Azerbaijan, Baku, Feb.15 /Trend A.Akhundov/
One of the many ways to solve the problem of "bad" assets in the banks of Azerbaijan is the intervention of the state, a leading analyst of the international rating agency Standard & Poor's Viktor Nikolsky told Trend on Wednesday.
"Often, State has to intervene when there is a problem of "bad" assets. We have seen that special banks are created in some markets, which accumulates "bad" assets.
Bank can live very long with "bad" assets, however, it ceases to make a profit at some point. If the law stipulates that banks must operate at a profit, and then intervene, any action by the state must follow in that case," Nikolsky said.
Nikolsky noted that these problems can be solved by raising the quality of management at the bank.
One way is to develop debt collection business in the country. The first collection agency Collection Agency BOA has passed state registration in Azerbaijan, but has not begun to work yet.
The expert of the agency believes that overdue loans can be redeemed by some organizations that can further affect the rate of these assets return.
"Generally, there are a lot of ways - it is a government intervention, internal changes in the banks to attract third-party management, debt collection services. Further activity of banks with "bad" assets will depend on the solution of the regulator and the state" Nikolsky said.
The share of overdue loans in total loan portfolio of Azerbaijani banks amounted to 6.4 percent in 2011.
Overdue loans from the total loan portfolio of banks amounted to 633.8 million manat for January 1, 2012 compared to 636.7 million manat in December 1, 2011 and 492.9 million manat in January 1, 2011.
As of September 30 last year, 90.5 percent (8.88 billion manat) of their total assets account for standard quality compared to 93.7 percent (11.15 billion manat) at the beginning of the year. The share of non-standard assets was 9.5 percent (820.35 million manat) compared to 6.3 percent (749.73 million manat) at the beginning of 2011, including assets of poor quality amounted to 3.7 percent (320.1 million manat) compared to 2.5 percent (302.12 million manat), respectively.
Three percent (263.23 million manat) accounts for the share of risky assets compared to two percent (239.38 million manat) on January 1, 2011, and 2.7 percent (237.02 million manat) accounts for the share of bad assets to 1, 7 per cent (208.16 million manat).
Assets of banks increased to 14,259.18 million manat in January 1, 2012 compared to 12768.35 million manat to the beginning of last year. Banking assets increased by 11.68 percent during the 2011.
Official exchange rate on Feb. 15 is 0.7861 AZN/USD