Overview and the way forward
In 2017, private financial institutions sold TRY 8.6 billion NPLs, in terms of unpaid principal balance (UPB), to AMCs, the highest number since the inception year of 2008
We expect annual total NPL sales volume of TRY 9.2-13.7 billion between 2018 and 2020 according to our macro-base scenario
Gross loan volume is expected to reach the range of TRY 3.4-3.7 trillion in 2020 from TRY 2.3 trillion in 2017, according to our three macroeconomic scenarios
Resulting NPL ratio out of gross loan volume, is expected to increase from 3.0% in 2017 to 3.1%-3.5% in 2020, according to our three macroeconomic scenarios
Yearly net NPL inflows (TRY billion, 2008-20)
NPL sales forecasts (TRY billion, 2008-20)
In summary, we expect the credits and NPL to grow in line with the GDP estimates of the country (similar to prior years), which would yield regular NPL sales by private banks and financial institutions. Hence, we foresee attractive opportunities for AMCs in the Turkish NPL purchasing market.