According to her, if next devaluation does not occur in the near perspective, the banking service may stabilize: “Azerbaijan’s GDP growth is expected to make 3.3% in 2016. Manat devaluation negatively affected the banking sector: increase inflation, purchasing power of population lowered. Decline of expenses from budget, including capital investments affect the banking sector. We are witnessing negative tendency in the lending. The macroeconomic situation of the country negatively affects the banking sector. IN the first quarter of 2016, the loans portfolio in Azerbaijan’s banking sector dropped 9%”.
She also touched upon the dollarization level in Azerbaijan: “In 2016, 4.5-5% credit losses are forecasted in Azerbaijan. Prior to devaluation, the deposits in foreign currency made 50%. After devaluation, these deposits rose to 82%, which is the highest indicator in CIS. High dollarization extends difference between assets and liabilities, increases currency risks”.
According to her, the Agency’s experts think the government will provide support to banking sector, especially banks with high loan portfolio.
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