S&P Global Ratings international credit rating agency released the high risks for the banking sector of Azerbaijan in the second quarter of 2023, APA-Economics reports citing Bank's risk assessment on the banking sector.
S&P Global Ratings has re-evaluated Azerbaijan with 9 points on a 10-point scale due to the increased level of risks in this sector.
The rating agency has kept the economic and industrial risk trends for the banking sector "stable".
"Bucking the global trend of tightening funding conditions, the emerging banking sectors of Armenia, Azerbaijan, Georgia, Kazakhstan, and Uzbekistan got a boost from a substantial inflow of nonresident deposits in 2022 due to the war in Ukraine and the increased instability in the region as a result.
This strengthened banks' funding bases and had either a neutral or positive impact on their funding costs. Although the impact is likely to be temporary and we do not expect the same strong inflows this year, we do not think that the nonresident deposits will leave the banking sectors abruptly. We therefore consider the related risk to be manageable," noted in the assessment.