BAKU, Azerbaijan, April 15. The balance of non-banking financial institutions (NBFI) expanded last year, with attracted funds directed toward the net loan portfolio, the Central Bank of Azerbaijan (CBA) told Trend.
The total assets of NBCIs operating in the country increased by 31 percent (235 million manat ($138.2 million)) during the year, reaching 993 million manat ($584.1 million).
The main contributor to this growth was the net loan portfolio.
"Throughout the year, the net loan portfolio grew by 28 percent (159 million manat ($93.5 million)), primarily driven by consumer loans. Along with the growth in the assets of NBFIs, the volume of funds attracted from banks and other financial institutions also increased.
The total liabilities of NBFIs grew by 21 percent during the year, reaching 537 million manat ($315.8 million). The increase mainly resulted from loans provided by resident and non-resident banks and other financial institutions (50 million manat ($29.4 million)). Other liabilities also made a significant contribution, with a 29 percent increase compared to 2023, mainly due to loans provided by the founders to the NBFIs," the bank said.
The CBA noted that in 2024, consumer loans continued to make up the largest portion of NBFIs’ portfolios.
"Over the year, the loan portfolio grew by 35 percent (208 million manat ($122.3 million)), reaching 808 million manat ($475.2 million). Consumer loans saw an annual increase of 41 percent (150 million manat), mortgage loans rose by 247 percent, and business portfolios grew by 12 percent (27 million manat ($15.8 million)).
By the end of 2024, 63.4 percent (512 million manat, $301.1 million) of the loan portfolio of NBFIs was composed of consumer loans, 31.3 percent (253 million manat, $148.8 million) of business loans, and 5.3 percent (43 million manat, $25.2 million) of mortgage loans. Within the business portfolio, 32 percent (80 million manat, $47 million) was allocated to the trade sector, 22 percent (55 million manat, $32.3 million) to the agricultural sector, 20 percent (51 million manat, $29.9 million) to other non-production and service sectors, 18 percent (46 million manat, $27 million) to the transport sector, and 8 percent (21 million manat, $12.3 million) to other sectors.
While the quality of the consumer loan portfolio deteriorated compared to previous years, the quality of business loans showed improvement. In 2024, the sector's non-performing loan (NPL) portfolio rose by 51.7 percent to 112.7 million manat ($66.2 million). The NPL ratio increased by 1.6 percentage points, reaching 13.9 percent during the year. The NPL portfolio for consumer loans rose by 4 percentage points to 15.8 percent, while the NPL ratio for business loans decreased by 1.4 percentage points to 12.5 percent," the report said.
Regarding regional credit activities, NBCIs were more active compared to banks.
"In 2024, 29 percent of NBFIs’ loan portfolio consisted of loans provided in economic regions, while the corresponding figure for banks was 23 percent.
The profitability of NBFIs has increased: In 2024, NBFIs achieved high profitability, with a net profit of 157 million manat ($92.3 million), continuing the positive trend in the sector’s capital position.
During the year, the capital of NBFIs grew by 45 percent (141 million manat ($82.9 million)), reaching 456 million manat ($268.2 million), driven by both capital injections and the generation of profit. Retained earnings more than doubled to 231 million manat ($135.8 million), while authorized capital rose by 18 percent (37 million manat ($21.7 million)), reaching 241 million manat ($141.7 million).
As of the end of 2024, there were 57 NBCIs and 36 credit unions (CUs) operating in Azerbaijan, bringing the total number of non-bank credit institutions to 93.
The high growth of NBCIs’ assets over the past two years has strengthened their role in the financial intermediary function. In total, NBFIs’ market share in the financial system, based on assets, was 1.6 percent. During the year, the licenses of four NBFIs were revoked, and three received new licenses.
Currently, 15 of the NBFIs are foreign-owned, with 12 of them having foreign capital share exceeding 50 percent. Over the year, the number of employees increased by 257, reaching 3,546, and the number of branches grew by 8, totaling 304," the report concluded.
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