ISTANBUL (Reuters) – A surge in the profits of Turkey’s top listed banks shows they are bouncing back from a 2001 economic crisis and becoming promising takeover targets, as consumer lending grows and the rate of bad loans falls, analysts say. The start of European Union entry talks on October 3 and falling interest rates in a more stable IMF-backed economy form the base to an expansion in credit that has prompted foreign banks to look anew at Turkey’s financial sector. The industry has been overhauled since the 2001 crisis wiped out 10 percent of the economy, threw many Turks out of work and led to the seizure of 21 troubled banks. Turkey’s banking watchdog put the cost of the crisis at around $46 billion. The combined profits of 13 out of 14 banks listed on the Istanbul Stock Exchange jumped 32 percent to 3.5 billion new lira ($2.6 billion) in the January-to September period from a year earlier. The 14th bank, Yapi Kredi Bankasi (YKB), has asked for more time before announcing its nine-month financial results due to its planned merger with Kocbank. «The growth in the banking sector this year is mainly driven by lira-denominated credits, especially through housing loans and KOBIs (small and medium-scale enterprises),» Akbank Assistant General Manager Hayri Culhaci said. The last year has seen an explosion in consumer credit, with lira-denominated consumer loans doubling and housing loans almost quadrupling between the end of 2004 and November 11, central bank data show. Total loans of the 13 banks, excluding non-performing loans and provisions, grew 40 percent to 84.5 billion lira from the start of the year to the end of September. The ratio of bad loans to total loans fell to 5 percent by end-October from more than 20 percent after the crisis, Culhaci said. Total assets jumped 30 percent to 205.5 billion lira and deposits grew 27 percent in the same period.