The BRSA announced that it has extended the previous measures to support banks during the epidemic until the end of June 2021. According to the statement made on the BRSA website, extended mitigation measures include credit risk calculation, securities valuation, bad credit classifications, and clauses for factoring and leasing firms.
According to this;
· In the calculation of the amount subject to credit risk in measuring capital adequacy, the average of the Central Bank's buying rate for the last 252 days can be taken as the exchange rate.
· The application, which increased the tracking period of loans from 90 days to 180 days, was extended until June. In addition to consumer loans, the regulation covers vehicle, housing and consumer loans and all commercial loans.
· Despite the 90-day delay for non-performing loans to be classified as 180 days, and the 90-day delay, the provisions to be set aside for loans, which continue to be classified in the Group 2, will continue to be allocated according to the banks' own risk models used in calculating the expected credit loss under TFRS 9.
· It will continue to be implemented as 90 days for the loans followed in the Group 1 and the provisions to be set aside for the loans that continue to be classified in the Group 1 despite the 30-day delay, will continue to be allocated according to the banks' own risk models used in the calculation of expected credit losses within the scope of TFRS 9.
· BRSA decided not to apply the obligation to dispose of commodities and real estates within 3 years from the date of acquisition.
· The practice of defining a grace period by not demanding the receivables of banks, including the minimum amount, during the period when they postpone their card debts, will continue until 30 June 2021.
· The BRSA also canceled previous regulations that delayed the execution of some foreign exchange and gold transactions by one day, according to a separate statement.
Prior to; Let's talk about removing the value date application in foreign exchange and gold transactions. The T + 1 rule, which was previously introduced, which was applied to real persons to purchase foreign currency and gold above 100K USD, was removed. Before that, for foreign currency and gold purchases of more than 100K USD, money could be transferred to the relevant account one day later, not the same day. With the removal of this application, the money in the foreign exchange transactions will be transferred to the relevant account on the same day. In the old practice, it was aimed to restrict real persons' purchases of large amounts of foreign currency and gold. We consider it a positive normalization step in terms of liberalization of the foreign exchange market.
The BRSA extends tracking period of loans from 90 days to 180 days for NPLs of banks. Banks now have to manage a highly problematic debt. Individuals and companies that have gone through a difficult process due to Covid-19 are experiencing difficulties due to factors such as decreasing income, collection problems, decreasing demand in the economy, and they have difficulty in paying their bank debts. Increasing the tracking time of loans currently maintains a steady trend in non-performing loans and group 2 loans, and these loans are still managed in bank balance sheets. High loan growth was encouraged in the 3Q20 period, when economic activity accelerated. In addition to the low interest rates, factors such as the asset ratio and the required reserve return criteria were also effective in this. This situation caused a high level of provision expense, especially due to the increasing provision ratios and free provision amounts in the 3Q20 financials of commercial banks.
NPLs pose a problem for the sector, but the effect of increasing interest rates and normalization of regulations for banks during the current financial tightening period relieves banks a little and strengthens their hands to make their own risk assessments. Banks will continue to manage NPLs in their balance sheets as well as try to collect them. The fact that bad receivables continue to float on the balance sheets also reveals the situation of keeping zombie companies alive.
