Inflow of retail investors in banking sector of Azerbaijan has increases

Azerbaijan, Baku, March 29 /Trend A.Hasanov/

Weak market conditions in the property market in Azerbaijan and the positive real deposit rates resulted in a significant inflow of retail depositors in the banking system since the start of the global crisis, the deputy director of Fitch Ratings to Financial Institutions Dmitry Abramov said at the presentation of "The banking system of Azerbaijan: recovery from the crisis," in Baku on Thursday.

"Deposits in domestic currency in recent years have grown at a faster rate, indicating the restoration of confidence in the manat," Abramov said.

The share of deposits in manat was about 1.3 billion manat at the beginning of 2011; this indicator was at about 2.2 billion manat at the beginning of 2012, which accounted for more than half of total retail deposits. It should be noted that deposits in manat have increased more than twofold since 2008.

At the same time, Abramov said, according to the structure of the economy a significant amount of funds is outside of the banking system.

"The indicator loans / deposits in the banking system is about 1.5x, which indicates that a significant amount of loans financed by foreign funding and through resources of the Central Bank of Azerbaijan" Abramov said.

Most of the foreign borrowing is concentrated in the International Bank of Azerbaijan, and about 0.3 billion manat from the total volume of borrowing amounted to more than 1.2 billion manat, accounted for the remaining banks (rated by Fitch).

There are 44 banks in Azerbaijan, seven of which holds Fitch rating. The IBA, AGBank, Demirbank, Kapital Bank, Technikabank, AccessBank and Unibank are among them.

Foreign liabilities of these banks account for approximately 80 percent of all liabilities of the banking sector of Azerbaijan.

Official exchange rate on March 29 is 0.7862 AZN/USD

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