S&P Global Ratings affirms Azerbaijani banks' ratings
The international rating agency S&P Global Ratings has affirmed the ratings of Azerbaijani banks, News.Az reports citing the rating agency.
According to the information, the main rating of local banks was kept unchanged at "bb-".
S&P noted that the Azerbaijani banking sector benefits from favorable macroeconomic conditions as a result of increased credit demand and improved asset quality against the backdrop of high commodity prices.
Thus, oil prices and the level of economic growth had a positive impact on the growth of the banking sector's loan portfolio in Azerbaijan: "In 2024, the sector's loan portfolio increased by approximately 20% as a result of an increase in both retail and corporate loans. We expect that infrastructure investments and a decrease in the main policy interest rate will lead to a double-digit growth of the loan portfolio in 2025-2026".
The rating agency said that as of the end of 2024, loans granted by Azerbaijani banks to the construction sector accounted for about 5% of the total loan portfolio, and mortgage loans for 15%. The limited allocation of funds by banks to these sectors helps reduce possible risks.
S&P also added that real estate prices in Azerbaijan increased by 10%-15% in 2024 and the increase in real estate prices in 2025 is forecast to be less than 10%.
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