ISTANBUL: Turkish Islamic lender Bank Asya said its second-quarter net profit slumped 81 percent to 10.6m lira ($4.9m), as its deposit base shrank and lending wilted under pressure from the government.
The bank has seen its profits and capital base collapse since December when it found itself at the centre of a power struggle between Prime Minister Tayyip Erdogan and his political foe Fethullah Gulen, an Islamic cleric whose sympathisers founded the bank. Erdogan accuses Gulen, who is based in the United States, of seeking to overthrow him and has pledged as president to continue purging institutions, such as the police and judiciary where Gulen is believed to wield influence, of his supporters.
Bank Asya is one of four Islamic lenders in Turkey. Three state-run Turkish banks — Ziraat, Vakifbank and Halkbank — have also been looking into setting up Islamic banks over the past year as the secular republic has opened up to Islamic finance to tap a pool of rich investors.
Bank Asya has been caught in the middle of the wrangling between Erdogan and Gulen. Earlier this year, state-owned companies and institutional depositors loyal to Erdogan withdrew 4bn lira, or some 20 percent of its total deposits, local media said in January.
Bank Asya’s Chief Executive Ahmet Beyaz said then that the lender had weathered mass deposit withdrawals and was not at risk. The government declined to comment at the time.
Bank Asya was not immediately available for comment. Loans contracted by 11 percent in the second quarter, while deposits shrank 3 percent, the bank said in a statement to the Istanbul stock exchange late on Monday.
Net fees and commissions declined 33 percent to 55.1m lira, while loans and receivables dropped 28 percent from the end of 2013 to 14.99bn lira, it said.
Bank Asya shares have been suspended from trading since August 7 after Turkish authorities cancelled key contracts with the bank, including a tax collection deal.
Bank Asya said at the time that the loss of the tax deal would “not have a significant impact” on its activities. The stock exchange has not said when the suspension would be lifted.
Last week, top government officials appeared to be at odds over a possible state purchase of the bank.
Deputy Prime Minister Ali Babacan said on Wednesday that state-run Ziraat Bank, which is looking to launch its own Islamic banking unit, could buy Bank Asya, but an advisor to Erdogan subsequently denied such a plan.
Reuters
