Comparative Analysis of the Financial Performance Between Turkish and American Commercial BanksFatma Aldırmaz Akkaya
The banking sector, which facilitates the safekeeping and distribution of resources, is very important for the development of the real economy and financial sector. This requires the strong and consistent performance of the banking sector and requires it to be capable of withstanding unexpected risks. This study aimed to firstLY establish a performance comparison between Turkish and American commercial banks which operated uninterrupted from 2008–2018 and then to present detailed financial performance analysis of the Turkish commercial banks. The CAMELS rating and performance analysis method was chosen for analysis and comparison, given its widespread use in international financial markets. As a result of both the financial performance comparison with the American commercial banks and the financial analysis of only the Turkish commercial banks, it was determined that the Turkish commercial banks, although within acceptable limits, have problems related to financial performance and have not developed sufficient defense against possible shocks. The research also revealed that the loans and receivables of the Turkish commercial banks have been at high level and it was determined that the banks have insufficiently followed these loans. If this problem is resolved, it is believed that it will reduce other issues that the banks face.
Türkiye Mevduat Bankalarının Finansal Performans Analizi: Amerika Ticari Bankalarıyla Karşılaştırmalı Bir BakışFatma Aldırmaz Akkaya
Kaynak dağılımını belirleyen bankacılık sektörü, reel ekonominin ve finans sektörünün gelişimi için büyük önem arz etmektedir. Bu durum, bankacılık sektörünün sürekli olarak güçlü bir performans göstermesini ve beklenmeyen risklere karşı dayanıklı olmasını gerektirmektedir. Bu nedenle çalışmada öncelikle, Türkiye’de 2008-2018 yılları arasında kesintisiz faaliyet yürüten mevduat bankalarının finansal performanslarıyla, Amerika’da faaliyet gösteren ticari bankaların performans karşılaştırmalarının yapılması, ardından mevduat bankalarının ayrıntılı performans analizinin yapılması amaçlanmıştır. Uluslararası finans piyasalarında CAMELS Derecelendirme ve Performans Analizi yöntemi yaygın kullanım alanına sahip olduğu için analiz ve karşılaştırma için tercih edilmiştir. Araştırmada, hem Amerika ticari bankaları ile yapılan finansal performans karşılaştırması sonucunda hem de sadece Türkiye mevduat bankalarının finansal analizi sonucunda, Türkiye mevduat bankalarının, kabul edilebilir sınırlar dâhilinde olsa da, finansal performansla ilgili sorunlar yaşadığı ve olası şoklara karşı yeterince savunma geliştiremeyeceği tespit edilmiştir. Çalışmada ayrıca, genel olarak Türkiye mevduat bankalarının kredi ve alacaklarının yüksek olduğu ve bankaların bunların takibinde yetersiz kaldığı tespit edilmiştir. Bu sorunun giderilmesi halinde, bankaların diğer problemlerini azaltacağı düşünülmektedir.
This study aimed to firstly establish a performance comparison between Turkish and American commercial banks. It will then present a detailed financial performance analysis of the Turkish commercial banks with a wider range of financial ratios, and finally, it will identify the issues which cause poor performance in the Turkish banks, offering a suggested solution. The CAMELS rating and performance analysis method was chosen for analysis and comparison, given its widespread use in international financial markets. Within this scope, the analysis was carried out using financial ratios for 24 Turkish commercial banks which operated uninterrupted from 2008 to 2018, using the data published by The Banks Association of Turkey in comparison to financial ratios for the American commercial banks that operated uninterrupted during the same time, with data published by the Federal Deposit Insurance Corporation.
As a result of the performance analysis comparison between American and Turkish commercial banks, the American commercial banks have shown a generally strong financial performance, with 1–2 points of the CAMELS score, whereas the Turkish commercial banks have generally been within acceptable limits, with 3 points of the CAMELS score. This means that the Turkish banks have issues with financial performance and have not developed sufficient defense against possible shocks. In the examination made on the basis of CAMELS components, it was observed that in comparison of asset quality, the Turkish banks have lent high rates of loans but have been inadequate in recycling loans. In management quality comparison, it was seen that the ratio of operating expenses to the total loans and receivables of the Turkish banks have been high and have increased to high levels of risk, especially in 2018. In a comparison of adequate liquidity, it was observed that the Turkish banks have very high risks in terms of liquidity and they have maintained this level of risk. In the sensitivity to market risk comparison also, it was observed that the Turkish banks have high risk.
In performance analysis of the Turkish deposit banks based on CAMELS index values, it was concluded that the banks have experienced some difficulties. Although it is within acceptable limits, they could be vulnerable in times of crisis. When the banks were evaluated on the basis of groups, it was observed that the best financial performance indicator among the public capital banks was of Halk bank, whereas Ziraat bank recorded a performance decrease in 2018. Among the private banks, it was observed that the best performance indicator was of Adabank, whereas İş and Yapi Kredi bank recorded a performance decrease in 2018. Among the foreign banks, it was observed that the best performance indicator has been in Citibank, whereas Burgan Bank, QNB Finansbank, and ICBC Turkey bank have continued their performances at very high risk levels. It was also observed that Denizbank returned to very high risk levels in 2018.
When banks with high risk levels were analyzed separately, it was observed that these banks have generally faced liquidity problems, decreased their operating income in total assets, increased their total loans and receivables, and increased their non-performing loans.
Nearly the same results were obtained in this study, both as a result of the performance comparison with the American banks and as a result of performance analysis of only the Turkish banks. Therefore, it is advised that the Turkish commercial banks should primarily practice caution regarding loans and receivables, and when return of loans and receivables are at appropriate levels, it is believed that this will simultaneously reduce liquidity and management quality problems.
This study has several important limitations. The research examines only commercial banks and the international comparison was only with the American commercial banks. Another limitation is the data in this research being from a certain time period only. Future studies that cover the whole of the banking sector and perform international comparisons with additional countries will be important for the establishing the testability of this study. This study is expected to contribute to the development and expansion of the literature and also to assist professional practitioners in the banking industry.