TBC Kredit: Azerbaijan's microcrediting market expected to stabilize

Baku, Azerbaijan, March 2

By Azad Hasanli - Trend:

In 2018, the situation in the microcredit market of Azerbaijan will begin to stabilize, Nukri Tetrashvili, director of TBC Kredit, a non-bank credit organization, said in an interview with Trend.

Tetrashvili said that after a difficult situation in the past two-three years, participants of the country's microfinance market started lending again, which is also linked with an increase in the activity of small and medium-sized entrepreneurs (SMEs).

"Small and medium-sized companies have been active for several months. They have had problems during the past two years, population's consumption has been declining, which in turn has hit the SMEs. The trade of companies was declining, they were at a crossroads and could not decide what to do - to invest further or to wait for improvement. However, in recent months the rate of the manat against the US dollar is stable [at 1.7 manat per USD], and for business it is a signal - stability has returned to the market and it is possible to invest. We see this on the example of our customers, whose turnover is growing again," Tetrashvili said.

Nevertheless, Tetrashvili said, there are still a number of problems in the microcredit market.

"One of the main challenges for non-bank credit institutions (NBCOs) is "bad loans". Of course, their volume is declining, but the market needs time to bring the volume of "bad loans" to an acceptable level. For example, we [TBC Kredit] offer our clients various opportunities to facilitate their situation, for example, we carry out restructuring of their debts, change the repayment schedule of loans and so on," Tetrashvili said.

He noted that another serious problem of the sector is the lack of funding. "Today, it is very difficult to find financing, especially in manats. A number of investors left the market after the devaluations [in February and December 2015] that led to decline of the microcredit market. Many NBCOs had problems with returning funds to investors, which is due to the fact that their clients, in turn, began to experience difficulties in repaying loans. I can say that we are one of the few organizations that was able to repay loans to our creditors on time and did not ask for restructuring," noted Tetrashvili.

At the same time, he continued, foreign investors lent mainly in foreign currency, and local players needed the manat loans.

"We need tools to hedge currency risks so that we can convert foreign currency into manats. If using current tools, then the manat funds are becoming expensive, so finding cheap resources in the national currency is one of the main challenges," Tetrashvili said.

As the TBC Kredit director noted, despite the fact that this year investors will still behave somewhat stiffly, next year they will invest in local companies more confidently.

TBC Kredit has been operating in Azerbaijan since 1999. Starting from 2007, 75 percent of its stock belongs to the Georgian TBC Bank, and 25 percent belongs to Enclude Holding, USA (former ShoreBank International, USA).


Follow the author on Twitter: @AzadHasanli

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