{"id":82498,"date":"2023-11-09T08:00:52","date_gmt":"2023-11-09T13:00:52","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/turkeys-banks-plan-to-seek-inflation-adjusted-accounting-sources\/"},"modified":"2023-11-09T08:00:55","modified_gmt":"2023-11-09T13:00:55","slug":"turkeys-banks-plan-to-seek-inflation-adjusted-accounting-sources","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=82498","title":{"rendered":"Turkey’s banks plan to seek inflation-adjusted accounting -sources"},"content":{"rendered":"
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\u00a9 Reuters. People stroll in a middle-class shopping area in Istanbul, Turkey July 5, 2023. REUTERS\/Dilara Senkaya\/File photo<\/span>
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By Ebru Tuncay<\/p>\n

ISTANBUL (Reuters) – Turkish banks plan to urge Treasury authorities to allow them to use inflation-adjusted accounting, rather than exempting them and ramping up taxes for the sector as the government currently plans, three senior bankers told Reuters.<\/p>\n

Last week, Finance Minister Mehmet Simsek said Turkey would move to the inflation-adjusted accounting method for companies, but that financial institutions may be excluded. <\/p>\n

Adjusting for inflation would shield firms from higher taxes and give a more realistic picture of performance, given annual inflation has risen above 61%. The banking sector, whose assets totalled 21 trillion lira ($737 billion) in September, wants to enjoy that benefit just like private-sector companies.<\/p>\n

“Banks want to implement inflation accounting and a meeting with the Treasury is being considered in order to raise this request,” said a senior banker, who requested anonymity.<\/p>\n

Part of the reason was that banks did not want high inflation to give the appearance of outsized profits at a time when the country remains gripped by a cost-of-living crisis, the banker said.<\/p>\n

The Banks Association of Turkey (TBB) declined to comment on the issue.<\/p>\n

Turkish companies’ end-2023 balance sheets would be inflation-adjusted, with the practice expected to continue until 2026 due to current inflation forecasts, the Treasury told Reuters in October. <\/p>\n

RISING PRICES<\/p>\n

Inflation soared above 85% last year following an aggressive rate-cutting cycle that sparked a currency crash in late 2021. Inflation subsequently declined but rose again in recent months and stood at 61.4% in October. <\/p>\n

Banks’ profits are expected to fall by more than half after inflation-adjusted accounting, and some banks may post losses, another banker said.<\/p>\n

“Banks want to have real, inflation-adjusted profits and want to implement the practice in their balance sheets,” he added. <\/p>\n

The annual increase in Turkish banks’ profits slowed to around 50% in the first nine months of 2023, following a surge of 366% last year.<\/p>\n

Since May elections, the government has raised several tax rates, including banks’ and financial institutions’ corporate tax to 30% from 25%, to fund the recovery from major earthquakes that struck the country in February. <\/p>\n

Another senior banker said that the reason for banks being excluded from the inflation-adjusted accounting practice was the government’s need of the tax revenues they generate.<\/p>\n

($1 = 28.5090 liras) <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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