks.

With the operating environment trending positively and FX reserves continuing to recover, Fitch’s updates suggest growing optimism that Turkey’s financial sector could stabilize further—provided current macroeconomic policies remain consistent.