Share of overdue loans down in Azerbaijan

Business Materials 14 September 2016 10:48 (UTC +04:00)

Baku, Azerbaijan, Sept. 14

By Anvar Mammadov - Trend:

The volume of overdue bank loans reached 1.5 billion manats in Azerbaijan in July 2016, decreasing by 2.6 percent compared to June, the Azerbaijani Central Bank's report said.
The official exchange rate is 1.6390 AZN/USD as of Sept. 14.

According to the report, the share of these loans in the loan portfolio of banks was 8.98 percent compared to 8.4 percent as of late June.

The credit portfolio of the Azerbaijani banks reduced by 9.3 percent and amounted to 16.71 billion manats in July 2016 compared to June 2016. The banks' lending in the economy declined by 17.2 percent compared to July 2015.

The banks issued over a half of loans worth 8.63 billion manats (51.7 percent) in the national currency, while the rest part – 8.07 billion manats (48.3 percent) in foreign currency.

This ratio was 73 and 27 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, 51.8 percent in April and 53.2 percent in May 2016.

As of Aug. 1, 2016, the volume of short-term loans amounted to 3.56 billion manats (including overdue loans worth 506.9 million manats) decreasing by 12.3 percent during the month (2.3 percent decline), and the year on year decline amounted to 19.3 percent (12 percent growth).

The volume of long term loans decreased by 8.5 percent for the month and by 15.6 percent to 13.16 billion manats for the year (including 997.6 million manats of overdue loans).

According to the CBA, the credit portfolio of the state banks in the country amounted to 5.42 billion manats with the specific weight of 32.4 percent, while private banks issued loans worth around 10.78 billion manats with a specific weight of 64.5 percent, where 4.37 billion manats falls to the share of banks with foreign capital.

The remaining 3.1 percent accounted for the share of non-bank credit organizations which issued 511 million manats, 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.