Standard & Poor's expects 10% increase in Azerbaijani banks' loan portfolio in 2011

Lending in the Azerbaijani banking sector will continue to grow in 2011. As a result, the level of expenses to form new reserves is likely to remain near two percent, as in 2010, provided that there will be no unfavorable changes in the global or domestic markets, according to Standard & Poor's Ratings Service’s report titled "Credit costs are stabilizing for banks in Russia, Kazakhstan, Ukraine, Belarus, Azerbaijan, Georgia, and Uzbekistan".

"In 2010 total amount of loans in the banking sector increased by 14% and in 2011 we expect that it will grow at least 10% more," the report said.

As of Dec.31 "nonstandard" loans (as defined by regulating authority) were at 8%, and delinquent loans at 4.7%.

Reserves for losses on loans formed by banks, covering 7.9% of total amount of the issued loans (as of Dec.1 31, 2010), do not allow adequate absorption of potential costs to form new reserves, Service’s analysts confer.


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