Consumer Credit & Financial Health

Key findings reveal concerning trends in the Turkish consumer credit market as of July 2024. Nonperforming loans remain at around 2%, equivalent to approximately 2 billion USD out of 100 billion USD worth of retail loans. Alarmingly, nearly 4 million customers are currently undergoing legal procedures, constituting about 10% of the household base. Of particular concern is the significant rise in first-time loan users, especially those opting for Overdraft loans with very high interest rates like 5% monthly rate, reaching 80% apr levels.

Recent data from April and May of 2024 highlights a notable increase in the number of first-time credit card users from 146 thousand to 192 thousand. More strikingly, the number of overdraft users surged from 133 thousand to 226 thousand, signaling a substantial 100K increase in a single month. Additionally, consumer installment loans saw an uptick from 91K to 105K. The choice of Overdraft loans, with high associated costs reaching 80% apr levels, may indicate financial challenges faced by many households in Turkey.

These figures necessitate close monitoring in the upcoming months, especially with no increase in minimum wages and a change in house rental regulations, allowing landlords to adjust prices according to inflation readings.