|Bid||35.300 x 0|
|Ask||35.350 x 0|
|Day's Range||35.100 - 36.000|
|52 Week Range||32.100 - 62.300|
|Beta (5Y Monthly)||0.49|
|PE Ratio (TTM)||15.11|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Feb 27, 2020|
|1y Target Est||10.07|
(Bloomberg) -- Turkey moved to slow lending to businesses in an attempt to stabilize the lira.The banking regulator, known as BDDK, said Monday that its asset ratio formula, which compels banks to extend more loans, will be reduced by 5 percentage points to 95% for commercial lenders, and to 75% for Islamic lenders. The regulator also fine-tuned some rules for calculating the ratio and allowed banks to use average levels of the foreign exchange rate for the previous month.Turkey is unwinding policies designed to shield the economy from the coronavirus pandemic that had unleashed a credit boom. The latest decision follows upheaval in financial markets last week that sent the lira to a record low against the dollar. The sell-off is showing little sign of letting up, with the Turkish currency suffering the second-biggest fall in emerging markets on Monday.The asset ratio was introduced earlier this year to push financial institutions to step up lending, purchase government bonds and engage in swap transactions with the central bank. Commercial lenders asked the regulator to ease the rule at a meeting last week after days of lira weakness.‘Relatively Small’The size of the change is “relatively small” but it will help banks that were slightly below the asset ratio limit, according to Evren Kirikoglu, an independent market strategist in Istanbul. Even if the change isn’t large, the move is striking as it signals a “return to normalcy,” he said.Banks have already started to raise rates on loans and deposits, reduced maturities on mortgage loans and canceled a grace period for second-hand homes. The central bank’s data show loan growth over the past 13 weeks slowed to around 35% after peaking at 50% in May, the fastest since at least 2008.Turkey’s currency was trading 0.5% weaker at 7.3128 per dollar at 3:38 p.m. in Istanbul, after falling to a record 7.4084 earlier on Monday. The benchmark Borsa Istanbul 100 Index fell as much as 2% before erasing losses to trade 0.7% higher.“No cocktail of these banking system tinkering or partial capital control measures is capable of turning the lira trend around,” Commerzbank AG economist Tatha Ghose said in a report. “The underlying weakness arises out of an inconsistent monetary policy framework, featuring no inflation targeting -- and this will continue to build up stress in the background until it ultimately forces fundamental change.”Bank FinesThe regulator slapped fines totaling 200.6 million liras ($27.4 million) on two lenders -- HSBC Holding Plc’s Turkey unit and Islamic lender Albaraka Turk Katilim Bankasi AS -- for breaching the rule in July, when the minimum asset ratio was at 100% for regular lenders and 80% for Islamic banks.A spokesperson for HSBC’s local unit declined to comment when asked if the eased requirements would have any impact on the fine.An Albaraka Turk executive -- who asked not to be named, in line with policy -- said the lender had already adjusted its books to comply with the rule after the fine and will now hold talks with the regulator to see if the adjustment has any impact on the penalty. The new 75% ratio threshold is an achievable level for Islamic lenders, the executive said.(Updates with information on fined banks for missing the ratio in final three paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The Bank of England risks being in a category of one. On Thursday, in its quarterly monetary policy report, it presented a surprisingly chipper assessment of how it expects the U.K. to recover from the pandemic lockdown.Its relative optimism was in jarring contrast to the gloom that’s engulfed Britain’s big lending banks. BOE Governor Andrew Bailey has had a decent crisis up until now, but he’ll dent his credibility if he’s seen as being too much of a cheerleader.Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Natwest Group Plc presented an unremittingly pessimistic outlook for the U.K. with their earnings results over the past couple of weeks. Collectively, the big lenders have taken 17.2 billion pounds ($23 billion) of cumulative writedowns this year, mostly in anticipation of future loan losses caused by the Covid lockdowns and the subsequent economic damage.By contrast, the BOE’s recovery scenario looks positively heroic, with an expectation that Gross Domestic Product will grow by a whopping 18% in the third quarter. The central bank also expects overall U.K. loan losses this year to be somewhat less than the 80 billion pounds it anticipated in May.This divergence of economic views between Bailey’s team and Britain’s top bankers is unusual. A central bank typically tries to provide balanced economic forecasts, finding a mid-point between the worst and best possible outcomes. But most of the risk in this one appears to be on the downside, something the governor acknowledged on Thursday.The biggest leap of faith is the BOE’s year-end unemployment forecast of 7.5%. That is nearly double its pre-Covid level, but NatWest expects an increase to 9.2%-9.8%, with a worst-case estimate of 14.4%. High unemployment is a very serious problem for Britain’s banks, who are heavily exposed to consumer and mortgage lending.You can see why Bailey would want to make the banks feel less despondent. The BOE needs them to lend, as that is its main transmission mechanism for getting money into the real economy. The banks have funds available but that doesn’t make them willing lenders when they fear the specter of bad loans, a phenomenon the European Central Bank has long struggled with. The sensible thing would be further enticements to get banks to use the BOE’s super-cheap borrowing pot — the so-called term funding scheme. Lenders can use this tool to get loans from the central bank, which they can in turn lend to small and medium-sized businesses. Bailey could make this more widely available or even make the loans essentially free to the banks.At the moment, the banking sector is hearing mixed messages from different parts of the BOE. The monetary policy committee may well be saying now that loan losses will be less severe than forecast in May, but the central bank is also the regulatory supervisor for the industry and lenders are fearful about getting into trouble by eating into their capital buffers.In fairness to Bailey, it’s natural that the commercial banks will be as conservative as possible in their assumptions, given that they can’t be blamed for the pandemic. But it still feels odd that these two parts of the City are singing such different tunes. The BOE has often acted in lockstep with the U.K. government, via the Treasury, in its response to the crisis. It’s troubling that it’s so out of sync with the bankers.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
HSBC cut its bonus pool by US$600 million in the first half of the year as chief executive Noel Quinn slashed costs as part of a massive restructuring of the lender and as the bank prepared for a potential surge in bad loans due to the coronavirus pandemic.Overall, HSBC's operating expenses declined by 4 per cent in the first half of the year as it reduced the bonus pool as well as discretionary spending, such as travel and marketing. Executives, however, cautioned some of those cost reductions - and the outsize performance of its trading businesses - may not be repeated later in the year."In the second half of this year, on the profitability side, we don't expect global markets to repeat their first-half performance of just over $4 billion [in revenue]," Ewen Stevenson, the bank's chief financial officer, said during the bank's first-half results presentation this week. "They made $2.6 billion in the second half of last year, and also we've got the UK bank levy [in the second half of the year]."HSBC declined to comment on the bonus pool cut on Thursday.To be sure, bonuses are not traditionally paid until after the year ends, and the amount of the bonus pool could fluctuate over the course of the year.The London-based bank, which generates the bulk of its profit in Asia, warned it may have to set aside as much as US$13 billion in provisions for soured loans this year and reported a 77 per cent drop in its first-half profit as the pandemic forced businesses to shift primarily to working from home and cut travel worldwide.The bonus pool cut comes as HSBC and its banking rivals face a much more challenging operating environment because of historically low interest rates and subdued business activity this year.Bankers and other financial services workers in Hong Kong took pay cuts of as much as 20 per cent and suffered an even heavier hit to their annual bonuses this year as the city navigates a historic economic downturn, with the local economy contracting by 9 per cent in the second quarter, headhunters have said.HSBC also has found its business, which spans from East to West, caught in the middle of rising tensions between the United States and China in recent months over its support for a controversial national security law for Hong Kong, its biggest market.Quinn, who was named permanent CEO in March after taking the job on an interim basis last year, is seeking to eliminate 35,000 jobs and reduce annual expenses by US$4.5 billion over the next three years as part of a reshaping the lender. The bank achieved about US$300 million of those projected cost cuts in the first half of the year as it was forced to temporarily suspend the job cuts, which it resumed in June.As part of the restructuring, HSBC is shifting capital from underperforming businesses in the United States and in Europe to growth markets in Asia and investing in its digital operations. This week, the bank announced it planned to hire up to 3,000 wealth planners in mainland China over the next four years as part of a growth push in the Greater Bay Area.In addition to its efforts to trim costs, HSBC also has faced pressure from its chief regulator in the United Kingdom, the Prudential Regulation Authority, to preserve capital by suspending its dividend this year and curtailing bonuses."The extra headroom should help the banks support the economy through 2020," the banking regulator said in a statement on March 31.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.