Baku, Azerbaijan, July 19
By Ilkin Shafiyev - Trend:
The Azerbaijan Micro-Finance Association (AMFA) predicts a two-fold reduction in the share of problem loans in the loan portfolio of non-bank credit organizations (NBCO) next year, AMFA Executive Director Jala Hajiyeva told Trend.
"The share of problem loans in the NBCOs’ loan portfolio today is about 30-40 percent, down by half compared to the previous year. Nevertheless, it is still a very large share, when compared with average global indicators. Overall, the dynamics in this area are positive, but time is needed. Some NBCOs solve the problem by restructuring problem loans. In this case, each credit institution must reach an agreement with investors. The risks in this area will decrease after the repayment of problem loans issued at the expense of the foreign loans. Overall, we expect the twofold reduction of share of problem loans in the loan portfolio of non-bank credit organizations in 2019," Hajiyeva said.
The executive director of the association identified the sphere of small production and service enterprises, as well as cooperative farms when speaking about the priority areas for lending.
"The integration of individual farmers into cooperatives will help reduce the prime cost of the products manufactured by them, and, accordingly, they will be able to sell these products at a more affordable price. In addition, cooperatives can obtain financing at a lower cost. Because if several farmers take one large loan, this reduces operating costs and, accordingly, the interest rate is also reduced. The NBCOs, in turn, are interested in financing a more sustainable business of such type," Hajiyev said.
The loan portfolio of the NBCOs amounted to 393.2 million manats (3.3 percent of the total portfolio of credit institutions) in January-May 2018 according to the data provided by the Central Bank of Azerbaijan.
The official exchange rate for July 18 is 1.7 AZN/USD.
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