Turkish loan growth dips below 24 pct at end feb

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ISTANBUL, March 5 Growth in Turkish bank loans eased below 24 percent in late February, adding to signs of a gradual economic slowdown after a year of unorthodox monetary policy aimed at preventing overheating. Loan growth stood at 23.72 percent from a year earlier as of Feb. 24, down from 24.83 percent a week earlier, according to weekly data published by the banking regulator BDDK. The central bank had said it wanted to keep growth to 25 percent in 2011, after loans expanded 34 percent in 2010, fuelling demand for imports that have led to worryingly high external deficits. The bank has not given a target for loan growth this year, but Deputy Prime Minister Ali Babacan, who oversees economic policy, said in January he expects loan growth of 15 percent.

"Loan growth momentum continued to recover further, but the overall slowdown continues... The central bank's most recent proxy, which is the 13-week rolling loan growth, recovered in the last three weeks and now reached 13.5 percent from around 10 percent," wrote Ozgur Altug, chief economist at BGC Partners.

"It is worth to note that the central bank implicitly stated that if this ratio remains around 10-15 percent, the Bank would feel comfortable. Consequently, we do not think that the central bank should alter its monetary policy soon," Altug added. With concerns the economy may be slowing too fast coming to the fore, the Turkish Central Bank unexpectedly eased its tight monetary stance last month, cutting its lending rate by 100 basis points to 11.5 percent and increasing by 1 billion lira the liquidity provided through one-month repo auctions.

Year-on-year loan growth stood at 29.50 percent at the end of 2011, above the central bank's target of 25 percent growth for the full year. The nominal figures provide the basis for the central bank's considerations on monetary policy, although it tends to refer publicly to numbers adjusted for shifts in exchange rates.