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Azerbaijan increases share of overdue loans

Business Materials 13 June 2016 15:29 (UTC +04:00)

Baku, Azerbaijan, June 13

By Azad Hasanli - Trend:

The volume of overdue bank loans reached 1.381 billion manat in Azerbaijan in April 2016, increasing by 4.1 percent compared to March, the Azerbaijani Central Bank's report said.
The official exchange rate is 1.5114 AZN/USD as of June 13.

According to the report, the share of these loans in the loan portfolio of banks was 7.4 percent compared to 6.7 percent as of late March.

The credit portfolio of the Azerbaijani banks reduced by 4.7 percent and hit up to 18.8 billion manat. The banks' lending in the economy declined by almost nine percent compared to April 2015.

The banks issued over a half of loans worth 9.7 billion manat (51.8 percent) in the national currency, while the rest part - 9.04 billion manat (48.2 percent) in foreign currency.

This ratio hit 27 and 73 percent in early 2015. But the share of foreign currency loans began increasing, reaching 49.3 percent as of the year after the February devaluation of the manat.

However, Azerbaijan's Financial Market Supervisory Body has established a moratorium on the issuance of consumer loans in foreign currency to the individuals who do not have foreign exchange earnings and bank deposits since April 2016 and imposed a ban on mortgage loans in foreign currency since May.

As a result, the share of manat loans began to grow gradually. For comparison, some 50.9 percent of the loan portfolio of banks accounted for the loans in national currency in March 2016.

As of May 1, 2016, the volume of short-term loans amounted to 4.2 billion manat (including overdue loans worth 505.6 million manat) decreasing by 6.25 percent and 8.3 percent for the month compared to late April 2015.

The volume of long term loans decreased by 4 percent for the month and by 8.75 percent up to 14.6 billion manat for the year (including 875.7 million manat of overdue loans).

According to the CBA, the credit portfolio of the state banks in the country hit almost 6.2 billion manat with the specific weight of 32.9 percent, while private banks issued loans worth around 12.04 billion manat with a specific weight of 64.2 percent.

The remaining 2.9 percent accounted for the share of non-bank credit organizations which issued 548.9 million manat, according to the CBA.

There are 37 banks in Azerbaijan, including two state-owned banks and 157 non-bank credit organizations, including 109 credit unions.

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