Profitability Of Azerbaijani Banks To Remain Stable, Says Moody's

The latest report by Moody's reveals that the average net income to tangible assets ratio of the Azerbaijani banks we rate should remain solid at around 2%-3%, supported by robust net interest margins, solid fee and commission income, and contained loan-loss provisioning charges.

“Margins have grown in recent years, reflecting an increasing share of higher yielding loans to retail borrowers and small and medium sized enterprises, with the economic recovery driving strong loan demand from these segments. However, there may be margin pressure, as declining Central Bank of Azerbaijan policy rates decrease the rates on banks' interest-bearing assets while rates on their funding remain fairly rigid because of fierce competition for customers. Increased obligatory reserve requirements will somewhat constrain still strong profitability,” reads the report.

Will be updated

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