Where is the hope? – Capital

Non-bank finance maintains hope of growth in 2020 …

18.05.2020 11:23:000

Elçin Cirik


Growth in non-life insurance will come from the health branch and auto insurances with a 30 percent increase. The driving force in life insurances, which grew 110 percent in the first two months, will again be products linked to bank loans. At least 30 percent growth is expected here, too. 2020 will be quite stagnant for IPS, which is waiting for a supplementary pension system. On the leasing side, solar energy and textile areas give hope this year. In factoring, 15 percent growth will come from domestic transactions.

2019 was tough for other categories of finance when insurance was left out. However, these categories started well into the first two months of 2020. The economic activity that started to revive in the last quarter of 2019 was reflected in all sub-categories such as insurance, leasing and factoring. With this positive atmosphere, positive scenarios for 2020 were created. Although the corona epidemic, which has increased in March, creates uncertainty in the economy, managers in these areas keep their hope for 2020. Finance managers are making optimistic forecasts for growth, especially in the second half of the year. So which area is promising according to these estimates?


In non-life insurance, the largest field in non-bank finance, 19 percent growth was achieved in premium production in the first two months. Health insurances, which have a 15 percent share from total premium production, are among the areas that will show the best increase this year. Güneş Sigorta General Manager and Turkey Insurance Association President Atilla Benli “of the so 34,2 growing health insurance in 2019, we consider that 25.4 per cent in the last four years of growth in 2020 would not be wrong to expect growth of 30 percent,” he says. A veteran manager of the industry, who does not want to be named, also thinks that there will be serious growth this year in the health branch and especially in complementary health. The manager predicts an increase in health premium production by 20 percentage points above inflation at the end of the year. Also, the picture is good on the auto side, where 50 percent of premium production is written. Here, a good growth is expected with the positive effect of the good start of the first two months for the automotive sector. Aksigorta General Manager Uğur Gülen said, “I expect motor branches, motor own damage and traffic insurance to be more active. 600-650 thousand vehicles are expected to be sold in 2020. This means that 300 thousand new vehicles will enter the market compared to the previous year ”. Of course, it is difficult to predict today how this vehicle sales forecast given at the beginning of the year will change with the effect of the corona virus. However, the two other managers agree. Atilla Benli counts traffic insurance, which increased by 17.7 percent in 2019, and automobile insurance, which increased by 20 percent, among the strongest growing branches of this year. The veteran manager said, “It seems that there will be good growth in motor own damage and traffic areas due to the higher automobile sales in the first months compared to the previous year. “I foresee a 5 percent increase in automobile insurance and a 10 percent increase in traffic above inflation.”


The private pension system lost 6 thousand people in the number of net participants at the end of 2019. At the end of 2019, according to EGM data, a fund size of 119.1 billion TL was reached on the fund side with an increase of 36 percent compared to the previous year and the year ended with 6.9 million participants. In automatic enrollment (OKS), the fund size of 8.2 billion TL and 6 million participants was reached with an annual increase of 75 percent. This year, a very stable course is expected in the sector due to the completion of all phases on the OKS side and the saturation in the market on the voluntary side. Anadolu Hayat Emeklilik General Manager Yılmaz Ertürk says, “Our agenda includes legislative work such as transforming automatic participation into a complementary pension system, differentiating state contribution according to age, allowing partial exit from BES funds, and PPS in foreign currency”. However, with the implementation of these changes, especially the complementary pension system in 2020 or 2021, there will be a movement in PPS. Currently, there is more growth in fund size than the number of participants. Yılmaz Ertürk predicts a 20 percent growth in the amount of funds at the end of the year with the current legislation. Atilla Benli, on the other hand, describes the growth on the fund side as follows: “There has been an average annual growth of 25.6 percent in IPS funds in the last 4 years. I think the trend of 25 percent will continue this year. ” Fırat Kuruca, CEO of AvivaSA, says, “Although we do not expect a large increase in the number of participants in OKS in 2020, we expect an increase in fund size.” Ayhan Sincek, General Manager of Katılım Emeklilik, said, “The fund side will go better this year. It would be better if the volunteer PES could grow by 1-2 percent in the net number of participants. In the first year of OKS, we were going to re-add the ones that we took to the system in 2020, but this has been delayed. Here, with the regulations to be announced at the end of 2020 or at the beginning of 2021, a complementary pension system is expected to come ”.


After the last 3 years of continuous shrinkage, the leasing sector aims to grow in 2020. The new transaction volume, which was $ 6.2 billion in 2017, fell to $ 4.8 billion in 2018 and $ 2.5 billion at the end of 2019. Leasing sector managers anticipate that the new transaction volume will increase to 3.2 to 3.4 billion dollars with 30-35 percent growth as a result of the rapid decline in interest rates in 2020, as a result of the companies taking on the investments postponed. So what will be the leading leasing areas in this growth? İş Leasing General Manager Mehmet Karakılıç draws attention to the renewable energy side, especially solar energy. “As it is the last year of the Renewable Energy Resources Support Mechanism (YEKDEM), the projects are in a hurry to be completed. “We can see growth here especially in the second half of the year”. Garanti BBVA Leasing General Manager Ünal Gökmen agrees. He explains that at the end of 2019, the share of energy finance in the leasing sector increased from 4 percent to 5.5 percent. Ünal says that rooftop solar energy system investments will come to the fore this year. He also states that after the legal regulation made for the self-consumption of companies in May 2019, the rooftop solar energy system investments are increasing day by day. Mehmet Karakılıç thinks that a growth of 30 percent can be expected in the field of renewable energy in 2020. Yapı Kredi Leasing General Manager Fatih Bozkurt said, “With the commissioning of postponed investments, we see that demand from different sectors is very common in January and February” and explains that there are investments especially in the textile and defense industry. Gökmen also believes that textile will come to the fore this year and says “We think that the sector share of textile machinery, which was 9.5 percent in 2019, will increase to double digits in 2020”. Managers foresee an increase of more than 30 percent in 2020 in parallel with the growth of the sector on the textile side.


In the factoring sector, which entered 2020 with a growth target of 15 percent, 85 percent of the volume in 2019 was made up of domestic transactions and the remaining 15 percent was made up by exports. This trend is expected to continue in 2020. Factoring QNB General Manager Ayvaz BÜMED Narcissus, “the 19-Covidien reality the impact of the global economy and Turkey’s economy’m not sharing my expectations because ignoring it remains unclear. “I expect growth this year to come mostly from domestic transaction volume.” Bumedian emphasizes that the growth trend, which accelerated in the last quarter of last year, will contribute to the sector this year. Nergis Ayvaz Bumedian said, “The share of supplier financing will increase especially in domestic transactions. We protect our performance in exports. Factoring receivables grew by 8.3 percent in 2019. The growth is entirely domestic. I expect 15 percent growth here in 2020 ”. Indeed, if the expected permissions are taken for changes such as removing the software requirement and obtaining confirmations for multiple identity verification in the supplier chain financing system, it is estimated that this area will increase by 20 percent. Kaya Yıldırım, General Manager of Garanti BBVA Factoring, thinks that growth will be faster in the agriculture, manufacturing industry and service sectors this year compared to the activities of his company in the first two months. Kaya said, “In 2019, 20 percent in agriculture, 11 percent in the manufacturing industry and 9 percent in the service sector within our industry’s turnover”, explains that they expect 20 percent growth in these three sectors this year.



I think the automotive finance area will go better in the finance companies sector in 2020. Our industry contracted 30 percent last year. We estimate that this year we will start to grow again with the base effect. Automotive finance, which has an 80 percent weight in the volume of the financing companies sector, will show a better growth with the car sales going well in the first months. In telecommunications-focused financing, on the other hand, there is no significant growth expectation this year as the limitations on installments continue. We anticipate a 15 percent growth in automotive finance at the end of 2020.
COMES IN BALANCE The use of financing in automobile purchases was reversed in 2019. 47 percent of the financing provided was borrowed by financing companies and 53 percent by banks. Particularly, the share of financing companies decreased due to the attractive loan rates applied by public banks. However, this picture does not change the fact that financing companies will be dominant in automotive finance in the future. This year, we can come back to 50-50 percent balance.



For life insurances, 2020 started with a surprising development. Life insurances sold in connection with 80 percent bank loans have achieved an annual growth of 110 percent as of February 2020. At the end of 2019, life insurance premium production grew 64 percent compared to last year. Anadolu Hayat Emeklilik General Manager Yılmaz Ertürk says, “We think that loan-linked life insurances will again take the biggest share in total production in 2020”.
“IT WILL EXCEED THE AVERAGE” Ertürk said, “Although the net effect of the geopolitical developments and the globally spreading corona virus on economic activity remains uncertain, we anticipate that our economy will complete this year with 4 percent growth. In this respect, we foresee that credit-related life insurances will grow by 15 percent in 2020, with the risk products offered by banks along with personal loans and credit cards. Turkey Insurance Association President Atilla Benli is the “last 4 years, the life insurance 31büyü percent, with expansion in loan volume in 2020 will exceed the annual average of 4” is in review.

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