ISTANBUL, May 27 (Reuters) - Turkish banking shares fell on Monday after the central bank halved the maximum monthly interest rate that banks can charge on overdrafts.
The central bank capped the monthly rates on overdrafts at 2.22 percent, triggering a 1.4 percent fall in the banking index.
“This will hurt the banking sector’s margins and profitability considerably,” analysts at Tera Brokers said in a note.
“The negative impact of the new regulation would be around a 2 percent decline in 2013 net income for most of the banks except Vakifbank,” Oyak Securities analysts wrote.
“Vakifbank seems to have the most to lose as it has the largest overdraft/loans ratio at 1.89 percent as of first quarter of 2013.”
Vakifbank shares were down 2.05 percent to 6.70 lira.
Turkey’s main share index was down 0.33 percent at 90,687.18 points, underperforming the global emerging markets index.
Insurer Aksigorta’s shares were up 0.72 percent after the company announced it had decided to sell its headquarters building for $72 million, much higher than the value registered in the company’s financials.
Shares in brewers Anadolu Efes and Turk Tuborg continued to fall on Monday after a sharp fall on Friday, after the government banned alcohol advertising and tightened restrictions on its sale.
Lira and bonds were firm in thin volume as UK and U.S. holidays kept European equity and bond markets quieter than usual.
The two-year benchmark bond yield fell to 5.23 from 5.28 percent on Friday. It hit an all-time low of 4.61 percent a week ago after a 50-basis-point interest rate cut, designed to boost the economy and keep a lid on the lira.
The lira strengthened slightly to 1.8451 against the dollar from 1.8479 late on Friday. It touched 1.8590 in intra-day trade on Thursday, its lowest in almost 12 months. (Reporting by Ece Toksabay; Editing by Toby Chopra)