AZE.US
The volume of problem loans in Azerbaijan continues to rise, with overdue credit reaching 635.4 million manats, or about $374 million, as of June 1, according to Central Bank data.
The figure was 3.45% higher than on May 1. Since the beginning of the year, the amount of overdue loans has increased by 21.15%, while the annual rise reached 25%.
By the end of May, overdue loans accounted for 1.9% of the country’s total credit portfolio.
Economists link the increase to several factors, including high interest rates on consumer loans, weaker repayment capacity among some borrowers and broader signs of slower economic activity. These pressures affect not only households but also entrepreneurs, who may find it harder to service existing debts when business activity weakens.
Banking specialists say borrowers should carefully assess their income and repayment capacity before taking out a loan. Some people, experts note, take loans without real necessity, and in some cases borrow from several banks at once, creating a financial burden that later becomes difficult to manage.
Specialists say a loan may be justified if it supports work, business activity or an urgent financial need. But unnecessary borrowing, especially under the influence of aggressive advertising, can quickly lead to repayment problems.
Borrowers who are already struggling are advised to contact their bank and ask about restructuring options. This may include softer repayment terms, a lower monthly burden or a longer repayment period.
The growth of problem loans also creates risks for banks. Financial institutions earn income by issuing loans, but when borrowers fail to repay, banks face additional pressure and may become more cautious in lending.
Experts urge citizens not to be misled by attractive advertisements for quick loans and to avoid unnecessary credit, especially for spending that is not essential.
AZE.US