According to Paklin, the banking sector of Azerbaijan has been generating profits for three years in a row and this trend will continue. In his words, the main banks that generate profits are the International Bank of Azerbaijan (IBA), PASHA Bank, Kapital Bank and Xalq Bank, while the rest operate with losses.
As the analyst commented, the gap between the leading and other banks will grow, but the solution of the issue of problem loans can have a positive effect on a number of banks in the country.
The analyst also noted that Azerbaijan ranks 1st in the region in terms of dollarization of deposits, but these figures are declining, and Azerbaijan has average figures with regards to its foreign currency loans.
Paklin added that the share of problem loans decreased to 15 percent in late 2018.
"For the last two years, we have been observing a significant improvement in the sector, which is caused by the clearing of the balance sheets of local banks. In the baseline scenario, without taking state support into account, we expected that the proportion of problem loans could have dropped to 12 percent by the end of 2019. However, taking into account the support measures for the population, this figure may be closer to 10 percent," he said.
According to the analyst, capitalization in the country has been growing for the last three years and this trend will also continue.