Azerbaijan, Baku, May 22 / Trend E. Aliyev /
The Azerbaijani banking market is at an early stage of its development, chairman of the board of VTB Bank (Azerbaijan) Alexander Yeremin said on Tuesday.
"This market is on the cusp of the boom in many areas of the banking business development," he told Trend on Tuesday. "Several countries have passed a similar period earlier. If Azerbaijan analyzes and properly takes into account the experience of these countries, great opportunities will appear to increase the credit market in terms of current, positive stable development of the country. There are all necessary preconditions."
While speaking about the risks, inherent in Azerbaijani banks, Yeremin said that superficial organizing of risk management of the bank poses a threat.
"It is very risky to allow "superficial" solutions in the rules and lending policy in pursuit of lending volumes, to use unreasoned procedures in the sense of control and not to have a balanced system of constant cross-checks of the procedure," he said. "Negligence in these issues leads to serious defaults."
Moreover, a coherent system of monitoring of the liquidity of the bank, as well as the risks of currency positions is required.
"An inadequate policy in the sphere of control of compliance with terms of borrowed and placed resources is a very frequent problem of the banks in the current development," he said. "While attracting money for a year or two, the banks often place them in the five-year loans, not paying much attention to the volume of such imbalance. Such short-sighted behavior of the bank management is a serious risk to the banking organization planning its development on the market not only in the two-year term. Fortunately, the Azerbaijani Central Bank is closely monitoring the situation. It is necessary to slightly snub the booming market sometimes to provide it with more stable development."
He added that at present, the preconditions of active growth of the Azerbaijani banking sector are based on two fundamental factors.
"First of all, Azerbaijan today is one of the most stable countries in the region and the Eurasian space as a whole. This is indicated by the steadily growing economy, stable currency, stable growth of the population's incomes and GDP. Recent years, which have been associated in other countries with the crisis and the recession, have been very stable for Azerbaijan. Oil revenues of the country together with competent, prudent policy of the government have led to a stable consistent development. It is easily now to plan your activities in Azerbaijan. It is very clear how the market develops and it grows, and what can be expected. Second, the domestic consumption is rapidly growing in the country.
The overwhelming majority of Azerbaijanis overcame the situation when the family income was sufficient only for the essentials. Today most of the population can think of spending at a much higher level which is a megaresource for the development of all the fields of consumption (trade, services, etc.). In a short period of time Azerbaijan left behind by income per capita, such countries such as Ukraine. As you know, the desires often 'run' in front of opportunities. And it is at this stage of intensive growth of incomes of the population when the segment of retail banking services is beginning to develop particularly active, providing private clients with required resources and services," Yeremin said.
According to the State Statistics Committee, the total assets of banks in the country on April 1, 2013 amounted to 18.494 billion manat increasing by 25.93 percent compared to the same period of 2012.
The basis of the assets of the banking sector (61.1 per cent) consists of loans granted to customers in the amount of 11.304 billion manat (annual increase of 23.97 percent), investments (1,564.7 million manat, 21.89 percent) and funds on correspondent accounts (1371.3 million manat with a decrease of 16.4 percent). Loans and deposits to financial sector amounted to 753.2 million manat (with growth of 30.26 percent).
During the first quarter of 2013, total liabilities of the banking sector of Azerbaijan increased by 26.4 percent and amounted to 15,826,710,000 manat. For comparison, the figure was 12.522 billion manat in the same period in 2012.