“Probability of government support for the largest banks in Azerbaijan remains high”, Moody's international rating agency released information in this regard, APA-Economics reports.
It was stated that total reserves accumulated by the sovereign wealth fund, State Oil Fund of the Republic of Azerbaijan, and the central bank exceeded 100% of GDP as of year-end 2023. Thus the government is well placed to support the economy and the highly dollarised banking system, which is small, with total assets at about 35% of GDP.
The agency noted that three out of five rated Azerbaijani banks' long-term deposit ratings incorporate an uplift from their Baseline Credit Assessments (BCAs) as a result of government support, reflecting their systemic importance: “We rate five out of 23 commercial banks operating in Azerbaijan, which together accounted for around 58% of the system total assets as of 31 December 2023. The banking sector held total assets of AZN 49 billion as of year-end 2023, which accounts for 35% of the country’s nominal GDP. Azerbaijani banks’ BCAs, our view of their standalone financial strength, are distributed over a three-notch range from ba3 to b2, with a weighted average BCA of b1. The weighted average long-term deposit rating is Ba3.”
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