BAKU, Azerbaijan, October 21. Prospects for the Azerbaijani banking sector’s credit quality are favourable due to the moderation of legacy risks, improved asset structure, tighter regulation and operating conditions that are supported by higher oil prices, Trend reports via international rating agency Fitch Ratings.
"Credit penetration in Azerbaijan is among the lowest in the CIS+ region, with a loans/GDP ratio of about 15 percent, but banks should be able to increase their business volumes and revenue generation now that their capital and liquidity have improved. Fitch forecasts strong sector loan growth (25 percent in 2023 and 20 percent in 2024), driven by retail lending," the agency said.
Fitch revised the outlook on the ‘b+’ operating environment score for Azerbaijani banks to positive from stable this month.
"This reflects our expectation that financial stability in Azerbaijan's highly cyclical economy will continue to improve due to the strengthening of the financial profile of domestic banks and tighter regulatory supervision. The latter is also leading to a reduction in asset quality risks," the agency emphasized.