Participation finance grew in 2025, led by savings finance companies

According to data in the 30th issue of the Sector Monitoring Reports series, 2025 was the year participation finance moved from a bank-centered structure to a multidimensional ecosystem. Savings finance companies, which provide participation-based home and vehicle financing with no down payment, were the fastest-growing area of the year.

Savings finance companies

The sector's total transaction volume rose 261.8 percent to 1 trillion 211 billion lira, and its asset size rose 251.1 percent to 323 billion lira. Net profit increased from 17.5 billion lira to 59 billion lira. The number of customers rose 117 percent to exceed 1.15 million; the number of companies reached 9 and branches 654.

Participation banks and digitalization

Participation banks' total assets rose 62.7 percent to 4.3 trillion lira, and the funds they collected rose to 2.8 trillion lira. Total net profit was 85.6 billion lira. Non-performing receivables rose 155 percent to 42.4 billion lira, while equity growth of 41.2 percent lagged behind asset growth.

While banks reduced their branches and ATMs, digital transaction volume rose 41 percent to 7.9 trillion lira and the number of transactions rose 61 percent to 205 million. The share of digital transactions among retail customers rose from 27 percent to 43 percent.

Capital markets, insurance and fintech

Of the 591 companies traded on Borsa Istanbul, 237 are in the BIST Participation All Index. The index's number of investors reached 4.26 million. Premium production in participation insurance rose 62.9 percent to 70.15 billion lira, outpacing the sector-wide growth of 45.9 percent; its share of the total insurance market was 5.73 percent.

The number of fintechs in Türkiye has risen 40 percent since 2021 to 1009, while the number of newly founded fintechs fell from 101 to 16. Participation banks' sukuk issuance volume rose 58 percent to 215.4 billion lira. In the private pension system, fund amounts reached 1.81 trillion lira, of which 745.7 billion lira were in participation-based funds.

ILKE Foundation Board Chair Ahmet Sait Öner, whose views are included in the report, said the ecosystem had undergone a marked transformation and added:

However, in a high-inflation environment, the real equivalent of nominal growth should be assessed with caution. What matters most going forward is turning quantitative growth into qualified and sustainable development.

Ahmet Sait Öner