Central Bank: Azerbaijan's banking system remains attractive to foreign investors

Azerbaijan, Baku, Feb. 19 /. Trend I.Khalilova /

Azerbaijan's economy and banking system retained their attractiveness to foreign investors in 2012.

According to the report of the Central Bank of Azerbaijan (CBA) on financial stability in 2012, deposits of non-residents - individuals placed in Azerbaijani banks within a year and funds raised from international financial institutions, rose by 21.99 per cent (2011 saw growth at 6.7 per cent), totalling 2.269 billion manat.

Deposits, placed in banks by non-resident individuals, rose by 58 per cent to 12 per cent of total deposits, while in 2011, the growth was at 34.6 per cent to nine per cent of the total deposits.

'Attracted foreign funds remained at an acceptable level reaching 15 per cent of total liabilities of banks. Their share was at 22 per cent in early 2011', the report says.

In general, reducing the dependence of banks on foreign resources and replacing them with internal resources increased the stability of banks to external shocks which made it possible to finance their lending through sustainable resources.

In 2012, the liabilities of banks rose in general, by 27.6 per cent (3.259 billion manat), amounting to 15.088 billion manat as of January 1, 2013. The total amount of banks' deposits increased by 13.3 per cent reaching 10.699 billion manat which is 71 per cent of the banks' liabilities.

During the reporting period, deposits from the public in the banking system increased by 24.1 per cent, reaching 5.113 billion manat and their share in the banks' total liabilities amounted to 34 per cent (in 2011 - 34.8 per cent, in 2010 - 29.8 per cent ). For comparison, in 2011, savings of the population in banks increased by 36 per cent, in 2010 by 30 per cent and in 2008-2009 by 26.2 per cent in average per year.

The Central Bank sees positive changes in the structure of deposits and the terms. Time deposits increased by 794.5 million manat and demand deposits by 199 million manat. The share of term deposits in total deposits was 80 per cent, same as in 2011.

'As a result of increasing public confidence to the banking system, continued growth in the portfolio of deposits, investments made for the long term and in the national currency, has been observed', the report said.

During the reporting period, long-term deposits increased by 33.9 per cent to 39 per cent of total deposits. Deposits in local currency over the last year rose by 30 per cent to 2.963 billion manat, or 58 per cent of total deposits (55.4 per cent in 2011, 46 per cent in 2010).

According to the report, the increase is also observed in the structure of deposits of legal entities.

Deposits of legal entities both financial and non-financial institutions, over the last year, increased by 4.9 per cent to 5.585 billion manat as of January 1, 2013.

Entities were giving preference to term deposits, the growth rates of which were higher than that of demand deposits. By reducing deposits in current accounts by 0.1 per cent, time deposits increased by 9.5 per cent. The share of term deposits in total deposits of legal entities by the end of the year was at 54 per cent.

The Central Bank notes that the growth of the resource base of the banking system in 2012 primarily was due to the internal market funds.

As of January 1, 2013, there are 43 banks operating in Azerbaijan.

The official exchange rate for Feb. 19 is 0.7847 AZN / USD.

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