BAKU, Azerbaijan, November 13. Asset quality of Azerbaijan Mortgage and Credit Guarantee Fund (MCGF) remains strong, with impaired loans accounting for less than 0.1% of the total mortgage and rent-to-own portfolio, Trend reports via Fitch.
“MCGF's financial profile is underpinned by ongoing and substantial state support, reflected in its stable but modest profitability and resilient business model. The fund receives annual capital injections from the state, totalling AZN172.7 million in 2024-2025, which it has used to finance social mortgages. The central bank's buyback guarantee on the fund's bonds is another form of support, under which the bank is obliged to buy back bonds from bondholders on request. The central bank currently holds about 80% of MCGF's outstanding bonds,” reads the latest report issued by Fitch.
Fitch analysts note that the fund is one of four organisations in the country that are exempt from the payment of income tax.
“The state provides indirect support through special risk group classification of the fund's bonds and its products, increasing their attractiveness for banks, compared with commercial bonds. Fitch expects regulatory and political influence to remain strongly supportive of MCGF, at least in the medium term. The state plans to provide AZN100 million of financing in 2026. Most of these funds are for the provision of social mortgages, but also for subsidising loans to SMEs.
The fund is a non-commercial but profitable state agency, supported by low-cost funding. It reported a profit of AZN23.2 million in 2024, unchanged from the previous year. A modest increase in net interest income, resulting from a gradual expansion of the loan portfolio, was offset by higher personnel expenses,” reads the report.