Performance Analysis Of Banks In Turkey Using Camels Approach Case Study: Six Turkish Banks During 2005 To 2016

This study analyzes the performance and financial credibility of six Turkish banks for the period of 2005-2016. The sample comprises two state-owned deposit banks, three private-owned deposit banks, and one foreign bank. As one of the most popular methods for measuring banking performance, CAMELS method is used to analyze the performance of the banks. CAMELS stands for Capital Adequacy, Asset Quality, Management Efficiency, Earning Quality, Liquidity, Sensitivity respectively. When the average rates of 2014, 2015 and 2016 ratios –for each one of these mentioned categories- separately examined, none of the banks is found to be superior to the others. As for the composite rate for CAMELS though, Ziraat Bank has the highest rate (29.32%) and Halkbank stands at the last row (21.94%). Overall, the values of the CAMELS ratios for 2016 seem to be quite close to each other. However, when the yearly analysis is conducted, some significant differences in the categories of CAMELS ratio are observed. In addition, ANOVA test results state that the means of CAMELS ratios are significantly different over the years. Finally, comparison of CAMELS ratings with institutional ratings shows that the latter does lag the financial indicators of the companies and even can be not reflective of the current financial condition of the company. On the other hand, the trends of the institutional ratings and of financial indicators are consistent over a long period of time.

PDF

___

Öztorul, G. (2011). Performance Evaluation of Banks And Banking Groups: Turkey Case. Master Thesis, Middle East Technical University, Department of Economics, İstanbul.

Akbank Website. (n.d.). Retrieved from http://www.akbank.com/en-us/investorrelations/ Pages/Financials.aspx

Arıçlik, G. (2010). Ticari Bankalarda Performans Ölçümü: CAMELS Analizine Dayalı Bir İ. Yüksek Lisans Tezi, Dokuz Eylül Üniversitesi, Sosyal Bilimler Enstitüsü, İzmir.

Babar, H. Z., & Lions, C. (2011). CAMELS Rating System for Banking Industry in Pakistan, Does CAMELS system provide similar rating as PACRA system in assessing the performance of banks in Pakistan? Umea University, Umea School of Business. Umea School of Business.

Banking Regulation and Supervision Agency - BDDK. (n.d.). Retrieved from https://www.bddk.org.tr/WebSitesi/English.aspx

Barr, R. S., Killgo, K. A., Siems, T. F., & Zimmel, S. (2002). "Evaluating the productive efficiency and performance of US commercial banks". Managerial Finance, 28 (8), 3-25.

Broz, L. (1997). The International Origins of the Federal Reserve System. Cornell University Press.

Christopoulos, A., Mylonakis, J., & Diktapanidis, P. (2011). Could Lehman Brothers’ Collapse Be Anticipated? An Examination Using CAMELS Rating System. International Business Research, 4 (2).

Cole, R. A., & Gunther, J. W. (1995). A CAMEL Rating’s Shelf Life. Federal Reserve Bank of Dallas Financial Industry Studies, 13-20.

Cox, D., & Cox, M. (2006). The Mathematics of Banking and Finance. John Wiley & Sons Ltd.

Dang, U. (2011). The CAMEL Rating System in Banking Supervision (A Case Study). Arcada University of Applied Sciences. International Business.

Dash, M., & Das, A. (2009). A CAMELS Analysis of the Indian Banking Industry. Social Science Research.

Dincer, H., Gencer, G., Orhan, N., & Sahinbas, K. (2011). A Performance Evaluation of the Turkish Banking Sector after the Global Crisis via CAMELS Ratios. Procedia Social and Behavioral Sciences, 1530–1545.

Economist Intelligence Unit. (2016, February 17). Retrieved from Economist Intelligence Unit: http://www.eiu.com/industry/article/603951444/downturncatches- up-with-turkeys-banks/2016-02-17

FitchRatings. (n.d.). https://www.fitchratings.com/site/home. Retrieved from https://www.fitchratings.com/site/home Garanti Bank Website. (n.d.). Retrieved from https://www.garanti.com.tr/en/our_company/investor_relations.page

Grier, W. A. (2007). Credit Analysis of Financial Institutions (2nd ed.). Euromoney Institutional Investor PLC.

Halkbank Website. (n.d.). Retrieved from https://www.halkbank.com.tr/en/international-banking/83/financialreports? AspxAutoDetectCookieSupport=1

İşbank Website. (n.d.). Retrieved from https://www.isbank.com.tr/EN/aboutisbank/ investor-relations/publications-and-results/financialstatements/ Pages/financial-statements.aspx

Ishaq, A., Karim, A., Ahmed, S., & Zaheer, A. (2016). Evaluating Performance of Commercial Banks in Pakistan: “An Application of Camel Model". Journal of Business & Financial Affairs, 5 (1).

JCR Eurasia Rating. (n.d.). http://www.jcrer.com.tr/. Retrieved from http://www.jcrer.com.tr/

Masood, O., Ghauri, S., & Aktan, B. (2016). Predicting Islamic Banks Performance Through CAMELS Rating Model. Banks and Bank Systems .

Mishra, S. K., & Aspal, P. K. (2013). A CAMEL Model Analysis of State Bank Group. World Journal of Social Sciences , 3, 36 – 55.

Moody's. (n.d.). https://www.moodys.com/. Retrieved from Moody's: https://www.moodys.com/

Nonperforming Loan - NPL. (n.d.). Retrieved from Investopedia: https://www.investopedia.com/terms/n/nonperformingloan.asp

Rozzani, N., & Rahman, R. (2013). "Camels and Performance Evaluation of Banks in Malaysia: Conventional Versus Islamic". Journal of Islamic Finance and Business Research, 2 (1), 36-45.

S&P Global. (n.d.). https://www.standardandpoors.com/en_US/web/guest/home. Retrieved from https://www.standardandpoors.com/en_US/web/guest/home

Siems,T.F.,&Barr,R.S.(1998)."BenchmarkingtheProductiveEfficiencyofU.S.Banks:FinancialIndustryStudies". FederalReserveBankofDallas.

Şekerbank Website. (n.d.). Retrieved from http://www.sekerbank.com/en/investorrelations/statements

Şen, A., & Solak, S. (2011). Ticari bankacılık sektörünün CAMELS analizi: Türkiye örneği. Finans Politik ve Ekonomik Yorumlar Dergisi , 48 (554).

The Banks Association of Turkey. (n.d.). Retrieved from https://www.tbb.org.tr/tr Yuksel, S., Dincer, H., & Hacioglu, U. (2015). CAMELS-based Determinants for the Credit Rating of Turkish Deposit Banks. International Journal of Finance & Banking Studies, 4 (4).

Ziraat Bank Website. (n.d.). Retrieved from https://www.ziraatbank.com.tr/en/InvestorRelations/Financials/Pages/AuditReport AndFinancialStatements.aspx