Turkish credit-card market expects strong growth

Published: 23 July 2008 y., Wednesday

Boston-based Celent LLC has published a new report about the state of the Turkish credit-card market, which has developed rapidly over the last decade and is expected to represent a high-growth opportunity. But according Celent's research, more stringent government regulations in Turkey are likely to put a ceiling on credit-card-interest rates, which could adversely impact the market's growth.
 
According to a news release, over the past two years the maximum allowable monthly interest rate on Turkish credit cards has decreased from 5.72 percent to 4.39 percent. And the government recently announced its intention to slash monthly interest rates to 2.7 percent.
 
The proposed regulation is expected to impact credit-card issuers' profitability and force them to reshape their strategies to remain competitive. The profitability breakdown across customer segments will shift fundamentally with the new interest rate.
 
Turkish banks will be compelled to focus on cost reduction in order to sustain the profitability of credit cards, as well as improve customer relationship management to steer clients toward more profitable products and services.
 
Celent's report provides an overview of the Turkish credit-card market and explains the major regulations. It then analyzes the likely evolution of the market, given the current competition and the impact of regulation on banks’ profitability.

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