Azerbaijan's banking system is recovering after a protracted correction, says the assessment of the banking sector of Azerbaijan by the international credit rating agency S&P Global Ratings, APA-Economics reports.
"Favorable commodity price dynamics have stimulated credit demand and resulted in improved asset quality. We expect the system will continue recovering, supported by strong growth in lending in 2021-2023. Stable profitability. We forecast 2024 profitability in line with 2023 levels, supported by new lending growth with a focus on retail products, normalizing cost of risk, and control over operating expenses. A moderate deterioration of asset quality. We expect nonperforming loans could increase to 3.5% over the next 24 months from 2.7% at end-April 2024, as loans season in a low-growth environment, and banks are likely to face additional provisioning needs. Credit losses in 2024-2025 will likely remain at 1.0%-1.2% of average loan books." the Agency noted.
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