AZE.US
Problem loans in Azerbaijan have risen sharply, with overdue debt now exceeding 600 million manats.
According to official statistics, overdue loans reached 619.6 million manats as of April 1. That is a 28.7% increase compared with the same period last year.
The pace of deterioration has also picked up in recent months. Economists say the main reason is not only borrowing itself, but the pressure on household income.
Food, services and daily expenses have become more expensive. Salaries may be rising in nominal terms, but inflation is eating into that growth. For many families, less money is left at the end of the month to cover loan payments.
That is especially difficult for borrowers who already have several financial obligations, including bank loans, credit cards or loans issued through mobile applications.
Another factor is the expansion of the credit market. Banks and financial institutions have been lending more actively, especially for consumer purposes. Getting credit has become easier. Paying it back has become harder.
Experts also point to the structure of lending in Azerbaijan. A large share of loans goes not to business activity, but to consumption. Such loans do not create new income for the borrower, which makes repayment risk higher when household expenses increase.
According to the Central Bank, 93.8% of loans are issued by banks. The rest comes from non-bank credit organizations and credit unions.
For now, economists do not describe the situation as critical for the financial system. Problem loans make up about 1.9% of the total credit portfolio. By banking-sector standards, that is still not an emergency level.
But the trend is worrying.
If prices continue to rise faster than real household income, more borrowers may fall behind on payments. That would force banks to monitor credit risks more carefully and could make lenders more cautious.
For ordinary citizens, the signal is also clear: fast credit may solve a short-term problem, but it can create a longer one if the loan is used simply to cover everyday expenses.
Problem loans are not rising because people suddenly stopped wanting to pay. In many cases, the explanation is simpler: household budgets are being squeezed, and the money runs out before the next payment date arrives.
AZE.US