The portfolio quality of the Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan (MCGF) remains stable with impaired loans representing less than 0.1% of the total, Report informs referring to Fitch Ratings.
MCGF's debt is dominated by mortgage and covered bonds, which according to the fund represented 85% of the total debt as of October 31, 2022.
“The residual was represented by uncovered bonds. The Central Bank is a bondholder of more than 30% of the fund's outstanding debt while the rest is held by commercial banks,” Fitch noted.
The fund's cash totaled 43.5 million manats ($25.588 million) as of October 31, 2022 and was almost entirely held in the Nostro accounts of the Central Bank. Additional liquid assets included 39 million manats ($22.941 million) deposits in commercial banks and 92.2 million manats ($54.235 million) in government bonds.
The fund is a non-commercial organization and profit is not its purpose, but it continues to demonstrate profitability, supported by low-cost funding. In 2021, the fund recorded 14 million manats ($8.235 million) profit, up from 7.2 million manats ($4.235 million) one year earlier, due to expansion of the loans portfolio by 30%.
MCGF is exempt from income tax.