Central bank: Enough liquid assets in Azerbaijani banking sector to cover half of public deposits

Business Materials 27 December 2012 18:34 (UTC +04:00)

Azerbaijan, Baku, Dec. 27 / Trend, I. Khalilova /

The total capital of the Azerbaijani banking sector increased 30% between January and November, the Azerbaijani Central Bank's statement on the main directions of monetary and financial stability for 2013 said today.

"The banks' capital position is estimated to be at a satisfactory level, as the capital adequacy index was at 15.7%, exceeding the minimum requirement of the Central Bank (12%)," a statement said.

The Central Bank increased the minimum requirement for capitalization by five times - up to 50 million Manat from January 1st, 2014 to improve the financial stability of the banking system and intensify financial intermediation. Today, banks covering 89% of the assets of the country's entire banking sector, meet this requirement.

The returns on equity (ROE) hit 9% within 11 months, and the returns on bank assets (ROA) exceeded 1%.

During the reporting period, bank assets rose by 20.6% and credit investments - by 20.9%. The banks increased lending to industry and production by 50%, and to agriculture and processing - by 16%. Some 66.4 million Manat were allocated through the Azerbaijan Mortgage Fund to finance housing purchases. More than 1,800 individuals received mortgage loans.

The volume of long-term loans increased 23%. Credit investments from banks outside of the capitol increased by 19.6%, and by 28% from the non-bank credit institutions.

In general, the central bank estimates the liquidity of the banking sector to be at a stable and reasonable level. The share of liquid assets totaled 12.8% of total volume of assets.

"This is enough to cover half of the population's deposits", the central bank said.

The process of the banking sector's integration into the global financial system and the acquisition of funds from foreign sources continued this year. Today, the share of external debt in bank resources is 15.5%.

The central bank thinks that public confidence in the country's banking sector strengthened, as evidenced by the growth of the savings by 15.6 % to 4.8 billion Manat. The amount of deposits with a maturity of over one year increased 17.4%. Deposits in local currency increased by 23% and significantly exceeded the growth rate of foreign currency which was 6.5%, while the population's deposits in the regions increased by 16%.

"Interest rates also declined during 2012," a statement said. "The average interest rate on loans and deposits decreased to two percentage points."

The Central Bank also stressed the expansion of regional coverage of the financial sector. Some 26 new bank branches and 14 offices have been opened within 11 months. At present, some 654 branches and 162 offices of banks, half of which are in the regions, are operating in the country. Moreover, around 114 branches of 132 non-banking credit organizations are operating in the country.

Some 43 banks are operating in Azerbaijan.

The official exchange rate is 0.7850 AZN/USD on Dec. 27.