Azerbaijan Central Bank Prioritizes Financial Diversification and Loan Stability
Taleh Kazimov announced plans to develop non-banking financial sectors while dismissing risks from a rise in overdue consumer loans.
Governor Taleh Kazimov announced a strategic shift to diversify Azerbaijan's financial landscape, aiming to reduce the banking sector's current dominance of 94–95% of the total financial market. During a press conference in Baku on October 29, Kazimov identified fintech, capital markets, and insurance as underdeveloped areas with substantial potential for growth. He contrasted the national bank-based system with the capital market-based model of the United States, stating the Central Bank will focus on creating conditions for market participants to expand these segments.
Addressing concerns over the banking sector, Kazimov dismissed the rise in overdue consumer loans as a non-systemic issue. He described the current growth in non-performing loans as normal and acceptable, noting that the regulator only becomes concerned when such loans reach the 4–5% range. He emphasized that stability is maintained because the provision coverage ratio for consumer loans is more than double the value of the loans themselves.
Kazimov further clarified that new lending regulations are not intended to restrict the volume of loans available to individuals. Instead, the regulations aim to improve the assessment and distribution of credit risks and foster better relationships with counterparties.
