Commercial Loans Show Dual Dynamics: Growth Accelerates While Delinquency Rises

Commercial loan volumes have surged to 19.8% growth, while the share of loans under watch has climbed to 2.3%, amplifying risk signals.

A Fresh Surge in Growth Momentum

According to the Banking Regulation and Supervision Agency (BDDK), commercial loan growth reached 19.8% year‑over‑year as of 31 July 2026, marking a clear rebound from the 16.1% trough recorded in May.

■19.8% growth eclipses the previous quarter's 16.1% level.

■Consumer loans stood at 28.8%, still below the 62.5% peak of the prior year but above commercial loan growth.

■The watch‑list loan ratio rose from 1.4% in 2024 to 2.3% in 2026, reflecting a continuous upward trend over the last two years.

Alarming Rise in Loans Under Watch

The proportion of loans under watch hit a historic low after peaking at 6.4% in 2020, but has been climbing since 2024, indicating deteriorating credit quality.

■2.3% remains below the ten‑year average of 3%, yet it signals a departure from the recent low‑point trend.

■The rising watch‑list ratio compels banks to revisit risk management and capital adequacy frameworks.

■This upward trajectory may mirror macro‑economic uncertainties that threaten portfolio sustainability.

Potential Impact of Macro‑Prudential Measures

The Central Bank’s tightening stance aims to curb credit demand by raising borrowing costs, while simultaneously heightening banks’ risk perception.

■A policy rate of 13.5% could push loan rates higher, dampening credit demand.

■Liquidity tightening may raise collateral requirements, aiding the remediation of delinquent loans.

■Financial stability reports emphasize keeping non‑performing loan (NPL) ratios under 5%.

Strategic Recommendations and Outlook

To preserve credit quality while sustaining growth, banks should consider the following actions:

■Strengthen risk classification and early‑warning systems.

■Update collateral valuation methodologies.

■Deploy SME‑focused restructuring programs to rehabilitate watch‑list loans.

■Tighten FX risk management to boost resilience against external shocks.

Expert Note: While the rebound in commercial loan growth suggests a revival of economic activity, the concurrent rise in watch‑list loan ratios exposes underlying sector fragility. The Central Bank’s tightening may balance credit demand, but banks must revamp risk frameworks to mitigate delinquency. Ensuring sustainable financing for SMEs will be pivotal to maintaining growth momentum while limiting default risk.