Monetary sector

In 2009, the National Bank of Azerbaijan (NBA) plans to focus on maintaining the financial stability of the banking system on the backdrop of increasing global risks, according to the NBA's recently released key monetary policy priorities. The NBA's policy will be to maintain the banking sector as a financial intermediary in the national economy, as well as the sustainability of the system, and to increase confidence in this sphere.

The appropriate mechanisms will be introduced on the interbank monetary market to provide for the effective use of liquidity in the banking system. This year, more attention will be paid to bank assets quality management and forming a domestic reservation policy at banks. To do this, banks will be offered institutional support to improve their assets quality management system. Maintaining capital adequacy at a safe level will also be promoted. Banking supervision will be strengthened to allow these tasks to be successfully implemented. The necessary arrangements will be made to identify risks in advance - and to appraise and manage them.

The legal framework of the banking system is expected to be improved in 2009. Along with amendments to the Law on the National Bank and the Law on Banks, the Law on Non-Bank Credit Organizations and the Law on Credit Bureaus, which are relevant for infrastructure, will also be passed.

Currency market and rates of AZN

In Jan. 2009, official exchange rate of the national currency depreciated 57 points. Dollar's rate increased from 0.8010 manat per U.S. dollar up to 0.8067 manat per dollar.

Exchage rate of USD increased gradually with little hesitations. Maximal and minimal rates of the rates were registered on Jan. 30 and 31 (0,8067) and Jan. 1-4 (0.8010) respectively. But the oscillation between the maximal and minimal importance made up 57 points.  

In Jan., the EUR rate in Azerbaijan decreaded by 893 points (from 1.1292 EUR/AZN to EUR/AZN 1.0399). The monthly minimum of rate - 1.0399 EUR/AZN - took place on Jan. 30-31, monthly maximum of rate - 1.1292 EUR/AZN on Jan. 1-4. The fluctuations between maximal and minimal significance constituted 893 points.

Exchange rate of the national currency in the reported period decreased by 0.55 % - from 0. 0.8013 to 0. 0.8057 per 1 USD. As a result, the average rate of AZN in relevant to USD made up AZN 0. 0.8037 per 1 USD, though in December 2008 it was AZN 0.8028.

Unibank (30.93%) leads among five banks for its share of trades on Baki Banklararasi Valyuta Birjasi. The other banks include ASB bank (25.68), Bank Standard (12%), Bank Nikoil (10.74%) and Mugan Bank (3.07%).

The total volume of deals in the U.S. dollar in Bourse E-system of trades - BEST totaled 32.592 billion manats ($26.194 billion). A total of 38 trade sessions were held in BEST system.

Monetary market

As of January 1, 2008, money supply (M2) dropped AZN 486.3 mln or 8% as with a rise of 1498.8mln manat (36.6%) in annual calculation. In December 2008, the rise totaled 568.2mln manat (10.3%) and 1985.1mln manat (48.5%) for 2008.

As of Feb. 1, 2009, M2 indicator was 5594.7 million manat against 6.081mln manat as of Jan. 1 and 4095.9mln manat as of Feb. 1, 2008.

The cash money mass (М0) decreased by 6% (AZN 249.6 mln) with a rise of 54.4 % (AZN 1372.1mln) in annual calculation As of Jan. 1, the index of M0 comprised AZN 3896.1 mln as compared to AZN 4145.7 mln as of 1 Jan. 2009 and AZN 2.524mln as of Feb. 2008.  

As of January 1, 2008, the Broad Money Supply (M3) made up AZN 8009.3 mln as compared to AZN 8494.2 mln as of Jan. 1, AZN 5650.3 mln as of Feb. 1, 2008. This indicator dropped 5.7% and increased 41.7% in annual calculation.

Transaction money (M1) made up AZN 4727.4 mln as compared to AZN 5.145mln and AZN 3303.8 mln respectively. In Jan. this indicator decreaed AZN 8.1% and rose 43.1% in annual calculation.

Parameters of the monetary market, mln AZN

Credit market

In January 2008, Azerbaijani banks increased crediting by 0.5 percent, a 51.3-percent rise from 2008, a National Bank of Azerbaijan (NBA) source said.

As of Feb. 1, banks issued credit worth 7.201 billion manat compared to 4.758 billion manat for the same period last year. Statistics of overdue credit do not include loans from the Aqrarkredit non-bank credit organization.    

Short-term credit composed 2.289 billion manat compared to 1.638 billion manat for the same period last year. As many as 42.4 percent of short-term credit and 41.6 percent of overdue credit were in hard currency.  

Long-term credit totaled 4.911 billion manat compared to 3.120 billion manat for the same period last year. As many as 53.4 percent of long-term credit and 40 percent of overdue credit were in hard currency.

As of early February, two state-owned banks issued credits worth 3.114 billion manat. Private banks issued 3.903 billion manat in credit. 

The credit portfolio of banks with foreign capital composed 1.975 billion manat. 

Azerbaijani banks decreased portfolio of consumer lending 0.16%. The portfolio grew 36.5% in annual calculation. It shrank 5 percent sinse September 2008, when consumer lending reached all time high.

Accordingt to the NBA, as of Feb. 1, portfolio of consumer lendng was 2312.5 million manat compared to 2334.9 million manat as of Jan. 1 2009 and 1694.3 million manat as of Feb. 1, 2008. In Jan., consumer lending made up 32.1 percent of bank's total credit portfolio (7201.3 million manat).

The restrictions on lending led to a complete zeroing in portfolio of guarantees by Azerbaijani banks and decrease in factoring operations.

As of Feb. 1 2009, the commercial banks did not hace guarantees while they had guarantees of 16.37 million manat or 0.34 percent of credit portfolio.

As of Feb. 1, factoring operations (lending with guarantee) kept on falling - 0.46 million manat or 0.01 percent of total portfolio (7201.3 million manat) against 0.52 million manat (0.01 percent) as of Jan. 2009 and 8.4 million manat (0.18 percent) as of Feb. 1, 2008.

As of Feb. 1, banks' letter of credit opened 187.79 million manat (2.61 percent of credit portfolio) compared to 43.63 million manat (0.61 percent of credit portfolio) as of Jan. 1, 2009 and 15.3 million manat (0.32 percent) as of Feb. 1, 2008.

As of Feb. 1, 2009 average annual rate of banking crediting for legal entities comprised 16.44 % in national currency against 14.87 % as of Jan. 1 2009 and 15.79 % as of 1 February 2008. The real credit rate made up 4.54 % amid inflation ratio of -5.93 %. The average annual rate on banking crediting the economy made up 15.53% in hard currency as compared to 12.37 % as of Feb.1, 2009.

As of Feb. 1, 2009 average annual rate of banking crediting for legal entities comprised 22.03 % in national currency against 21.53 % as of Jan. 1 2009 and 20.44 % as of 1 February 2008. The real credit rate made up 10.13 %. The average annual rate on banking crediting of individual client in hard currency was 21.69% compared to 21.52% and 21.22% respectively.

Banking sector

In Jan. the total amount of deposits of the Azerbaijani banks decreased by 6.41 % and compared to a rise of 7.4% in Dec. and 36.6% in 2008.

According to the National Bank of Azerbaijan, as of Feb. 1, 2009 the amount of deposits and savings of legal and physical entities made up AZN 4.113.2 mln compared to AZN 4.348.5 mln as of Jan. 1, AZN 3.126.3 mln as of Feb. 1, 2008. AZN 1698.6mln of the sum fell on AZN and remaining part (AZN 2.414.6 mln) on foreign currency.

In December, the savings and deposits of the physical entities decreased by 3.7 % and legal entities' deposits decreased 9%. During the year the individual deposits totaled 22.3 %, despite a rise of corporate clients' deposits by 40.1%. 

As of Feb. 1 2009, the amount of deposits of physical entities in the banks decreased from 1903.7 mln as of Jan. 1 up to AZN 1833.9 mln. 

As of Feb. 1, 2009 the amount of deposits of physical entities in the banks totaled AZN 2279.2 as compared to AZN 2444.9 mln as of Jan. 1. and 1626.6mln manat Feb. 1, 2008.

As of Feb. 2009, AZN 933.4 mln of deposits and savings of physical persons was realized in national currency and AZN 900.5 mln in hard currency. Some AZN 765.2 mln of legal persons' deposits were realized in AZN and AZN 1.514mln in hard currency.

As of Feb. 1, 2009 the average rate of bank deposits in the national currency comprised 11.57 percent compared to 11.61 percent as of Jan. 1, 11.39 percent as of the beginning of the year, the National Bank of Azerbaijan said. The average rate of banking deposit in foreign currency is 8.2 percent compared with 7.96 percent, 12.15 percent respectively.

As of Feb. 1, 2009 the average rate of bank deposits of physical entities in the national currency comprised 12.38 percent compared to 12.54 percent as of Jan. 1, 12.33 percent as of Feb. 1, 2008. The average rate of banking deposit of individual client in foreign currency is 12.36 percent compared to 12.43 percent and 12.5 percent respectively.  

As of Feb. 1, 2009 the average rate of bank deposits of legal entities in the national currency comprised 9.49 percent compared to 9.48 percent as of Jan. 1, 9.87 percent as of Feb. 1, 2008.

The average rate of banking deposit of corporate client in foreign currency is 5.52 percent compared to 5.4 percent and 7.55 percent respectively.

In Jan. 2008, capitalization structure of Azerbaijani banking sector did not incur any changes compared to 2008. As of Feb. 1 2009, capital of 43 banks exceeded 10 million manat compared to 38 banks as of Feb. 1, 2008. Percentage in this category in the total amount of capital of all banks increased from 94.6% in Jan. 2008 to 98.6% in Jan. 2009.

Two banks' capital (with percentage of 1.1%) ranged from AZN5 million to AZN 10 million. One bank - AZN 3.5 and 5mln. In Jan. 2008, five banks with the special weight of 5% have formed their capital between AZN 5 and 10mln, one bank - AZN 3.5 and 5mln (0.4%).

The number of unprofitable banks decreased from 38 to 35. One bank did not operate. The number of banks did not change compared to Jan. 2008.

Revenues of the bank sector decresed 67.4% in Jan. and totaled 62.56 million manat. However, total revenues of banks increased more than twice compared to Jan. 2008.

The number of unprofitable banks increased by thrice and one bank compatred to Jan. 2008. A total of 11 banks lost AZN 8.03 million, which is 8.5% more than the figure for early 2008 and 29.1% more than in Jan. 2008.

Stock market

In Jan. 2009 the Ministry of Finances held five auctions on placement of T-bills in the amount of AZN 16mln, of which AZN 9.109mln was placed. Placement cost AZN 66mln. However, AZN 34.157 have been placed. The average sustainable profitability on the results of shareholders was 5.12 % per year. A total of 20 deals at the secondary market totaled AZN 23.887 mln.  

The National Bank held four auctions on the placement of T-bills with the total of amount of AZN 130mln. The emitter succeeded to place AZN 101.074 mln, or 50.54 % of the entire emission. The average sustained profitability ratio on the results of auctions 4.3% per year. A total of 15 deals worth AZN 24.733 mln were held at the secondary market.

In Jan., AZN 71.256 mln was placed at the corporate shares market at 25 deals, while at the secondary market on short-term notes the placement amounted to AZN 20.855 mln at 163 deals. No deals were concluded in initial placement of corporate bonds. At the secondary market three deals in foreign currency amounted to $0.05 mln.