MONETARY-CREDIT SECTOR

Major tendencies in different segments of monetary-credit system in June:

The rate of manat in regard to world leading currency - US dollar got consolidated in the currency market.

In June money mass grew considerably in the monetary market;

In June the Azerbaijani banks increased crediting in economy by 0.12%, while in a year it grew 12,51%;

Trading sessions on placement of T-bills were held in the stock market. The NBA continued the placement of short-term notes in the Baku Stock Exchange.

Currency market and rate of AZM

In Junel the exchange of AZM rate grew 49 manats and dropped from 4756 manats to 4707 in regard to USD.

Maximal rates were fixed on 1 and 30 June. The fluctuations between maximal and minimal figures made up 49 points.

In June the exchange rate of euro dropped by 167,69 manats (5859,63 manats per euro to 5691,95 manats per euro). The monthly minimum rates were fixed at 5677.95 EUR/AzM on 26 June and the monthly maximum rates was achieved on 1 June (the difference was 181,68 points).

Amount of currency trading sessions at BBVB in June 2005

As of totals of trading sessions in the currency section the Baku Interbank Currency exchange defined 5 leader banks in April 2005. The leader-banks of the currency exchange market were the International Bank of Azerbaijan (64.83%), Azerigasbank stock-investment bank (5.77), Amrahbank commercial bank (4.94%), Rabitabank stock-investment bank (8.81%), and Bank of Baku stock-commercial bank (2.93%).

In June 20 member-banks of the currency section participated in the auctions. They concluded 114 deals at 21 trading sessions with the total amount of 276,144bn manats, or $58,421m. 10.2% of the turnovers of currency section fell on SWAP-operations system which stated 16 January 2005.

In May deals with RUR and EUR made up 207m manats, or 2.2 times down as compared to April..

Exchange rate of AZM in regard to US dollar grew 1.08%, 51.39 points - from 4756 to 4702.94 manats per USD. Respectively, in May the average sustained rate of AZM comprised 4726,82 manats per US $1, whereas in April it was fixed at 4778,07 manats.

Leader banks on currency operations at BICEX

Money market

In June monthly pace of money mass rose 5.044%, while in 2005 a cut made up 12.7%. As of 1 July 2005 money mass (M2) made up 3851.3bn manats, against 3631.8bn manats of 1 May and 3418bn manats as of 1 January 2005.

In June the amount of cash money (Рњ0) grew 7,399%, while in 2005 a drop made up 11,913%. As of 1 July M0 turned out at 2673.6bn manats against 2489.4bn manats fixed as of 1 May and 2389bn manats fixed as of 1 January 2005.

In June the amount of non-cash money grew 3,09%, drop in 2005 was equal to 14,451%. As of 1 July non-cash funds grew to 11177.7bn manats against 1142.4bn manats fixed as of 1 May and 1029bn manats fixed as of 1 January 2005.

Parameters of monetary market, in bn AZM

Net international reserves and international assets, in bn manats

Credit market

In June the Azerbaijani banks increased crediting economy by 4,17%, while it grew 7.969% in 2005.

As of 1 July the banks allotted 5341,532bn manats worth of credits against 5573.947bn manats as of 1 June and 4947,302bn manats as of 1 January 2005.

As of 1 July 280.454bn manats of total credits were overdue against 264.696bn manats as of 1 June and 275,271bn as of January 2005. The statistics of overdue credits does not include the similar loans allotted by non-bank credit organization Agrarkredit.

The short-term credits comprised 3344.7bn manats (including 214.6bn manats of overdue loans) against 3663.5bn manats (including 197.9bn manats of overdue loan) as of 1 June and 3503.9bn manats (208.7bn manats) as of 1 January 2005. The long-term credits constituted 1996.8bn manats (66.9bn manats) against 1910.5bn manats (66.8bn manats) as of 1 June and 1443.4bn manats (66.6bn manats) as of 1 January 2005.

148.2bn manats, or 2.93% of the all credits, was spent in crediting the sphere of energy and natural resources. 5.88%, or 297.7bn manats fell on the agriculture sector, 31,8bn manats, or 0.63% - on state property, 324.5bn manats (6.41%) - on construction and property, 2.82% of all credits, or 42.6bn manats was distributed among different spheres of economy.

32.75% of all credits, or 1,657,3bn manats were distributed among physical entities, 28.73%, of 1,454bn manats was directed at the development of trade and services, 11.44%, or 578,8bn manats вЂ" in transport and communications, 8.42%, or 426bn manats in the heavy and light industry.

As of 1 July two state banks approved credit in the amount of 2488,323bn manats (-1,34% in June and +8,38% in 2005), private banks 2738,425bn manats (+3,04% in June and +21,275% in 2005).

As of 1 June credit portfolio of banks with foreign capital made up 1118bn manats (+17.49% and +46.54% respectively), including 101.2bn manats loaned by foreign banks (+5.52% and -2.97% respectively).

As of 1 July average annual rate of banking crediting the economy comprised 16.33% in national currency against 15.74% as of 1 June and 15.55% as of 1 January 2005. With consideration of inflation in January to June, real rate was equal to 11.53%. The average annual rate on banking crediting the economy made up 18.28% in foreign currency against 18.43% as of 1 June and 18.96% as of 1 January 2005.

As of 1 July the average annual rate of banking crediting of legal entities made up 15.4% in national currency against 15.17% as of 1 June and 16.06% as of 1 January 2005, while real rates вЂ" 10.6%. The average annual rate of banking credit of legal entities constituted 16.47% in foreign currency against 16.87% as of 1 May and 17.12% as of 1 January 2005.

As of 1 July average annual rate on banking crediting of physical entities comprised 18.65% in national currency against 17.27% as of 1 June and 14.22% as of 1 January 2005, while real вЂ" 13.65%. Average annual rate of banking crediting of physical entities made up 21,75% in foreign currency against 22.89% as 1 May and 22.24% as of 1 January 2005..

20 deals with one borrowing of 29,015bn manats was held at the Organized Interbank Currency Market (OICM), functioning under the trading system BEST. Interbank crediting in the OICM made up 11.16 per annum.

Banking sector

In June deposit base of Azerbaijani banks dropped 1.12% due to fall in deposits of legal entities, while since the beginning of the year it dropped 12.51%. As of 1 July the total amount of bank deposits and savings of legal and physical entities made up 5767.4bn manats against 5774.4bn manats as of 1 June against 5126.3bn manats as of 1 January 2005. 1177.7bn manats of the total sum fell on manat reserves, while 4589.7bn manats on hard currency. In May growth of deposits in manat made up 3.09% while currency deposits fell 0.9%.

As of 1 June the amount of savings and deposits of physical entities grew to 1.3%, while the savings and deposits of legal entities dropped 0.95%. The savings and deposits of legal entities of individual clients increased 6.79%, while deposits of corporate clients grew 16.21%

As of 1 July the amount of savings and deposits of physical entities grew to 2152.5bn manats against 2124.8bn manats as of 1 June and 2015.6bn manats as of 1 January 2005. As of 1 July the amount of deposits of legal entities made up 3614.9bn manats against 3649.6bn manats a of 1 May and 3110.7bn manats as of 1 January 2005.

In July 219.8bn manats (+11.74%) of savings and deposits of physical entities was implemented in national currency, while 1932.8bn manats (+0,248%) in hard currency. 957.9bn manats of deposits of legal entities (+1.29%) were implemented in manats, while 2704bn manats (-1.74%) вЂ" in hard currency.

As of 1 July the average rate of bank deposits in the national currency comprised 7.52% against 7.54% as of 1 May and 4.8% as of 1 January 2005. The real deposit rate for the first time made up 2.72% in January to June. The average rate of banking deposit in hard currency constituted 9.99% against 9.8% as of 1 June and 9.43% as of 1 January 2005.

As of 1 June the average rate of bank deposits of legal entities in the national currency comprised 6.3% against 6.53% as of 1 June and 5.89% as of 1 January 2005, while real rate was -1.5%. The average rate of banking deposit of corporate client in hard currency is 6.6% against 6.47% as of 1 April and 5.58% as of 1 January 2005.

As of 1 July the average rate of bank deposits of physical entities in the national currency comprised 9.66% against 9.59% as of 1 May and 9.61% as of 1 January 2005, while real rate вЂ" 4.86%. The average rate of banking deposit of individual client in hard currency is 10.52% against 10.31% as of 1 June and 10.53% as of 1 January 2005.

Status of attracted resources as of 1 July, 2004

14 deals with the total amount of 18.677bn manats at average annual rate of 28.3% were registered at the Organized Interbank Credit Market functioning on BEST trade system. Over the 5 months of 2005 BakIBOR in manat grew 1.63%, while in currency 1.11%.

As of 1 June 2005 BakIBOR in manats comprised 14.77% per annum, credits in US dollar 17.2% per annum.

2 auctions on placement of centralized resources were held at credit section of BBVB in May.

As of totals of June 2005 average statutory capital of the Azerbaijani bank dropped from 25.9bn manats to 26.2bn manats against 23.9bn manats as of beginning of the year and normative requirement for $3.5m as of aggravate capital of the bank, the National Bank of Azerbaijan announced. In June the net of branches of the banks grew 0.84%.

As of 1 July 43 banks had had 357 branches against 356 branches of 42 banks as of 1 June against 350 branches (44 banks) as of 1 January 2005.

In June the statutory capital of banks dropped from 1086.6bn manats to 1127.8bn manats ($223,118%), or 3.79%, while this year the statutory capital comprised only 7.3%. The capital of 41 commercial banks grew in June from 946.6bn manats to 987.8bn manats. The capital of two state banks was maintained at the level of 140bn manats. As of 1 July 2005 24,092bn manats of statutory capital falls per bank in average.

The total capital of 17 banks with foreign participation grew in June from 388.6bn manats to 442.4bn manats and their share in entire statutory capital comprised 39.2%, while net foreign investments (214bn manats) comprised only 19% of the total sum.

Stock market

In June the Finances Ministry held one auction on placement of T-bills. The auction with issue of 10bn manats resulted in the placement of 9.91bn manats (99.1% of the issue). Average sustained profitability rate of the auction comprised 10.59%, or lower than the annual inflation ratio which comprised 13.1.

No deal on T-bills was held in the secondary market.

In January to April the National Bank of Azerbaijan has placed 40.6bn manats. Average sustained profitability of rate of five auctions comprised 8.1%.

In June the National Bank of Azerbaijan (NBA) held three auctions on placement of short-term notes. The emitter succeeded to place only 20.5bn manats (68.3% of the issue) of the total of 30bn manats. The low interests on the notes are explained with their low profitability rate, which does not cover the annual inflation ratio. The average sustained profitability rate on the results of three June auctions comprised 10.64% per annum. No deal with notes was held in the secondary market.

Stock of the Azerdemiryolbank was placed in the corporate bonds market. The total issue comprised 2bn manats. The emitter succeeded to place the entire amount.

No trading session was held at the corporate bonds market.