Moody's expects growth of bank lending in Azerbaijan
Baku, Azerbaijan, Aug. 8
By Azad Hasanli - Trend:
The loan portfolio of Azerbaijani banks will grow by 5 to 10 percent in 2018, the international rating agency Moody's forecasts.
In its new report, the agency changed the forecast for Azerbaijan's banking system from negative to stable.
According to the agency, the resumption of economic growth is likely to cause a gradual increase in demand for loans, mainly due to the growth of loans to the population. Nevertheless, dynamics of corporate lending in 2018 will remain weak.
It is noted in the report that the share of loans in the total assets of banks fell from 74 percent in 2014 to 41 percent in 2017.
Moody's expects further clearing of loan portfolios of Azerbaijani banks from problem loans and hedging the short currency position of the International Bank of Azerbaijan. At the same time, the consolidation of the banking sector will continue, as banks with capital shortages are seeking to join the more financially strong banks.
The capital adequacy indicators will remain broadly stable against the backdrop of renewed, albeit modest, growth in lending, as well as the provision by shareholders of the financial support to private banks, the report says.
The credit institutions of the country increased lending by 2.95 percent as of July 1, 2018 compared to the figure at the beginning of the year, to 125.6 million manats according to the data of the Central Bank of Azerbaijan. The volume of overdue loans has increased by 7.3 percent to 1,745.7 million manats since the beginning of the year. At the same time, the share of overdue loans increased from 13.8 to 14.4 percent over the same period.
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