Turkey’s leasing and factoring companies face rising asset-quality risks and weaker profitability margins this year and in 2027, Fitch Ratings warned on Monday.
Leasing companies buy equipment or property and rent it to businesses, while factoring companies provide cash against bills that businesses are waiting for their customers to pay.
High funding costs and financial pressure on small and medium-sized businesses threaten these companies’ ability to collect payments and earn profits, according to the assessment.
Fitch had changed its outlook for finance and leasing companies in emerging Europe, a category covering Turkey, to “deteriorating” in June, citing slowing economic growth, persistent inflation and pressure on borrowers.
Recent turmoil in Turkey’s financial markets has had little direct effect on leasing and factoring companies so far, the agency found.
Leasing companies have limited investments in securities and access to established funding sources, while factoring companies owned by banks benefit from their parent companies’ support.
However, market turmoil could make it harder for their customers to pay, while higher lira interest rates and rising costs of insuring Turkish debt against default could increase the finance companies’ own funding costs.
The value of new leasing business increased 48 percent in dollar terms in the first half of the year compared with the same period in 2025.
Sale-and-leaseback transactions, in which businesses sell assets and then lease them back, accounted for 38 percent of that total, pointing to demand for cash to cover operating expenses rather than finance new investments, according to Fitch.
Such arrangements allow businesses to raise money while continuing to use their buildings or equipment but expose leasing companies to risks if property valuations fall or assets prove worth less than expected.
The share of leasing loans classified as nonperforming, meaning borrowers have fallen behind on payments, fell to 1.9 percent, although Fitch expects it to rise toward the end of this year and next year.
Factoring companies recorded a nonperforming loan ratio of 2.3 percent, while new impaired loans and charges to account for potential losses continued to weigh on their finances.
The warning comes as Turkey pursues an inflation reduction program that has kept credit costs high for businesses and households.
Turkey’s central bank kept its benchmark interest rate at 37 percent in September, while annual consumer inflation slowed to 29.73 percent that month.
The government shifted toward policies aimed at curbing inflation after President Recep Tayyip Erdoğan’s re-election in 2023, following years in which his demands for lower interest rates contributed to inflation and a decline in the value of the lira.
The post Fitch warns of rising risks for Turkish leasing and factoring firms appeared first on Turkish Minute.