Azerbaijan, Baku, October 31 /Trend D. Nasibova/
One of the major priorities of socio-economic development in Azerbaijan for 2013-2016 is the development of a stable banking system and increasing the level of confidence on the part of economic agents.
This has been stated in the draft of the state budget of Azerbaijan for 2013 and the next three years, submitted to the Parliament.
'It is planned to strengthen the role of the banking system by ensuring the diversification of the economy through the development of the non-oil sector, acceleration of the development of Azerbaijan's regions and reducing poverty and increasing entrepreneurship in order to achieve these goals', the draft said.
Moreover, the banking sector is expected to increase investment and credit opportunities which will create a legal competition in the banking market. More attention will also be paid to the quality of the bank's assets and risk prevention management.
As of September 1, 2012, banks issued loans worth 11.157.8 billion manat, which is 8.8 per cent compared to the beginning of the year and by 18.7 per cent compared to the same period in 2011.
Loans and borrowings worth 731.7 million (6.56 per cent) of the total portfolio were overdue compared to 633.8 million manat as of January 2012, and to 592.5 million manat - September 1, 2011.
Due loans increased by 15.4 per cent for eight months of the year past, while by 23.5 per cent - on an annual basis.
Loans issued to the population in the regions of Azerbaijan amounted to 1.429.67 billion manat or 12.8 per cent of the total loan portfolio at early September.
Most of the loans were granted to households in Azerbaijan. Loans totalling 3.942.2 billion manat, or 35.3 per cent were allocated to households in January-August 2012, the CBA said.
It is also planned to develop payment systems in subsequent years, including electronic payment systems.
A series of activities in order to develop the banking system of the country in priority areas, which include the completion of the improvement and management of enterprise systems, increase access including in the regions, to banking services, the capitalisation of the banking system and the continuation of the consolidation process and to encourage the creation of new institutions and mechanisms for access to financial resources is also planned.
According to the CBA board's decision dated July 25, the minimum total capital of existing banks and authorised capital of newly established banks increased from the current 10 million manat ($12.7 million) to 50 million manat ($63.7 million). The new requirement for the capitalisation of the existing banks will come into force from January 1, 2014.
The capitalisation of the banking sector in Azerbaijan increased by 2.5 per cent and by 9.7 per cent compared to the beginning of the year, and decreased by 0.2 per cent compared to August 2011, amounting to 2.324.6 billion manat on September 1.
Azerbaijani banks forced to raise their capital to the new regulatory level have already started negotiations on the consolidation.
The country's banking system already has successful experience of bank consolidation with EBRD assistance. UniBank was established due to the unification of two commercial banks MBank and Promtexbank in 2002 and EBRD getting a 15 per cent share. Unification of the Bank of Baku and IlkBank took place in 2005.
Official exchange rate on Oct 31 is 0.7849 AZN/USD