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Implications of the COVID-19 crisis for the Turkish banking sector

Banks are among the most vital institutions in the financial system of a country’s economy, working to canalise resources into the right areas. The effects of a serious global pandemic such as COVID-19 on banks can be classified into 4 main groups:

4 main effects on banks:

Operational impact:

Like all institutions, banks should prepare emergency/crisis management action plans, carry them out and ensure that employees continue working safely and that the technical infrastructure supports this. They should regularly communicate with all internal and external shareholders. The management of all actions should be coordinated by a crisis management team led by the CEO and which includes expert managers from various functions. 

Credit risk, loss of income and liquidity:

Banks have difficulty collecting loans as the result of decreasing trust as a crisis continues. Also, a decrease to income resulting from reduced transaction volumes is expected. All of this will impact liquidity, the amount of assets with risk, profitability and capital adequacy negatively. Under these circumstances, banks should carry out scenario analyses under various assumptions to manage potential financial impacts that may arise in the future.   

Customer Behaviour Changes:

COVID-19 will change the needs, consumption and behaviour of customers. With declining spending, it is to be expected that alternative distribution channels will be used more actively. Banks should categorise their customers by various criteria, vary their fields of service in accordance with changing customer behaviour and provide special opportunities to their customers.  

Funding structure and cost:

With the impact of the crisis on Turkish and foreign economies, the perception of risk of individual/corporate customers and financial institutions, as well as their investment preferences, will change funding structures and cost. There are actions that banks should take to better manage their balances at this time.

Contact us

Talar Gül

Talar Gül

Financial Services Industry Leader, PwC Turkey

Tel: +90 212 326 6073

Ozan Cığızoğlu

Ozan Cığızoğlu

Strategy Consulting, Director, PwC Turkey

Tel: +90 212 326 6748

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