Moody's talks on operational conditions for Azerbaijani banks

Economy Materials 1 August 2023 10:13 (UTC +04:00)
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, August 1. The economic and operational conditions for Azerbaijani banks will remain favorable, Trend reports.

According to Moody's forecasts, Azerbaijan's GDP will grow by 3 percent in 2023, but government spending against the backdrop of high oil prices will continue to stimulate the non-oil economy, where most of the banks' activities are concentrated.

Moody's analysts predict that the quality of loans will remain stable after significant improvements in recent years.

"Problem loans will remain generally stable at a historic low of about 3 percent of total loans, while the coverage of problem loans by reserves will remain above 100 percent by the end of 2023. Asset quality will be supported by favorable economic conditions due to stable indicators in non-oil sectors of the economy," the rating agency said.

"The stability of the manat supported the quality of loans in foreign currency, which decreased to 20 percent of the total volume of loans at the end of 2022 from about 30 percent in 2020," the agency added.

According to the Central Bank of Azerbaijan (CBA), a total of 22 banks completed their activities with a net profit from January through June.

The net profit of Azerbaijani banks amounted to 563.3 million manat ($331.3 million) and the operating profit amounted to 772.3 million manat ($454.2 million) in the first half of 2023.

The net and operating profits of banks increased by 41 percent and 26 percent, respectively, compared to the same period last year.