In Azerbaijan, the financial crisis arrived late. Unlike Russia, Kazakhstan or Ukraine, Azerbaijani banks had barely touched the Eurobond market, so the global liquidity squeeze did not feed through directly via bond spreads.
But the crisis arrived all the same. According to Central Bank of Azerbaijan (CBA) data, the banking sector’s aggregate pre-tax profits halved to 140m manat ($178m) in 2010, and were flat year on year in the first five months of 2011. Overdue loans reached 6.3% of total loans in May 2011 (the most recent data available), compared with 3.9% at the start of 2010, and foreign bankers in Azerbaijan suggest that banks are recognising loan losses rather gradually. Total loan portfolios are stagnant, growing less than 0.2% in the year to May 2011, compared with 17% in 2009 and a soaring 54% in 2008.
