Citi Research indicated that the adverse macroeconomic conditions in Turkey could weigh on the performance of domestic banks in 2019. But it noted that the banking sector has remained resilient in the face of the ongoing weakness of the Turkish lira. Also, it said that private banks have sufficient capital buffers, while state-owned banks are already receiving significant government support. It anticipated the Turkish government to continue to support state-owned banks and to boost their capital adequacy ratios (CARs) through recapitalization schemes, in case of need. Further, Citi indicated that it performed a stress test to assess the impact of currency depreciation on the banks' capital levels. It estimated that the CAR of most banks would remain above the Banking Regulation and Supervision Agency's (BRSA) minimum requirement under a scenario where the lira trades at TRY7.25 against the US dollar. However, it noted that the CAR for private banks would only start to test the BRSA's threshold if the currency further depreciates to TRY8.8 per dollar. Citi pointed out that syndicated debt rollovers reflect sentiment about the health of the Turkish banking sector, given the sector's elevated open net foreign currency position of $209bn. It said that the banks' rollover rates are still high but have started to decline as the banks reduce their foreign currency debt. It added that banks are targeting rollover rates of 60% to 80% currently compared to a rate of 100% in the fourth quarter of 2018. 
Source: Citi Research