Turkey caps bank dividends at 15% after record profit year
Turkey’s banking regulator decided to allow commercial lenders to pay as much as 15% of their record 2023 net income as cash dividends, according to people with knowledge of the matter.
The regulator, known by its Turkish initials BDDK, set the cap after banks submitted their requests for 2023 profit distribution, the people said, asking not to be identified because discussions are private.
The regulator declined to comment.
The banking index rose as much as 2.1% to 9,911.3 points in Istanbul, taking its two-day gain to 7.3%. Yapi Kredi climbed 3% while Isbank was up 1.8%.
“Whether banks will be able to distribute dividends is a subject of debate every year,” said Yusuf Kavak, head of research at Istanbul-based brokerage Alnus Yatirim. “So, this news is a positive development.”
The decision marks the second year in a row BDDK authorized lenders to distribute up to 15% of their distributable net income to shareholders after several years when lenders were forced to use profits to boost their capital.
The decision was aided by the fact that Turkish banks’ net income rose to a record 620.5 billion liras ($19.4 billion) in 2023, although the annual increase of 44% was below the average inflation rate of 53.9% for the whole year.
The rise in profits slowed down last year after the central bank’s return to more orthodox policies and the jump in its policy rate from 8.5% to 42.5%. The policy pivot took place after May elections, where President Recep Tayyip Erdogan got reelected.
