BAKU, Azerbaijan, April 16. The balance sheet of the non-bank credit organizations (NBCOs) in Azerbaijan expanded against the backdrop of directing raised funds into the net loan portfolio last year.
Data obtained by Trend from the Central Bank of Azerbaijan shows that the total assets of NBCOs operating in the country increased by 31 percent (235 million manat, or $136.3 million), reaching 993 million manat ($576.94 million).
According to the information, the primary catalyst for expansion was the net lending portfolio.
Over the year, the net loan portfolio grew by 28 percent (159 million manat, or $92.22 million), mainly due to consumer loans. Against the backdrop of asset growth, the volume of raised funds from banks and other financial institutions also increased.
The total liabilities of NBCOs grew by 21 percent (94 million manat, or $54.52 million), totaling 537 million manat ($311.46 million), mainly due to loans from resident and non-resident banks and other financial institutions (50 million manat, or $29 million). The share of other liabilities in the growth of NBCO liabilities was also significant. Other liabilities increased by 29 percent (48 million manat, or $27.84 million), most of which consisted of loans provided by NBCO founders.
It was noted that in 2024, consumer lending persisted as a pivotal component within the NBCO asset allocation framework.
Over the year, the loan portfolio grew by 35 percent (208 million manat, or $120.64 million), reaching 808 million manat ($469.36 million). Consumer loans grew by 41 percent (150 million manat, or $87 million), mortgage loans by 247 percent (31 million manat, or $17.98 million), and business loans by 12 percent (27 million manat, or $15.66 million).
By the end of 2024, 63.4 percent of the NBCO loan portfolio (512 million manat, or $297.12 million) consisted of consumer loans, 31.3 percent (253 million manat, or $146.74 million) were business loans, and 5.3 percent (43 million manat, or $24.94 million) were mortgage loans. Of the business loan portfolio, 32 percent (80 million manat, or $46.4 million) was in the trade sector, 22 percent (55 million manat, or $31.9 million) was in agriculture, 20 percent (51 million manat, or $29.58 million) was in other non-production and service sectors, 18 percent (46 million manat, or $26.68 million) was in transportation, and the remaining eight percent (21 million manat, or $12.18 million) went to loans in other industries.
Despite a deterioration in the quality of consumer loan portfolios compared to the previous year, there was an improvement in the quality of business loans. In 2024, the portfolio of non-performing loans (NPLs) in the sector increased by 51.7 percent, reaching 112.7 million manat ($65.5 million). During the year, the NPL ratio increased by 1.6 percentage points to 13.9 percent. The NPL ratio for consumer loans increased by 4 percentage points to 15.8 percent, while the ratio for business loans decreased by 1.4 percentage points to 12.5 percent.
According to the information, NBCOs exhibit a heightened engagement in regional lending activities compared to traditional banking institutions.
In 2024, 29 percent of the NBCO loan portfolio consisted of loans issued in economic districts. For banks, this figure was 23 percent. Profitability in the NBCO sector grew. In 2024, NBCOs earned high profits (net profit of 157 million manat, or $91.06 million), and despite the rise in profitability, the sector maintained a positive trend in capital position. Over the year, NBCO capital increased by 45 percent (141 million manat, or $81.78 million), reaching 456 million manat ($264.48 million).
The growth in capital was due to both capital injections and profit generation within the NBCO sector. Thus, over the year, retained earnings grew more than twice, reaching 231 million manat ($134.98 million), and authorized capital increased by 18 percent (37 million manat, or $21.46 million), totaling 241 million manat ($139.78 million).
By the conclusion of 2024, the landscape comprised 57 operational non-banking credit organizations (NBCOs) alongside 36 credit unions, culminating in a total of 93 non-bank credit entities.
Over the last two years, the high growth of NBCO assets further strengthened their role in financial intermediation. Overall, the share of NBCOs in the financial market by total assets was 1.6 percent. During 2024, four NBCOs had their licenses revoked, while three NBCOs obtained licenses.
Currently, out of the active NBCOs, 15 have foreign capital, with 12 of them having foreign capital exceeding 50 percent. Over the year, the total number of NBCO employees increased by 257 people, reaching 3,546, and the number of branches grew by eight, totaling 304.