Fitch affirms Turkiye Kalkinma at BB-

Fitch Ratings has affirmed Turkiye Kalkinma ve Yatirim Bankasi AS's long-term foreign-currency issuer default rating at BB- with a stable outlook.

Kalkinma Bankasi's BB- issuer default rating is driven by support from the Turkish authorities, if needed.

Kalkinma Bankasi generally reports modest profitability metrics. It reported an operating profit/risk-weighted assets ratio of 2.0% in 2020, broadly in line with the sector average, and a return on average equity of 18.5% underpinned by volume growth, low impairment charges and low-cost government-guaranteed IFI funding. However, profitability was boosted by one-off gains from asset sales, equal to 20% of pre-tax profit.

The bank's common equity tier 1 ratio was 14% (net of forbearance) at end-2020, which is only moderate, given operating environment risks. Nevertheless, its ratio compares favorably with development bank peers.

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