Fitch affirms Emlak Katilim at B

Fitch Ratings has affirmed Turkiye Emlak Katilim Bankasi AS's long-term foreign currency issuer default rating at B with a stable outlook.

Emlak Katilim's default rating is driven by potential state support reflecting a high government propensity to provide support, in case of need. This reflects the bank's 100% state ownership, the strategic importance of Islamic banking to the authorities and the record of capital support, including capital injections in December 2020 (TRY 277 million of core capital) and April 2019 (€200 million additional tier 1).

The Turkish sovereign's ability to provide support in foreign currency is constrained by its weak net foreign currency reserves position. This drives the two-notch difference between the sovereign's default rating and Emlak Katilim's support rating floor notwithstanding its small size (0.3% market share of total assets), although the bank plans aggressive growth over the medium term.

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