Standard & Poor's assesses Azerbaijani banks' readiness to take risks

Azerbaijani banks show a moderate readiness to take risks, Standard & Poor's said on Monday.

The International Bank of Azerbaijan (IBA) still holds the dominant position in the country's banking system. About 30 percent of banking system assets accounts for it. IBA and other banks are able to choose the most reliable borrowers in the domestic market," the report said.

The government's willingness to privatize the IBA has recently increased, but the S&P believes that it will require considerable support of the capital and resources of the bank by the state, in part, this support has already been provided.

"Evaluation of the resource base of the banking system as subject to very high risk, reflects structural weaknesses, including a relatively low share of loans funded by deposits (60 percent)," the statement said.

However, according to S&P, the resource base of the banking system has improved in recent years due to increased use of retail deposits to fund asset growth, reducing the amount of funding from foreign sources, reducing the share of financing in foreign currency and the favorable policies of the Central Bank of Azerbaijan (CBA).

"The government of Azerbaijan has considerable potential and stands ready to support Azerbaijani banks with high and moderate value for the country's banking system. We continue to refer to Azerbaijan government as the governments, ready to support the national banking sector. This assessment takes into account the fact that the government has repeatedly provided support to the banking system in 2008-2011," the statement said.


/Trend/