BAKU, Azerbaijan, February 21. Gradual diversification of Azerbaijan's economy and decreasing dependence on hydrocarbons opens more opportunities for the development of local banks, the reports of Moody's (international rating agency) says, Trend reports.
"In Azerbaijan, government expenditure is supporting the development of its non-oil sector. In the long term, in five or more years, we expect that economic growth in Azerbaijan through diversification of the economy and preservation of monetary stability will create a stimulus for the growth of Azerbaijani banks," the agency's experts indicate.
Meanwhile, large companies in Azerbaijan (many in the fuel and energy sector and in the extractive industry) generally have accounts in major banks.
"Smaller banks have much lower liquidity. This makes it difficult for them to expand lending as it requires them to take on additional risks," Moody's reports.
The rating agency notes that the structure of lending by banks in Azerbaijan is dominated by their issuance of short-term loans, which account for up to 89 percent (the highest in the CIS).
"Concentrated economies in Azerbaijan and Kazakhstan prefer short-term lending to long-term lending, and this maximizes returns," the rating agency's experts emphasize.
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