S&P Global Ratings classified Turkey's Banking Industry Country Risk Assessment (BICRA) in 'Group 9', and its economic and industry risk scores at '8' and '9', respectively. The BICRA framework evaluates global banking systems based on economic and industry risks facing the banking sector, with 'Group 10' including the riskiest banking sectors. Other countries in BICRA's 'Group 9' include Azerbaijan, Cambodia, Kenya, Tunisia, Uzbekistan, Vietnam, Egypt and Mongolia. The agency indicated that Turkey's economic risk score reflects its "very high risks" in economic imbalances and credit risks in the economy, as well as its "high risk" in economic resilience. It said that the economic risk assessment reflects the country's volatile economic growth, institutional challenges, wide current account deficits, and high external financing needs. It noted that the banks' very high credit risk is due to the rapid growth in lending and to the high share of lending in foreign currency, which reached about 40% of total loans following the depreciation of the Turkish lira. It added that the trend for economic risk is 'negative' as it anticipated Turkey's economy to contract by 0.5% in 2019 amid persistent high inflation, heightened political and geopolitical tensions, as well as wide current account deficits. In parallel, S&P indicated that the industry score reflects the country's "extremely high risk" in its system-wide funding, "very high risk" in its institutional framework and "high risk" in its competitive dynamics. It noted that the high industry risk and 'stable' trend reflect the banks' elevated reliance on short-term external debt, which leaves the latter vulnerable to changes in investor sentiment. 
Source: S&P Global Ratings