We revised our economic risk trend for Azerbaijan to stable from negative, owing to the stabilization of major macroeconomic metrics, Standard & Poor’s said in EMEA Financial Institutions Monitor For 1Q2018.
‘Although the financial system remains relatively weak, we believe it will gradually recover in tandem with improved growth. At the same time, we still think that Azerbaijan’s economy remains in a correction phase, with a high impact on its banking sector. This can be seen in elevated credit costs and nonperforming loans (NPLs) on Azeri banks’ balance sheets. We expect bank lending to demonstrate anemic or even negative growth over 2018. This year, NPLs (including restructured loans) will likely peak at 23-25% of systemwide loans, with restructured loans accounting for about one-third of that amount’, S&P said.