Financial depth of Azerbaijani banking sector reaches 78% of non-oil GDP

Business Materials 30 December 2014 17:33 (UTC +04:00)

Baku, Azerbaijan, Dec.30

By Maksim Tsurkov - Trend:

In 2014, strengthening of the role of the banking sector in the economic development of Azerbaijan was observed, said the statement of the Central Bank of Azerbaijan (CBA) on the main directions of monetary policy and financial stability for 2015, published Dec.30 in the official press.

The document said that the Central Bank has taken appropriate measures to expand the lending of business in accordance with the strategic goals of the development of the country. In particular, important steps were taken to optimize the costs on business lending and reduce the cost of banks' funding sources.

"The financial depth of the banking sector, which concentrates in itself the 90 percent of the assets of the financial system in the country, continued to grow in the current year," said the statement. "The assets of the sector increased by 21.2 percent and reached 78 percent of non-oil GDP. At present, financial depth of the banking sector of Azerbaijan corresponds to parameters of the countries with an average level of development of the banking systems."

The document said that the volumes of bank loans rose by 18 percent, including the long-term loans, which rose by 19.2 percent.

"Currently, long-term loans account for more than 81 percent of the loan portfolio," said the statement. "Over the past 11 months of 2014, business loans increased by 18 percent, including lending of industry and production, which increased by 36.3 percent, agriculture and processing - by 14.1 percent. The share of business loans in total loan portfolio amounted to 73 percent. Lending of the regions has increased by 39.4 percent."

The document said that the Central Bank has taken regulatory measures in connection with the current growth dynamics of consumer loans and potential risks.

"As a result, the growth rate of consumer lending decreased by 1.9 times compared to the same period last year, fell by 19 percent or 11 percent, excluding mortgage loans," said the statement. "The volume of car loans fell by 31 percent. The share of consumer loans in the total loan portfolio of Azerbaijan is below the average index of the EBRD (European Bank for Reconstruction and Development) countries. In developing countries, the share of consumer loans is 50 percent or higher."

The document said that mortgage loans worth 92 million AZN were granted in 2014.

The official exchange rate for December 30 is 0.7844 AZN / USD.

"As a result, the loan portfolio of the Azerbaijan Mortgage Fund (AMF) has reached 628 million AZN, and the number of persons who have received mortgage loans exceeded 15,700," the statement said. Authorised banks, insurance companies, appraisers and AMF started using e-mortgage."

The total volume of mortgage lending (taking into account the loans within the own programs of the banks) in the country, increased by 25 percent and exceeded 1 billion AZN, which accounts for 3 percent of non-oil GDP.

Edited by CN

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