IMF Sees Stability as Banking Risks Move Across Türkiye

Easing on the surface, pressure underneath

The latest banking sector report points to a gradual easing of financial conditions as Türkiye moves into 2026. This broadly aligns with recent assessments by the International Monetary Fund, which note improving headline stability. Read closely, however, the domestic picture suggests something more nuanced. Pressure is not fading. It is shifting.

Credit growth is picking up, but not where long-term resilience is built. The report shows momentum concentrating in consumer lending, credit cards and overdraft facilities rather than in investment-led credit. These segments help revenues in the short run. They are also the first to absorb stress when inflation lingers or household incomes tighten. The recovery therefore looks smoother on the surface than it does underneath.

This gap between calm indicators and underlying durability reflects a broader point we examined earlier: stability should not be confused with policy endurance. Headline order can persist even as structural pressures accumulate, particularly when adjustment relies on temporary measures rather than lasting reform.

Where the strain begins to show

The most delicate signals sit in retail credit. Credit cards and consumer loans are expanding faster than inflation, even as early signs of asset quality pressure re-emerge in cards and SME portfolios. Regulatory adjustments introduced in mid-2025 helped contain headline non-performing loan ratios, but the report is explicit that this effect is temporary.

As those buffers unwind, pressure is expected to surface gradually in 2026 through a higher cost of risk. This is not the kind of stress that arrives suddenly. It builds quarter by quarter, often unnoticed until margins and capital begin to feel it.

A shift away from currency risk, not toward confidence

At first glance, the stabilisation of dollarisation around 40 percent appears reassuring. A closer look points elsewhere. The most pronounced shift has been toward gold.

Precious metal deposits now account for a markedly larger share of foreign currency holdings, while estimates of household gold kept outside the banking system remain substantial. This is not a return of confidence in the lira. It is a hedging instinct. Households are not rotating decisively back into domestic assets. They are stepping away from exposure altogether.

Strength that depends on timing

Capital adequacy ratios remain comfortable, supported in part by regulatory forbearance introduced to cushion exchange rate volatility. That support, however, is time bound. The report notes that these measures are set to expire in early 2026.

Once they do, capital ratios are expected to adjust downward, particularly in banks with higher risk-weighted assets. The system is not undercapitalised, but timing matters. More subordinated debt issuance is likely, adding funding costs just as interest margins begin to normalise.

Where things stand

Stability has held, but largely because pressure has been managed rather than resolved. Credit growth is drifting toward areas that allow quick expansion, while savings behaviour continues to reflect caution rather than renewed confidence in domestic assets.

As regulatory support tapers in 2026, strain is likely to surface unevenly across margins, asset quality and funding costs. The issue is not whether pressure appears, but whether it can be absorbed without extending temporary fixes yet again.