Azerbaijan.US
The volume of non-performing loans (NPLs) in Azerbaijan reached 805.1 million manats in the first 10 months of the year, according to available data. With results for the final two months yet to be published, analysts do not rule out further growth.
The figure represents a 14.1% increase compared to the same period last year, translating into an annual rise of roughly 102 million manats. The increase was driven primarily by consumer and business lending.
Non-performing consumer loans rose sharply, climbing from 246.1 million manats at the end of last year to 375.1 million manats over the reporting period – an increase of nearly 79 million manats.
Problem loans in the business segment also expanded, rising by 72.1 million manats to 447.1 million manats.
Economist Khalid Kerimli attributes the upward trend to changes in lending conditions. He notes that until the summer months, banks eased access to credit while simultaneously raising interest rates, increasing the financial burden on borrowers.
“Since 2023, higher interest rates have continued to weigh on both households and businesses. Combined with rising prices, this has worsened borrowers’ financial positions and made loan repayment more difficult,” Kerimli said.
In contrast, non-performing mortgage loans declined during the year. At the start of the year, problem mortgage debt stood at 34 million manats, but by the beginning of last month it had fallen to 32.1 million manats.
Kerimli expects further risk-mitigation measures in the banking sector. Since the summer, new regulatory rules limit credit lines and credit card ceilings to no more than five times a borrower’s officially declared income – a step the economist describes as a prudent safeguard.
He added that these measures suggest no immediate systemic risks in the financial sector, with banks pursuing a more cautious lending policy.
For comparison, total non-performing loans in Azerbaijan amounted to 655.1 million manats at the end of last year.
