Fitch: No growth expected in Azerbaijani banks’ loan portfolio
Baku, Azerbaijan, Apr.13
By Azad Hasanli - Trend:
Fitch Ratings international ratings agency doesn't expect growth in Azerbaijani banks' loan portfolio in 2016, Dmitry Vasilyev, director for financial institutions at Fitch Ratings said during the fifth annual meeting on Azerbaijan Apr.13.
The growth is not expected due to the slowdown in the economic growth and restrictions related to the capital in a number of banks in Azerbaijan, according to Vasilyev.
"We have repeatedly said that there is a structural vulnerability in the corporate sector," he said, adding that this vulnerability has increased following the devaluation of Azerbaijan's national currency.
The volume of overdue loans (over 90 days) reached 15 percent as of late 2015, said the Fitch representative, adding that however, their share will increase in 2016, as the effect of the December devaluation will be noticeable only in 2016.
Dollarization will remain as one of the main risks for banks, according to Vasilyev.
"Dollarization of loans affects the quality of assets, since many borrowers do not have foreign currency revenues," he said. "Dollarization of the sector is quite high, and it will grow further."
"Dollarization of liabilities of banks in higher than that of assets," said Vasilyev. "Therefore, banks will have to increase the share of dollar-denominated loans in their portfolios. This is what we expect in the next few years."
Currently, 37 banks operate in Azerbaijan. The official exchange rate on Apr.13 is 1.5264 AZN/USD.
Edited by SI