Turkish banks request authorization to distribute dividends

Several large Turkish banks want to distribute dividends to shareholders after posting record profits in 2022, while the country’s banking watchdog BDDK is studying the request, three banking sources familiar with the matter told Reuters.

Every year, the BDDK makes recommendations on the distribution of banks’ profits. In 2021, dividends were up to 10% of the lenders’ net profits and, in previous years, the BDDK made recommendations that profits be added to capital.

In a context in which Turkish inflation reached its highest level in 24 years this year, above 85%, the net profits of lenders soared 408% annually, to 335.9 billion liras in the January-October period, driven by inflation-indexed bond yields.

According to a source, some banks, especially private ones, have asked the BDDK for authorization to distribute benefits, which the agency is evaluating.

Another bank source said the BDDK’s general approach to the sector’s profits is: “Don’t distribute it, add it to capital.”

“However, last year, the BDDK evaluated this issue on a bank-by-bank basis, suggesting profit sharing up to a certain percentage, based on banks’ capital adequacy ratios and other indicators,” the source explained.

The BDDK will announce the banks’ January-November profit data today, however, it did not respond to requests for comment.