“We can grow 15 percent if competition in interest rates does not get too aggressive,” Özince said in an interview in Istanbul on Dec. 25. “If we have to sacrifice profit, then we will not grow as much and growth will be around the lower end” of a target range of 12 to 15 percent for loans and deposits.

 

     Turkish banks posted higher profits this year as falling interest rates boosted the value of their bond portfolios and widened the margin between loans and deposits. Lending may be less profitable this year, even as the economy grows, because the central bank is expected to keep rates on hold and then start raising them.

 

     The central bank cut rates for 13 straight months before ending the sequence in December. The reductions helped lift Turkey out of its worst recession since World War II. The economy, which probably shrank more than 6 percent this year, will grow 5 percent in 2010 and the central bank may start raising rates in the second half, JPMorgan Chase estimates.

 

     İşbank’s fourth-quarter profit will be “a parallel performance” to the third, when net income tripled from a year earlier to 433 million Turkish Liras ($287 million), Özince said. Next year, Turkish banks should expect lower interest income from loans, though they’ll remain more profitable than peers in developed countries, he said.

 

     The bank’s loan book shrank 3.5 percent to 47.6 billion liras in the nine months through September. İşbank has not provided more up-to-date figures.