Baku, Azerbaijan, April 29
By Emin Aliyev - Trend:
The nominal growth of Azerbaijani banks' loan portfolio will stand at around 20 percent in 2014, according to a report from the Moody's Investors Service.
"Moody's forecasts annualised nominal loan growth of around 20 percent in 2014 (against expected inflation of 3.4 percent), compared to loan growth of 25 percent in 2013," according to the report.
Moody's expects Azerbaijan's operating environment to broadly support credit demand and borrowers' financial profile.
The rating agency also highlighted the recent policy to tighten consumer lending, which should help curb growth in this booming segment.
"While the current trend of strong loan growth may represent a latent risk to asset quality, potential credit costs are well-contained by current provisioning and capitalisation," Moody's said.
Azerbaijani banking sector's assets as of March 1, 2014 stood at 2.08 billion manats versus 1.67 billion manats as of February, 2013. The banking assets increased by 24.65 percent over the year.
Azerbaijani banks increased lending to the economy by 28.34 percent in January-February, 2014 - up to 15,667.9 million manats.
Out of the total portfolio the loans worth 831.6 million manats (5.31 percent) were overdue compared to 761 million manats as of January-February, 2013.
The statistics of overdue loans does not include similar loans of the non-banking credit institution Aqrarkredit.
The overdue loans increased by 9.3 percent over the year.
Last year the Central Bank of Azerbaijan (CBA) demanded the country's banks to tighten control over the consumer lending.
The CBA sent a letter to Azerbaijani banks, saying to cease granting the borrowers a loan without demanding the borrowers' certificate of employment.
Aside from that, the terms for granting loans for car purchases was tightened, which, the experts believe, is due to worsening of banking sector's portfolio on this type of lending.
The exchange rate of April 29 is 0.7843 AZN/USD.
Translated by E.A.
Edited by S.I.