Azerbaijan's banking sector demonstrated stable asset growth trend by late 2020

Finance Materials 5 January 2021 16:07 (UTC +04:00)
Azerbaijan's banking sector demonstrated stable asset growth trend by late 2020

BAKU, Azerbaijan, Jan. 5

By Zeyni Jafarov - Trend:

2020 was remembered for the Azerbaijani financial and banking sectors as the year of the policy of avoiding global shocks, supporting macroeconomic stability, reconstruction and economic growth, Executive Director of the Azerbaijani Center for Analysis of Economic Reforms and Communication Vusal Gasimli said.

Gasimli was speaking about the economic and social results of 2020, Trend reports.

“Under the influence of the coronavirus pandemic, the fluctuations observed in the banking sector in the first half of 2020 have stabilized since the second half of the year while the loan portfolio, total assets, net profit, and banks' capital have mostly come out of the negative situation,” the executive director added.

“In particular, starting from the second half of 2020, positive signals were observed in terms of the development of the banking sector, which was the result of an effective crisis response policy under the leadership of the president,” the executive director said.

“The assets of the banking sector showed stable growth trends and reached 30.7 billion manat ($18.05 billion) by the end of 2020,” the executive director said. “The steady positive trend is observed in the operating profit of the banks.”

Gasimli also stressed that as a result of the regulatory reform, the quality ratios of loan portfolios have improved.

“The total volume of overdue loans, considered one of the most important indicators, reached 922.9 million manat ($542.8 million) while its share in the total loan portfolio decreased up to 6.3 percent, which is three percent less than in the same period of 2019,” the executive director said.

“The steady reduction in overdue loans recently was the result of ongoing reforms in the Azerbaijani banking system and this achievement has made Azerbaijan one of the most successful countries in the CIS,” Gasimli added.

“At the same time, one of the issues of particular importance from the point of view of the stability of the sector was the formation of trends in long-term lending,” the executive director said. “The share of long-term lending in the total portfolio increased by three percent compared to the corresponding period of 2019 and reached 83 percent.”

The executive director stressed that proceeding from the analysis, it was clear that the impact of leaving four banks from the system on the decrease in deposits is already accompanied by stabilizing trends.

"The process of de-dollarization of savings and loan portfolios which was observed in 2019 continued in 2020,” Gasimli said. “The share of manat in deposits has already reached 42 percent for the year, which is the biggest figure over the past five years and can be considered the best indicator of big confidence in the stability of the national currency."


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