Moody’s says “cleaning” in Azerbaijan’s banking sector will continue

Moody’s Investors Service forecasts that number of banks in Azerbaijan will continue to decline this year.

“I think the "cleaning" process in Azerbaijan’s banking sector will continue this year. This means that number of banks in Azerbaijan will  decline”, Maria Malyukova, an Assistant Vice President at Moody's, told APA-Economics.  
 
According to her, the banks are still struggling against negative impacts of manat devaluation: “Of course, the main goal of the banks is to combat troubled loans. In other words, the main goal is to restructure the troubled loans and minimize the risks. One of the main challenges before the banks is decline of profit and loans and increase of interest rates on the background of increase of troubled loans. Capitalization remains at low level due to credit losses and currency risks”.
 
The Vice-president added that dollarization in deposit portfolio is still remaining at high level: “Some banks have open currency position which makes them sensitive against any volatility of currency”.
 
“Taking into account the economic situation and risks in the banking sector, I can say that our outlook on Azerbaijan’s banking sector is still negative”, she said. 

News.Az

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