AMF was negatively affected by the continued recession and subdued economic activities in the country in 2016, Fitch Rating reported.
According to the agency, this was due to lower oil prices and subsequent manat devaluation, amid continued rebalancing of sovereign finances and a weak banking sector:”The government's policy response to the challenging macro environment is still under development, which could impact AMF in the medium term”.
AMF has been receiving annual state contributions since its establishment. As of end-2016 the cumulative contributions totalled AZN316m and the government has approved an additional AZN50m equity injection in 2017.
Fitch projects AMF's mortgage portfolio could grow 30%-40% in 2017 after a slight decline in 2016 (unaudited 2016: AZN539m), supported by an AZN50m equity injection and upcoming AZN200m bond issue.
However, Fitch estimates that the return on equity (net income/equity and reserves) ratio could moderately decline to 1.65% from an average 1.97% in 2014-2016 since AMF became an income taxpayer from end-2016.