KKM doping on TL deposit maturity

Sebnem TURHAN

The currency-protected TL deposit product, which was introduced in the last month of last year, has changed the maturity structure of the banking industry. Traditionally, while the TL deposition density in Turkey was 32 days, there was a big change in terms of 3-6 months and 6-12 months after KKM. According to data from the Banking Regulatory and Supervision Agency, Turkish residents’ TL deposits with a maturity of 3 to 6 months increased by 323% compared to March last year, while the amount of deposits in TL with a maturity of 6 to 12 months has increased. 513.7% compared to March of last year. While the share of 3-6 month maturities in total TL deposits increased from 4.7% to 13%, the share of 6-12 month maturities increased from 2.1% to 8.3% .

Even though the exchange-protected TL deposit, which went live when USD/TL exceeded TL 18, was intended to encourage the transition from foreign currency deposits to TL deposits, 3 months was determined as the shortest deposit term for real people. Then, in February, the way was opened for companies to transfer their foreign currency deposits to the KKM, and this time the shortest maturity was 6 months. March 2022 data from the BRSA not only reveals the increase in TL deposits since the start of the year, but also shows that the maturity structure has lengthened.

It also doubled by the end of the year

Data from BRSA indicates that the total TL deposits of domestic residents increased by 612 billion TL compared to the end of December 2021. This increase also reveals that more than 200 billion lira have been added each month since January. While TL deposits have increased, the maturity structure has also changed significantly compared to end-December 2021 and March 2021. The maturity distribution of total TL deposits, between 3-6 months and 6-12 months, which was influenced by KKM, increased significantly. As the size of deposits in TL with a maturity of 3-6 months increased to 316.3 billion TL in March 2022, this indicates a 323% increase compared to March last year. Compared to the end of December 2021, the increase in maturity from 3 to 6 months is 244.6%. In other words, in the last three months, TL deposits with a maturity of 3 to 6 months have doubled due to the effect of KKM. The same change occurred in TL deposits with a maturity of 6 to 12 months. This time in February, the size of TL deposits in this maturity grew rapidly to TL 202.7 billion. Compared to March of last year, there was a growth of 513.7% and compared to the end of 2021, deposits in TL of this maturity managed to increase by 670%.

Real people brought maturity from 1-3 months to 3-6 months with KKM

BRSA data also reveals that the maturity structure of real people and business institutions evolves differently depending on the structure of KKM. Total real person TL deposits increased to 1 trillion 260 billion TL. Last year it was at the level of 903.5 billion lire. This 40% shows that real people’s TL deposits have increased. The most significant change in the maturity structure was between 3 and 6 months. TL deposits from real people residing in Turkey with a maturity of 3-6 months increased by 298% compared to March last year. Since KKM determined the lowest maturity for real people at 3 months, there has been a rapid increase in this maturity. While the share of TL deposits with a maturity of 1-3 months was 58% in March last year, it fell to 47% in March this year. While the share of 3-6 month maturities was 6% in March last year, it has exceeded 17% this year. The fact that real people are carrying TL deposits with 1-3 month maturity in KKM, rather than foreign currency deposits, is evident from the share change in the BRSA data. While the share of deposits with 1-3 month maturity decreased by 11 points, the share of TL deposits with 3-6 month maturity increased by 11 points.

1,225.7% increase over 6 to 12 months compared to the end of the year

Commercial institutions were included in KKM from February. Commercial institutions can switch foreign currency deposits to the KKM, thereby obtaining a corporate tax exemption for their foreign currency income in the last quarter of 2021. BRSA data shows that the transition of commercial institutions to TL filings accelerated from February. According to the data, commercial institutions’ TL deposits increased by 73.3% compared to March last year. And in March 2022, it exceeded the 1 trillion lira limit for the first time in history. Regarding the evolution of the maturity structure, 6 months, which is KKM’s lowest maturity for commercial institutions, came to the fore. The size of TL deposits between 6 and 12 months, which was 18.6 billion TL in March last year, jumped to 178.6 billion TL in March this year. This indicates an increase of 870 percent. Other deadlines, on the other hand, have not changed in commercial institutions. Considering the share of maturities in total TL deposits of commercial institutions, the share of 6-12 month maturities in March last year increased to 17.5% in March this year, so that it was 3.12%. On the other hand, there was a decrease in demand deposits from commercial institutions with 1-3 month maturity and 3-6 month maturity. Again, the evolution of TL deposits from commercial establishments with a maturity of 6 to 12 months compared to the end of December 2021 is striking. The size of deposits in TL with a maturity of 6-12 months, which fell to 13.5 billion TL in December 2021, increased by 1225.7% in March 2022.

The size of the KKM exceeded 782 billion lira

According to data from the Banking Regulation and Supervision Agency (BDDK) for the week of April 22, the size of protected currency deposits in TL reached 782 billion 32 million TL. The data is available from the week of December 24, 2021. During the last period, it is not known what share is the return of foreign currency deposits and what share is due to foreign residents. The size of KKM, which was 29 billion lira in the week of December 24, 2021, also experienced very rapid weekly growth, especially in February and the first week of April. The share of TL deposits in total deposits also increased as a result of KKM. While the size of TL deposits was 1 trillion 847 million TL during the week of December 24, 2021, it increased to 2 trillion 625 million TL during the week of April 22. While the TL equivalent of foreign currency deposits was 3 trillion TL 20 billion during the week of December 24, it rose to 3 trillion TL 487 billion during the week of April 22. Total deposits, on the other hand, reached 6 trillion 112 billion lire against 4 billion 868 billion lire. During the week of December 24, the share of TL deposits in total deposits was 37.9%, and during the week of April 22, it was calculated at 42.9%. In other words, the share of TL deposits in total deposits increased by 5 points.

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