The overdue loans ratio in Azerbaijan's banking sector decreased to a record low 1.8% at end-2023 (end-2022: 2.9%), underpinned by strong loan growth, loan recovery and write-offs, Report informs citing Fitch Ratings.
"Capitalisation declined, but remains adequate, with the sector Tier 1 capital ratio at 13.5% at end-2023 (15.2% at end-2022). Profitability remained robust, supported by high asset yields and moderate funding costs due to the prevalence of current accounts in the deposit base," the agency said.
It further noted that deposit dollarisation fell below 40% in 2023, approaching the historical peer median of 35%; foreign-currency loans fell to 19% of the sector loans at end-2023 (20% end-2022).
It considers that the country's banking sector has improved, but is still fairly weak, reflected by Fitch's Banking System Indicator score of 'b'.