Azerbaijani banks' leverage exceeds Central Bank's minimum requirement
Azerbaijan, Baku, November 12 / Trend, I. Khalilova /
The leverage of the bank system of Azerbaijan exceeded, following the results of the third quarter, the Central Bank of Azerbaijan-specified minimum requirement of 8 percent as it reached to 10.9 percent, the CBA stated in a financial stability report.
The CBA has been applying the new leverage coefficient since February 2011.
"This indicator was equivalent to 11.5 percent in the beginning of the second quarter and 10.9 percent on October 1," the report said.
As the new coefficient has been introduced, banks will be obliged to observe capital/assets ratio.
Leverage coefficient is designed to restrain a strong growth of banks.
"This is a very efficient instrument from the point of restraint of growth of banks having no sufficient capital," CBA Director General Rashad Orujov told Trend earlier.
Similar practice had been applied in the bank sector of Azerbaijan but the validity of leverage with the six-percent coefficient was suspended in 2003.
The CBA this year restored the validity of leverage norm, this time in a stricter form as it is calculated proceeding, apart from balance assets, from non-balance assets, and has its coefficient increased from 6 percent to 8 percent.
CBA key goal in the introduction of leverage norm is the provision of capital, liquidity, and credit risks management at a safe level. This will push banks toward capitalization.
In terms of capital adequacy, banks in 3 quarters of 2011 exceeded the CBA-established minimum requirement of 12 percent of the combined capital and 6 percent of the first-level capital, up to 16.1 percent and 13.2 percent, correspondingly, on October 1, 2011.
In January-September, the combined capital of the banking system increased by 8.2 percent or 154.9 million manat up to 2,052 million manat, up 9.4 percent from the same period of last year.
In first 9 months of the year, the combined assets of banks increased by 9.9 percent or 1,217.1 million manat up to 13,567.6 million manat.
There are 44 banks operational in Azerbaijan.
The official exchange rate on November 12 is 0.7866 AZN/USD.