Fitch announces latest state of Azerbaijan's banking sector

Fitch announces latest state of Azerbaijan
# 17 February 2024 13:01 (UTC +04:00)

"The banking sector in Azerbaijan has improved, but is still fairly weak, reflected by Fitch's Banking System Indicator score of 'b'," the international credit ratings agency Fitch Ratings noted, APA-economics reports.

The overdue loans ratio in Azerbaijan's banking sector decreased to a record low 1.8% at end-2023 (end-2022: 2.9%), underpinned by strong loan growth, loan recovery and write-offs.

"Capitalisation declined, but remains adequate, with the sector Tier 1 capital ratio at 13.5% at end-2023 (15.2% at end-2022). Profitability remained robust, supported by high asset yields and moderate funding costs due to the prevalence of current accounts in the deposit base," Fitch noted.

The agency also added that deposit dollarisation fell below 40% in 2023, approaching the historical peer median of 35%; foreign-currency loans fell to 19% of the sector loans at end-2023 (20% end-2022).