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Türkiye’s Ziraat Bank expects the central bank to continue gradually lowering interest rates in 2026 as disinflation gathers pace, with the policy rate projected to fall below 30% by year-end, according to CEO Alpaslan Cakar.
Cakar said the policymakers are likely to maintain their current focus on disinflation, guided by data and implemented on a meeting-by-meeting basis. "We foresee a cautious easing path in line with the lasting improvement in the underlying inflation trend," he noted.
Cakar added that despite the expected rate cuts, real returns on Turkish lira (TL)-denominated assets would likely remain positive, reinforcing the recent shift toward TL deposits, which he anticipates will strengthen further in 2026.
Starting the year at 48.5%, the Central Bank of the Republic of Türkiye (CBRT) ended 2025 with a policy rate of 38%, having delivered 800 basis points of cuts over the final four meetings, as inflation also dropped from 44.38% to around 31% as of November.
Reviewing the performance of 2025, Cakar described the year as one of high uncertainty but also resilient growth. The banking sector, he said, successfully adapted to tight monetary conditions through selective lending, controlled balance sheet expansion, and effective risk management.
Macroprudential measures introduced alongside the CBRT’s tight policy shaped the flow of liquidity and credit, with banks responding by prioritizing balance sheet health. “The sector maintained operational continuity, ensured uninterrupted access to credit, and aligned with the goals of the economic program,” Cakar said.
The banking industry ended the year with an average return on equity of about 27% and a return on assets near 2.5%, while Cakar noted that external financing through Türkiye’s banking sector approached $200 billion in 2025.
Cakar said Türkiye’s economy entered 2026 with stronger fundamentals, including a diversified export structure, improved reserves, better fiscal discipline, and a lower current account deficit. These factors, he noted, support macroeconomic stability and increase investor appetite for Türkiye.
"The opportunities offered by macroeconomic stability, falling borrowing costs, and shifting global capital flows are now more visible," he said. He added that the economy’s resilience would likely lead to more tangible improvements in the financial lives of both households and businesses.
He projected that sector-wide credit growth in 2026 will range between 25% and 30%, while deposit growth is expected to fall between 20% and 25%.
He also said the banking industry is entering the year well-capitalized and positioned to manage potential shocks. "We expect macroeconomic indicators to improve further, and the operating environment to become more predictable," he said.
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