Bank asset quality indicators in region may deteriorate again


July 4, Fineko/abc.az. The transfer of problem loans to banks of "bad" assets contributed to the "clearing" of portfolios of some banks, says S&P Global Ratings' report on the financial position in the region, including Azerbaijan.

The report says that, according to forecasts, this improvement may be temporary due to the lack of reforms in banking supervision, bankruptcy procedures and corporate governance.

According to the report, insufficient progress in removal of important shortcomings of banking supervision and corporate governance will continue to exert pressure on the quality of banks' assets in the region. The decline in average economic growth rates, as well as the low level of efficiency of the legislative system and bankruptcy procedures in the countries of the region, will constrain the "clearing" of the sector.

As a result, in case of negative changes in the economic situation in the next few years, the quality indicators of banks' assets in the region may deteriorate again.