Moody's expects increased profitability for Azerbaijani banks

Business Materials 26 August 2010 12:39 (UTC +04:00)

Azerbaijan, Baku, Aug. 26 / Trend N.Ismayilova /

The Moody's international rating agency wrote in a report released this week that the losses incurred by Azerbaijani banks this year will be fully covered by their reserves.

According to the agency's stress test, the expected losses could reach 520 million manat. The figure is comparable to the total reserves of Azerbaijani banks last year, or 507 million manat.

"This means that we do not expect significant growth in new reserves," the report stated. "Lower expectations for new reserves will maintain the profitability of banks, as the majority of problem loans are ensured in the balance."

Profitability indicators will also be supported by the credit growth acceleration, which will spped up the proportion of high-yielding assets in bank balance sheets and maintain stability and commission income. These trends will occur after the sharp decline in credit growth last year, which lowered profitability.